China in Quotes
“The Chinese stock market is undervalued against cash, Chinese bonds, gold, and other world stock markets — and it is in a state of total panic,” Charles Gave, Gavekal Group’s co-founder
Decypher Data Dive 📊: FATF Assessment of Asia 🌏
The FATF Recommendations set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction.
Timeline: News From Asia
Friday
Russian ships were caught by U.K. eyes in the sky loading up supplies at a North Korean port, another indication that Moscow is stocking up on North Korean munitions to fuel its war in Ukraine. The United Kingdom sent satellite photos of Russian cargo ships that are under Western sanctions docking and loading up at North Korea’s Najin port to a U.N. panel of experts on North Korean proliferation. Russia has cozied up to North Korea in its desperation to get more weapons and ammunition to its forces bogged down in Ukraine, and so far North Korea has been accused of providing ballistic missiles and hundreds of thousands of artillery shells to Moscow. Putin recently met with North Korean Foreign Minister Choe Son Hui in Moscow. (The Guardian)
Israeli start-up Patternz, one of a small group of companies seeking to build a bridge between geolocation via advertising data (ADINT) and spyware, has been taken to court by the well-connected business development firm Improvate The Future. (IO)
America’s national security adviser is on his way to Thailand to meet China’s foreign minister for two days of discussions that will reportedly focus on the Middle East, a move that builds on pledges by the two sides to strengthen bilateral engagement. (SCMP)
Chinese officials have asked their Iranian counterparts to help rein in attacks on ships in the Red Sea by the Iran-backed Houthis, or risk harming business relations with Beijing, four Iranian sources and a diplomat familiar with the matter said. (Ground)
Currencies across the Asia-Pacific region have slipped to their weakest levels against the dollar in months, as the slowdown in China casts a shadow over countries holding strong economic and trade ties with Beijing. (Nikkei)
Thursday
The Himalayan kingdom of Bhutan is aiming to ramp up its rich hydrological resources with an eye on boosting the country’s happiness quotient. Home to glacial lakes and cascading rivers, the landlocked country is looking to unlock value in its abundant water resources through partnerships with neighbouring India, and explore business opportunities outside its borders.“We are talking to a lot of strategic partners in India today, and we also look forward to talking to strategic credible international partners,” said Ujjwal Deep Dahal, CEO of Druk Holding and Investments, the commercial arm of the Royal Government of Bhutan. (SCMP)
Taiwan has raised over NT$540 million ($17.2 million) from the private sector in a fundraising campaign to help Japan recover from a powerful earthquake three weeks ago that killed more than 200 people, the island’s Health and Welfare Ministry said Monday. (Nikkei)
Saudi Arabia plans to allow alcohol sales to non-Muslim diplomats for the first time, two sources familiar with the plan told AFP on Wednesday (Jan 24), modifying strict rules governing liquor in the conservative country. (CNA)
Turkish President Recep Tayyip Erdogan said Wednesday that he and visiting Iranian counterpart Ebrahim Raisi agreed on the need to avert the Israel-Hamas war from engulfing the entire Middle East region. (Arab News)
Wednesday
A Chinese-led team of scientists say they have found a new material that could be used to create the ultra-low temperatures needed for hi-tech applications such as quantum computing. (SCMP)
Chinatown in Honiara, the capital of the Solomon Islands, still bears scars two years after demonstrators demanding that the pro-China government step down in November 2021 turned riotous. The Solomons, under Sogavare’s premiership, broke off ties with Taiwan in 2019, opting to recognize Beijing. According to the Lowy Institute, a think tank based in Sydney, China’s total development finance spending on the island country — home to just over 700,000 people — nearly quadrupled to $41 million in the first two years after diplomatic relations were established. (Nikkei)
Less than 13 per cent of Japanese have positive or “friendly feelings” towards China, according to the latest results of an annual government poll, the lowest since Tokyo introduced the survey in 1978. (SCMP)
