Mistral点评

• China says its Fujian carrier is world’s largest conventionally powered warship
• ‘Not our fault’: ex-top China athlete paralysed after brain operations inspires others
• Chinese scientists find natural selection loophole that could help transform food security
• China-made AI sexbots: the next national security risk for US, EU?
• Nvidia to launch in Middle East, amid US curbs on AI exports, concerns China dodging ban
• Longest-serving Taiwanese top legislator on personal ‘pilgrimage’ to mainland China
• ‘Who is haute couture queen?’: China KOL Lulu with million fans slams French design house for loan of dress to actress
• German economy minister Robert Habeck urges China to shift away from coal power
• How Modi 3.0 could steer India-China relations
• China makes moves to reopen economic ties with Libya, 13 years after suspending trade
• South China Sea: Beijing urges UN not to consider Philippine request to extend continental shelf
• EU probe into Chinese electric vehicle subsidies stirs debate over ‘unfair’ treatment
• Marcos says Philippines won’t incite wars as South China Sea tensions spike
• Chinese e-commerce sales up 14% during 618 shopping festival, report says
• Choke points: China’s Yangtze River shipping is stuck in traffic, and the costs are rising
• China couple shocked to discover ‘dead’ son alive after 33 years, was raised by infertile relative of hospital director
• Chinese-built steel plant in Zimbabwe fires up its furnace as it ‘builds the nation’
• China and EU agree to talks on planned electric vehicle tariffs
• Will China’s third plenum bring a solution to its local fiscal woes as debts snowball?

China says its Fujian carrier is world’s largest conventionally powered warship

https://www.scmp.com/news/china/military/article/3267713/china-says-its-fujian-carrier-worlds-largest-conventionally-powered-warship?utm_source=rss_feed

China has laid claim to having the world’s largest conventionally powered aircraft carrier, with fresh details of the Fujian’s design.

In the first in-depth review of the vessel’s power and operating systems, state broadcaster CCTV also declared the warship had achieved something widely believed to be impossible by using an advanced electromagnetic catapult on a conventionally powered ship.

It had previously been thought that only nuclear-powered ships could generate enough electricity to launch aircraft using this technology.

“The Fujian is … currently the world’s largest known conventionally powered aircraft carrier by displacement,” CCTV said in a programme aired on Thursday. “In a sense, the larger the carrier’s displacement, the greater its combat power.”

The Fujian, China’s third aircraft carrier and its first built using a domestic design, was launched in June 2022.

At the time, authorities said its full load displacement – a key indicator of a ship’s carrying capacity, range, speed and manoeuvrability – was more than 80,000 tonnes.

In terms of size, it has often been compared with the US Navy’s decommissioned Kitty Hawk-class supercarriers, the biggest of which was the USS America with a full load displacement of about 85,000 tonnes.

The Fujian reportedly wrapped up its second sea trial earlier this month, following an eight-day maiden test voyage in May.

Its sailing has been viewed as sending a signal to all parties in the South China Sea and East China Sea about the People’s Liberation Army’s combat abilities.

On Saturday, the US Navy aircraft carrier Theodore Roosevelt arrived in South Korea for a three-nation drill also involving Japan.

The three countries agreed to hold annual three-way exercises last year at a summit, where their leaders accused China of “dangerous and aggressive” behaviour in the South China Sea.

Taiwan’s defence ministry has also warned that the Fujian would pose a “substantial threat” in the event of a war.

Beijing regards Taiwan as part of its territory and has never renounced the use of force to regain control. Most countries, including the United States, do not recognise Taiwan as an independent state, but Washington opposes any attempt to take it by force and is committed to arming the island to help it defend itself.

The Fujian is China’s first aircraft carrier equipped with electromagnetic catapults, an advance that allows aircraft to be launched more frequently and heavier planes to lift off from its deck.

The nuclear-powered USS Gerald R. Ford – which at over 100,000 tonnes leads the world in full load displacement – is the only other aircraft carrier on the planet today with this advanced ability.

“The arrival of the Fujian has not only debunked, with its strength, the design theory that only nuclear-powered carriers can use electromagnetic catapults, but also elevated the combat capabilities of future domestically made carriers to another level,” CCTV said.

Information about new carrier-based aircraft for the Fujian will be released soon, the programme said. It also showed the Fujian making a sharp turn, noting that the carrier had effectively reduced its wake, reducing the ability of enemy weapons to locate and attack the ship.

Military analyst Cao Weidong told the broadcaster that the design of the Fujian was “much more complex” in some ways than that of its nuclear-powered peers, because it must ensure adequate electricity supplies for all devices.

He said the warship could carry more planes and thanks to its electromagnetic catapults, could launch fixed-wing early warning aircraft to improve airborne time, radar performance and command capabilities.

The catapult also means that warplanes can take off when carrying full fuel loads and ammunition, Cao added, reducing the need for refuelling aircraft and effectively freeing up space to carry more drones, transport planes and electronic warfare aircraft.

He said it would take up to two years to finish trials for the Fujian, adding: “The PLA Navy may build more aircraft carriers, potentially powered by nuclear energy.”

Cao, a former researcher at a PLA Navy-affiliated institute, also said that in future the navy would concentrate on building large ships and using information technology to win wars.

‘Not our fault’: ex-top China athlete paralysed after brain operations inspires others

https://www.scmp.com/news/people-culture/china-personalities/article/3263605/not-our-fault-ex-top-china-athlete-paralysed-after-brain-operations-inspires-others?utm_source=rss_feed

A basketball player who was once dubbed China’s most handsome athlete, but was left partially paralysed after three operations, has inspired fans with his optimism.

Wu Zhonghua, 29, from Liaoning province in northeastern China, is a former national-level basketball player and fitness coach.

Despite being born into a poor rural family, Wu’s impressive athletic talent led him to a top Chinese sports university, according to NetEase News.

He was given the title of China’s most handsome athlete by his fans because of his 188cm height, impressive physique and striking good looks.

In November 2014, he was diagnosed with a malignant tumour, leading to his first craniotomy surgery.

Three months after the operation, Wu returned to college and implemented a strict rehabilitation plan, determined to regain his athletic abilities.

But two years later, his condition worsened and he underwent a second craniotomy, which left him with severe complications.

Wu lost the hearing in his left ear, experienced diminishing vision in his right eye and suffered weakness in his limbs.

In 2022, his condition further deteriorated, and he needed surgery again.

This time, Wu was left with hemiplegia, a paralysis on one side of his body and face, slurred speech and an unsteady gait.

He shared before-and-after video of his illness on Douyin that showed the once slam-dunk star now struggling to dribble a basketball. The former model for fashion magazines also had a contorted and expressionless face.

Wu began documenting his journey from wheelchair to standing and living independently, aiming to encourage others with similar experiences not to blame themselves.

“Although I lost a life many envied, I gained the chance to continue living in this world,” he said.

With a titanium implant in his skull, Wu can no longer engage in intense physical activity, but he remains motivated by his love of basketball.

In April last year he fulfilled a dream by stepping onto a Chinese Basketball Association court, where he had a photo taken with his idol, Guo Ailun, the point guard of the Chinese men’s national basketball team.

A therapist told Wu that his facial paralysis will improve but he will not fully recover his former looks.

“My features were once handsome and are now distorted, I accept this with calmness,” said Wu.

He said he thinks that many young people are too fragile and easily break down emotionally.

