“Xi Tours Central Asia, Promotes Panchsheel, and Meets Putin at SCO”

China in Quotes

“In geopolitics, the past never dies and there is no modern world.”

Robert D. Kaplan, author and geopolitical expert.


De/Cypher Data Dive📈

The number of preschool and kindergarten pupils in China both plunged by 1.7 millions in 2022 compared to a year earlier. This decline in the number corresponds to a decrease in births.

China’s primary and middle school-age population

Source: Caixin

The graph above shows the China’s primary school and mid school age population trend from 2020 to 2035. The primary and mid school-age population is expected to decline in the future as shown in the graph.


Asia View

Xi Jinping remembers Panchsheel, forgets all the regional conflicts he has been waging

Written by Prof Amogh Dev Rai, Research Director at Advanced Study Institute of Asia & Priyanka Garodia, Geopolitical Research Analyst – South Asia

(From left to right) Amb. N. Raghavan, Premier Zhou Enlai, Prime Minister Jawaharlal Nehru, Chairman Mao Zedong, Zhu De, Liu Shaoqi and Song Qingling in Beijing, October 19, 1954. Photo: Ministry of External Affairs

Xi Jinping is an astute politician, some think it is easy being a politician in a one-party state. It is not. The people do not vote for you, your mentors, and your rivals vote for you. So for a person like Xi Jinping even with his credential as a ‘Red Princeling’ it has been a greasy pole to climb, and climb, and clung to the power he has. 

A man leading a country such as China understands displays of diplomatic splendour are important, and useful. It is therefore very interesting to see that he has taken the opportunity to celebrate 70 years of the Panchsheel agreement. It is not a celebration of the fractious peace that it brought to India and China,  but a promise that China wants to make to the world at large. 

The problem is that the world is getting a bit of rude shock as China is largely taking the bull in the China shop approach to foreign policy. Caught in a vicious security dilemma with the United States, the Chinese are looking to build regional cooperation and trust. Chinese relations with its neighbours are not ideal – its relations with India are souring; it has been locked in a conflict with the Philippines, Vietnam and Laos in the South China Sea; and it has a ticking bomb with Taiwan’s pro democracy forces getting stronger. Coupled with a looming internal economic crisis in the country and the widespread corruption within the Communist Party, China needs to focus on building allies rather than isolating the world. The Panchsheel Principles have been used to do so before and could be the possible trick China needs to adopt in present times.

Xi Jinping’s address at the ‘Conference Marking the 70th Anniversary of the ‘Five Principles of Peaceful Coexistence’ was a reminder to the global community that at the heart of China’s foreign relations is the Panchsheel Agreement. He highlights the present utility of the policy in four succinct points. 

Chinese President Xi Jinping gives an important speech at the Conference Marking the 70th Anniversary of the Five Principles of Peaceful Coexistence in Beijing, China, June 28, 2024. Photo: Chinese Foreign Ministry

Firstly, the principles were a historic benchmark in international diplomacy, which altered the negotiating capacity of countries using universally acceptable principles. Secondly, the principles served as a guiding light for countries with different social systems to maintain diplomatic ties. Thirdly, the principles allowed developing countries to “pursue cooperation and self-strength through unity”. They have been instrumental in boosting South-South and North-South cooperation. Fourthly, the principles have been instrumental in building a corpus of historic wisdom and reform to improve global relations. He claimed that China had not only developed these ideas but also put them into practice in their handling of international relations.

History proves otherwise when looking at Chinese foreign policy. Xi mentions “upholding the principle of sovereign equality,” which is the central focus of the Panchsheel agreement, while conveniently forgetting China’s handling of Tawanese assertions about self governance and repeatedly threatening military intervention.  

