China in Quotes
“In recent years, the number of foreign students coming to study in China from developed countries has fallen sharply. According to publicly available data, the number of American students studying in China dropped to around 350 in 2023 from a peak of about 15,000 a decade ago.”
Professor Jia Qingguo, Peking University
De/Cypher Data Dive📈
Governing by Silence: Understanding Authority in China’s Two Sessions
Quick China: Unmissable Stories 📜
Premier Snubs Corporate Leaders?
Chinese Premier Li Qiang does not intend to hold a meeting with visiting foreign CEOs at the upcoming China Development Forum (CDF) in late March, three sources briefed on the matter said, raising concerns about Beijing’s commitment to attract investment from abroad at a time of souring sentiment. Organised annually by Beijing since 2000 at the Diaoyutai State Guesthouse, the high-level forum traditionally serves as an opportunity for global CEOs and Chinese policymakers to meet and discuss foreign investment. The decision follows a surprise move last week to scrap the premier’s news conference at the end of the annual session of parliament, one of the most-watched events on China’s economic and policy calendar. This was viewed by some observers as a sign of the country’s increasingly inward focus and centralised control. Read more: Reuters
Overinflated: Chinese Balloons in Taiwan?
After a Chinese balloon crossed through the continental United States in February 2023, Taiwanese officials revealed that they had recorded “dozens” of fly-overs of Chinese spy balloons in the last couple of years. Interestingly, only one of those incidents had been publicly reported by Taiwan’s Ministry of National Defense (MND) previously – an incident involving the sighting of several balloons around the north of the country.
Following this announcement, Maj. Gen. Huang Wen-chi of the MND told reporters that Taiwan would shoot down any balloon considered to be a national security threat, though he noted that the balloons over Taiwan had been mostly meteorological so far. Later in 2023, the MND doubled down on this statement. It began tracking the balloons officially, and reaffirmed that Taiwan would engage any balloons thought to be representing a threat. Read more: The Diplomat
Chinese advisor warns of Xi’s Geopolitical Risks
Huang Yiping, a former advisor to China’s central bank, on Wednesday said China’s industrial policy is at the heart of US concerns about Chinese overcapacity and the European Union’s anti-subsidy investigation into Chinese electric vehicle imports. His comments represent a rare admission among government advisers of the external challenges facing President Xi Jinping’s efforts to drive growth by pouring money into manufacturing.
“We should pay serious attention and recognize that this could be an important development in geopolitics,” Huang said during an online forum held by China Macroeconomy Forum, a think tank associated with the Renmin University of China in Beijing. “A widespread protectionist wave against Chinese products would be bad for China’s future development and innovation.” Read more: Bloomberg
Why China’s Hidden Local Debt Can’t Be Managed Well?
The country faces a substantial hidden debt crisis, estimated at over 70 trillion yuan ($9.8 trillion), surpassing Germany’s GDP. Recent measures, labeled a “package of debt-resolving plans” by top leadership, saw cities issuing over 1 trillion yuan in “special refinancing bonds” to tackle off-the-books debt. These bonds are aimed at repaying hidden debts recorded by the Ministry of Finance by 2018 and settling government arrears owed to businesses, with a total issuance potentially reaching 1.5 trillion yuan.
To address the mounting pressure, the central government directed commercial banks in 12 heavily indebted regions to restructure LGFVs’ non-standard debts since September. This initiative, now extended to all provincial-level regions, aims to ease repayment strains by swapping debts for longer-maturity bank loans with reduced interest rates, as per sources familiar with the matter informed Caixin. Read more: CAIXIN
Chinese Premier Wants Deeper Integration of Sci-Tech & Innovation
Chinese Premier Li Qiang, a member of the Communist Party of China Central Committee, emphasized the need to deepen the integration of scientific and industrial innovation. During his inspection at an operation center of the city’s high-level autopilot demonstration zone, Li urged strengthening support in setting standards and factor guarantees, so as to boost the development of the automobile industry and the construction of smart cities with the upgrading of the autopilot technology. Read more: Xinhua
Beyond The Great Wall 🧱
Exploring News About China in Depth
Internal Politics 🏛️
The National People’s Congress (NPC), China’s annual legislative gathering, was held from March 5 to March 11, 2024.
