Quick China Facts:
In 2022, China’s national general public budget exhibited a modest revenue increase to 20.37 trillion yuan. However, with national general public budget expenditures reaching 26.06 trillion yuan, it resulted in a significant deficit of 3.37 trillion yuan, encompassing both central and local government budgets. The central government, overseeing the national budget, reported a revenue of 9.49 trillion yuan, experiencing a deficit of 2.65 trillion yuan due to expenditures totaling 13.27 trillion yuan. Local governments, contributing to the fiscal landscape, anticipate a revenue of 11.7135 trillion yuan in 2023, with projected expenditures at 23.674 trillion yuan, reflecting varied budget dynamics across different administrative levels.
Revealed: how top PR firm uses ‘trust barometer’ to promote world’s autocrats
The Guardian and Aria, a non-profit research organization, revealed that public trust in repressive governments is rising, according to Edelman, the world’s largest public relations firm, known for its “trust barometer.”
The report highlights that citizens in authoritarian countries like Saudi Arabia, the UAE, and China tend to trust their governments more than those in democracies, according to Edelman’s surveys. However, the report unveils that some of these authoritarian governments are also clients of Edelman, raising concerns about conflicts of interest and ethical considerations. The investigation focuses on Edelman’s work for the UAE government, particularly in the context of the UN’s COP28 climate summit in Dubai. Additionally, the report notes that in 2010, Edelman and a subsidiary signed two more contracts to work on behalf of the Emirati government, including the production of a “Beltway barometer survey.” Read more: The Guardian
Trust in Authoritarian Governments over the years according to Edelwise
News From Asia This Week
Monday
Pakistani security forces killed eight militants in an intelligence-based operation in South Waziristan. The militants actively participated in attacks on security forces and civilians. The militants’ possessions included weapons, ammunition, and explosives.
The Land Bridge project, a proposed route for shipping that could bypass the Malacca Strait, is being shopped by the Thai government as it seeks financing. If built, the bridge could reshape the economy of Southeast Asia – but China has not shown a willingness to put up the cash.
China’s National Health Commission attributes the surge in respiratory illnesses to common viruses and pathogens, denying the presence of a novel virus.
Jordan’s Foreign Minister Ayman Safadi said Sunday he hopes a meeting of Mediterranean officials will help bridge a gap between Arab and European countries in calling for a humanitarian pause in Gaza to become a permanent cease-fire.
Tuesday
The Pakistani rupee is expected to be Asia’s worst-performing currency in 2023, and to fall even further in 2024. Analysts cite high inflation, the trade deficit, and external funding gaps as key factors. The IMF’s recent $700 million payment helps avert an immediate default, but long-term concerns remain.
China records first quarterly foreign direct investment deficit. Execs worry about China slowdown, geopolitics, regulations. Trend could weigh on yuan, chip away at growth potential-analyst.China-focused buyout fundraising has ground to a halt-data. (Reuters)
Commerce minister Wang Wentao met Vietnamese Prime Minister Pham Minh Chinh on Saturday in Ho Chi Minh City. Vietnam offered support to China’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade pact (SCMP)
PLA’s most advanced carrier is shown metres from usual berthing place in satellite images, and it appears to launch object in unverified video. Aircraft carriers are expected to play key role in strategy for potential Taiwan attack and are part of Chinese navy’s goal to operate in open sea. (SCMP)
Kim Jong-un of North Korea received satellite images of the White House, Pentagon, and US aircraft carriers captured by their recently launched spy satellite. The satellite also photographed the Andersen Air Force Base as well as US bases in Norfolk and Newport. The United States and South Korea have both condemned this act as a violation of UN resolutions.
The Indian government has halted Huawei’s efforts to partner with India’s top tech schools due to security concerns. Huawei had been collaborating with Indian institutions since the 1990s, but the government became concerned about Huawei’s ties to the Chinese government. The government advised institutes to end their collaborations with Huawei, and existing projects were halted.
Wednesday
“Pakistan is no longer an economically viable state and is in deep economic trouble,” said Adeel Malik, a development macroeconomist at St. Peter’s College of Oxford University. Pakistan makes Afghan refugees pay the price for economic crisis. Threatened with default, government tries reform whilst looking for scapegoats.
Japan’s Finance Ministry will raise the assumed interest rate paid on bonds in the government’s annual budget proposal for the first time in 17 years in fiscal 2024, reflecting policy shifts by the Bank of Japan that have allowed yields to rise.
