China in Quotes
Senator Tom Cotton: “Mr Chew have you ever been a member of, associated or affiliated with the Communist Party of China (CPC)?”
“Senator, I’m Singaporean! No,” replied Mr Chew, stressing that he has no links with the Chinese party.
Decypher Data Dive 📊: How China’s neighbor see its power and influence 🐉
In parts of East Asia, roughly half of adults or more view China’s power and influence as a major threat than any of the other geopolitical issues, according to a Pew Research Center.
Timeline: News From Asia 🌏
On Monday, an Indian destroyer saved an Iranian-flagged fishing vessel and its Pakistani crew after pirates hijacked the ship off the coast of Somalia, according to an Indian Navy statement. Pakistan has not said anything publicly about the incident. India also rescued a Sri Lankan ship from pirates on Monday, and an Indian destroyer helped a British-flagged vessel with a mostly Indian crew after it was hit by a Houthi missile attack in the Gulf of Aden last Saturday. (FP)
Friday
China’s small businesses, which are critical components of its private sector and big drivers of urban jobs, are still contending with severe payment delays and other operational difficulties, according to a recent financial health survey. The findings, compiled by the Chinese Academy of Financial Inclusion at Renmin University in Beijing, were based on data collected from more than 2,300 small and micro-sized firms across the country. (SCMP)
Relations between the Philippines’ two most influential political clans – the Marcoses and the Dutertes are fraying as tensions over constitutional changes erupt into a public feud. Adding to the rancor are a long-simmering dispute over discretionary funds and disagreements over political agendas. (Nikkei)
Iran has begun construction on four more nuclear power plants in the country’s southern coastal province of Hormozgan, with an expected total capacity of 5,000 megawatts, the state-backed IRNA news agency reported Thursday. (Al-Monitor)
Indonesian President Joko “Jokowi” Widodo’s increasingly visible support for presidential candidate Prabowo Subianto has been likened by observers to how United States presidents formally endorse and even campaign on behalf of their preferred candidates, the observers report that President’s support for Mr Prabowo through his various indirect shows of support in the run-up to the Feb 14 polls is unprecedented in Indonesian politics and could undermine public confidence in the presidency as an institution and over the electoral process going forward. (CNA)
Thursday
The interior minister of Pakistan, Gohar Ijaz, announced that the scheduled elections on 8th February will proceed despite a recent surge in violence. Concerns arose from attacks in Balochistan, targeting political candidates. Security measures have intensified, including extra patrols and snap-checks. In Khyber Pakhtunkhwa, two candidates were shot dead, causing election turmoil. (Yahoo News)
ChangXin Memory Technologies (CXMT) is racing to produce China’s first domestic high bandwidth memory, a critical component in artificial intelligence computing, as the country battles U.S. export controls and looks to reduce its reliance on foreign suppliers. (Nikkei)
While the investigation into the People’s Liberation Army’s strategic and nuclear force is in full swing, Beijing is also engaged in information warfare, with the Ministry of State Security seeking to strike back after leaks from US intelligence services. (IO)
Average monthly salaries in 38 major Chinese cities dropped by 1.3 per cent in the fourth quarter of 2023 – the biggest quarterly drop since 2016 – according to a major job-recruitment platform. (SCMP)
Indonesians aged under 40 make up the majority of the country’s voters. All three presidential candidates have been wooing them but analysts say winning this crucial demographic over may take more than promises and online branding. (CNA)
Wednesday
Johor ruler Sultan Ibrahim Sultan Iskandar has been sworn in as Malaysia’s 17th king, marking his first time holding the position after more than 34 years since his father’s reign. The 65-year-old monarch’s appointment is seen as a potential catalyst for positive changes in the economy, diplomacy, and national unity. (Channel News Asia)
Imran Khan and Shah Mahmood Qureshi have been sentenced to 10 years in jail in the cipher case, related to a diplomatic document Imran allegedly failed to return. The special court’s decision, just nine days before the February 8 general elections, disqualifies both from contesting for five years. (Dawn)