“By sharing my experience, I hope to show that even in such adversity, you should cherish life, not complain, and not give up,” he said.

The resilient and optimistic athlete has inspired many on mainland social media.

“You once stood at the pinnacle of life and fell to its lowest because of illness. But this journey has made you a true warrior,” one online observer said on Douyin.

Others shared personal stories: “I am 38 years old now and I had a craniotomy for moyamoya disease, you give me hope to live,” said one person.

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Chinese scientists find natural selection loophole that could help transform food security

https://www.scmp.com/news/china/science/article/3267374/chinese-scientists-find-natural-selection-loophole-could-help-transform-food-security?utm_source=rss_feed

Scientists in China have found a way to bypass natural plant gene inheritance, by using a CRISPR-based gene editing system to boost the transmission of preferred genes even when they are detrimental to a plant.

By harnessing a system that uses both a toxin and an antidote to target the male plant germline, the scientists were able to overcome the natural Mendelian transmission rate, achieving gene transmission rates of up to 99 per cent over two generations.

“Facing diverse challenges such as threats to food security from agricultural weeds and the environmental crisis of invasive plants, the genetic manipulation of wild plant populations has emerged as a potentially powerful and transformative strategy,” the team wrote in a paper published in the peer-reviewed journal Nature Plants on Monday.

Efforts to breed for ideal genes that can be detrimental to their plants have been limited by the classical principles of Mendelian inheritance and Darwinian natural selection, the team from the Chinese Academy of Sciences and Peking University said in their paper.

Mendelian inheritance is a principle that describes how genetic traits are passed from one generation to another, and states that the two alleles contained within a single gene each have a 50 per cent chance of passing on to offspring through reproduction.

“Synthetic gene drives, inspired by natural selfish genetic elements and transmitted to progeny at super-Mendelian (greater than 50 per cent) frequencies, present transformative potential for disseminating traits that benefit humans throughout wild populations, even facing potential fitness costs,” the team said.

A gene drive is a genetic engineering technique that allows genes to be modified in a way that discourages them from following the usual rules of heredity, thereby increasing the likelihood that a particular suite of genes will be passed onto the next generation and spread through a population.

“We constructed a gene drive system in plants called CRISPR-Assisted Inheritance utilising NPG1 (CAIN), which uses a toxin-antidote mechanism in the male germline to override Mendelian inheritance,” the researchers said.

The synthetic “toxin” – in this case, a guide RNA Cas9 cassette – was used to disrupt the No Pollen Germination 1 (NPG1) gene limiting pollen germination. A CRISPR-resistant “antidote” copy of NPG1 is then used to rescue pollen cells that carry the desired gene drive.

A red fluorescent seed marker was added to CAIN to track the progress of the gene drive.

“CAIN transmission rates greatly exceeded the expected Mendelian inheritance of 50 per cent in heterozygous male parents, reaching 88 to 99 per cent within two successive generations,” the team wrote.

“We established CAIN as a state-of-the-art tool to efficiently modify entire plant populations.”

The researchers chose thale cress, a self-pollinating plant from the mustard family, as the model to limit the chances of inadvertently releasing CAIN into wild populations.

CAIN has advantages over other gene drive systems, which can develop a higher amount of resistance alleles that limit their efficacy. Compared to other systems, the team said they also chose to target the male germline over the female germline, since toxin-antidote gene drives targeting the female germline can compromise fertility and limit efficiency.

CAIN could be used in a variety of plants, as NPG1 is conserved across many species. One potential use of the system would be to target herbicide resistant genes in weeds to help reduce the need for excessive herbicide spraying, according to the researchers.

“This gene drive-based approach thus seeks to balance crop protection and environmental considerations to minimise the loss of biodiversity while optimising productivity,” the researchers wrote.

The team acknowledged that even if gene drive technologies are biosafe and self-containment strategies are implemented, the strategies “may not be feasible in cases of intentional misuse of gene drive technology, targeting domestic crops or wild plants”.

One method to safeguard against misuse “could be the intentional creation and if necessary, release of suppressor lines. Editing the native NPG1 allele to resist Cas9 cleavage is a particularly straightforward and efficient method”, the team said.

“As we venture into this new frontier in genetic engineering, [CAIN] and other gene drive systems could reshape ecological management and agricultural practices.”

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China-made AI sexbots: the next national security risk for US, EU?

https://www.scmp.com/opinion/world-opinion/article/3267696/china-made-ai-sexbots-next-national-security-risk-us-eu?utm_source=rss_feed

When the European Union passed its Artificial Intelligence Act in March, its aim was to provide the first comprehensive legal framework intended to “foster trustworthy AI in Europe and beyond, by ensuring that AI systems respect fundamental rights, safety and ethical principles and by addressing risks of very powerful and impactful AI models”.

The act cuts to the heart of the challenges faced in managing the moral and ethical issues embedded in the development of AI. At the top of a four-tier risk pyramid sits those that pose an “unacceptable risk”, which should be expressly prohibited.

This includes the potential for personal harm arising from manipulative, deceptive or subliminal techniques to influence someone to make a decision they would otherwise not have made; exploitation of vulnerabilities because of age, disability or specific socioeconomic status; the use of data to categorise individuals; and harmful development of facial recognition databases.

An article in the Post last week brought such unacceptable risks sharply into focus and identified the kind of development that, if fully achieved, would reflect AI’s assumption of fully human powers. Evan Lee, CEO of Shenzhen’s Starpery Technology, says his company is “developing a next-generation sex doll that can interact vocally and physically with users”.

While Lee acknowledged that technological challenges remain to achieve realistic human interaction, his company’s aim is not just humanoid robots that provide sexual services but robots capable of household chores and providing care for those with disabilities or the aged. The news prompted the Post’s cartoonist to ask whether such robots would also be able to cook.

Even the most basic thought experiment makes it clear that Starpery’s ambitions – and those of its competitors – cannot be fully achieved without such robots acquiring fundamentally human capabilities that will run into the EU’s “unacceptable risk” category.

As an important hub of the US$35 billion global sex toys industry, China is likely to find itself at the heart of the physical and ethical challenges that come with the rise in use of AI in a wide variety of industries.

And given the US’ paranoid imaginativeness on what counts as a national security risk, I am sure there is someone in the Pentagon ready to explain why AI-empowered sex dolls threaten national security.

The production of sex robots remains a comparatively small portion of the global sex toy industry, in which vibrators account for 54 per cent of revenue generated. The sex toy review site Bedbible estimates that sex robots make up about 0.5 per cent of the US$37 billion industry. The site puts the average price of sex robots sold in 2022 at US$3,567, a sharp fall from US$24,000 in 2010.

A report in The Guardian in January on the sex robot industry questions the pace of the sector’s projected rise and says simple logistics will impose limits beyond the overall creepiness of buying or owning a sex robot. It quotes author Rob Brooks as saying, “They’re big, they’re clunky, they’re embarrassing if they’re sitting on the sofa when your friends come over. You need a massive closet, both literally and figuratively, if you’re going to have one.”

Lee lends further weight to this scepticism in the Post article, highlighting the significant challenges of batteries and artificial muscles. Just as manufacturers such as BYD and Tesla are struggling to shrink batteries, sexbot manufacturers are finding that humanoid robots lack space for large batteries and current engines lack the flexibility of human muscles.