The leaders of the U.S. Central Intelligence Agency (CIA) and Israel’s Mossad met Qatar’s prime minister in Doha on Tuesday to build on the two-day extension of a truce between Israel and the Palestinian group Hamas, a source briefed on the visit said.
Chinese companies that believe the smart money is on advancing artificial intelligence are poised to invest heavily over the next decade, and the annual windfall will stretch into the trillions of dollars and become a strategic driver of economic growth. (Mckinsey)
China is rapidly catching up to Japan in the development of bendable solar panels, having filed four times as many patents as Japan in 2021. Chinese firms are also leading in academic research and mass production, threatening Japan’s long-held leadership in this field. With the global market for these panels expected to reach $6.74 billion by 2035, collaboration with foreign companies may be critical for Japan to maintain its position in this rapidly evolving field.
Thursday
Henry A. Kissinger the foremost American geostrategist and former Secretary of State who helped first US-China reapprochement is dead at 100. (Guardian)
Several pieces of US legislation targeting China – including one that could close Hong Kong’s representative offices in America and another that would all but block US investment in China’s AI and other hi-tech sectors – cleared a key congressional committee on Wednesday. A bill that would bolster Washington’s cooperation with India, Japan and Australia and others that would authorise further action aimed at protecting China’s Tibetan and Uygur populations from alleged human rights abuses also passed without objection. (SCMP)
International pressure grew on Israel and Hamas to extend a truce on Thursday after another exchange of hostages for Palestinian prisoners and humanitarian aid was delivered to the besieged Gaza Strip.
Banpu, Southeast Asia’s biggest coal mining company, plans to enter Thailand’s growing electric vehicle market, producing lithium-ion batteries for Chinese EV makers.The company is expected to start making the batteries by the first quarter of 2024, said Banpu CEO Somruedee Chaimongkol in an interview with Nikkei Asia. (Nikkei)
Friday
Saudi Arabia and South Korea formed a ministerial committee to help businesses and Vision 2030. The committee focuses on five sectors: energy, infrastructure, capacity building, healthcare, and small and medium-sized enterprises (SMEs). They reached an agreement on 40 projects, which included desalination plants, smart cities, and theme parks. Both countries see the collaboration as critical to economic growth.
Asian sharemarkets started the last month of the year on a cautious note after recent strong gains, though growing expectations Europe and the U.S. are poised to cut rates should help ease pressure on local currencies and central banks. Global oil prices extended losses after a drop of more than 2% overnight as voluntary oil output cuts by OPEC+ producers for the first quarter next year fell short of market expectations. (Reuters)
An unprecedented armed resistance has left Myanmar’s military regime on the brink of collapse and another wave of attacks will come “in the next few weeks,” the foreign minister of the country’s shadow civilian leadership told Nikkei Asia. (Nikkei)(Reuters)
Guarding China’s critical minerals is among its most important tasks, the country’s top anti-espionage body said, while slamming the West for its “small yard, high fence” containment drive directed at Beijing. “Critical mineral resources are the important basis for serving the development of new industries. They are the top priority for resource security,” China’s Ministry of State Security said in a post on its official social media account on Thursday. (SCMP)
Visiting US Secretary of State Antony Blinken on Thursday (Nov 30) urged Israel to create safe zones for Palestinian civilians in Gaza before it resumes “major military operations” in the Hamas-ruled territory. (CNA)
Sensetime, partly state owned AI firm is a redflag, Grizzly research warns, stocks of Sensetime tank
SenseTime is a partly state-owned Hong Kong-headquartered artificial intelligence company. The company develops technologies including facial recognition, image recognition, object detection, optical character recognition, medical image analysis, video analysis, autonomous driving, and remote sensing.
SenseTime (0020.HK) describes itself as “a leading AI software company,” however, we believe that in this case AI stands for Artificially Inflated revenue. Our research exposes SenseTime for what appears to be a pattern of falsifying revenue through employment of revenue fabrication schemes. Two court cases describe revenue fabrication and round-tripping schemes in which SenseTime either directly or through intermediaries provides funds to customers that in turn are used to purchase goods from SenseTime that might never have been delivered. The scheme was corroborated by the CEO of Capital Watch, a Chinese financial media company, who reported that SenseTime invests in third-party companies in exchange for revenue of an equal amount without real delivery of product. As unearthed in one of the court cases, SenseTime’s round-tripping scheme involved a counterparty who was detained by the police and never paid back the money. This implies to us that SenseTime either wilfully works with criminals or does not conduct risk management.