The address also beacons the world to uphold the “golden rule of  non-interference”  while opposing “acts of imposing one’s will on others, stoking bloc confrontation, creating small circles, and forcing others to pick sides.” While clearly calling out American action in South China, China itself has been accused of regional bullying by the Philippines and Vietnam in the region to begin with. The hostile annexation of Tibet and the cartographical aggression shown towards India in the Arunachal Pradesh region display a clear disregard of the very principle that China endorses – ‘not imposing one’s will on others’. China has always pursued pragmatic and realist international posturing and its policies, including its foreign affairs, have been constructed in pure self-interest. The strategic relationship it has developed with Pakistan has been interpreted as a relationship leveraged to keep India in check. Hence, China’s positioning of the Panchsheel must be seen with caution.


Quick China: Unmissable Stories 📜

Zelenskiy said China should play a “serious role”

Zelenskiy said China should play a “serious role” in resolving the war since Russia is now so dependent on its market for exports. He said he agreed with an assessment by Finnish President Alexander Stubb that China could pressure Russia to stop fighting. Zelenskiy suggested the US and China, should they put aside differences, could act as joint mediators to end the conflict. (Bloomberg)

Government-funded association highlights 30 areas that got the most attention from research and industry groups last year

“Digital humans”, optical chips, internet satellites and deep-sea power stations have been identified as some of the biggest challenges in Chinese science, engineering and industry last year. They are among a list of 30 areas that got the most attention from research and industry groups in China. The annual list – which also includes high-performance graphics processing units and future space exploration tools – was released by the government-funded China Association for Science and Technology, or CAST, on Tuesday. Research areas often see significant progress after they appear on CAST’s annual lists, with some even getting resolved within a year or two of being highlighted. Among the 10 key science challenges is research into “digital humans” and robots with both intelligence and emotions – an area the government has identified as a source of economic growth for the country. (SCMP)

India and China Meet At The Sidelines of SCO Marking The First High Level Contact Between The Two Sides

Post caption: “Met with CPC Politburo member and FM Wang Yi in Astana this morning.” Photo: X @ DrSJaishankar

Indian External Affairs Minister Subrahmanyam Jaishankar and Chinese Foreign Minister Wang Yi held talks on Thursday on the sidelines of the Shanghai Cooperation Organisation’s summit in Kazakhstan’s capital, Astana, amid a lingering border standoff between the neighboring Asian giants. This was the first high-level contact between the two sides since Indian Prime Minister Narendra Modi’s government secured a third five-year term last month. “Discussed early resolution of remaining issues in border areas. Agreed to redouble efforts through diplomatic and military channels to that end,” Jaishankar posted on X (formerly Twitter), along with a picture of them shaking hands.

The two countries have been locked in a border standoff in the eastern Ladakh region along their Himalayan boundary since 2020, when a deadly hand-to-hand clash broke out between their troops, killing 20 Indian and four Chinese soldiers. They have been negotiating through diplomatic and military channels to ease the tensions in eastern Ladakh, and in 2021 agreed to pull back their forces from one of the friction points in their standoff in the region. The remaining issues to be resolved mainly related to patrolling rights.

In his post, Jaishankar asserted that respecting the Line of Actual Control – the de facto 3,500-kilometer boundary between India and China – and ensuring peace and tranquillity in the border areas is essential, saying “The three mutuals – mutual respect, mutual sensitivity and mutual interest – will guide our bilateral ties.” (Nikkei)

China working with grifters in the US

“Our country is crumbling,” American influencer Jackson Hinkle says in a YouTube video from March. “The working class have terrible jobs. Our infrastructure is falling apart. Our government is spending hundreds of billions on wars in Ukraine, Taiwan, Israel, everywhere else, and we’re letting all these 7 million illegal migrants come into our country in one year.” The 24 year old edgy conspiracy theorist is one of the many people China has platformed to access the hearts, and minds of the MAGA (Make America Great Again) crowd.

