China in Quotes
“The CCP’s Leninist bureaucratic structure―whereby officials and party activists penetrate every sector of society and the economy, from universities and village committees to delivery companies, telecommunication firms, and Tibetan monasteries―ensures that Beijing’s eyes and ears are truly everywhere. While today’s system is far more robust than that of years past, it is modeled after mass surveillance implemented under Mao Zedong and Chinese emperors centuries ago”.
— Minxin Pei, “The Sentinel State: Surveillance and the Survival of Dictatorship in China”.
Decypher Data Dive 📊: ‘Graying Dragon’🐉- China’s Population is Aging
China 2024: Year of the Dragon Predictions 🐉
In 2024,
- 🚀China is poised to bolster its military prowess with intensified development of three new solid-fuel intercontinental ballistic missile (ICBM) silo fields and expansion of liquid-fuel DF-5 ICBM silos. The nation also advances its DF-26 intermediate-range ballistic missile (IRBM) capabilities, replacing DF-21 in nuclear roles. Moreover, efforts include refitting Type 094 ballistic missile submarines with JL-3 SLBMs and potentially integrating nuclear-capable air-launched ballistic missiles into operational bomber fleets. (Read next section for Context)
- 📈 China will further intensify its efforts to decouple Western economies by promoting self-reliance and developing new trade and investment partnerships, especially in emerging markets and within the Belt and Road Initiative framework. (Read next section for Context)
- 💱China’s stock market is expected to remain volatile, prompting further government intervention including potential injections from the sovereign wealth fund. (Read next section for Context)
- ♻️ China is poised to elevate domestic climate resilience to a security priority, driven by escalating global climate challenges and recent tragic encounters with climate-induced extreme weather events.
- 💽 China’s semiconductor industry is expected to make significant progress in 2024, particularly in the field of quantum technology, despite increased scrutiny from the United States.
- 💻 GenAI will spearhead digital transformation with enterprises concentrating on governance and broad implementation. China’s regulatory reaction to international law and the responsibility of AI will be closely watched.
- 🚺Despite the historical proclamation that “women hold up half the sky” in China, gender disparities and discrimination against women will persist. This may spark a “quiet resistance” among women, particularly in urban areas and younger generations, as they remain at odds with government expectations.
Timeline: News From Asia 🌏
Friday
China has warned the Philippines against “playing with fire” amid reports that Manila plans to bolster its military deployment on strategically important islands it controls near Taiwan. Chinese foreign ministry spokesman Wang Wenbin on Thursday reiterated Beijing’s position that Taiwan was “at the centre of China’s core interests and represents an insurmountable red line and bottom line”. (SCMP)
Xi aims anti-graft purge at China’s military on eve of centenary. Personnel encouraged to confess or inform on others to avoid severe penalties. (Nikkei)
Russian President Vladimir Putin said in an interview that aired on Thursday (Feb 8) that Russia will fight for its interests “to the end” but has no interest in expanding its war in Ukraine to other countries such as Poland and Latvia. (CNA)
From all-expenses paid trips to cover China’s Belt and Road summit to content-sharing agreements with major media outlets, Beijing is investing in ways to share its narrative with Indonesian audiences, analysts say. (VoA)
Thursday
Pakistan temporarily suspended mobile phone services on Thursday to strengthen security as voting began in the country’s national election, the interior ministry said.The government’s decision comes amidst a rise in militant attacks in the run-up to the election and a day after jailed former Prime Minister Imran Khan urged his supporters to wait outside polling booths after voting until results are announced. (Reuters)
The PLA Eastern Theater Command sent Taiwan a New Year’s message in the form of a music video sung in Taiwanese – “The motherland will be unified, Taiwan will return!”. It is sung to the tune 爱拼才会赢 written by Paitan Chen (陈百潭). (China Daily)
Chinese President Xi Jinping is pressing forward with an anti-corruption campaign against the military by encouraging personnel to blow the whistle on themselves and others. The PLA Daily, the official newspaper of the People’s Liberation Army, ran a notice on Jan. 5 recommending military personnel to report corruption. The notice specifically cited “first form” enforcement, defined by the Communist Party as penalties applied when people independently report instances of graft committed personally or by colleagues. (Nikkei)
China’s consumer prices suffered their steepest fall since September 2009 in January, with the fourth consecutive monthly decline adding to concerns that deflationary risks are becoming an increasing threat to the overall economic recovery. The consumer price index (CPI) fell by 0.8 per cent year on year in January, the National Bureau of Statistics said on Thursday, compared to a 0.3 per cent fall in December. (SCMP)
Israeli Prime Minister Benjamin Netanyahu on Wednesday (Feb 8) dismissed Hamas’s demand for a ceasefire and ordered troops to prepare to move on the city of Rafah in Gaza’s far south, where more than one million Palestinians have sought refuge. (CNA)
Wednesday
China’s population dropped for a second year in a row in 2023, falling by 2.08 million from 2022 to 1.4097 billion, while Chinese mothers only gave birth to 9.02 million babies last year, representing the lowest level since records began in 1949. Meanwhile, China’s workforce is also shrinking, as its working-age population aged between 16-59 also fell from 875.56 million in 2022 to 864.81 million last year, which may lead to an acceleration of automation, as well as the postponement of the retirement age. (SCMP)
Thailand’s attorney general is considering prosecuting convicted former Thai premier Thaksin Shinawatra over an alleged insult of the powerful monarchy, an official said on Tuesday (Feb 6), just weeks away from his possible release on parole. (CNA)
Saudi Arabia said there will be no diplomatic relations between the Kingdom and Israel unless Palestinians had an independent state, state news agency SPA reported early on Wednesday citing a statement from the foreign ministry. “The Kingdom has communicated its firm position to the US administration that there will be no diplomatic relations with Israel unless an independent Palestinian state is recognized on the 1967 borders with East Jerusalem as its capital,” the statement said.
