China in Quotes
“We have always welcomed healthy, orderly interactions across the strait, but trade and economic exchanges cannot become a political tool.” President Tsai Ing-wen of Taiwan
Quick China Fact 📊
From regional blocs like the African Union to major economic powers like Saudi Arabia and Japan, nearly half of the G-20 members rank China as their primary export destination. Australia, Brazil, Indonesia, Russia, South Korea, and Japan rely on China for almost one-fifth of their outgoing trade.
Timeline: News From Asia
Friday
A Beijing court has approved shadow bank Zhongzhi’s bankruptcy filing, citing its inability to repay debts exceeding its assets.
China has accelerated investments in Central Asia with projects like Henan Suda’s plan for 50,000 EV charging stations in Uzbekistan, a $700 million trade hub in Kyrgyzstan, and a $220 million cement plant in Kazakhstan.
North Korea has fired 200+ artillery shells into the sea, leading to evacuation orders on two South Korean islands. Tensions persist amid North Korea’s nuclear warnings and military buildup calls. (CNA)
South Korea’s spy agency has suggested that North Korean leader Kim Jong Un’s daughter, Kim Ju Ae, is likely to succeed him. The National Intelligence Service highlights her public engagements and the respect shown to her as indicators. (NHK)
Thursday
2023 marked a milestone for international banks’ diversifying strategies in Asia, as China’s sluggish recovery and strict foreign market listing rules pushed the West’s big investment banks to look for growth in other markets.
For the first time since 2008, investment banks collected more fees from advising Southeast Asian clients on bond and stock issues than they did from coaching Chinese companies doing international deals on such matters, Dealogic data released on Wednesday shows. (Nikkei Asia)
Chinese balloons flew over Taiwan again for the second day in a row, the island’s Defense Ministry said Wednesday.
The ministry said four balloons were detected Tuesday crossing the median line of the Taiwan Strait, southwest of Ching Chuan Kang Air Base in Taichung, and three of them flew directly over the island at altitudes between 3,659 and 6,706 meters. (Focus Taiwan)
Two explosions killed nearly 100 people and wounded scores at a ceremony in Iran on Wednesday to commemorate commander Qassem Soleimani, who was killed by a U.S. drone in 2020, Iranian officials said, blaming unspecified “terrorists.”
Iranian state television reported a first and then a second blast after 20 minutes during a crowded fourth-anniversary event at the cemetery where Soleimani is buried in the southeastern city of Kerman. (Reuters)
Russia’s economy appears to have defied the Western sanctions that followed its invasion of Ukraine in February 2022. Its economic performance could offer China some insight amid its economic and technological rivalry with the West, led by the United States. (SCMP)
Wednesday
China’s battle against corruption set new records last year, with the ruling Communist Party’s anti-corruption watchdog launching probes into 45 senior officials, according to a tally by the South China Morning Post.
The record number of investigations came five years after Chinese President Xi Jinping declared a “crushing victory” in his war on corruption, a sweeping crackdown that was launched in 2013.(SCMP)
Deputy Hamas leader Saleh al-Arouri had long expected the Israeli drone strike that security sources said killed him in Beirut on Tuesday, three months after his group’s surprise cross-border assault that triggered a devastating war in Gaza. “I am waiting for martyrdom and think that I lived too long,” he said in August, as he urged Palestinians in the Israeli-occupied West Bank to take up arms amid a surge of violence. (SCMP)
Myanmar’s shadow government has said it is ready to work with China on a range of issues, such as promoting direct investment in Myanmar and combatting cross-border crime. The foreign ministry of the National Unity Government (NUG) released a 10-point “Position on China” on Monday. The document included support for the “One China” principle, which states that Taiwan is an inalienable part of China. (Nikkei Asia)
Turkish authorities have detained 34 people suspected of being linked to Israel’s Mossad intelligence service and of targeting Palestinians living in Turkey, a senior Turkish official said on Tuesday, adding Mossad also recruited members in the country. (Reuters)
Tuesday
Surging investment from China, including a multibillion dollar oil project late last year, is leaving a giant question mark over Sri Lanka even as it tries to restructure towering debt and recover from its worst economic crisis as an independent nation: Just how much leverage does Beijing have over the island country?