Israel has accused 190 UNRWA staff of being militants, claiming they participated in abductions and killings during the October 7 raid that triggered the Gaza war. The Israeli intelligence dossier alleges that these employees, including teachers, doubled as members of Hamas or Islamic Jihad. Multiple countries, including the U.S. and Germany, have halted funding for UNRWA, jeopardizing its aid operations in Gaza. (Reuters)
Iran’ has raised its alert status, indicating that any direct strike on Iranian soil would elicit retaliation against American assets in the Middle East. This caution comes in the aftermath of the death of three U.S. servicemen, attributed to a Tehran-backed militia in Syria. (The Guardian)
Tuesday
About 110,000 Chinese Communist Party officials faced disciplinary action last year as part of the ongoing drive to clean up the party’s act, according to the country’s top anti-corruption body.The figures published by the Central Commission for Discipline Inspection (CCDI) on Sunday represent a 13 per cent increase in the number of cases compared with the previous year. The figures published by the Central Commission for Discipline Inspection (CCDI) on Sunday represent a 13 per cent increase in the number of cases compared with the previous year. (SCMP)
Washington is prepared to pump funds into Vietnam’s chip sector to shore up supply chains and wants the country to “take advantage” of its bid to reduce reliance on China, a visiting U.S. envoy said.The U.S. is targeting seven countries for part of its CHIPS and Science Act, which includes $500 million for improving semiconductor training, cybersecurity and business climates globally, said Jose Fernandez, U.S. undersecretary of state for economic growth, energy and the environment. Fernandez told Nikkei Asia that Vietnam should also take action before it is too late to attract investment in vital industries, like clean energy and minerals, that can be used for electric vehicles and batteries. (Nikkei)
The Maldivian Democratic Party plans to submit an impeachment motion against President Mohamed Muizzu following a diplomatic dispute with India. The motion is supported by the majority party in Parliament, and the necessary signatures have been gathered. The Parliament’s regulations have been revised to allow for impeachment without requiring support from minority parties, and a reduced number of members are required for the impeachment committee. (Ground News)
Hong Kong’s leader mapped out the details of a public consultation on a domestic national security law on Tuesday morning, introducing nine chapters on which residents can offer views during the one-month period. Chief Executive John Lee Ka-chiu was joined by Secretary for Justice Paul Lam Ting-kwok and security minister Chris Tang Ping-keung, who are part of the core team on the Article 23 legislation, at a 10am press conference. (SCMP)
Beyond The Great Wall
Exploring News About China in Depth
“Pew’s Findings: TikTok Surges in Popularity Amidst CEO Backlash”
TikTok’s popularity in the United States has skyrocketed, with 33% of Americans now using it, a 12% increase since 2021. This increase is especially notable among young adults, women, and people of color, cementing TikTok’s position as the fastest-growing social media platform. TikTok has a sizable global user base, with 170 million monthly active users in the United States alone, surpassing competitors. The platform’s rapid rise was highlighted during a Senate hearing, when CEO Shou Chew pledged $2 billion in 2024 for child safety, highlighting TikTok’s commitment to trust and safety in the face of increased scrutiny on social media platforms worldwide.
The hearing took an unexpected turn as Senator Tom Cotton’s persistent questioning of Chew’s nationality and ties to China sparked backlash, injecting a geopolitical dimension into the ongoing discussions surrounding TikTok’s global impact. Read more: Bloomberg, SCMP, The Hill
China: Neither a “A Match Made in Heaven” Nor the “Axis of Evil”
By Tuvia Gering
The recent war has intensified debate about Israel’s relationship with China. Can China be a reliable partner, or is it an opportunistic rival in a shifting global order? Some view China’s criticism of Israel and support for Palestinians as aligning it with an “axis of evil.” But is this an accurate picture?
While China does back Palestinian causes, its actions seem more symbolic than impactful. Their aid is minimal, and UN votes are easily negated by the US veto. This suggests China’s main goal is likely to isolate the US and gain leverage, not truly help the Palestinians. Despite political differences, China is Israel’s economic lifeline. Severing ties could cripple its post-war recovery. Fears of China “controlling” infrastructure are also overblown.