The State Council Organic Law🧑⚖️: Revision & Implication
Written By De/Cypher Team
The ‘Two Sessions’ are a series of meetings in China where the nation’s economic, political and social course is set. The National People’s Congress (NPC) and the Chinese People’s Political China Consultative Conference (CPPCC) are the two most important meetings where policies are mulled over for implementation in the country. The Two Sessions for 2024 drew to a close on Monday 11th March, 2024. Economic announcements included a 5% economic growth rate of the Chinese GDP with a focus on nanotech, artificial intelligence and biomedicine. On the political front, a constitutional revision of the State Council Organic Law was introduced which while appearing deceptively minimalist, is an essential step in the plan laid down by the Communist Party of China of the Chinese Communist Party (CCP) in party strengthening. The amendments allow the CCP to have absolute say in matters of the state and the State Council is now legally obligated to follow party diktat. The move of the Communist Party to consolidate its position in such open terms for the time could be attributed to its preparation for the economic decline that is being predicted for the Chinese economy as reported by the International Monetary Fund.
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Xi Jinping Urges Tech Innovation💻 and Self-Reliance in China’s “Two Sessions”
Summarized by De/Cypher Team
During the “two sessions,” President Xi Jinping emphasized the conversion of scientific research into marketable products by strengthening ties between research institutions and improving incentive systems. China’s low patent conversion rates of 6% for scientific achievements and 36.7% for invention patents lag far behind the US rates of nearly 80% and 50%, respectively. Xi warned against neglecting traditional industries and misuse of investment while promoting technological advancement.
Xi highlighted Guangdong and Jiangsu provinces as pivotal for technological innovation, contributing over 20% of China’s GDP, exports, and foreign investment. These provinces aim for 5% annual growth in line with central government objectives. Stressing the need for technology self-reliance, Xi called for addressing obstacles in traditional industries and enhancing vocational training to meet a forecasted shortage of 30 million workers in key manufacturing sectors by 2025. While acknowledging growth in sectors like solar panels, electric vehicles, and lithium batteries, Xi cautioned against overcapacity and trade barriers, affirming China’s commitment to fostering new industries and self-sufficiency. Read more: SCMP
Xi’s Tighter Script at China Parliament Leaves Investors💰 in Dark
At China’s recent legislative meeting, officials strictly followed the Communist Party’s script, indicating a more controlled event that kept investors in the dark. President Xi Jinping’s prominent role in the brief seven-day National People’s Congress hampered dialogue, highlighting concerns about data gaps and investor access. Read more: Bloomberg
Five Key⬇️ Takeaways From China’s Major Legislative Gathering
Stabilizing Growth: China aims for 5% GDP growth in 2024, indicating a desire to avoid an economic slowdown, which differs from previous years.
Transition to Tech Innovation: Despite the risks associated with relying on old sectors, Xi Jinping emphasizes a shift from traditional sectors to advanced manufacturing and service industries.
Fiscal Stimulus: China intends to issue 1 trillion yuan ($139 billion) in long-term bonds to spur growth, the largest fiscal stimulus since 2020.
Disappointing Markets: Beijing’s stimulus plan focuses on supply-led support, disappointing economists who hoped for direct payments to households or increased welfare spending.
Power Centralization: Xi Jinping consolidates power further, as evidenced by the cancellation of Premier Li’s press conference, indicating a shift toward a more centralized governance model.
Read more: Bloomberg
China And The World🌐
China appoints Chen Xiaodong vice foreign minister, says human resources ministry
Chen Xiaodong, former Chinese Ambassador to South Africa, has been appointed as the Deputy Minister of Foreign Affairs, as announced by the State Council on March 14, 2024. Read more: Reuters
China, NATO hold security dialogue in Beijing
China and NATO conducted their eighth security policy dialogue in Beijing on Wednesday, as announced by China’s Defense Ministry on March 13, 2024. The discussions centered on defense exchanges and the global security environment. Read more: China Daily
China Urges US to Stop ‘Unreasonably Suppressing’ TikTok
China has called on the US to cease “unreasonable suppression” of TikTok, citing its pivotal role in escalating tensions. The US House passed a Bill, backed by both parties, requiring ByteDance to sell TikTok’s US assets within six months or face a ban. Chinese officials stressed the need for the US to follow market principles and ensure fair competition, noting the absence of evidence from the US on TikTok’s alleged national security threat. Read more: Bloomberg
Beijing hits out over Taiwan vice-president-elect Hsiao Bi-khim’s ‘personal’ trip to the US
Taiwan’s vice-president-elect Hsiao Bi-khim’s “personal” trip to the US, confirmed by the ruling DPP, has drawn ire from Beijing. Beijing opposes any visit by Hsiao, labeling her a “Taiwan independence separatist”, urging Washington to avoid contact. Read more: SCMP