China is the largest bilateral creditor to Sri Lanka, which in May 2022 became the first Asian lower-middle income country to default on its sovereign debt in two decades. Chinese loans had financed a string of large infrastructure projects, including highways, an airport and a port in the country. (Nikkei Asia)
According to Iran’s semi-official Tasnim News Agency, the warship named “Alborz” under the command of the 94th Naval Fleet of the Iranian navy passed through the Bab al-Mandeb Strait and entered the Red Sea as part of regular missions in international waters.The news stated that the Iranian navy has been “operating in open waters to secure shipping lines, fight pirates and perform other tasks” since 2009. (AA)
Lee Jae-myung, who narrowly lost the presidential elections in 2022, was stabbed on the left side of his neck on Tuesday morning. Mr Lee, 59, leads the Democratic Party of Korea. He is not currently a member of South Korea’s legislature but is widely expected to run for a seat in the next general election, which will take place in April 2024. (BBC)
Israel’s Supreme Court struck down a controversial law passed by Prime Minister Benjamin Netanyahu’s government, which limited the court’s power and sparked protests. Supporters claimed the changes aimed to strengthen democracy, while opponents saw it as a power grab by Netanyahu and an assault on a key watchdog. (Ground News)
Beyond The Great Wall
Exploring News About China in Depth
Decypher Opinion: China’s Quest for Tech Supremacy and the Global AI Power Struggle
China has become a significant player in the global tech industry due to President Xi Jinping’s 2015 Made in China plan. This plan aims to improve national resilience by promoting localised supply chains, to achieve 70% self-sufficiency in critical technologies by 2025. In the field of artificial intelligence (AI), there is a divergence in approaches, with some nations favouring open systems aligned with democracy, while China leans towards state-controlled and restricted ones. In response, the U.S. is pushing for international collaboration, particularly among democracies, in what is unfolding as a Digital Cold War marked by heightened nationalism and global competition.
In 2017, China launched the New Generation AI Development Plan, targeting AI leadership by 2030. By 2020, the plan aims to align AI with global standards, fostering economic growth and improving livelihoods. Goals for 2025 include foundational AI theory breakthroughs, a core industry scale exceeding 400 billion RMB, and the establishment of legal and ethical frameworks. Looking ahead to 2030, China aspires to global AI leadership in both theory and applications, integrating AI into production, governance, and defence. The target is a core industry scale surpassing 1 trillion RMB and related industries exceeding 10 trillion RMB, alongside the creation of global AI innovation centres and robust regulatory frameworks.
China has positioned itself as a key player in the global race for technological supremacy, particularly evident through President Xi’s strategic initiatives such as the Made in China plan. The nation’s strength lies in its digitised society and centralised government, fostering seamless data flow between the government and domestic tech giants. Utilising state-backed “guidance funds,” nearly 2,000 such funds invest in strategic technologies, empowering small businesses with AI aspirations to compete with larger, data-rich firms.
Governments globally, notably the U.S. and China, are heavily investing in AI, committing $40-50 billion each in the previous year. Additional pledges from Britain, France, Germany, India, Saudi Arabia, and the UAE total around $40 billion. To reduce reliance on foreign semiconductor production, the U.S. allocates $50 billion for domestic chip-making, while China earmarks $300 billion to establish a resilient chip supply chain. Gulf states, particularly Saudi Arabia and the UAE, jointly spent $500 million on GPUs.
The competition for AI supremacy goes beyond tech giants to geopolitical considerations. The U.S. emphasises self-reliance, investing heavily in domestic chipmaking and imposing strict export controls on advanced AI tech. China responds with a massive plan to build a resilient chip supply chain. Navigating this complex landscape requires careful consideration and international collaboration, especially among democracies.
Navigating Uncertainty: Asia’s Economic Outlook in 2024
As we begin 2024, Asia faces many unknowns, from economic challenges to geopolitical tensions. With last year’s economic forecasts often missing the mark, many are asking if we’re in for a repeat. A recent Bloomberg article by the veteran analyst John Authers, who got it wrong last year with being bearish cautions that despite the resemblance of 2024 to the past year, we shouldn’t let our guard down. Therefore, we look at the reasons for being bearish and bullish about S&P‘s and IMF’s cautiously optimistic economic outlook for Asia in 2024, considering the uncertainties that lie ahead.
Bullish Points:
1.Robust Economic Growth: The IMF projects Asia’s economic growth to hit 4.2% in 2024, which outstrips the forecasted global expansion of 2.9%. Driving this growth are emerging markets, with India expected to lead at a robust rate exceeding 5%, followed by Indonesia, the Philippines, and Vietnam (Fitch).