Another factor holding back the sector is cost. Starpery prices its dolls at around US$1,500, while an advanced Harmony doll produced by Abyss Creations in the United States starts at US$6,000. Humanoid robots from Dalian-based Ex-Robots can cost as much as US$276,000.

But even if sex robots remain a marginal part of the industry and progress is slow, this new technological era appears to be here to stay. Kate Devlin, an AI researcher at King’s College London, says that sex with robots is “about the future, both near and distant: science fiction utopias and dystopias, loneliness and companionship, law and ethics, privacy and community. Most of all, it’s about being human in a world of machines.”

It is clear that sex robots are nowhere near being plausible companions. But as technologies improve and the nuanced behaviour intrinsic to romance and sex become more technologically feasible, the distinguishing boundaries between humans and humanoids will become harder to discern. It is clear they will come up against the EU’s “unacceptable risk” frontiers sooner or later.

Ethical considerations also have yet to be fully addressed. There is the potential for sex robots to enable their owners to act out socially questionable fantasies, though that is not that different from concerns over the use of pornography or abuse of sex workers.

Perhaps the most ethically problematic aspect is the issue of consent. The act of consent is exclusively human, and by definition a humanoid robot has no more capacity to grant consent than is programmed into the algorithms that drive it.

Orly Lobel, author and professor of law at the University of San Diego, writes that the continuing debates around sex robots are complex, nuanced and uncomfortable. “Until a robot is truly autonomous in its decision-making, it cannot truly grant consent.”

And these debates will also not be framed exclusively by the EU’s AI Act, no matter how well meaning the effort.

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Nvidia to launch in Middle East, amid US curbs on AI exports, concerns China dodging ban

https://www.scmp.com/news/world/middle-east/article/3267721/nvidia-launch-middle-east-amid-us-curbs-ai-exports-concerns-china-dodging-ban?utm_source=rss_feed

Nvidia has signed a deal to deploy its artificial intelligence technology at data centres owned by Qatari telecoms group Ooredoo in five Middle Eastern countries, Ooredoo’s CEO said.

The agreement marks Nvidia’s first large-scale launch in a region to which Washington has curbed the export of sophisticated US chips to stop Chinese firms from using Middle Eastern countries as a back door to access the newest AI technology.

It will make Ooredoo the first company in the region able to give clients of its data centres in Qatar, Algeria, Tunisia, Oman, Kuwait and the Maldives direct access to Nvidia’s AI and graphics processing technology, Ooredoo said in a statement.

Providing the technology will allow Ooredoo to better help its customers deploy generative AI applications, Nvidia’s senior vice-president of telecoms Ronnie Vasishta said.

“Our b2b clients, thanks to this agreement, will have access to services that probably their competitors [won’t] for another 18 to 24 months,” Ooredoo’s CEO Aziz Aluthman Fakhroo told Reuters in an interview.

The companies did not disclose the value of the deal, which was signed on the sidelines of the TM Forum in Copenhagen on June 19.

Ooredoo also would not disclose exactly what type of Nvidia technology it will be installing in its data centres, saying that it depends on availability and customer demand.

Washington allows the export of some Nvidia technology to the Middle East, but curbs exports of the company’s most sophisticated chips.

Ooredoo is investing US$1 billion to boost its regional data centre capacity by 20-25 additional megawatts on top of the 40 megawatts it currently has, and plans to almost triple that by the end of the decade, Fakhroo said.

The company has carved out its data centres into a separate company, following a similar move last year to create the Middle East’s largest tower company in a deal with Kuwait’s Zain and Dubai’s TASC Towers Holding.

Ooredoo also has plans to carve out its undersea cables and fibre network into a separate entity, Fakhroo said.

Longest-serving Taiwanese top legislator on personal ‘pilgrimage’ to mainland China

https://www.scmp.com/news/china/politics/article/3267709/longest-serving-taiwanese-top-legislator-personal-pilgrimage-mainland-china?utm_source=rss_feed

Former Taiwanese top legislator Wang Jin-pyng is on a week-long “religious pilgrimage” to the mainland as Beijing steps up pressure on the island’s new leader.

Wang, from the Beijing-friendly opposition Kuomintang (KMT), was invited to attend the opening of a new theatre stage at the Huiju Tianhou Temple in Kunshan, in Jiangsu province, Taiwanese media reports quoted his office as saying last week.

The temple is dedicated to the Chinese sea goddess Mazu, a deity worshipped by coastal communities on both sides of the Taiwan Strait.

Wang’s office said the trip was purely for “personal religious purposes” and had nothing to do with politics.

Wang was joined at the temple on Sunday morning by Jiangsu’s Taiwan affairs chief Lian Yueqin.

Taiwanese daily China Times reported on Sunday that Wang might pay a courtesy visit to the Taiwan Affairs Office, the mainland body overseeing cross-strait matters, and meet its director, Song Tao.

Quoting unnamed sources, the report said that even if the visit did take place, Wang’s meeting with Song might not touch on “any in-depth issues”.

Wang met Song’s predecessor, Liu Jieyi, during a previous trip to the mainland in May 2019. The visit to his ancestral village in Zhangzhou, in Taiwan-facing Fujian province, came two months after Wang declared his intention to become KMT’s candidate for the 2020 presidential election. He later decided not to run.

During his meeting with Liu, Wang said independence for Taiwan was a “false proposition” that would never work, and the “1992 consensus” laid the foundation for cross-strait peace.

The 1992 consensus is an unofficial agreement that there is only one China but the two sides may disagree about what that means. Reached when the KMT was in power, the consensus was often credited as the basis for semi-official cross-strait exchanges which began in the early 1990s. It is also a major precondition set by Beijing to engage in cross-strait dialogue.

Beijing sees Taiwan as a part of China to be reunited by force if necessary. Most countries, including the United States, do not recognise Taiwan as an independent state. But Washington opposes any attempt to take the self-governed island by force, and is legally bound to help Taiwan defend itself.

Wang was the head of Taipei’s Legislative Yuan from 1999 to 2016, the longest term served by anybody in the role. He is expected to return to Taiwan on Thursday.

As the cross-strait political and social divide widens, Beijing has tried to win over Taiwanese people by highlighting shared cultural and ancestral roots.

Wang’s trip comes two months after a high-profile visit to mainland China by former Taiwanese leader Ma Ying-jeou, also of the KMT, his second such trip in as many years.

Ma and his delegation attended a ceremony in northwestern Shaanxi province to pay homage to Huangdi, or the Yellow Emperor, a legendary common ancestor of the Chinese people.

President Xi Jinping highlighted the inevitability of the cross-strait “family reunion” as he welcomed Ma to historic talks in Beijing on April 10.

But Beijing has also used displays of military might to warn new Taiwanese leader William Lai Ching-te and his pro-independence Democratic Progressive Party against challenging its sovereignty.

On Friday, just a month after Lai’s inauguration, Beijing’s Supreme People’s Procuratorate, and the ministries of public security, state security, and justice, released a judicial guideline warning that “Taiwan independence” separatists could face the death penalty in extreme secession cases.

Beijing has branded Lai as an “obstinate separatist” whose leadership could lead to war.

Lai took office on May 20, declaring that Taiwan and the mainland “are not subordinate to each other” in an inaugural speech slammed by Beijing as bearing “dangerous signals”.

Three days later, the People’s Liberation Army launched large-scale military drills around Taiwan simulating a blockade.