English-language media in the PRC, particularly the generously-funded CGTN, have been platforming foreign “tankie”-esque figures like Galloway, Calla Walsh, and Jeffrey Sachs with increasing regularity. Andy Boreham, a New Zealander who hosts the English-language show “Reports on China” with the Shanghai Daily, seems lately to be increasingly comfortable espousing far-right views, expressing sympathy for Trump and praising far-right commentator Andrew Tate for “helping China spread the word.” Boreham also recently released a 37-minute interview with Hinkle. In Europe, China has succeeded in courting both the far-right and far-left, with Hungary’s Viktor Orban emerging as a close ally.

“The Communist Party doesn’t have any political principles so they have no difficulty identifying with people identifying as far right or far left, even people as being avowedly anti-Chinese. They are extremely practical to a fault in thinking about who their collaborators might be,” says Eli Friedman, an assistant professor of sociology at Cornell University who studies labor and social movements in China.

The CCP’s ethnonationalist tendencies and positions on issues like immigration and gender make its positioning closer to that of Russia, Trump, and the Republican party than the American right may like to admit, “a big exception being how they approach this question about empire,” Friedman says. It was for those issues and his nationalistic, “strongman” style that Trump gained his share of Chinese fans during his presidency.

In China, Hinkle is so far being platformed only by the tight-knit circle of propagandists surrounding Zhang’s China Institute and Guancha, which is not directly controlled by the CCP but abides closely by government narratives. It is unclear who invited Hinkle to China and who is translating his posts into Chinese for Weibo, but The New York Times reported that he “visited Russia and China this year at the invitation of organizations close to the governments.” (China Media Project)

People’s Bank of China steps into cool Bond Frenzy

The People’s Bank of China building in Beijing on May 29. Photo: Bloomberg

China’s central bank plans to intervene directly in bond markets in a sign of officials’ growing discomfort with a rally that has pushed borrowing costs to the lowest level in two decades. The People’s Bank of China said on Monday it would “borrow sovereign bonds from primary traders in the open market in the near future”. The decision was made on “prudent observation and evaluations of current market situations” in order to “maintain the stable operation of the bond market”. The statement came as the yield on China’s onshore 10-year government bond declined two basis points to 2.18 per cent, the lowest since Bloomberg started tracking the data in 2002. Investors have piled into the bonds as they hunt for haven assets in a weak economy. Experts said the PBoC’s statement indicated it was moving to cool the market rally by selling bonds to ease demand. (FT)

Climate, demographics and geoeconomic cracks top challenges: EU economist Rolf Strauch

Rolf Strauch shares his views on the resilience which Europe has shown in managing the recent crises in his interview with Kandy Wong, published in SCMP. Photo: Linkedin

Rolf Strauch is the chief economist and management board member at the European Stability Mechanism (ESM) and the European Financial Stability Facility. Strauch, who holds a PhD in economics from the University of Bonn in Germany, previously worked at the European Central Bank and Deutsche Bundesbank. This interview first appeared in SCMP Plus. For other interviews in the Open Questions series, click here.
Mr Strauch, you have mentioned that climate change is the next big financial threat. Why do you think this is significant to the financial sector and are global institutions adjusting enough to meet this new threat by referencing the European situation and its climate target?

Climate change is indeed one of the three major mega trends affecting the global economy. The other ones are demographics and geoeconomic fragmentation. We need to recognise that the financial sector is a connecting sector within economies because it can be either an absorber and a mitigant, or it can be an amplifier of what happens to the economy through climate change.

That depends very much on whether financial flows will help smoothen out the impact of climate change, or if they will be more disruptive.

I generally distinguish between transition risks and physical risks emerging from climate change.

Transition risks are related to a more sustainable and carbon neutral economy. That requires a lot of changes in policies. And these changes bring about reputational risks, operational risks, legal risks. Assets may get stranded. They may lose their value in that context. (SCMP)


Beyond The Great Wall 🧱

Exploring News About China in Depth

Economy

Chinese counties took 2 billion yuan from rural school meal subsidies to ‘settle local debt’

Phoebe Zhang writes in SCMP that county officials across China misappropriated at least 2.2 billion yuan in rural school meal subsidies between 2021 and 2023 to settle local debts. A State Council audit found over 100 counties involved, with 66 counties diverting nearly 2 billion yuan directly to debt and insurance payments. Other counties lowered meal standards or fabricated purchases, often colluding with suppliers. The meal subsidy program, crucial for rural students’ nutrition and academic performance, faces challenges due to local debt crises and economic pressures.