China seafood targeted by U.S. lawmakers over North Korean labor
U.S. lawmakers, Rep. Chris Smith and Sen. Jeff Merkley, have expressed concern over China’s seafood industry employing North Korean labor, potentially funding Pyongyang’s nuclear program. They called for a restriction of imports from Chinese seafood firms employing forced North Korean labor. Read more: Nikkei Asia
It’s Too Late to China-Proof the Lithium Supply Chain
Efforts to “China-proof” the global lithium supply chain are too late, given China’s significant investments. Major players such as Albemarle in Australia rely heavily on Chinese partnerships. Given China’s dominant position in the electric vehicle market, cooperation with Beijing is critical to securing lithium supplies, positioning China as a partner rather than a competitor for the industry’s future. Read more: Bloomberg
Japan, ASEAN to launch joint QR code payment services in FY2025
Japan and ASEAN plan to launch joint QR code payment services by fiscal year 2025, with the goal of unifying systems for the convenience of international travelers. This initiative, spearheaded by the Payments Japan Association, aims to connect with overseas providers, with discussions currently underway with Southeast Asian governments and central banks such as Indonesia and Cambodia. The goal is to speed up cashless transactions, strengthen economic ties, and potentially counter China’s growing digital payment influence in Asia and Africa. Read more: Nikkei
China Vanke in Debt Swap Talks With Banks to Stave Off Default
China Vanke Co., the second-largest real estate firm in China, is discussing a debt swap with banks to prevent its first bond default. Creditors may convert billions of yuan in bonds to secured debt, offering collateral against potential losses. Moody’s downgrade reflects concerns over Vanke’s liquidity amid falling property sales, while the company faces pressure from insurers and challenges in securing offshore loans. Vanke’s ties with Shenzhen’s government remain vital, with significant land holdings across major Chinese economic regions. Read more: Bloomberg
How China’s National Security Law Changed Hong Kong
Following the 2019 pro-democracy protests in Hong Kong, China implemented a national security law, which resulted in arrests and media restrictions. President Xi Jinping intends for “patriots” to govern the city, raising concerns about its autonomy. The 2020 law criminalizes a variety of actions, including secession and collusion with foreign forces, with Chief Executive John Lee proposing additional control through ambiguous terms like “state secrets” and “external interference” in 2024 legislation. Read more: Bloomberg
Camp🏕️ David Principles And The ‘light’ US-Japan-South Korea Participation
Written By De/Cypher Team
In August 2023, U.S. President Joe Biden convened a summit at Camp David with Japanese Prime Minister Kishida Fumio and South Korean President Yoon Suk Yeol, resulting in a framework for trilateral cooperation. This marked a new phase in their relations, known as the Camp David Principles, emphasizing a free and open Indo-Pacific, opposition to coercion, containment of North Korean threats, and addressing challenges from China. Agreements included establishing an information-sharing hotline, launching a trilateral working group, and conducting annual military exercises.
However, subsequent delays in follow-up summits raise concerns about the sustainability of these commitments. Challenges persist in implementing the agreed mechanisms, with slow progress noted from South Korea. Leadership changes and domestic politics hinder Japan-South Korea cooperation, while uncertainties around U.S. commitment, especially with the potential return of former President Donald Trump, complicate the agreement’s future. China closely watches the growing coordination among the U.S., Japan, and South Korea, particularly in military exercises, impacting its regional interests.
Despite strategic and security concerns, Japan and South Korea heavily rely on China as their largest trading partner, adding complexity to the trilateral dynamics. As the 60th anniversary of their bilateral ties approaches, Seoul and Tokyo aim to sustain the positive momentum from Camp David. While significant progress was made, effective implementation remains a key challenge for the agreement to reach its full potential.
Funan Techo Canal: Shifting Cambodia’s Trade🚢 Focus from Vietnam to China
Written By De/Cypher Team
Cambodia’s push for the Funan Techo Canal project, which is funded by China’s Belt and Road Initiative, is a significant aspect of the country’s expanding Chinese investment landscape. This $1.7 billion initiative, approved by Cambodia in May, is only one piece of a larger picture of Chinese-backed infrastructure development.
Hun Manet’s interactions with Chinese leaders and investors, particularly during his visit to China in September 2023, demonstrate China’s commitment to the project through the China Bridge and Road Cooperation (CBRC). The project, which is structured under a Build-Operate-Transfer (BOT) agreement with CBRC, represents China’s long-term investment in Cambodia’s economic growth.
Vietnam, historically a strong influence in Cambodia, is now confronted with the prospect of losing shipping earnings as Cambodia potentially shifts towards self-reliance in waterway transportation. Moreover, Hun Manet’s government has emphasized Cambodia’s desire for independence, framing the canal as a means for the country to “breathe through its own nose.”