SenseTime has deep ties to the Chinese government as reported by employees and media which has led to unprofitable (and seemingly unpaid) contracts. Chinese government ties also led SenseTime to being blacklisted by the United States Government since 2019 due to use of its facial recognition software in persecuting Uyghur Muslims – the blacklist cuts off SenseTime from U.S. technology markets. Smart money is rushing for the exits with Alibaba and one co-founder reducing their respective stakes to zero.
Link to the report. Click here
Beyond The Great Wall
Exploring News About China in Depth
How China sees the world 2023
The China Institute at the University of Alberta released the Chinese Citizens’ Global Perception Survey in May 2023. This comprehensive survey of Chinese citizens provides essential insights on their views about the world’s influential powers, their trust in different international actors, and their attitudes towards China’s global role.
Predominantly, Chinese citizens identified the United States as the world’s most influential power, despite its contested relationship with China at various fronts. This suggests a recognition of America’s historical dominance in economic, military, and soft power realms. Meanwhile, Russia commanded high trust amongst Chinese citizens, indicative of China’s favourable geopolitical alignment with Russia.
It is notable that Chinese citizens express strong support for their nation’s active global engagement, especially in the areas of peace, security, technology, and innovation. This reflects the internal consensus with the Chinese government’s ambitions on the international stage. However, their less enthusiastic endorsement for exporting China’s economic and political model indicates a bleak view of China’s domestic conditions. In light of these findings, a question emerges: In what ways will these public sentiments shape China’s foreign policies and its future as a global leader?
However, India, Japan, and Australia- nations with growing economic and political clout, were perceived as less influential, revealing gaps between international realities and Chinese perceptions.
Looking at Weapon Patents filed under the Patent Classification System
The International Patent Classification is a hierarchical system used to classify and search patent documents based on the technical fields they relate to. For defence patents, we have tried to focus on the top 4 countries that filed patents under two specific classifications, F41 and F42. The F41 classification includes weapons and projectiles. The F42 classification pertains to ammunition and blasting.
We analysed the IPC data from WIPO (World Intellectual Property Organisation) for three countries with sights on China, and China.
As per the latest data, China has emerged as the leader in the filing of F42 patents, leaving other countries far behind. However, when it comes to F41 patents, the USA still holds the top position, with China ranking second. It is worth noting that in 2016, China surpassed the USA to become the highest F41 patent publisher year on year.
Chinese official warns Australia on navy maneuvers
Liu Jianchao, a Chinese official, has urged Australia to notify China of navy movements in the disputed South and East China seas in order to avoid misunderstandings and escalation of tensions. Liu questioned Australia’s motives for maintaining a navy presence in the region, implying that it is there to contain China. He urged Australia to exercise caution in this matter. Read more: Taipei Times
Myanmar, China hold naval drills amid border fighting
Myanmar and China are conducting naval drills together despite ongoing fighting between the junta and ethnic militias. The drills take place as China’s influence among militias grows and thousands of Chinese citizens are repatriated from Myanmar. The junta has charged Beijing with assisting militias. Read more: Manila Times
China Investment Bank Bans Bearish Research, Wealth Displays
China International Capital Corp. (CICC) has instructed its analysts to refrain from publicly or privately making bearish comments about the economy or markets. These measures are part of the Chinese government’s ongoing efforts to maintain control over the financial sector and promote “common prosperity.” Read more: Bloomberg
Global firms rush to buy Alipay’s stake in India’s Zomato
Global investors such as Vanguard, Goldman Sachs, and the Singapore government purchased a portion of Zomato’s shares after Alipay sold its entire stake in the Indian food delivery platform. Zomato’s stock price has nearly doubled this year, prompting some investors to lock in profits. Alipay’s exit from Zomato follows a trend of Chinese investors selling their stakes in Indian companies. Read more: Channel News Asia
House Prepares to Drop China Investment Curbs From Defense Bill
According to reports, US Congressional negotiators are planning to remove restrictions on US investment in Chinese technology from the Defence Bill. This move comes amid ongoing trade tensions between the two countries and calls for sanctions against Chinese firms to be lifted in order to promote bilateral cooperation. Read more: Bloomberg
Xi’s First Shanghai Visit Since 2020 Showcases Tech, Finance
Chinese President Xi Jinping visited Shanghai for the first time in three years, focusing on technology, finance, and affordable housing. His visit is seen as a signal to boost investor confidence and revitalise the post-pandemic recovery. Read more: Bloomberg
Why is China’s high-quality research footprint becoming more introverted?