So, how should Israel proceed? Engaging with China is crucial to address its antisemitism and support for Iranian-backed groups. But complete isolation is counterproductive. Increased scrutiny of sensitive technology transfers is necessary, but not total shut-off. Israel can also leverage its growing ties with moderate Arab states. Together, they can pressure China and Iran through regional dialogue.
Labeling China solely as “evil” ignores its economic value and potential for cooperation. Conversely, viewing it as a savior ignores its realpolitik motives and limited security involvement. Israel’s best approach lies in pragmatism. Maintaining dialogue with China while setting clear red lines against supporting terrorism and undermining sovereignty is key. Diversifying trade and collaborating with Arab partners offer additional routes to navigate this complex relationship. Read more: INSS
Top China Stories
Did China Meddle in Canada’s Election?
Gzero has reported today that: “Calls for an inquiry were sparked by media reports that suggested China had interfered in the 2019 and 2021 Canadian federal elections, attempting to swing the country’s 1.7 million citizens of Chinese descent behind the governing Liberals. Among the allegations were claims that one Liberal MP viewed as being pro-Beijing was nominated as a candidate with the help of paid Chinese students, bused in by the PRC Consulate in Toronto (The MP in question, Han Dong, denied the allegations and is suing the media outlet, Global News)”. Read more: GZero
China is merging 2,100 banks with US$ 6.7 Trillion in Assets.
China is embarking on the biggest consolidation in the banking industry by merging hundreds of rural lenders, this has been going on since 2022 where it was tried for the first time in seven provinces. This year the policy mandarins have identified this US$ 6.7 Trillion sector as an important priority. This has become important as the bad-loan ratio stands at 3.48%, twice as high as that of the whole sector. Liu Xiaochun, deputy-director of think tank Shanghai Finance Institute was quoted in Bloomberg saying that this is where risks are most concentrated, and risk could be resolved through mergers, and reorganisations. Only time will tell, but there are many other issues that will crop up with this move. Read more: Bloomberg
Global Fund Exodus From China Stocks Hits Sixth Month
Global funds offloaded 14.5 billion Yuan (US$ 2 billion) worth of shares on a net basis in January via trading links with Hong Kong, extending their selling to a record sixth month Bloomberg compiled the data and reported it as well, since August this has meant that stocks worth 201 billion yuan has been sold. Read more: Bloomberg
Pro-China politician picked as Taiwan speaker
A populist former presidential candidate who was recalled as a city mayor has been elected speaker of Taiwan’s legislature, raising the specter of bitter infighting over reforms and defense spending to counter an increasingly aggressive China. Han Kuo-yu – who made headlines for striking lawmaker Chen Shui-bian, who later became president, during a legislative session in 1993 – took the politically powerful job after winning votes from 54 newly elected members of the main opposition party, the Kuomintang (KMT). Read more: Nikkei Asia
Beijing & Pyongyang Deepen Sports Ties
Nikkei writer Yukio Tajima has written that “China and North Korea have agreed to promote exchanges through sports, the Chinese government said Tuesday, as the two countries undertake a flurry of diplomatic visits to deepen friendly ties. North Korean sports minister Kim Il Guk on Monday met with Gao Zhidan, the director of China’s General Administration of Sport, in Beijing, where the two signed this year’s sports exchange protocol.