Snow and icy rain in central China stranded people on highways and in train stations as the nation gears up for the world’s biggest travel week. At least two people died in Hubei and Hunan provinces because heavy snowfall collapsed market rooftops, according to local media reports. In Hubei, some drivers were trapped on roads for as long as three days because of icy conditions, while trains were delayed up to 24 hours, according to China Business News.
Tuesday
Economic pessimism hits Pakistan like a thunderbolt. 70% of people in the Gallup poll say the economy is getting worse, and this is the lowest that the economy has been reported to go down to in the last 18 years. (Reuters)
Fourteen Chinese regions have been tasked by the Ministry of Industry and Information Technology to stabilise manufacturing and ensure a good start to the year, as the sector faces unabating headwinds in the run-up to the Lunar New Year holiday.At a meeting held by the ministry for officials from major economic centres, efforts were also urged to mitigate disruptions from the impending holiday and support companies in their explorations of external markets. (SCMP)
A top Chinese macro hedge fund said it slashed stock positions last month as the nation’s market rout deepened, taking losses after acknowledging mistakes betting on a rapid economic recovery. Shanghai Banxia Investment Management Center “significantly reduced” its equity assets in the middle of January to cut losses, only keeping exposure to safer high-dividend stocks and bigger companies in the CSI 300 Index, according to its January letter to investors. (Bloomberg)
China held a record number of military exercises in Southeast Asia last year, a sign of its intent to hold its ground amid a tussle with the US for regional influence and also a reflection of Beijing’s growing confidence in its armed forces, say observers. “Defence diplomacy and engagements can help play down talk of the China threat, particularly in Southeast Asia,” Dr Hoo Tiang Boon, associate professor at the School of Social Sciences at Singapore’s Nanyang Technological University (NTU), told CNA. (CNA)
Beyond The Great Wall
Exploring News About China in Depth
Chinese Nuclear Program will continue unabated in 2024
“Underlying Challenges and Near-Term Opportunities for Engaging China” by Tong Zhao provides insights into the challenges and opportunities in the bilateral relationship between China and the United States, specifically in the context of nuclear policy. It discusses the recent consultation on arms control and nonproliferation between China and the United States, which took place before the Xi-Biden summit in San Francisco.
The analysis highlights China’s deviation from its long-standing nuclear policy, including a shift towards simultaneous quantitative expansion and qualitative improvement of capabilities, as well as the development of a nuclear triad. It also mentions China’s potential adoption of a launch-under-attack doctrine and the direction of Chinese nuclear forces towards achieving “strategic decisive victories.”
Policy incoherence within China’s decision-making process is identified as a challenge, with a more centralized and personalistic decision-making model under President Xi Jinping. Zhao suggests that this has led to internal incoherence in strategic decisions, including expanding nuclear capabilities. The analysis also mentions the reduction in the scope for internal debate and the erosion of checks and balances.
Zhao emphasizes the need for better understanding and engagement between China and the United States in addressing these challenges. He suggests the importance of shared understandings concerning safety protocols, fail-safe mechanisms, and the role of artificial intelligence (AI) in supporting nuclear decisions. The analysis also highlights the significance of internal policy dialogue within China to prevent destabilizing nuclear policies.
Furthermore, the analysis discusses the potential opportunities for engagement between China and the United States. It suggests shifting the focus from arms control measures that China is unlikely to adopt in the foreseeable future to stimulating internal policy discussions and debates within China. The analysis also emphasizes the importance of addressing misunderstandings and misperceptions between the two countries, utilizing open-source information, and engaging in official and expert-level exchanges.