China’s contribution to high-quality research is growing, but international collaboration is shrinking. This is due to factors such as the COVID-19 pandemic, political tensions, and policies that favour domestic research. Despite these challenges, China continues to expand its collaborative footprint around the world. Read more: Nature
Buyout Billionaire Sees Rising China Risk, Sanctions Over Taiwan
The co-founder of Swiss private equity firm Partners Group Holding AG is growing cautious about investing in China, due to rising geopolitical tensions and a shrinking population. Read more: Bloomberg
China’s factory activity contracted at quicker pace in November
Manufacturing activity in China contracted at a faster rate in November, falling short of expectations and indicating that more policy support is required. The PMI fell to 49.4, indicating negative sentiment among factory managers due to weak demand both at home and abroad. Read more: Nikkei Asia
China-Türkiye business deals on rise as ‘strategic partnership’ evolves out of geopolitical strife with West
Turkish businesses want to expand their cooperation with China, seeing Türkiye as a strategic partner for China’s global trade. China’s investment in Türkiye is also increasing, particularly in the energy sector. China-Türkiye relations are strengthening as geopolitical tensions with the West rise. Read more: South China Morning Post
China’s Path to Power Runs Through the World’s Cities
The BRI has received enormous attention for its eye-popping price tag and its huge and protean ambitions. Having already invested around $1 trillion, China intends to link more than 150 countries by new roads, railways, seaports, energy systems, and technological and cyberspace innovations, encouraging commerce and connectivity and drawing two-thirds of the world’s population yet closer to Chinese markets and political influence. Read more: Foreign Affairs
Why China Fondly Remembers Henry Kissinger
Former US Secretary of State Henry Kissinger is remembered fondly in China for his role in establishing relations with Communist China during the Cold War. Kissinger’s efforts, which included using Pakistan as an intermediary and secretly dispatching himself to Beijing, culminated in Richard Nixon’s historic trip to China in 1972. Read more: Time
Xi family in the middle of EU Storm
The Chinese propaganda machine, busy with America and the Mideast, has been curiously muted since von der Leyen said on November 16 that China’s trade surplus with the EU, almost €400bn ($437bn) in 2022, is part of the largest global trade surpluses in history. Well, let’s hope she mentions this to President Xi Jinping before the delegation is shunted off to deal with Premier Li Qiang, an old crony of the Chinese boss since his days running an export powerhouse province back in the early years of this century.
That’s because Xi’s own family is directly involved in the drive to expand China’s electric vehicle industry and stands to profit from government handouts and political patronage in building new factories to churn out the vehicles.
The key figure is Daniel Foa, a Briton raised in Wimbledon and now married to the president’s niece, Hiu Ng, the daughter of his younger sister, Qi An’an. CEPA
China wielding ‘bargaining power’ with Russia over Power of Siberia 2 natural gas pipeline
Construction of one of Russia’s key natural gas projects to ensure a financial lifeline overseas is likely to be slower than expected as China seeks to leverage its “bargaining stance”, according to a Russian source and Chinese analysts. The discussions with Beijing over the construction of the Power of Siberia 2 natural gas pipeline, a long touted signal of bilateral cooperation, have progressed slowly. The pipeline, if completed, would divert 50 billion cubic metres (1.8 trillion cubic feet) of natural gas per year that previously supplied Europe to north China, offering a significant boost to Beijing’s energy security. Read more: South China Morning Post
China and South Korea Surge Ahead in Perovskite Solar Cell Innovation, Challenging Japan’s Dominance
China and South Korea are quickly catching up with Japan as the leading countries in total patent filings for next-generation bendable perovskite solar cells. China dominates in academic papers on perovskite solar cells, and if the current pace of patent applications continues, China is likely to become the leader in this field. Among companies and organisations, Chinese battery leader Contemporary Amperex Technology (CATL) ranks seventh in applications submitted in all years. In July last year, Chinese start-up DaZheng (Jiangsu) Micro-Nano Technologies became the first in the world to mass-produce large perovskite solar panels.
Japan, which was the first to develop perovskite technology, had led in applications for five consecutive years until 2019. However, Japan only submitted 19 patents in 2021, while China submitted 70 applications and South Korea was a distant second with 39 patents.
Perovskite cells are significantly lighter than their silicon counterparts and have lower production costs. The global market for perovskite solar cells is expected to reach 1 trillion yen ($6.74 billion) in 2035, up from 32 billion yen last year, according to a report by research firm Fuji Keizai.
Foreign Affairs: Who Killed The Chinese Economy?
