Top Headline From Asia This Week
Narges Mohammadi has been awarded the Nobel Peace Prize for her work to promote human rights and freedom for all, as well as her struggle against women’s persecution in Iran.
The Headlines From China Section for Today
Quick China Facts: China is Ageing, Its Rulers Are Ageing Rapidly
China Condemns Philippines Resupply Mission to Disputed Atoll.
The Chinese have strongly criticized the efforts by the Phillippines navy to send supplies to Lawak (Nanshan) island. Four ships dodged the Chinese coast guard and managed to complete the resupply. Tension has increased since the 10 dash line approach was adopted by the Chinese authorities.
The Chinese Space Station To Double Its Capacity
The China Academy of Space Technology (CAST) announced in the 74th International Astronautical Congress in Baku that the life of the Chinese Space Station will be 15 years, and it will be expanded to six modules from the current three modules. Even after the expansion it will only be 40% of the mass of the ISS. The ISS however is nearing the end of its lifespan, but the Chinese space diplomacy is not going according to plan as the European Space Agency redlighted a proposal to send European astronauts to Tiangong, as the space station is known in the Mandarin.
Lottery Ticket Sales in China Have Soared
From January to August, a total of 375.76 billion yuan of lottery tickets were sold nationwide, up 51.6% from a year earlier, the data showed. The data is in stark contrast to the economic data which is gloomy at best. The unemployment numbers are staggering and the hopeless is palpable in China. The sale of lottery ticket shows the extent of hopelessness in the Chinese economy. “Young people are more likely to win 5 million yuan in the lottery than to earn 5 million from work,” one wrote on the popular Chinese microblog Weibo.The country’s statistics bureau abruptly stopped publishing the youth unemployment statistic in August, saying it had been suspended as officials sought to “optimise” its data collection methodology, triggering a wave of social media criticism. Reuters reported earlier this week.
Refreshed China-Germany deal helps Beijing keep economic foothold in West amid US-led decoupling
At the first high-level talks between China and Germany in four years, both sides agree to update a financial cooperation agreement, but trade appears sidelined China’s updated agreement with Europe’s largest economy keeps door open to part of the world where other leaders have tried to pare Beijing’s influence. This follows on the heels of the German Foreign Minister Annalena Baerbock called the Chinese leader Xi Jinping a “dictator” during her visit to the USA.
Detention of China Evergrande founder Hui Ka-yan ‘a signal Beijing won’t let super-rich off the hook’
Hui ‘underestimated Xi Jinping’s determination’ to deflate China’s property bubble regardless of the impact on the private sector. The idea that private sector will be spared in the great Chinese crackdown has been proved wrong. The CCP is the ultimate custodian of the Chinese state and will brook no oppositon at all. Private capital will have a few hard decisions to take in China. The private businesses have started toeing the line as well, as it could be seen by a video posted by another entrepreneur posted a video to social media on Monday accusing the Evergrande chief of being ‘an enemy of the Chinese people’.
Terror Threat To China is A Challenge to Afghanistan: Taliban Leader
Afghanistan’s Foreign Minister Amir Khan Muttaqi has assured Wang Yi, the Chinese Foreign Minister that the Chinese nationals are absolutely safe in Afghanistan. The Taliban vowed to protect property, and personnel from China while attending a forum in China.
What China is Reading, August 2023: Analysis of Bestsellers in China
Beyond The Great Wall
Exploring News About China in Depth
What happened to the Chinese Economy?
The Chinese economy has been nose-diving for at least an year if the official data is to be believed. However, now the growth projections have been downgraded specifically by the World Bank last week to just 4.4%. The reasons for this massive contraction are not just economical, but a massive churning in the Chinese state. We quote an original work by Red Lantern Analytica, and add our own context to this:
Over time, structural issues have arisen as a result of over centralisation of power at centre leading to political decisions in matter of investments and exports-driven growth model coupled with a turbulent external environment employing large-scale stimulus to boost demand. (The economy for too long was given freedom which President Xi has been wresting slightly more control every year)
An unintelligent Zero-Covid policy, geo-political disputes with almost all its neighbours, trade wars, strict regulations & lack of ease of doing business, and harrassment of private entrepreneurs, entertainment industry icons, technology industry leaders, and foreign executives have led to the fall of China in global multilateral trade and simultaneously discouraged new foreign companies from setting up bases in China. (The ever changing legal, and extra-legal regime in China is confusing at best and nefarious at worst).
State finances are strained due to a excessive oversupply of industry and property, rising debt levels among local governments, sluggish consumption, falling exports, skyrocketing unemployment and a rapidly declining young population.