China’s influence in Cambodia extends far beyond the “Funan Techo” canal, with major investments reshaping the country’s infrastructure. China’s commitment to Cambodian development is evident in projects such as the $1.7 billion canal and the $1.5 billion Techo International Airport near Phnom Penh. These initiatives, which are part of the Belt and Road Initiative, usher in a new era of cooperation between China and Cambodia, with the goal of increasing economic integration and regional collaboration. With China accounting for roughly 41% of Cambodia’s total foreign debt, these projects represent significant steps forward for Cambodia’s economic growth and modernization.
🗾Japan’s Intellectual Property Challenge
Summarized By De/Cypher Team
Japanese universities are failing to utilize their intellectual property. According to Japan’s Cabinet Office, the country’s top 10 patent revenue earners logged a total of 2.4 billion yen ($16 million) on average per year between 2017 and 2021. Top Japanese schools earn just 2% of the 117.8 billion yen worth of revenue earned by their American counterparts. This is even though the top 10 Japanese universities, ranked by the number of patents granted, obtain 1,320 patents per year, which is slightly more than half the amount granted to their American counterparts, which is 2,347. Read more: Nikkei Asia
News From Asia 🌏
Friday
- As Japan prepares its annual festivities to welcome the arrival of cherry blossoms, a new report has delivered a chilling warning that climate change could cause the nation’s most popular variety in the sakura season to become extinct in parts of the country by 2100. (SCMP)
- Prices of new homes in China fell further in February, official data showed Friday, underscoring calls for more policy support to shore up demand. Key cities, including Beijing, Guangzhou and Shenzhen, led the 0.3% monthly decline in top-tier locations despite last month’s record cut to the mortgage benchmark. (Nikkei)
- Vietnamese tech major FPT has opened a large software development base in the northeastern Chinese city of Dalian, tapping the many local workers with the language proficiency to support its Japanese clients. (Nikkei)
- The Bank of Japan will ditch its negative interest rate policy in April, according to just under two-thirds of economists polled by Reuters, although a growing minority now expect it to happen this month compared to only a few surveyed in February. (CNA)
Thursday
- Police departments across China have pledged to create and strengthen “new quality combat capacity” with technology aimed at “preventive policing” and efficiency. (SCMP)
- Pakistan is approaching a month without reliable access to the social media platform X, a blockage widely believed to be related to the country’s controversial elections and one that is taking a toll on both businesses and journalists. (Nikkei)
- Lebanon will file a complaint with the UN Security Council to protest about a series of Israeli attacks that have led to civilian casualties in residential areas, the foreign ministry said on Wednesday. (Arab News)
- North Korean leader Kim Jong Un guided a military demonstration involving a new battle tank, state media KCNA reported on Thursday (Mar 14), in the latest show of force by the isolated state as South Korea and the United States wrapped up joint drills. (CNA)
Wednesday
- Yang Chengzhang, a member of China’s top political advisory body, has urged Beijing to improve transparency by releasing economic data more frequently. This move aims to accurately portray the dimensions and diversity of the world’s second-largest economy, addressing investor concerns. (SCMP)
- Japanese rocket joint venture Space One’s maiden rocket launch failed Wednesday, as it tried to become the first private Japanese company to put a satellite into orbit and secure a slice of the fast-growing space business. (Nikkei)
- US Central Command said it carried out six strikes on Yemen on Monday, destroying an unmanned underwater vessel and 18 anti-ship missiles that the Yemeni Houthi militia had prepared to launch at US and international ships in the Red Sea, as the group warned it was prepared to step up attacks in the region during Ramadan. (Arab News)
- The US House of Representatives plans to vote on a Bill on Wednesday (Mar 13) that would give TikTok’s Chinese owner ByteDance about six months to divest the short-video app used by about 170 million Americans or face a ban. (CNA)
Tuesday
- A South Korean citizen arrested in Russia earlier this year on suspicion of spying is to remain in custody until mid-June, Russia’s state news agency Tass said on Monday. (SCMP)
- India has successfully test-fired a domestically developed ballistic missile capable of carrying multiple nuclear warheads for the first time, Prime Minister Narendra Modi said Monday. (CNA)
- Chinese state-owned companies are stepping up power infrastructure investment in Laos, including hydroelectric power plants and transmission, expanding their footprint in a country that aims to become the “battery of Southeast Asia.” (Nikkei)
- Israel’s Foreign Minister Israel Katz on Monday demanded the United Nations Security Council “put as much pressure as possible” on Palestinian militants Hamas to release the people it took hostage during the Oct. 7 attack on Israel. (Arab News)
Thank you for reading!!!