Michael Pettis: Pettis argues that government intervention drove China’s rapid growth in its early economic reform years. He suggests that the problems facing the Chinese economy are not solely the result of recent policy shifts but rather deep imbalances that have been present for nearly two decades. He emphasizes the need for China to address the demand side of the economy by strengthening the share of GDP retained by Chinese households.
Zongyuan Zoe Liu: Liu contends that the problems facing the Chinese economy are not solely due to recent policy shifts or Xi Jinping’s leadership. She argues that these challenges are the result of deep imbalances that date back nearly two decades and were apparent to many economists long ago. Liu emphasizes the need for the West to prevent a Chinese economic crisis, as it would have significant consequences for the global economy.
Adam S. Posen: Posen acknowledges the problems facing the Chinese economy, such as weak consumption and anemic business investment. He argues that these issues are not solely the result of recent policy shifts under Xi Jinping but rather the inevitable result of deep imbalances that are common to countries following a similar growth model. Posen suggests that China’s economic problems predate the COVID-19 pandemic and warns that mishandling the pandemic could further plague the Chinese economy.
Albert Hirschman (referenced in the article): Hirschman’s insights are cited in relation to the challenges of transforming a successful growth model. The article suggests that a successful growth model develops its own set of institutions, making it politically difficult to transform. It implies that China’s economic success created powerful constituencies that benefited from the existing model, hindering efforts to transition to a new growth model.
Read more: Foreign Affairs
China’s new cancer drug Toripalimab is approved in the US but will cost 30 times more
Toripalimab, a Chinese cancer drug approved by the FDA, will cost more than 30 times more in the US than in China, costing $8,892 versus $280 per dose. Despite the markup, these drugs are still less expensive than comparable US drugs. In China, the price of the drug is based on enrolment into the national healthcare insurance system. Read more: South China Morning Post
Decypher Report (Translated from Mandarin)
Politburo studies foreign legal system, this is interesting as the Chinese law firms are expanding abroad.
Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, has stressed the need to strengthen foreign-related legal system development, as he chaired a group study session of the Political Bureau of the CPC Central Committee on Monday.
Xi highlighted the need to create law-based governance conditions and a favourable external environment for advancing Chinese modernization. Xi emphasized that bolstering the rule of law in foreign affairs serves the long-term need for building a strong nation and advancing national rejuvenation through a Chinese path to modernization.
He further underscored the immediate importance of foreign-related legal system development in fostering high-standard opening-up and addressing external risks and challenges. Calling for attention to the importance and urgency of the issue, Xi stressed the need to foster a foreign-related legal system and capacity that meet the needs of high-quality development and high-standard opening-up. A professor from Wuhan University gave a lecture, after which members of the Political Bureau had a discussion. Speaking after the discussion, Xi pointed out that foreign-related legal framework is an important part of China’s legal system.
Speech by Pan Gongsheng, Governor of the People’s Bank of China, at the Hong Kong Monetary Authority-Bank for International Settlements high-level meeting where he warns of long difficult Chinese recovery.
中国人民银行行长潘功胜在香港金融管理局—国际清算银行高级别会议上的讲话
“分析中国经济需要注意两个视角。一是当前中国的GDP总量已超120万亿元人民币，约合18万亿美元。庞大的基数决定了中国经济很难像此前那样维持每年8-10%的高速增长。二是中国正在经历经济增长模式的转型。传统增长模式过度依赖基础设施和房地产投资，也许短期内能实现更高增速，但也会固化结构性矛盾，损害增长的可持续性。高质量和可持续发展更加重要，我们必须更加关注经济结构调整，培育新的增长点。这是我们必须要经历的转型之路。
展望未来，中国拥有创新能力强、市场广阔、基础设施完善、产业链完整以及人力资源丰富且质量高等优势，加上前期出台的一系列政策效应逐步显现，相信2024年及以后中国经济将保持健康、可持续增长.”
When analysing China’s economy, we need to pay attention to two perspectives. First, China’s total GDP currently exceeds 120 trillion yuan, which is approximately 18 trillion U.S. dollars. The huge base determines that it is difficult for China’s economy to maintain a high-speed growth of 8-10% per year as before. Second, China is undergoing a transformation of its economic growth model. The traditional growth model relies too much on infrastructure and real estate investment. It may achieve higher growth rates in the short term, but it will also solidify structural contradictions and damage the sustainability of growth. High-quality and sustainable development are more important. We must pay more attention to economic structural adjustment and cultivate new growth points. This is the path of transformation we must go through.
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