 China’s Largest LNG Reserve Base Completed in East China

The Green Energy Port in Yancheng City of east China’s Jiangsu Province. Photo: CMG

CGTN reports that the Green Energy Port, China’s largest LNG reserve base, was completed in Yancheng City, Jiangsu Province. Independently designed and constructed by the China National Offshore Oil Corporation (CNOOC), this project significantly enhances energy security in the Yangtze River Delta region. With a total storage capacity of 2.5 million cubic meters and the ability to handle 6 million tonnes of LNG annually, it supports China’s green development by connecting major natural gas transportation networks and supplying gas to multiple provinces.

China Services Activity Decelerates, Caixin PMI Shows

Qing Na writes in Caixin that China’s services activity grew at the slowest pace in eight months in June, with the Caixin China General Services Business Activity Index falling to 51.2. The index reflects weaker business optimism and a shrinking job market, although new orders and export orders continued to grow. The labor market contraction and reduced-price pressure indicate businesses’ reluctance to fill vacancies. The future outlook for both manufacturing and services weakened, highlighting the need for policy support and reforms to boost market confidence and demand.


Internal Politics 🏛️

Chinese military newspaper backs Xi Jinping’s anti-corruption drive after 2 ex-defence ministers accused of corruption

People’s Liberation Army (PLA). Photo: CTGN

Vanessa Cai writes in SCMP that the PLA Daily has pledged loyalty to President Xi Jinping, supporting his anti-corruption efforts following the charges against former defense ministers Wei Fenghe and Li Shangfu. The military newspaper emphasized the need for unity under Xi’s leadership, the eradication of corruption, and adherence to party discipline, coinciding with the 103rd anniversary of the Communist Party.

 

China’s Internet Watchdog Begins Crackdown to Ensure ‘Favourable’ Environment Ahead of Major Policy Meeting

William Zheng writes in SCMP that the Cyberspace Administration of China (CAC) has directed regulators and internet companies to create a favorable public opinion environment ahead of the third plenum, which will set economic policy for the next five to ten years. The CAC emphasized managing online content to prevent risks while supporting economic growth. Following a meeting, major tech firms began removing ultranationalist comments.

 

China reinforces central emergency response law as vast swathes battle downpours, drought

Firefighters relocate villagers trapped by flooding in Kangle village in Pingjiang county, Hunan province, on Tuesday. Photo: Guo Liliang, China Daily

Hayley Wong writes in SCMP that China has reinforced its central emergency response law amid extreme weather conditions. The revised Emergency Response Law, effective November, strengthens central mechanisms for disaster management and increases penalties for failing legal responsibilities during emergencies. This update, inspired by the Covid-19 experience, aims to enhance warning, reporting, and resource allocation systems. Amid recent floods and droughts, the law also mandates the creation of a comprehensive emergency warning platform and stricter media guidelines to prevent misinformation and ensure accurate reporting.

 

China’s Communist Party on track for 100 million members by year’s end

Phoebe Zhang writes in SCMP that the Chinese Communist Party’s membership is set to reach 100 million by the end of 2024, with a net increase of 1.14 million members last year. Membership growth has slowed, but there are notable increases in educated members, women, and ethnic minority groups. Xi Jinping emphasized strict governance and local organization reforms. Despite overall growth, the number of young members has slightly declined.