2.Resilient Domestic Demand: Consumption and investment across Asia are expected to remain strong, fueled by factors like rising middle-class populations and increasing urbanization.
3.Inflation Trends in Asia and the Pacific: The expectation of declining inflation in 2024 in Asia and the Pacific, staying within central bank target ranges for most countries, distinguishes the region with a faster pace of disinflation compared to other regions.
4.Intra-Asian Trade Ties: Growing trade and economic ties within Asia act as a buffer against global downturns. This regional interconnectedness fosters collaboration and economic resilience.
5.Technological Advancements: Growing investments in tech across Asia boost productivity and competitiveness, opening doors for new industries and economic opportunities.
6.Mainland China’s Gradual Economic Recovery: Enhanced stimulus measures and a pro-market policy pivot are expected to boost household and private business confidence in Mainland China, leading to a gradual economic recovery. Import demand, especially for commodities and capital equipment, is projected to bounce back.
7.Bank of Japan’s Monetary Policy Normalization: The Bank of Japan is likely to begin normalizing its monetary policy in 2024 by raising its short-term reference rate to zero and ending yield curve control, contingent on sustained wage increases.
8.Appreciation of Asia-Pacific Currencies: Currencies like the Japanese yen, Chinese yuan, Australian dollar, and Malaysian ringgit are expected to appreciate moderately against the US dollar in 2024 due to narrowing interest rate differentials.
9.Manufacturing Wage Growth in India and Southeast Asia: Relocations from Mainland China to India and Southeast Asia are driving wage growth in manufacturing. The “China plus one” strategy is leading to increased demand for labour in the region.
Bearish Points:
1.Fiscal Challenges in Bangladesh, Pakistan, and Sri Lanka: IMF assistance is crucial for the fiscal recovery of these countries. Progress will hinge on political stability, and sustained efforts by governments to implement revenue-raising and expense-reducing measures during 2024.
2.Continued Reliance on Fossil Fuels: Despite global energy transition efforts, most major Asia-Pacific economies are likely to continue relying on coal and other fossil fuels to support economic growth. Volatility in global oil markets may drive early mitigation strategies.
3.Challenges in Developing Critical Mineral Supply Chains: Efforts by Australia, India, Japan, and South Korea to reduce reliance on processed minerals from Mainland China may face challenges. Increased foreign investment in critical minerals may encounter obstacles in expanding mining output and downstream processing.
4.Trade and Regulatory Barriers Between Mainland China and the US: Mainland China and the US are likely to maintain trade and regulatory barriers in strategic industries, focusing on self-sufficiency in emerging sectors and addressing risks posed by US sanctions.
5.Nonmilitary Confrontations in the South China Sea: Heightened risk of nonmilitary confrontations in the South China Sea is anticipated between Chinese vessels and those of other countries with contested claims, particularly the Philippines.
Former navy commander appointed as China’s new defense minister
General Dong Jun, the 62-year-old former commander of the People’s Liberation Army Navy, will take on the new role, following a decision by the National People’s Congress (NPC) Standing Committee at a session that ended on Friday 29th December, 2023. Dong’s appointment came just days after Beijing named Hu Zhongming, a submarine expert, as its new navy commander. Read more: VOA News
Huawei Teardown Shows 5nm Chip Made in Taiwan, Not China
Huawei’s latest laptop, the Qingyun L540 notebook, features a 5nm chip from Taiwan Semiconductor Manufacturing Co (TSMC), debunking speculation about a breakthrough by Chinese partner Semiconductor Manufacturing International Corp (SMIC). Huawei remains reliant on TSMC for advanced chip technology despite trade challenges. Read more: Bloomberg
Donald Trump reaped US$5.5 million from China and its state entities during presidency: US House report
Businesses tied to former US president Donald Trump accepted over US$5.5 million from China’s government and its state-owned entities during his time in office, according to a congressional Democratic staff report released on Thursday. Read more: SCMP
Communist Party diplomat Liu Jianchao steps up role in China’s foreign policy drive
As Beijing grapples with a new reality of growing international scrutiny and resistance, the Communist Party’s diplomatic arm under veteran diplomat Liu Jianchao has become increasingly active in bolstering the country’s image abroad. The office was earlier only for socialist countries outreach but now is seen more active than the foreign ministry. Read more: SCMP
China’s LGFVs Must Repay a Record $651B of Bonds in 2024
Lots of debt is coming due this year 4.65 trillion of local government financing vehicle debt, CNY737.3 billion of offshore and onshore property developer bonds. Read more: Bloomberg