Indian bonds are likely to attract about $100 billion of foreign inflows in the coming years, lured by the global bond index inclusion, according to HSBC Asset Management. While inclusion into global indexes may trigger inflows of as much as $50 billion, a similar amount of flows is also expected from large institutional investors, sovereign wealth funds and pension funds, Shriram Ramanathan, chief investment officer of fixed income at HSBC Asset Management’s India unit, said in an interview. (Bloomberg)
Tuesday
Mounting frustration in Brussels and political intransigence in Beijing are nudging the European Union and China closer to a trade war, senior European officials fear.Last week, Chinese Premier Li Qiang arrived in Europe, painting China as a bastion of open markets and multilateralism during a keynote speech at the World Economic Forum global elite gathering at Davos. (SCMP)
China has moved to set its own standards for semiconductors used in electric vehicles and self-driving cars as it seeks to replace imports of these vital components with domestic production. The government has called on industry to create technological standards for more than 30 important automotive semiconductors by 2025 and more than 70 types by 2030, according to guidelines issued this month by the Ministry of Industry and Information Technology. (Nikkei)
Australia has identified the Russian mastermind behind a crippling cyber attack, unmasking the 33-year-old hacker for the first time on Tuesday (Jan 23) and linking him to an international crime syndicate. (CNA)
Chinese authorities are considering a package of measures to stabilize the slumping stock market, according to people familiar with the matter, after earlier attempts to restore investor confidence fell short and prompted Premier Li Qiang to call for “forceful” steps. (Bloomberg)
Beyond The Great Wall
Exploring News About China in Depth
Decypher Context: AI Oligopoly and Antitrust Challenges
The ongoing antitrust cases against major tech conglomerates, such as Google, Apple, and Amazon, have cast a spotlight on the perilous implications of artificial intelligence (AI) on economic concentration. Beneath the surface of these high-profile legal battles lies a complex web of collusion and coordination, warranting equal scrutiny. The recent upheaval at OpenAI, marked by the controversial CEO Sam Altman’s termination and subsequent reappointment, has revealed a deeper conflict, transcending internal dynamics and drawing attention from regulatory bodies like the US Federal Trade Commission and the UK’s competition authority.
Of particular concern is Microsoft’s dual role as both investor and competitor in OpenAI, raising suspicions of an illegal collusive relationship that could further solidify the AI oligopoly. This instance, however, is but a fragment of the broader AI landscape, where market power is consolidated across the supply chain. From Nvidia’s dominance in AI development chips to the triumvirate of Amazon, Google, and Microsoft in cloud computing, significant components of AI development are alarmingly concentrated.
The interconnected relationships among major tech firms and their executives present ample opportunities for collusion, often obscured by the focus on individual abuses of monopoly power. Historical parallels with the Gilded Age “money trust” highlight the consolidation of power among financial institutions and industrial giants, a phenomenon mirrored in the tech industry but on an unprecedented scale. Big Tech’s unparalleled access to consumer and business data allows for a level of control surpassing traditional banks.
Moreover, the concentration of economic power within the top seven tech companies, comprising 30% of the entire S&P 500, surpasses historical benchmarks, akin to the dominance of banks in the 1920s. If AI fulfils its promise as the linchpin across sectors, the future may witness unparalleled economic concentration and corporate political power. As authorities grapple with individual antitrust cases, urgent attention is required to address the intricate network of relationships fostering the collective dominance of Big Tech in the era of artificial intelligence. The battle against their influence must extend beyond the courtroom to encompass the nuanced issue of collusion and coordination among these entities, safeguarding against the Trojan horse of AI intensifying their hegemony.