‘Who is haute couture queen?’: China KOL Lulu with million fans slams French design house for loan of dress to actress

https://www.scmp.com/news/people-culture/china-personalities/article/3264816/who-haute-couture-queen-china-kol-lulu-million-fans-slams-french-design-house-loan-dress-actress?utm_source=rss_feed

An influencer in China has been outraged after a French haute couture brand loaned her outfit to British actress Anya Taylor-Joy.

Taylor-Joy wore the black bodysuit adorned with white silk roses, from Giambattista Valli’s Spring/Summer 2024 Couture collection, at the London premier of the film Furiosa: A Mad Max Saga, on May 17.

The influencer, known as Lulu, was angry because she had ordered the suit and paid a deposit for it in January.

She felt it was inappropriate for the brand to lend it to somebody else without asking her – especially another celebrity who will be photographed wearing it first.

Lulu, dubbed by many as “China’s haute couture queen”, said she had been purchasing high-end designs for a decade.

Haute couture is a French term that translates as “high dressmaking” and generally refers to handcrafted garments made by skilled artisans using the best quality materials.

Such top-notch clothes take many people many hours to make and generally cost a minimum of US$100,000. The pieces are usually one-of-a-kind rather than mass-produced.

Lulu said there is an unwritten rule that brands do not lend the original dress to celebrities if a customer has bought it.

The “haute couture queen” rose to fame in 2014, wearing the same Valentino music-notes-emblazoned dress that Katy Perry wore earlier that year to the Grammy Awards.

When she was accused by some fashion bloggers of being a copycat, Lulu said she had already bought the dress and so she was, in fact, wearing an item from her own wardrobe.

She said she immediately ordered the dress after seeing it at the design house’s runway show in January, but Perry borrowed it before Lulu had the opportunity to wear it.

“If I had ordered faster, she wouldn’t have had the chance to wear it to the Grammys,” the influencer told NetEase Women.

Valentino later posted a photo of Lulu wearing the dress and captioned it “Chinese fashion icon”.

In 2019, Lady Gaga wore a mauve gown from Valentino to the Golden Globes. Lulu said it was an adapted version of her original royal blue gown, that she made sure to buy so that no one else could wear exactly the same dress.

The influencer said an haute couture dress is “more important than a boyfriend, because the dress is unique and men are countless”.

Lulu, whose real name is Lu Min, has more than 1 million followers across several social media platforms. She introduces herself as a fashion collector and buyer.

Her age and background are a mystery. The only information she has ever disclosed to the media was that her father was in the army and her mother was a businesswoman.

She studied for a degree at university, but realised the subject was not for her, choosing to enter the world of fashion instead.

Lulu is frequently seen sitting in the coveted VIP front row during Paris Haute Couture Week, which is held twice a year.

She said “a classy brand” such as Armani or Valentino would never lend their customers’ bought items without their permission.

Lulu said she no longer wanted the dress and forfeited her deposit, vowing to never buy Giambattista Valli designs again. It was reported by Chinese fashion blogger Chrison that the deposit was US$2,800.

German economy minister Robert Habeck urges China to shift away from coal power

https://www.scmp.com/news/china/diplomacy/article/3267712/german-economy-minister-robert-habeck-urges-china-shift-away-coal-power?utm_source=rss_feed

China is indispensable to achieving global climate goals and must find a safe alternative to coal, which accounted for nearly 60 per cent of the country’s electricity supply last year, German Economic Affairs Minister Robert Habeck has said.

China was expanding coal production for security reasons, Habeck said in Hangzhou on Sunday, citing Chinese officials he met the previous day in Beijing.

“China also imports large amounts of gas and oil and China has already seen what has happened in Europe and Germany in the last two years,” he added, referring to the energy crisis triggered by Russia’s full-scale invasion of Ukraine.

He also said cooperation with China must be strengthened.

“Without China it would not be possible to meet the climate targets globally”, Habeck said, adding that it should be possible to achieve the same level of security with fewer coal-fired power plants.

Later, Habeck told students at Zhejiang University that the difficulty lay in integrating variable forms of energy such as wind and solar into a system built to work on more predictable fuels.

He said that doubling capacities was “the old way” of doing it, but not the most efficient.

China is expanding its coal production but also installed almost 350 gigawatts of new renewable energy capacity in 2023, more than half the global total.

Habeck said extension of the power grid and use of batteries to store energy could reduce the number of traditionally fuelled power plants needed to meet China’s needs.

Economic growth and climate action were not opposites, he added.

“Transforming the economy to a climate-neutral one is not only good for the climate but creates new opportunities for wealth and growth.”

How Modi 3.0 could steer India-China relations

https://www.scmp.com/opinion/asia-opinion/article/3267413/how-modi-30-could-steer-india-china-relations?utm_source=rss_feed

India’s latest election marked a resurgence of democracy, as voters pushed back against concentrated power and the ethno-nationalist sentiments in the ruling Bharatiya Janata Party. This shift may force Prime Minister Narendra Modi to reconsider his hardline policies and opt for more cautious approaches. Implemented wisely, such changes could bolster India’s international standing.

India’s return to coalition government brings to mind the diverse alliances from 1989 to 2014. These coalition governments implemented major economic reforms, spurring significant growth across various sectors in India’s journey to becoming the world’s fifth-largest economy.

But a rising India under Modi has also seen its relationship with neighbouring China enter a complex phase. Both vast and competitive economies, they are facing hurdles in building their friendship and, increasingly, security concerns are outweighing economic considerations.

Border clashes – especially in 2013, 2014 and 2017 – have shaped the relationship, and the 2020 Galwan Valley incident signalled a turning point. The long-standing animosity, China’s hegemony in the Indian Ocean and its salami-slicing tactics along the Line of Actual Control – a loosely defined ceasefire line – has pushed India towards the US. At the same time, China is drawing closer to India’s adversary Pakistan.

This divergence underscores Beijing and New Delhi’s distinct geopolitical interests. China pursues a global agenda, leveraging soft power with its Belt and Road Initiative while asserting dominance in the South China Sea. In contrast, India prioritises diplomatic interactions with developing nations and has recently strengthened ties with the US, guided by the disparity between its military expenditure and China’s.

India’s deepening alliance with the United States, characterised by President Joe Biden as “the defining partnership of the 21st century”, reflects their shared interests in managing China’s influence despite the historical mistrust.

This also positions India with Europe’s aspirations for global influence, potentially reshaping New Delhi’s multi-alignment strategy.

Both the European Union and India face security threats and are grappling with economic dependency on China. They can unite over the diversification of supply chains, as Europe implements “de-risking” and economic security measures. New Delhi has its “Make in India” initiative, though this has yet to significantly reduce its reliance on China.

Amid tensions, India’s political landscape is changing. Coalition governance and a stronger opposition may prompt more pragmatic policies but business demands also drive this shift.

Sino-Indian tensions are estimated to have cost India’s electronics manufacturers US$15 billion in production losses, with 100,000 job losses over the past four years. They are calling for more flexible trade policies and visa relaxations for skilled Chinese workers.

This evolving setting could steer the Sino-Indian relationship in two directions: continued rivalry and strategic competition amid closer India-West coalitions, or increased collaboration and mutual understanding with China.

First, points of convergence between India and the West are multiplying, extending beyond India’s “Vishwaguru” (teacher to the world) foreign policy, “neighbourhood first” strategy and focus on leading the Global South.