 

China Starts Smartphone Inspections to Boost Anti-Espionage Efforts

 A surveillance camera is seen in Shanghai. Photo: Reuters

Kyodo News reports that China has enacted new regulations allowing authorities to inspect smartphones and other electronic devices without warrants in emergencies, raising concerns among expatriates and foreign businesspeople. The regulations, under the revised anti-espionage law, aim to enhance national security by expanding the definition of espionage activities. While Chinese authorities assert that ordinary passengers will not be targeted, the ambiguity around what qualifies as emergencies or spying activities has led to increased caution among travelers and businesses, with some advising against bringing smartphones into China. 

China tightens rules for rare earths mining and refining, spells out fines for breaches

Vanessa Cai writes in SCMP that China has introduced new regulations for rare earths mining and refining, effective October 1. These rules emphasize state ownership of resources, enhanced oversight, and environmental protection. Companies must ensure traceability and face hefty fines for breaches, ranging from five to ten times illegal gains, or up to 5 million yuan. The regulations aim to rationally develop rare earth resources, crucial for global technologies, while safeguarding the environment and national security.


China And The World🌐

Xi Kicks Off State Visit to Tajikistan, Eyeing New Heights in Bilateral Cooperation

Tajik President Emomali Rahmon holds a grand welcome ceremony for Chinese President Xi Jinping at the airport in Dushanbe, Tajikistan, July 4, 2024. Xi arrived on Thursday for a state visit to Tajikistan. Photo: Xinhua, Yan Yan

Xinhua reports that Chinese President Xi Jinping began his state visit to Tajikistan on July 4, welcomed by Tajik President Emomali Rahmon with a grand ceremony in Dushanbe. The visit aims to elevate China-Tajikistan relations through enhanced cooperation and strategic partnerships. Xi’s visit follows his participation in the Shanghai Cooperation Organization summit in Kazakhstan, and it underscores the growing ties and mutual support between the two nations, particularly in trade, infrastructure, and security under the Belt and Road Initiative.

 

Xi Holds Talks with Kazakh President Tokayev

Chinese President Xi Jinping arrives in Astana, Kazakhstan, July 2, 2024, for the 24th Meeting of the Council of Heads of State of the Shanghai Cooperation Organization, and a state visit to Kazakhstan at the invitation of Kazakh President Kassym-Jomart Tokayev. Photo: Xinhua

China Daily reports that Chinese President Xi Jinping held discussions with Kazakh President Kassym-Jomart Tokayev in Astana during his state visit to Kazakhstan. Xi’s visit coincides with the 24th Meeting of the Council of Heads of State of the Shanghai Cooperation Organization (SCO). A grand welcome ceremony featured Kazakh fighter jets creating colored smoke trails representing the Chinese national flag.

Xi Jinping Holds Talks with Vladimir Putin on SCO Sidelines in Kazakhstan

Zhao Ziwen and Liu Zhen write in SCMP that Chinese President Xi Jinping met Russian President Vladimir Putin at the Shanghai Cooperation Organisation summit in Kazakhstan. This was their fifth meeting since Russia’s invasion of Ukraine, underscoring their deepening strategic partnership.  

Xi Jinping Warns SCO to ‘Resist External Interference’ in Latest Veiled Swipe at US

Chinese President Xi Jinping met various regional leaders, including Vladimir Putin, at the summit. Photo: Xinhua

Zhao Ziwen writes in SCMP that Chinese President Xi Jinping urged the Shanghai Cooperation Organisation (SCO) members to “resist external interference,” implicitly referring to the US. Speaking at the SCO summit in Kazakhstan, Xi emphasized unity and support among member states to counter the “cold war mindset” and address security and economic challenges. Xi’s call for solidarity and cooperation comes amid strengthening ties between China and Russia and growing SCO membership, including recent additions of Iran and Belarus. The summit highlighted the bloc’s aim to promote stability and development despite Western skepticism.

Norwegian Arrested for Allegedly Spying for China

DW reports that a Norwegian man was detained by Oslo’s court on espionage charges, allegedly for spying on behalf of China. Arrested at Oslo’s international airport, the suspect denies the accusations. The Norwegian Police Security Service had previously labeled China a significant intelligence threat. The court ordered the man to a four-week pretrial detention, including two weeks in isolation.