Top China Stories
Chinese shares close higher Thursday
On January 25th, boosted by the news that the State-owned Assets Supervision and Administration Commission of the State Council plans to incorporate market value management into the performance evaluation of central enterprise leaders, stocks with “China” in their names saw a significant surge. The Shanghai Composite Index rose by 3.03%, closing at 2906 points. The Central Enterprises Index (866059) significantly increased by 3.64%, with 27 central enterprises listed in Shanghai, including China Communications Construction, China Unicom, and China Coal Energy, hitting the upper limit. Read more: Xinhua
Xi signs order to promulgate revised regulations on military legislation
Xi Jinping, Chairman of the Central Military Commission, signed revised military legislation regulations, effective from March 1, which aims to enhance high-quality development and governance in accordance with the law. Read more: Xinhua
China’s United Front tests influence method in Italy
The Chinese Communist Party is experimenting with new strategies to promote trade with Italy after the latter’s exit from the New Silk Roads that, if successful, could be deployed elsewhere in Europe. Read more: Intelligence Online
DNI postpones release of China corruption report, forestalling Beijing tensions
A US Intelligence report on the corrupt activities of China’s political leadership, including its President, that was set to be released last month has had its deadline extended, Intelligence Online has learned. Read more: Intelligence Online
Implementing the Guiding Principles of the Central Conference
On Work Relating to Foreign Affairs and Breaking New Ground
In Major-Country Diplomacy with Chinese Characteristics
On making strategies and policies, it is imperative to apply systems thinking. The CPC, a Marxist party armed with theories of dialectical and historical materialism, should know how to analyze, study and assess international situation with the understanding that things are universally connected and constantly evolving. We should be able to see the present from a historical perspective and look beyond the surface to get to the crux of issues, so as to discern and analyze accurately the laws and direction of the profoundly changing world, and make sound foreign policies. On addressing risks and challenges, it is imperative to carry forward our fighting spirit. The CPC has never been deterred by intimidation, swayed by fallacies, or cowed by pressure. Only with the courage and ability to carry on our fight, can we overcome various difficulties and obstacles. Going forward, we will face an even more severe international situation and more complex external environment. We must forge ahead with an indomitable spirit and tenacious efforts to open up new horizons in our external work. Read more: China Daily
Taiwan’s Academia Sinica told to keep its doors closed to Chinese researchers
The prestigious Taiwanese research institute, Academia Sinica, is to continue treating all applications from academics with foreign passports with suspicion especially from China. Read more: Intelligence Online
ASML’s China Sales Surged Despite Secret Dutch Deal With US
Bloomberg has reported that Chip designer ASML has been shipping to China despite the secret US deal to ensure that it does not. The deal, which hasn’t been reported before, stumbled as ASML turned to Beijing to compensate for weak demand elsewhere. The Dutch government permitted more shipments, allowing China to stock up on the gear before new US-brokered export restrictions came into force this month. Originally intended as a stopgap before those restrictions took effect, the agreement was meant to prioritise shipments of the company’s immersion deep ultraviolet lithography machines to markets outside of China, according to people familiar with the deal who spoke anonymously. But the global downturn pushed ASML to successfully lobby The Hague for export licenses to China of critical semiconductor manufacturing kit, dashing US officials’ expectations that the deal would limit deliveries, they said. Read more: Bloomberg
Beijing purges, part 3: the Guoanbu tightens US embassy system
The ongoing purges within Beijing’s military-diplomatic apparatus, amid spying accusations targeting the children of those in power, are forcing the security services to refocus on diplomatic facilities once more. Read more: Intelligence Online
Italy uncovers $1.9 billion fraud linked to Chinese shadow bank network
Italian police uncovered a 1.7 billion euros ($1.9 billion) tax fraud involving false invoices, with funds laundered through Chinese shadow banks. In Ancona, assets worth 350 million euros, including cash, cars, and real estate, were seized. Read more: Reuters
Vietnamese army conglomerate Viettel and Huawei compete in Cambodian fibre optic rollout
Viettel, Vietnamese army conglomerate is pushing to roll out its fibre optic network in the latest battle of influence between Hanoi and Beijing in Cambodia. Read more: Intelligence Online
China’s clean energy sectors were the biggest drivers of its GDP growth in 2023: CREA
Clean energy contributed a record 11.4tn yuan ($1.6tn) to China’s economy in 2023, accounting for all of the growth in investment and a larger share of economic growth than any other sector. Capacity rose to 31.4 gigawatts, from just 8.7 gigawatts in 2022, the National Energy Administration said Thursday. The systems are mainly lithium-ion batteries. The tally also also includes other technologies such as compressed air storage, but excludes pumped hydro facilities. Read more: SCMP
ADB Paper Analysis: Assessing the Impact of Infrastructure Investments Using Customs Data: The Case of the Greater Mekong Subregion Corridor and the People’s Republic of China
The ADB paper released in December 2023 looks at the effects of road infrastructure development on trade patterns and economic activities in Yunnan Province and the Greater Mekong Subregion (GMS). The study utilizes data from Chinese customs, satellite images, and road network data to analyze trade flows, economic growth, and the impact of infrastructure improvements.