This is evident in the Quadrilateral Security Dialogue and India’s increasing security cooperation with Western partners, even as it continues to buy weapons and energy from Russia. Collaborations include the India-Middle East-Europe Economic Corridor project and the US-led Minerals Security Partnership. These developments underscore India’s strategic efforts to counterbalance China in the long term and reaffirm its stature as a credible power.

While it remains to be seen how China will perceive a more influential India as it positions itself as a bridge between the West and the Global South, Beijing may well view New Delhi’s rising status with caution, particularly as Modi 3.0 seeks to capitalise on the “China plus one” strategy. But, for India to fully leverage this position, it needs significant reforms to become more attractive as an alternative investment destination.

Second, to enhance Sino-Indian relations, senior leaders should convene now that India’s elections are over. A resumption of dialogue between Chinese President Xi Jinping and Modi would lead to ministerial submeetings to resolve long-standing issues like business barriers and Indian authorities’ scrutiny of Chinese companies.

New policies may find space for Sino-Indian joint ventures and return the Line of Actual Control to the pre-2020 status quo. Concessions from both sides would provide stability and predictability.

Tempering the confrontational rhetoric in Indian politics and media regarding China could create a more conducive atmosphere for dialogue, when China also needs to de-escalate tensions, especially in light of US rivalry. Both nations participate – and compete against each other – in organisations like the Shanghai Cooperation Organisation, Group of 20 and Brics-plus, which offer frequent opportunities for negotiation and collaboration.

Relaxing visa regulations and bolstering “Track-II” diplomacy, academic collaboration, joint research projects and think-tank dialogue, along with facilitating meetings among civil society organisations, are pivotal. This approach, especially in the Himalayan border regions and major cities, fosters grass-roots engagement and mutual understanding, easing tensions.

By clearly categorising areas of cooperation and contention, both countries can manage enduring disputes constructively while capitalising on shared opportunities, ultimately nurturing a more harmonious and strategic partnership.

India’s post-election period should catalyse a shift in domestic and international policies as it gradually assumes the role of a global power. This requires India to embrace a nuanced foreign policy strategy and enhance its diplomatic engagements with both China and the West to bolster its influence and stability.

While competition will persist, the two rising Asian powers have the opportunity to be less confrontational, revitalise their collaborative spirit, reshape regional dynamics and promote global cooperation.

China makes moves to reopen economic ties with Libya, 13 years after suspending trade

https://www.scmp.com/news/china/diplomacy/article/3267487/china-makes-moves-reopen-economic-ties-libya-13-years-after-suspending-trade?utm_source=rss_feed

Before the 2011 revolution that toppled Muammar Gaddafi and led to a bloody civil war in Libya, China had vast interests in the oil-rich North African nation.

At the time, 75 Chinese companies controlled 50 large projects with a contract value of more than US$20 billion, according to estimates by China’s ministry of commerce.

Spanning oil, construction, railways and telecoms, the extensive Chinese investments came to an abrupt halt after some of the companies were raided and dozens of workers were seriously injured.

Beijing acted fast to evacuate its citizens from the turmoil. During the crisis, 35,860 Chinese nationals were pulled out of the country – officially the largest overseas evacuation since the founding of the People’s Republic in 1949.

Then, as the security situation worsened, China suspended new investments, something which has remained relatively unchanged – until now.

Currently Libya is split between two administrations: the internationally recognised Government of National Unity (GNU) based in Tripoli in the west of the country, and the rival Government of National Stability (GNS) which is aligned with renegade general Khalifa Hifter of the Libyan National Army in Benghazi in the east.

Recently, signs have begun to emerge that China is ready to return to the energy-rich, yet still politically divided, country.

On June 10, Libyan Minister of Economy and Trade Mohamed al Hwej issued a directive to activate the Libyan-Chinese Joint Economic Chamber. The minister urged the chamber to help build bridges and enhance investment communication between the two countries.

Chinese officials and Libya’s National Transitional Council have been negotiating China’s return to Libya, which was one of the issues under discussion when GNU Prime Minister Abdul Hamid Dbeibah, visited China in late May.

He held talks with Premier Li Qiang and Foreign Minister Wang Yi on the sidelines of the 10th Ministerial Conference of the China-Arab States Cooperation Forum, where they discussed restoring political and economic cooperation between the two countries.

Li said China is willing to work with Libya to tap the potential for cooperation under the framework of the Belt and Road Initiative, strengthen cooperation in areas such as infrastructure construction and provide more support for Libya’s development.

“It is hoped that Libya will provide a fair and non-discriminatory business environment for Chinese companies,” Li said.

Meanwhile, Wang also offered China’s backing.

“China always supported Libya’s stabilisation and development … and the Libyan-led and Libyan-owned political transition process,” he said.

In return, Dbeibah said at the meeting: “Libya highly appreciates China’s important role in supporting Libya’s political process and national reconstruction.”

The meetings also discussed the start of processes for the Chinese embassy to resume operations in the capital, Tripoli, according to Libyan media.

But according David Shinn, a China-Africa specialist and professor at George Washington University’s Elliott School of International Affairs, continued political instability in Libya could still prove to be a fly in the ointment.

“China supports a unified Libya and encourages dialogue as a solution to their differences,” Shinn said.

He said that Libya exported US$36 billion worth of oil in 2023 and China accounted for US$2.2 billion of this total. China would like to re-engage in winning infrastructure contracts, he added, while the GNU would like to see the return of Chinese companies.

“Political instability remains a concern, however, and it is not clear how China would interact with the Khalifa Haftar regime in eastern Libya,” Shinn said. “Any major re-engagement in the country would require a reopening of China’s embassy in Tripoli.”

John Calabrese, a senior fellow at the Middle East Institute in Washington, said before the Libyan civil war, all three Chinese state-owned energy giants – China National Petroleum Corporation, China National Offshore Oil Corporation and China Petroleum & Chemical Corporation – had projects in Libya. He said the recent developments might have something to do with those companies wanting to recover losses, re-establish themselves and resume potentially lucrative work.

He noted that China had dealings with both sides during the second civil war (from 2014 to 2020), just as it has elsewhere, such as Afghanistan and the Saudi Arabia-Iran conflict.

“Somehow, they have managed to avoid permanently alienating either of the two rival camps,” Calabrese said.

“If China does not help with reconstruction, who will? Arguably, the Europeans should. As far as I can tell, Washington has tended to hand over this poisoned chalice to them. Maybe Beijing has found it opportune to insert itself into this situation as a means of capitalising on the Euro-Atlantic partners’ preoccupations with other, more pressing priorities.”

Mohammed Soliman, a global strategy adviser at McLarty Associates, said the reopening of the Chinese embassy could signal strengthened diplomatic ties and further validate the political structure in Tripoli.

“Chinese companies have a proven track record in executing large-scale projects swiftly and efficiently, which is essential for Libya’s reconstruction,” Soliman said, adding that China’s involvement in Libya’s reconstruction aligns with Beijing’s broader interests in the Mediterranean and North Africa.

“After [Italy] departed from China’s Belt and Road Initiative, Libya’s location at the crossroads of Africa, Europe and the Middle East could make Tripoli a gateway for Chinese investments into the broader region, enhancing China’s belt and road objectives,” Soliman said.

“Furthermore, by playing a role in Libya’s recovery, China positions itself as a key global player committed to international development and stability.”

Amjed Rasheed, a lecturer of defence studies at King’s College London, said Libya is in dire need of reconstruction as part of its transition to a post-conflict country.