The analysis provides context on the challenges and opportunities in engaging China on nuclear policy and highlights the importance of constructive dialogue and understanding in the bilateral relationship between China and the United States.
The 2024 nuclear risk will only increase, we summarise a few points from Federation of American Scientists report from 16th, January 2024.
- China has continued to develop its three new missile silo fields for solid-fuel intercontinental ballistic missiles (ICBMs), expand the construction of new silos for its liquid-fuel DF-5 ICBMs, and has been developing new variants of ICBMs and advanced strategic delivery systems.
- China has further expanded its dual-capable DF-26 intermediate-range ballistic missile (IRBM) force, which appears to have completely replaced the medium-range DF-21 in the nuclear role.
- China has been refitting its Type 094 ballistic missile submarines with the longer-range JL-3 submarine-launched ballistic missile (SLBM).
- China has recently reassigned an operational nuclear mission to its bombers and is developing an air-launched ballistic missile (ALBM) that might have nuclear capability.
What to Expect in China’s Stock Market in 2024
In 2024, China’s stock market is facing significant challenges, with the Hang Seng Index experiencing a 9.2% loss in January alone, marking its worst start since 2016. This decline reflects broader economic concerns, including weak economic data, Beijing’s piecemeal support measures, and renewed geopolitical risks. Additionally, foreign investors continue to divest from Chinese stocks, further contributing to market instability.
The appointment of Wu Qing as the new head of the China Securities Regulatory Commission (CSRC) underscores the urgency to address market concerns. However, despite efforts to stabilize the market, such as injecting funds and crackdowns on misconduct, public confidence remains low.
Looking ahead, CLSA’s Feng Shui Index predicts a turbulent ride for Hong Kong’s stock market, with the Hang Seng Index potentially entering positive territory only in the summer or later. The forecast suggests that market weakness will persist in the first half of the year before a potential recovery. The shift in elemental influences, with fire replacing earth as the guiding element, presents opportunities for breakthroughs in technology and medicine, but challenges for sectors like metals.
Key Predictions:
- Continued Volatility: The Chinese stock market is likely to experience continued volatility during the Spring Festival holiday, mirroring the trend of previous years.
- Government Intervention: The government is expected to intervene further to stabilize the market, potentially injecting funds from its sovereign wealth fund.
- Public Confidence: Public confidence in the stock market and government interventions may continue to erode, leading to increased skepticism among investors.
- Foreign Investor Reaction: Foreign investors may become more cautious or even withdraw from the Chinese market due to concerns about government interference and market instability.
- Market Sentiment: Despite efforts by state media to maintain an optimistic tone, online pushback and dissatisfaction among small investors could persist, impacting overall market sentiment.
China’s Strategic Shift: Promoting Self-Reliance and New Trade Partnerships Amidst Economic Decoupling Trends
China will further intensify its efforts to decouple Western economies by promoting self-reliance and developing new trade and investment partnerships, especially in emerging markets and within the Belt and Road Initiative framework.
Context:
Acknowledging the current trend of economic ‘decoupling‘, countries are implementing trade barriers for security reasons and reducing reliance on China. The U.S. has seen its trade deficit with Mexico surge to $152 billion—more than double since 2017—and for the first time in at least 15 years, it imported more from Mexico than from China, indicating a significant shift in trade relationships.
Amidst this, nations such as Germany, Japan and South Korea are diversifying trade away from China, favoring the U.S. as a key partner. Faced with this, China is expected to adapt by forging stronger ties with rising economies beyond the US’s sphere to preserve its trade influence. As corroborated by OECD data, China’s contribution to foreign value added in the domestic final demands of member countries has surged over a decade, indicating deep entrenchment of Chinese manufacturing in global markets, especially in sectors like computer and electric equipment. In light of these developments and the ongoing decoupling dynamics driven by Western economies, China is poised to further intensify its decoupling efforts. This can be seen in the Made in China 2025 plan, unveiled in 2015, which aimed to transition China from being the “world’s factory” to a hub of high-tech industries leading in fields such as electric cars, next-generation IT, artificial intelligence, etc. By leveraging its domestic market and forge new trade and investment relationships, particularly focusing on emerging markets and countries along the Belt and Road Initiative, which provides alternative avenues for China’s economic outreach.
The trajectory suggested is not one of rapid decoupling, but rather a gradual and strategic reorientation of China’s position within global trade networks. While undercurrents of fragmentation along geopolitical lines are palpable, the data suggest that a complete disentanglement from China’s manufacturing and export might is not yet foreseeable.
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