The research emphasizes the importance of transportation connectivity in promoting regional value chains and integration into global value chains. It highlights the need for improved physical connectivity to trade hubs, reduced border crossing times, and multimodal transportation linking production centers to seaports. These factors contribute to the facilitation of trade and economic development.
The study finds that road infrastructure development has led to a reduction in trade costs and an increase in economic activity. It observes significant growth in built-up areas and night-time lights intensity, indicating economic progress and urbanization. The research also identifies variations in the effects of infrastructure improvements across different sectors and regions.
The construction of road infrastructure, particularly the Kunming-Bangkok Expressway, has facilitated trade flows, enhanced connectivity, and contributed to economic growth in the region. It has also led to a shift in export composition, with agricultural products replacing chemical products as the main export from Yunnan Province to Thailand.
However, the report also highlights certain cautionary aspects. It acknowledges the potential limitations in the study’s methodology, such as the concern that the location choice of the expressway was not random. To address this, the researchers utilized changes in build-up levels captured by satellite images before the road project as a placebo test. Additionally, the report acknowledges the heterogeneity of effects across different sectors and regions, suggesting that the impacts of infrastructure development may vary depending on specific characteristics and contexts.
Is China’s BRI truly vital for all nations?
By Decypher Team
In a recent Foreign Policy article, global strategy advisor Parag Khanna reimagines the Belt and Road Initiative(BRI) as China’s strategic effort to enhance global connectivity and collaboration. He underscores the defensive origins of the BRI as a response to China’s vulnerabilities in global supply chains and its need to secure energy and raw material imports while offloading surplus production. He argues that BRI projects provide nonexcludable and nonrival infrastructure assets, benefitting multiple stakeholders and advancing global connectivity. However, despite these arguments, scepticism remains regarding China’s Belt and Road Initiative.
Counterarguments highlight that while it may present itself as cooperative and focused on mutual development, the reality is more complex and sometimes troubling.
Experts warn of “debt-trap diplomacy,” where China’s large loans for infrastructure projects can lead to political or economic leverage over borrowing nations. Some countries unable to meet their debt obligations have had to cede control of strategic assets to China, as seen with Sri Lanka’s Hambantota Port.
Some believe the BRI primarily serves as a tool for China to export surplus production and secure raw materials rather than genuinely aiding participating countries’ development. This initiative is perceived as expanding Chinese economic hegemony and creating a China-centric network of trade and political alliances, causing concern among Western powers about China’s growing geopolitical influence and potential impact on global economic structures. In addition, the lack of an official map for the Belt and Road Initiative from China has led to its ambiguous geographic scope and strategic direction, affording China flexibility but also drawing criticism over its opaque intentions.
Furthermore, while the BRI may promise economic benefits, the initiative’s long-term sustainability is questioned. The rapid construction of infrastructure can lead to a slew of economic downsides from mismanaged projects, lack of proper maintenance, and a failure to foster organic economic growth within the communities they traverse. This has led to scepticism about China’s objectives and the true beneficiaries of the initiative.
BRI, thus, is perceived not as unequivocally altruistic but as a complex interplay of China’s economic objectives with the diverse needs and restrictions of the countries involved. Will it pave the way for a redefined era of global relations or create new dependencies and divisions?
Thank you for Reading!!!