 

Italian PM Meloni Likely to Visit China This Month, the Reward of Cautious Diplomacy

Cyril Ip writes in SCMP that Italian Prime Minister Giorgia Meloni is expected to visit China on July 29-30, following Italy’s exit from the Belt and Road Initiative. The visit aims to stabilize and enhance economic ties, emphasizing sectors like clothing, chemicals, and machinery. Enterprise Minister Adolfo Urso is currently in Beijing to prepare for the visit.

 

China-Serbia free trade agreement comes into effect

Serbian President Aleksandar Vucic (left) and Chinese President Xi Jinping in Beijing, October 2023. Photo: Instagram, @buducnost srbijeav 

CGTN reports that the China-Serbia free trade agreement (FTA) took effect on July 1, 2024, eliminating tariffs on about 90% of traded products, with over 60% enjoying zero tariffs immediately. At the launch event in Novi Sad, Serbian Trade Minister Tomislav Momirovic highlighted the agreement’s role in enhancing trade, investment cooperation, and economic benefits for both nations.

Indonesian Textile Companies Ask for Protection as Chinese Goods Flood in

Caixin reports that Indonesia plans to impose tariffs of up to 200% on certain Chinese products to safeguard its domestic manufacturing sector. The tariffs, discussed by President Joko Widodo and ministers, aim to combat dumping practices worsened by trade wars. Textile industries, hit hard by Chinese imports, face significant layoffs and financial struggles. The government also plans safeguard and anti-dumping duties on various products to protect local industries and workers.

 

China to buy another African mine as it elbows in to lead global green energy revolution

Chinese company JCHX is close to finalising a deal to buy an 80 per cent stake in Lubambe copper mine in Zambia. Photo: Lubambe Copper Mine

Jevans Nyabiage writes in SCMP that Chinese firm JCHX Mining is finalizing a deal to acquire an 80% stake in Zambia’s Lubambe copper mine, emphasizing China’s dominance in Africa’s critical minerals market. The move, awaiting Zambian approval, aligns with China’s strategy to lead the global green energy transition. This acquisition follows Chinese investments in other African mining projects, bolstering Beijing’s control over essential minerals for renewable energy and electric vehicle industries.


Tech🧑‍💻 in China

BYD to Open Thai Factory as New EU Tariffs on China EVs Kick In

Francesca Regalado writes in Nikkei that Chinese electric vehicle giant BYD is opening its first Southeast Asian factory in Thailand’s Rayong province, with a $486 million investment. To mark the occasion, BYD is significantly discounting its Atto 3 SUV for local buyers. While the factory’s primary market is Southeast Asia, it aims to export to Europe, where new tariffs on Chinese EVs start today. Analysts predict increased Chinese EV exports to Southeast Asia due to these tariffs.

China’s Space Pioneer blames massive rocket-test crash on structural failure

The rocket crashes in hills outside Gongyi in Henan province on Sunday afternoon. Photo: Weibo

Ling Xin writes in SCMP that Space Pioneer attributed the crash of its Tianlong-3 rocket during a static-fire test to a “structural failure.” The rocket, unexpectedly launched, crashed 1.5km from the test site in Henan province, causing a massive explosion but no casualties. The mishap has drawn both criticism for safety lapses and calls for support of China’s commercial space sector amidst its development challenges.

 

China Leads Global AI Cooperation as 140 Nations Co-Sponsor UN Resolution

China’s permanent representative to the United Nations Fu Cong (center, front) speaks at the Security Council briefing on cybersecurity at the UN headquarters in New York, on June 20, 2024. Photo: Xinhua

China Daily reports that the 78th UN General Assembly adopted a resolution led by China on enhancing AI cooperation, co-sponsored by over 140 countries. This decision highlights China’s role in AI governance, aiming to bridge the digital divide and promote inclusive AI development. The resolution emphasizes people-centered AI growth, supporting the UN’s 2030 Agenda for Sustainable Development and advocating for fair global AI governance.