“The idea here is that reconstruction leads to normalcy and ends the circle of political violence. This is important for the Government of National Unity to score credit and strengthen the legitimacy of [Dbeibah’s] UN-backed government vis-à-vis his political rivals in Tobruk and eastern Libya,” Rasheed said.

He said Libya is yet another partner with the Belt and Road Initiative to secure and enhance energy security.

“Libya can play a key role, along with Egypt and Algeria, in completing the picture in Mediterranean Africa to ensure access to the European single market,” Rasheed said. At the same time, he said, as with any post-conflict society, Libya provides a lucrative opportunity for Chinese companies.

Since that tense evacuation of its citizens in 2011, China has maintained its neutrality in the Libyan conflict, biding its time for an eventual return of Chinese-owned businesses to the country, according to Shaio Zerba, director of the Centre for Intelligence and Security Studies at the University of Mississippi.

She said Libya needs foreign investors to rebuild its capacity to tap into its vast oil reserves.

“Violent conflict, political instability and a divided government in transition have severely limited foreign investment in Libya. Given Libya’s vast oil reserves, China is willing to assume the risk and assist in the country’s reconstruction in exchange for access to oil,” Zerba said.

“Engaging in economic cooperation and infrastructure projects with Libya advances two Chinese goals – achieving energy security and increasing China’s influence in Africa.”

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South China Sea: Beijing urges UN not to consider Philippine request to extend continental shelf

https://www.scmp.com/news/china/diplomacy/article/3267698/south-china-sea-beijing-urges-un-not-consider-philippine-request-extend-continental-shelf?utm_source=rss_feed

China has formally urged a United Nations body not to consider a Philippine bid to extend the legal outer limits of its continental shelf in the disputed South China Sea.

In a diplomatic note last week, China called on the UN’s Commission on the Limits of the Continental Shelf not to review the submission, which aims to confirm the outer boundaries of its legal continental margin beyond the 200-nautical mile (370km) limit.

“[The Philippine claims] have seriously infringed China’s sovereignty, sovereign rights and jurisdiction in the South China Sea,” the mission said in the note to UN secretary general Antonio Guterres.

“China has indisputable sovereignty over Nanhai Zhudao [the South China Sea islands] and the adjacent waters, and enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof.

“The Chinese government seriously requests the commission not to consider the submission by the Philippines.”

China claims almost all of the South China Sea but the Philippines, Vietnam, Malaysia and Brunei all have competing claims to the waterway, a key global shipping hub.

The dispute has escalated into frequent, and sometimes violent, clashes between China and the Philippines over the past year, raising fears of conflict.

In 2016 an international tribunal ruled in favour of the Philippines and said China’s claims in the South China Sea had no legal basis, a decision Beijing refused to accept.

Earlier this month, the Philippines asked the UN commission to recognise that the outer limits of its continental margin extended beyond 200 nautical miles in the West Palawan region facing the South China Sea.

According to the executive summary of Manila’s submission, made available last week, the new proposed limits cover the Palawan-Mindoro microcontinent.

It said that served as the basis for determining the “natural prolongation of the Palawan and Mindoro landmasses”.

Under the 1982 United Nations Convention on the Law of the Sea, a coastal state can gain exclusive rights to exploit natural resources on its continental shelf, including mineral resources, fish stocks and oil and gas reserves.

The Philippines noted that its submission may overlap with previous claims, including a joint submission by Malaysia and Vietnam in 2009, but it was willing to discuss maritime boundaries with them.

Maritime observers have suggested that the move is unlikely to succeed as the commission – which is mainly a scientific and technical body – cannot consider disputed claims unless all parties involved agree.

The commission deferred the 2009 joint proposal submitted by Vietnam and Malaysia for that reason.

China is so far the only country to object to the Philippine claim through a diplomatic note.

In 2012 the Philippines successfully extended its continental shelf off the Philippine Rise on its northeastern coast without opposition.

EU probe into Chinese electric vehicle subsidies stirs debate over ‘unfair’ treatment

https://www.scmp.com/news/china/diplomacy/article/3267687/eu-probe-chinese-electric-vehicle-subsidies-stirs-debate-over-unfair-treatment?utm_source=rss_feed

The European Union’s decision to increase tariffs on Chinese electric vehicles has triggered a debate about whether the country is being unfairly singled out.

China is not alone in subsidising its domestic industry, but critics say the scale of its subsidies set it apart. However, one Chinese economist defended state support for EVs, saying Brussels has not understood the thinking behind them.

Trade tensions between the two sides escalated this month after the EU announced punitive tariffs of up to 38 per cent on electric vehicles imported from China, claiming Beijing’s “unfair” subsidies had led to overcapacity, which distorted the market and damaged EU firms.

Beijing dismissed the accusations and hit back with an anti-dumping probe into EU pork imports.

Yuyuan Tantian, a social media channel affiliated with China’s state broadcaster CCTV, said on Friday that the EU’s anti-subsidy probes “have far exceeded the range of traditional anti-subsidy investigation and abused the rules of the World Trade Organization”.

It said over the past decade the EU has launched anti-subsidy probes that go beyond direct government subsidies to other areas such as land, loans and electricity supplies.

The platform has previously accused EU investigators of demanding “core business secrets” and “snooping”.

Wang Yong, deputy academic dean at the School of New Structural Economics at Peking University, said the EU was labouring under a “misconception” about China’s dominance of the global EV market.

Rather than being the result of state subsidies, he said they were the result of fierce competition at home.

“The domestic market in China is already highly competitive. In order to survive in the domestic market, prices have to continuously decrease,” said Wang.

He also said EVs can bring broader societal benefits such as conserving energy and helping the environment, but may need large investments upfront and struggle to turn a profit. “So of course, they definitely need subsidies,” said Wang.

Central and local governments in China provided between 200 billion and 250 billion yuan (US$27.5-34 billion) in direct subsidies to EV makers over a 13-year period before ending them last year, Securities Times reported in November last year

It is still offering tax cuts for buyers and has said these will remain in place until 2027, while critics of China’s approach have said a vast number of other subsidies are on offer and have complained of a lack of transparency.

One study, by US-based consulting firm AlixPartners in July 2023, calculated that the value of Chinese government subsidies for EV buyers alone could be as much as US$57 billion over a six-year period from 2016 to 2022.

A number of European governments also offer subsidies for EV buyers, while in the US manufacturers can receive subsidies if they comply with certain rules on components produced in North America – a move both Europe and China have criticised as unfair.

According to Berlin-based think tank Sinolytics, Germany and the United States both offered higher tax credits for buyers than China last year, with US$7,500 (€6,800) available to American buyers, compared with €6,200 per vehicle in Germany and €4,000 in China.

But James Zimmerman, former chairman of the American Chamber of Commerce in China, said China’s subsidies go way beyond incentives for buyers.

“They include significant governmental handouts that prop up local manufacturers with cheap land resources, steep discounts on energy inputs, a docile workforce and cheap labour, financing for production, grants for R&D investments, bulk purchases by government agencies, and lower corporate income taxes since EVs are designated as high-tech enterprises.”

Zimmerman, a partner in international law firm Perkins Coie, also said: “All governments do indeed provide certain types of subsidies, but it’s an issue of fairness and competitiveness.

“If subsidies and preferential treatment are so extensive that they distort the markets and result in inefficiencies, then such subsidies are not fair and amount to anti-competitive conduct.”