Recovering from the zero covid policy meant a slow GDP growth due to low level of consumption and increased saving habits among the masses. (The centralisation of economic and power in Beijing means that intervention from provinces is too little too late)
A major chunk of the Chinese GDP (25%) comes from the real estate sector, which is in doldrums for the last two years. Its connection to more subsidiary and dependent industries (e.g. construction, finance, marketing, etc.) makes it more prone to risk and losses which is proven by the fact that real estate accounts for 76.4% of the debtor assets of listed banks with mortgages exceeding 10 trillion yuan. (The Chinese model of building your economic blues away, no longer seems to be working as well it has in the past, especially in the 2007 to 2009 financial meltdown).
In 2022, the investments in real estate sector fell by more than 10% on an year-over-year basis. Investments are already down by 8.5% halfway through 2023. More than 60% of the sector’s businesses that have released performance reports for the first half of 2023 anticipate losing money this year.
The fall of China’s real estate sector had a domino effect on China’s shadow banking system as it invested heavily in real estate. The fluctuations in demand and property prices led to shadow banks defaulting on payments. This banking system, equivalent to $3 trillion, also raised money directly from rich investors and corporate treasuries, and went on to lend to local government vehicles, property developers and other borrowers that couldn’t otherwise obtain traditional credit.
The party in China is effectively stepping into the economy where it earlier controlled it through proxies, and set the line, now it wants to control the rudder. However, the Chinese economy is complicated and needs delft handling which at times is in contradiction with the stated party dogma and this is the primary cause of the unsteady, swing positions both internally, and externally.
China’s Missing Generals
Though the news generally from China covers the leaders who have suddenly found themselves on the wrong side of the ever-changing political landscape in Beijing. However, there is another very interesting dynamic that is becoming clear only after the National Day banquet held recently, a number of very senior, and formerly prominent Chinese Generals were missing, and no information was released either before or after the banquet. Yet, the very senior General and former minister of national defense Chi Haotian, who at 94 recently rebuked President Xi Jinping and yet was invited to the meeting, it points to a greater churning in the Peoples Liberation Army (PLA) we will continue to track it.
Ray Dalio Worried About Too Many Red Flags in US-China Relations
“U.S.-China relations are, in a number of areas, on the brink of red lines,” Dalio said Tuesday in his state of the global economy address at the start of the 6th annual Greenwich Economic Forum, a conference in Connecticut focused on alternative investments and what it calls “the defining issues of our times.” The Nikkei reported.
Chinese Continue To Fish in ‘Contaminated Water’
The Chinese administration has been making huge claims about the water from Fukushima, but they continue to fish in the zone at largely the same intensity as they always have, roughly between 146 to 167 vessels have been recorded even after the Chinese vociferous denouncements of Japan. The data comes from Global Fishing Watch.
The USA has a Quantum Deficit, and it is National Security Risk
The Chinese have been making remarkable progress in the QIST (Quantum Information Science & Technology). an area where US and its allies have been trying to bscale up their R&D and have a porous sharing of information, but currently the talent shortage in this is seen as a national security risk and the plan to fulfill vacancies is going nowhere, Sam Howell argued in FP.
Mpox Continues To Rage in China
In July and August, the country said it had found nearly 1,000 new cases, more than half of the new infections reported worldwide in those months. This marked a sharp rise from zero infections early in the year. The mpox virus has spread across China, with 26 of the mainland’s 31 provincial regions reporting infections. Some 80% of cases lack a clear chain of infection, health officials say, implying that many others are not being recorded. The Economist has reported.
The Older Chinese Refuse to Save
The Chinese population is the world’s second largest but has started shrinking, last year for the first time since the Great Leap Forward. The Chinese pension funds will be in the red by 2028, and bankrupt by 2035. These are not alarmist numbers from external sources but those of the official think tank, as Chinese retire early, and the pensions are paid by the state. The Chinese government introduced a law last year to tinker with the, but not enough people are contributing to the pension system that the state introduced to take some pressure off the state pension. This is another problem on the long list currently facing Beijing.
The Haiguo tuzhi
The Haiguo tuzhi (Illustrated record of maritime kingdoms, 1844) by Wei Yuan was a significant work that assessed Western expansion and its implications for Asian trade and politics. Wei Yuan combined traditional Chinese and European mapping techniques in his work. He used annotated, non-gridded maps for historical Chinese regions, resembling traditional gazetteers. For world maps, he employed European techniques like the Sanson-Flam steed projection for equatorial regions, Bonne projection for latitudes above 45°, and Mercator projection for navigational significance. Wei’s purpose was to promote Westernisation and advocate the adoption of European technology, particularly in arms and naval vessels manufacturing. His work influenced Chinese and Japanese perspectives on Westernisation.