 

China Grows Strength in Wind Turbines, Takes Top Spot in Key Patents

Chinese turbine makers such as Mingyang and Goldwind are expanding exports with their low prices. Photo: Goldwind Australia via Nikkei

Koki Izumi and Taiyo Suzuki write in Nikkei that China surpassed Denmark in wind turbine patent competitiveness in 2023, aiming to expand its 60% global market share with larger and more affordable turbines. Chinese companies like Mingyang and Goldwind are increasing exports with low-priced products. The International Energy Agency predicts wind power’s share in the global energy mix will rise from 7% in 2022 to 15% by 2030, with wind energy generation becoming more stable compared to solar.


China’s plastics boom is creating a new headache

Written by Farheen, Policy & Trust Analyst

De/Cypher Lighthouse: China’s plastics boom is creating a new headache

The petrochemical sector in China has experienced significant growth, resulting in a surplus of plastic production compared to domestic consumption. This surplus is expected to continue until 2025, according to the China Petroleum and Chemical Industry Federation, leading to China becoming a major exporter of plastics. The increase in production capacity was aimed at meeting domestic demand and reducing reliance on imports, but due to slower-than-expected economic recovery post-pandemic and other factors like declining consumer confidence and ongoing geopolitical tensions, there is now a significant imbalance between production capacity and domestic consumption.

The forecast indicates that China’s polyethylene (PE) capacity will exceed demand by an average of 26 million tonnes annually from 2024 to 2030, a significant increase from the 7 million tonnes annually from 1993 to 2023. Similarly, global polypropylene (PP) capacity is projected to surpass demand by an average of 24 million tonnes annually in the same period, up from 6 million tonnes annually in the previous three decades. These projections highlight the magnitude of the oversupply issue.

Global Market and Trade Tensions:

The surge in China’s plastics production has caused a significant shift in global supply dynamics, with nearly a quarter of the global ethylene capacity at risk due to surplus. This surplus, contributed largely by China, has resulted in a structural surplus in Asia.

The overcapacity issue in the plastics sector in China is a result of misjudging the country’s petrochemical demand growth. Originally, there was an optimistic view that the demand would continually rise at high rates, but experts note it has instead stabilized at a more modest 1-3% annually due to demographic changes and a saturated debt market. As a result, the global capacity built to cater to an expected surge in Chinese demand now far exceeds the actual consumption needs. This situation is intensified by industry projections that initially overestimated China’s petrochemical demand growth. China’s decision to maintain production despite narrow profit margins has also heightened global trade tensions. The persistent oversupply is expected to lead to increased exports, exacerbating existing trade imbalances and provoking protective measures from other countries. Experts warn that the global petrochemical market will experience significant disruptions due to this Chinese surplus. Furthermore, Northeast Asian (NEA) polyolefin margins have plummeted, with average NEA PE integrated variable cost margins falling to a record low of minus 27 in 2024.

As China continues to export its surplus plastics, global markets must navigate this excess’s economic and political ramifications. As John Richardson, a seasoned chemicals analyst at ICIS and researcher at the Oxford Institute of Energy Studies, observes, the very definition of a “tight market” is shifting. What once signaled scarcity now often means “slightly less long” – a subtle but significant change in the language of economics. This shift highlights the new normal of oversupply in the petrochemical industry, driven in part by China’s economic recalibration.