“We hope to deepen sports exchange and pragmatic cooperation, and together write a new chapter in Sino-North Korean friendship,” Gao said, according to a statement from the sports administration.” This is an extension of the shuttle diplomacy that the Chinese and North Koreans have been active in the past few weeks. Read more: Nikkei Asia
Chinese leaders hint at increased focus on politics and Communist Party discipline for coming year
Chinese leaders, in the first Politburo meeting of 2024, prioritized political control and party discipline over economic concerns. Despite a focus on stable economic growth, there was a notable absence of reference to the third plenum, hinting at a delay in the key economic policy meeting. Read more: SCMP
China’s anti-corruption watchdog says 110,000 Communist Party officials faced disciplinary action last year
China’s anti-corruption watchdog, the Central Commission for Discipline Inspection (CCDI), revealed that approximately 110,000 Communist Party officials faced disciplinary action in 2023, marking a 13% increase from the previous year. Read more: The Star
China hacking threatens US infrastructure, FBI director warns, as Volt Typhoon botnet foiled
FBI Director Chris Wray warned of China’s cyber threat to US infrastructure, revealing the disruption of a state-backed Chinese effort to plant malware targeting civilian infrastructure. The operation targeted a botnet using small routers owned by private citizens and companies, hijacked by Chinese hackers. Read more: The Guardian
Pentagon calls out Chinese companies it says are helping Beijing’s military
The United States has added over a dozen Chinese companies to a Defense Department list, alleging their collaboration with Beijing’s military. The updated list, including firms like YMTC, Megvii, Hesai Technology, and NetPosa, aims to curb American technology support to China. Read more: Reuters
China and US vow closer cooperation in fighting America’s fentanyl crisis as drugs group begins its work
China and the U.S. pledged to intensify efforts in fighting illicit drugs, especially fentanyl, launching a counternarcotics working group and coordinating law enforcement actions. Read more: SCMP
China’s ambassador to the U.S. accuses immigration officers of harassing Chinese students: ‘This is absolutely unacceptable’
Chinese Ambassador Xie Feng accused U.S. immigration officers of harassing Chinese students, claiming that some with valid visas have faced lengthy interrogations, electronic device checks, and forced deportation upon arrival in the U.S. Read more: Fortune
Human Rights Watch warns carmakers over China forced labour risk
Human Rights Watch (HRW) has called on carmakers, including Tesla, Volkswagen, and BYD, producing cars in China to ensure Uyghur forced labor isn’t in their supply chains. HRW claims Xinjiang aluminum producers, linked to forced labor programs, supply materials used by global car manufacturers. Read more: Reuters
Vietnam, Philippines Sign Deals on South China Sea Security
Vietnam and the Philippines have signed memoranda of understanding to enhance cooperation between their coast guards in the South China Sea. While China’s Ministry of Foreign Affairs didn’t comment, Chinese media warned cooperation against its interests could increase the risk of conflict. Read more: VOA
Myanmar hands over three junta-backed Chinese warlords to Beijing
Myanmar handed over three Chinese warlords, involved in trafficking individuals for scams, to Beijing, marking the downfall of the military-backed Chinese mafia in Myanmar. Read more: BBC
China overtakes Japan in auto exports with boost from EVs
China has surpassed Japan as the world’s largest exporter of automobiles for the first time, driven by robust overseas sales of electric vehicles (EVs). In 2023, Japan exported 4.42 million vehicles, a 16% increase from the previous year. However, China outpaced Japan with exports of 4.91 million vehicles, marking a 58% year-on-year surge. Read more: Nikkei Asia
Decypher Original: Belt and Road Initiative(BRI): Macroeconomic Perspective
The Belt and Road Initiative, conceived by China in 2013, has since evolved into a cornerstone of its foreign policy and economic strategy. Touted as a means for national rejuvenation, BRI has transcended its initial pitch as a mere series of infrastructure projects, aiming instead for a deep-rooted structural overhaul of the international economic and geopolitical order.
China’s economic landscape is undergoing a significant shift, marked by a structural slowdown prompting a redirection of investment focus from domestic consumption to manufacturing to achieve growth targets. However, this transition has sparked concerns over potential global trade tensions, as China’s surplus industrial capacity could lead to disputes with other nations.
The roots of the BRI can be traced back to China’s consistent current account surplus since 1993, indicating a surplus of domestic savings over domestic investment. Traditionally, China exported its excess savings through investments in US Treasuries and other dollar-denominated assets managed by the People’s Bank of China (PBoC). However, the accumulation of reserves raised concerns about credit growth and financial stability, prompting the need for alternative investment avenues beyond the PBoC’s purview. Consequently, initiatives like the BRI emerged to facilitate overseas investment and diversify China’s foreign asset portfolio.
An example of this shift is the surge in loans from the PBoC to Chinese commercial banks, which has seen a substantial increase of 5 trillion renminbi in the last six months alone. This influx of liquidity underscores China’s strategic pivot towards alternative investment channels, including the BRI, as part of its broader economic agenda.