Jacob Gunter, lead analyst at Berlin-based think tank the Mercator Institute for China Studies said the EU’s tariff hike is justified as it is the scale of the subsidies in China “that’s so significant” compared with relatively “modest” European subsidies.

“This is about subsidies as a tool to promote the development of industries and to become strong in certain industries and highly competitive in certain industries,” he said, adding this type of policy was generally not regarded with favour by the WTO.

Gunter said the EU’s investigation had been thorough and “there has been extensive public documentation of things that the Chinese government had made publicly available for a very long time about the level of subsidisation, the availability of cheap loans, free land, all of the traditional sorts of industrial policy”.

He added: “We’re talking about potentially tens of thousands of dollars worth of support, extensive amounts of below market financing, all sorts of different things. But when added together it’s an incomparable level of subsidies.”

Marcos says Philippines won’t incite wars as South China Sea tensions spike

https://www.scmp.com/news/asia/southeast-asia/article/3267693/marcos-says-philippines-wont-incite-wars-south-china-sea-tensions-spike?utm_source=rss_feed

Philippine President Ferdinand Marcos Jnr said on Sunday his country is not in the business of instigating wars and will always aim to settle disputes peacefully, amid escalating maritime confrontations with China.

“In defending the nation, we stay true to our Filipino nature that we would like to settle all these issues peacefully,” Marcos said in a speech to troops of the Western Command unit in charge of overseeing the South China Sea.

Philippine navy personnel and the Chinese coastguard had their latest clash last week in the disputed waterway, where the Philippine military said a Filipino sailor was severely injured and its vessels damaged.

“In the performance of our duties, we will not resort to the use of force or intimidation, or deliberately inflict injury or harm to anyone,” Marcos said.

“We will never be intimidated or oppressed by anyone,” the president said as he gave out medals to sailors involved in Monday’s clash off Second Thomas Shoal.

He did not name China in his speech.

Beijing’s actions during a routine Philippine resupply mission have been condemned by the United States, Britain and Canada.

China’s foreign ministry disputed the Philippine account, with a spokesperson saying on Thursday that the necessary measures taken were lawful, professional and beyond reproach.

China claims almost the entire South China Sea, a conduit for more than US$3 trillion of annual shipborne commerce, including parts claimed by the Philippines, Vietnam, Indonesia, Malaysia and Brunei.

In 2016, the Permanent Court of Arbitration in The Hague said China’s claims had no legal basis, a decision Beijing has rejected.

Chinese e-commerce sales up 14% during 618 shopping festival, report says

https://www.scmp.com/tech/big-tech/article/3267642/chinese-e-commerce-sales-14-cent-during-618-shopping-festival-report-says?utm_source=rss_feed

China’s major e-commerce platforms saw gross merchandise value (GMV) grow 13.6 per cent year on year during the 618 shopping festival, according to third-party data, although profit margins are likely to be squeezed amid a heated price war.

The estimated GMV growth, published in a report from research firm Analysys on Thursday, includes sales on China’s biggest online shopping platforms: Alibaba Group Holding’s Taobao and Tmall, JD.com, Pinduoduo, ByteDance’s Douyin and rival short-video platform Kuaishou.

Newer challengers in the e-commerce arena appear to have greater momentum than Alibaba and JD.com, the two long-standing players in the domestic market. Alibaba owns the South China Morning Post.

Douyin, the Chinese version of TikTok, led all other platforms with a 26.2 per cent surge in GMV, followed by Pinduoduo’s 17.7 per cent and Kuaishou’s 16.1 per cent. Alibaba and JD.com saw GMV grow 12 per cent and 5.7 per cent, respectively, according to Analysys.

The companies have largely stopped publishing their own GMV figures for big shopping festivals, including for this year’s 618 event. However, the Analysys figures align with the growth narrative from the limited figures that firms did release this year.

JD.com said on Wednesday that transaction volume and orders during the midyear sales extravaganza broke records, without disclosing the exact figures.

Taobao and Tmall’s GMV also recorded a new high during the campaign period through June 18, according to people familiar with the matter.

“The gap between online growth and total growth in retail sales has gradually widened, indicating that the driving force of online consumption is significantly stronger than offline consumption,” Analysys said in the report.

“While there isn’t an obvious consumption downgrade trend this year, consumers are generally more rational in their spending patterns,” said Joyce Ju, vice-president of Greater China Internet Research at BofA Securities.

Ju noted that some categories, such as clothing and home appliances, have shown weaker online sales, while segments like online food delivery remain more resilient.

Despite the GMV growth, many merchants have complained that profits are declining owing to a brutal price war that has emerged as platforms compete to attract price-conscious consumers in a slowing economy.

Zuoliang – a domestic brand that sells bird’s nest soup, a Chinese cuisine, on JD.com – said in a social media post on Thursday that it was “forced to sell at a price that is even lower than our cost” during the 618 event, creating an “unprecedented dilemma”.

Other brands have also complained publicly about taking a loss on their goods, including apparel and appliances.

Merchants have been trying to adopt a more rational sales approach this 618 season, but platform operators have become more aggressive in providing consumers with cash subsidies and discounts, according to BofA’s Ju.

“E-commerce platforms are placing greater emphasis on price competitiveness than ever before, aiming to protect and regain market share amid intensifying competition in the sector,” Ju said.

Pinduoduo reportedly introduced an “automated price-tracking system” for merchants to swiftly adjust prices online during the 618 event. Douyin has also been testing a smart pricing system for merchants, according to recent Chinese media reports.

During the event, the delivery rate of e-commerce parcels grew 23 per cent year on year, outpacing GMV growth, mainly due to higher return rates and a potential year-on-year decline in value per order, reflecting more conservative consumer behaviour, according to a research note from HSBC on Thursday.

Jessie Li, a 30-year-old based in Shanghai, said she had spent nearly 4,000 yuan during the sales event this year. However, this year she chose to buy “obviously cheaper” brands that she would not have bought a few years ago. Many of these are domestic brands that offer similar quality at lower prices, she said.

“After my boss cut my quarterly bonus last year, I had no choice but to become much more price-sensitive,” Li said.

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Choke points: China’s Yangtze River shipping is stuck in traffic, and the costs are rising

https://www.scmp.com/news/china/article/3267559/choke-points-chinas-yangtze-river-shipping-stuck-traffic-and-costs-are-rising?utm_source=rss_feed

China’s Yangtze River, the longest waterway in Asia – and one of the busiest – has long suffered from choke points that hinder transport efficiency, and now calls are growing for major improvements to the artery to help boost the local economies that it connects.

Shipping industry professionals, experts and local officials from four provinces and a municipality along the river – Chongqing, Sichuan, Guizhou, Yunnan and Shaanxi – gathered in Chongqing earlier this month to discuss “high-quality” shipping development in the upper Yangtze region.

Since their first forum in 2021, the five regions have discussed cooperation on shipping data, emergency river rescues and interprovincial regulations. More than 33 companies have signed contracts to collaborate on river tourism, new routes for container ships, shipbuilding and general water transport.

The four provinces and the municipality of Chongqing are key to China’s “Go West” plan to boost development in its western and central regions.

The forum has also tried to solve ongoing problems that hamper shipping along the key transport route, which have worsened, according to the experts at this year’s forum.

Frequent traffic jams occur as boats pass by the Three Gorges Dam, and travel on important tributaries like the Wu, Jialing and Min rivers continues to be impeded. Those waterways lack optimal connections to the main body of water body, news portal The Paper reported, citing experts at the forum.