Hong Kong Prosecutors Allege Pro-Democracy Publisher Jimmy Lai Encouraged Protests
Hong Kong prosecutors have alleged that pro-democracy publisher Jimmy Lai encouraged protests and urged the US to act against China, presenting evidence of seditious content and instructions to support Western sanctions. Lai, facing life imprisonment, denies charges widely condemned as retaliatory. Read more: Voice of America
Chinese workers see biggest drop in hiring salaries on record
Chinese workers are facing the largest drop in hiring salaries on record, with average salaries for new hires in 38 key Chinese cities falling 1.3% to $1,458 in Q4 2023 compared to a year ago. The decline, the longest in at least six years, highlights deflation risks and sluggish consumer confidence in China’s economy. Read more: South China Morning Post
BYD overtakes Tesla in quarterly EV sales, reflecting China’s rapid industrial upgrade
BYD surpasses Tesla as the world’s largest electric vehicle (EV) maker in Q4 2023, marking a milestone in China’s auto industry. BYD’s success reflects China’s industrial upgrading and high-quality development. Read more: Global Times
China holds 289 officials accountable for environmental protection problems
China holds 289 officials accountable for environmental protection issues discovered during the third round of the central inspection drive on ecological and environmental protection. The inspection covered five provinces, revealing problems in the implementation of environmental measures and slow progress. Read more: Xinhua
Thermo Fisher halts DNA collection kit sales in Tibet
Axios reports that “biotechnology company Thermo Fisher Scientific has halted sales of DNA collection kits to Tibet after criticism from rights groups and pressure from Congress”. Marc N. Casper, Chairman, President and Chief Executive Officer of Thermo Fisher is also chairman of the board of the US-China Business Council. Read more: Axios
Chinese premier calls for ensuring a good start for 2024 economic work
Li Qiang called for more efforts to foster new productive forces, promote high-quality development, and get this year’s economic work off to a good start during his inspection in central China’s Hubei Province.
In his tour on Tuesday and Wednesday, Li also stressed the high-quality development of the Yangtze River Economic Belt and the implementation of the arrangement made at the Central Economic Work Conference. Read more: China Daily
Senior official urges study, implementation of Xi Jinping Thought on Culture
The National Conference of Ministers of Propaganda was held in Beijing. Cai Qi attended the meeting and delivered a speech. Short readout, some excerpts:
Cai Qi emphasized the need to consolidate and expand the achievements of the thematic education, continuously applying efforts in truly learning, understanding, believing, and applying, and deepening internalization and transformation, to further deepen the study, publicity, and implementation of Xi Jinping’s Thought on Socialism with Chinese Characteristics for a New Era. It is important to build a new situation of mainstream public opinion that enhances confidence and consensus, continuously strengthen positive publicity and opinion guidance, and promote the optimistic view of China’s economy. We should widely practice the core socialist values, advance the construction of ideology, morality, and spiritual civilization, and better cultivate the new ethos and appearance of the era. Read more: english.scio.gov.cn
Professor of Finance and Dean of Guanghua School of Management released a report titled “Increase policy intensity, innovate policy tools, and promote the sustained recovery of the economy — China’s Economic Outlook and Recommendations for 2024”
Liu Qiao, Professor of Finance and Dean of Guanghua School of Management, Peking University, and Yan Se, Associate Professor have released a report titled “Increase policy intensity, innovate policy tools, and promote the sustained recovery of the economy — China’s Economic Outlook and Recommendations for 2024”. From the summary: “The insufficient consumption of residents is the crux of the current economic problem. The reasons for this lack of consumption can be attributed to three aspects: First, the ‘scarring effect’ brought about by the pandemic still exists, leading to a lack of confidence and weak expectations among residents. Second, the growth rate of per capita disposable income of residents in China has declined, with the income growth rate of low-income groups, who have a higher marginal propensity to consume, being the lowest. Third, real estate and financial investments are important components of residents’ wealth, and there has been a significant shrinkage in residents’ wealth.” All the efforts the push positive propaganda to improve confidence and “promote the optimistic view of China’s economy” will fall flat if citizens are worried that their wages will be stagnant or drop, if they can keep their jobs, and their household wealth will continue to decline as the real estate market weakens.
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