News From Asia

Friday

  1. The return of 14 sculptures to Cambodia this week, looted during a period of war and unrest, has been celebrated as a significant cultural and historical event. (AP)
  2. Indian Prime Minister Narendra Modi is set to visit Russia on July 8 and 9, marking his first trip to the country since the onset of Russia’s military offensive in Ukraine. (CNA)
Indian Prime Minister Narendra Modi (left) and Russian President Vladimir Putin pose for a photo prior to their talks on a sideline of the Shanghai Cooperation Organization summit in Bishkek, Kyrgyzstan on Jun 13, 2019. Photo: AP/Sputnik, Kremlin Pool/Grigory Sysoyev
  1. Myanmar’s army is learning a bitter lesson in military logistics in its faltering campaign against determined insurgents on multiple fronts, as they are having to scrounge for increasingly costly supplies of gasoline, diesel and aviation fuel. (Nikkei)
  2. A South Korean court sentenced a man to 15 years in prison for stabbing the leader of the main opposition party, in one of the country’s most visible cases of political violence in recent years. (Bloomberg)

Thursday

  1. Japan’s Supreme Court ruled that the government must compensate victims of forced sterilizations conducted under the Eugenics Protection Law from the 1950s to 1970s, deeming the law unconstitutional. (AP)
The plaintiffs, their lawyers and supporters hold the signs reading “Winning lawsuit” outside the Supreme Court after in Tokyo, Japan. Photo: Kyodo News via AP
  1. Iraq’s legal teams from Cleary Gottlieb and Vinson & Elkins have been pushing the U.S. State Department to mediate a resolution to their prolonged oil dispute with Turkey. (IO)
  2. Hamas has presented new “ideas” via Qatari mediators aimed at ending the nearly nine-month-long Gaza war with Israel. (CNA)
  3. The Philippines’ recent UN submission over seabed territory claims has sparked renewed protests from Malaysia, reviving the longstanding territorial dispute over Sabah. (SCMP)

Wednesday

  1. Ten members of Mother Nature Cambodia were sentenced to 6-8 years in prison for conspiring against the state and insulting the king, highlighting the Cambodian government’s intolerance of dissent. (AP)
  2. A Pew study reveals an increase in favorable views of Russia and President Putin among Malaysians and Singaporeans, attributed to Russia’s support for Palestine and Putin’s “macho” image. (CNA)
  3. Nepalese Prime Minister Pushpa Kamal Dahal faces a political crisis as the UML party withdraws support from his coalition, reducing his government to a minority. (Daily Star)
Nepalese Prime Minister Pushpa Kamal Dahal. Photo: REUTERS
  1. The International Court of Justice (ICJ) granted Canada, Denmark, France, Germany, the Netherlands, Britain, and the Maldives permission to intervene in Gambia’s genocide case against Myanmar, which alleges genocide against the Rohingya minority. (AA)

Tuesday

  1. Washington intends to concentrate on the fight against Russian influence in the information and economic spheres of the Black Sea, a region that has seen significant upheaval since the war in Ukraine. (IO)
  2. Pavo Group, a Turkish cyber and defence electronics firm, is looking for zero-day vulnerabilities to develop a cyber intelligence tool for Malaysian intelligence services. (IO)
Pavo Group Locations. Photo: Pavo Group
  1. The Finnish company is developing a navigation system for autonomous ground and airborne ISR systems that heavily relies on feedback from Ukraine. (IO)
  2. A former director, dissatisfied with a settlement reached last year between Kazakhstan and funds linked to the former president’s entourage, is suing the firms’ current directors. This sheds light on financial operations carried out by Ron Wahid, a veteran investigator with close ties to Kazakhstan. (IO)

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We are pleased to bring to you the new edition of the De/Cypher Journal. De/Cypher was started keeping in mind, the critical role that informed discourse plays in shaping our understanding of Asia’s evolving landscape. Our Journal is conceived as a bridge, linking local insights from Asia with a global audience keen on nuanced perspectives.
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We are pleased to bring to you the new edition of the De/Cypher Journal. De/Cypher was started keeping in mind, the critical role that informed discourse plays in shaping our understanding of Asia’s evolving landscape. Our Journal is conceived as a bridge, linking local insights from Asia with a global audience keen on nuanced perspectives.
De/Cypher Journal: Live Long & Prosper?
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This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.