Historically, China has consistently allocated a significant portion of its GDP to infrastructure and housing investments, ranging from 40% to 47%. However, this sustained investment has raised concerns, particularly regarding local government debt related to financing vehicles, which accounts for a substantial portion of GDP, posing a threat to financial stability. Moreover, oversupply in the housing sector, coupled with stagnant household consumption and a surge in low-interest loans to manufacturers, underscores the challenges facing China’s domestic economy. These challenges are further compounded by a contraction in exports in 2023, driven by sluggish global demand and an unstable domestic economic recovery.
In contrast, the Belt and Road Initiative represents a strategic response to China’s economic dynamics. In 2022, the BRI’s financial input reached USD 67.8 billion, indicating a strategic shift towards larger investments and a focus on substantial, higher-yield projects. This shift is evidenced by the increase in the average deal size to USD 650 million, reflecting a more selective approach amidst a tighter global economic climate. Since its inception, cumulative BRI engagement has totaled USD 962 billion, with significant investments allocated to construction contracts and non-financial investments. Regionally, there has been a notable increase in BRI engagement in East Asia, while Sub-Saharan Africa and West Asia have experienced a decline. Conversely, the Middle East has witnessed an increase in BRI engagement, indicating strategic expansion in a region critical for energy resources. Furthermore, Chinese investments in green energy within the BRI framework have surged, signaling a shift towards more sustainable projects. However, fossil fuel projects continue to dominate the BRI’s overseas energy engagement.
Notwithstanding these advancements, persistent challenges arise, notably in striking a balance between economic growth and environmental sustainability, as well as in addressing regional engagement disparities. Furthermore, the effectiveness of BRI investments in propelling enduring economic development and nurturing international cooperation continues to face scrutiny.
Japan Wants Both Taiwanese Security and Chinese Trade
Following the victory of Lai Ching-te from Taiwan’s Democratic Progressive Party in the presidential elections, Japan has shown increased support for Taiwan, exemplified by suggestions of parliamentary security talks including U.S. representatives. Concurrently, Japan is planning a significant increase in its defense spending, aiming to reach 2 percent of its GDP by 2027. This would make Japan’s defense budget the third-largest in the world, reflecting its concern over regional security despite its historically pacifist stance.
Internationally, Japan is building partnerships, for instance, forging agreements with Australia, supporting Southeast Asian countries over South China Sea disputes, and considering the establishment of a NATO office in Tokyo. These strategic moves come without significant repercussions from China, which has been cautious despite not welcoming these developments.
Diplomatically, Japan has shifted its tone towards Taiwan, now considering it an “extremely crucial partner” and suggesting a departure from the traditional stance of non-involvement in One China policy discussions. This adjustment in stance is becoming mainstream in Japan, with high-level political figures acknowledging the interconnection of Taiwan’s security and Japan’s national interests. Yet trade with China is indispensable for Japan, with China being its largest trading partner. This necessitates a diplomatic balance, as evidenced by recent summit meetings between Japanese and Chinese leaders focusing on maintaining a mutually beneficial economic relationship. Read more: Foreign Policy
Beijing government repays bond 17 years early to save on interest
The Beijing municipal government is experimenting with a program to repay its special-purpose bonds early to save on interest charges.
Beijing repaid 39 million yuan ($5.5 million) of principal on an 8.4 billion yuan ($1.18 billion) 20-year special-purpose bond in August, almost 17 years before its maturity date. This early repayment resulted in over a 70% saving on interest charges, according to the finance bureau’s report.
The funds from the bond were utilized for enhancing highways, transportation facilities, and municipal infrastructure. The finance bureau also disclosed that approximately 700 million yuan was designated for a cultural industry park in Beijing’s eastern district.
In recent years, with the increase in the issuance of local government bonds, there has been a significant rise in interest expenses. Ministry of Finance data indicates that interest payments on local government bonds surpassed 1 trillion yuan for the first time in 2022. From January to November 2023, local governments disbursed a total of 1.14 trillion yuan in bond interest costs. Local governments can reduce interest charges by repaying government bonds early when interest rates are decreasing. For instance, Beijing redeemed a bond issued in 2020 with an interest rate of 3.42% in August but introduced another special-purpose bond with a coupon rate of 2.98% in June. Read more: Nikkei Asia
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