Last year, the average waiting time for cargo ships to pass through the locks of the Three Gorges Dam stretched to 12 days due to a lack of capacity, according to the Southwest China Chapter of the European Union Chamber of Commerce.

“The significant increase in waiting time has led to an uptick in transport costs and difficulties in shipping companies’ operations, as well as more pollution in the area. It had a negative impact on supply chains, especially as delays in the delivery of goods such as fuel and raw materials passing through the locks disrupted industrial production,” the chapter told the Post.

“Enhancing the shipping capacity of the Yangtze River’s upper region will be imperative for advancing the regional development of Sichuan and Chongqing.”

Experts at this month’s forum said procedures for ships to pass locks should be simplified. Ships hauling aviation oil, iron ore, steel, grain and other essential materials should be given priority, and governments should support the construction of inland shipping, they added.

The sustained emphasis on improved river transport efficiency on the Yangtze comes down to costs, according to Zhao Jian, director of Beijing Jiaotong University’s urbanisation research centre.

“This is the cheapest way, especially for large quantities of cargo,” Zhao told the Post. “The ships usually transport cargo at ports, which will also be beneficial for these cities as they develop the ‘port economy’.”

The chamber also said the navigation capacity of the Yangtze River shipping channel affected the quality of sea access for the central and western regions, as well as their connections to international trade routes. Measures to improve the efficiency of cargo transport and upgrade links between land and water along the Yangtze River would boost efforts to open up central and western China, they said.

Like the Mississippi River in the United States, the Yangtze consists of vast watersheds and deltas, and has long been considered China’s “highway on the water”, a key contributor to the country’s economy.

According to official statistics, cargo throughput at Yangtze River ports last year rose by 8 per cent from 2022 to 3.8 billion tonnes, while tourists made 1.38 million trips on the river between provinces, an increase of more than 26 per cent compared to 2022.

The rapid growth of shipping on the Yangtze River can be credited to its much lower costs, compared to rail or air, Zhang Hongbin, an analyst at the Shanghai Institutes for International Studies, wrote in an article for China Review News in January.

“Because of its high efficiency, the Yangtze River has accounted for 80 per cent of China’s mineral ore shipping, 80 per cent of coal and 70 per cent of crude,” he said.

However, further transport development has been stalled by the river’s choke points, such as the heights of some bridges, including near the eastern city of Nanjing. He said that bridges built to a height of 24 metres (79 feet) in the 1950s were not compatible with today’s larger ships.

Efforts have been made to fix some of the choke points. In 2017, a government project was launched to dredge a major section of the river from the city of Yichang in Hubei province through Wuhan to Anqing in Anhui province.

The Hubei transport department said at the time that the project, which would extend the depth of parts of the river to 6 metres, would enable 13,000-tonne ships to reach Wuhan and 5,000-tonne ships to reach Yichang, bringing direct economic benefits while significantly cutting down the energy use of ships.

China couple shocked to discover ‘dead’ son alive after 33 years, was raised by infertile relative of hospital director

https://www.scmp.com/news/people-culture/trending-china/article/3264807/china-couple-shocked-discover-dead-son-alive-after-33-years-was-raised-infertile-relative-hospital?utm_source=rss_feed

A couple in China who believed their son had died shortly after he was born, discovered more than three decades later that he was actually alive and well.

Zhang Huaiyuan, 33, raised in a poverty-stricken rural village in Anhui province, eastern China, was shocked to discover that he was adopted and that his biological parents were wealthy merchants from Zhejiang province in southeastern China.

Doctors told Zhang’s birth parents he was dead because he was born prematurely, but he had in fact been given to a relative of the hospital director who was unable to conceive.

Zhang grew up about 400 kilometres away from Zhejiang province where his birth parents live.

The couple who adopted him were in their 50s and the father was disabled, so Zhang faced financial hardship which meant he dropped out of school at 17.

It wasn’t until after his adoptive father’s death in 2023 that his adoptive mother told Zhang he was not their biological child.

After being separated for decades, Zhang finally met his biological parents in May this year, with the help of the police.

At a big celebration held in Zhejiang on May 20, Zhang’s birth father, Li Shijie, tearfully presented his son with a bank card for an account containing 1.2 million yuan (US$166,000).

Zhang is the Li family’s second child.

“Our first child was just a year old when we conceived our second. Since the first was born via caesarean section which hadn’t fully healed, my wife’s incision reopened during the sixth month of pregnancy,” Li said.

The child was delivered prematurely and the doctors declared him dead soon after birth.

Despite growing up in poverty, Zhang seemed to inherit his biological parents’ knack for business as he owned a small factory.

Recently, the Li’s visited Zhang’s home in Tianjin, eastern China, where they met their daughter-in-law and nine-year-old grandson.

“My poor child lived for over 30 years not knowing his own birthday. This year, our family will finally celebrate it together,” Li Shijie said.

Online observers have shared in the family’s delight.

“Your story is something even a screenwriter could not make up. The family is finally happy and complete. Best wishes to you,” one online observer said.

“Look at the family photo, Zhang looks so much like his mother,” said another.

Zhang was also praised for building his business through hard work, rather than solely relying on the fortune of his birth parents.

Other stories about children separated from their families, have surfaced recently.

In December last year, Xie Qingshuai, a 25-year-old man in China who was abducted in childhood, reunited with his affluent parents and was given three flats and a car at his emotional homecoming ceremony.

In the same year, another father who had been searching for his son, abducted 22 years before, made a desperate bid to encourage more people to provide DNA data for the police to make a match.

He said he had worked hard for his six properties and four companies and wanted to pass them on to his son.

Chinese-built steel plant in Zimbabwe fires up its furnace as it ‘builds the nation’

https://www.scmp.com/news/china/diplomacy/article/3267554/chinese-built-steel-plant-zimbabwe-fires-its-furnace-it-builds-nation?utm_source=rss_feed

A new US$1.5 billion Chinese-built iron and steel plant in Zimbabwe has fired up its blast furnace as it begins production of pig iron, a major raw material needed to make steel.

There are high hopes that the Mvuma steel plant could see Zimbabwe become one of Africa’s largest producers of iron and steel products.

“Today marks a monumental milestone as our cast iron machine produces its very first batch of pig iron,” Dinson Iron and Steel Company (Disco), the Zimbabwean subsidiary of Chinese steel giant Tsingshan Holding Group, said on June 13

Pig iron, also known as crude iron, is produced by smelting iron ore in a blast furnace. From July, the Chinese firm also aims to start making steel billets, an intermediate form of steel. Eventually it will make other products, too, such as pipes, bolts and nuts, smaller slags, rolled tubes, fences, shafts, wires and bars.

The plant will initially produce 600,000 tonnes of steel a year at the peak of its first phase and production is expected to reach five million tonnes in the final phase of the plant expansion. It will have up to 3,000 workers during the first phase of production with the number expected to double in the second phase.

When running at full throttle, the processing plant around 200km (120 miles) south of the capital Harare is touted to become Africa’s biggest integrated steelworks. And it could not come soon enough.

After years of economic mismanagement, especially during the leadership of former president Robert Mugabe when the country’s biggest steel plant was mothballed, Zimbabwe is now pinning its hopes on the revival of its iron and steel industry.

The Chinese embassy hailed the start of operations at the new plant, posting on X, formerly Twitter, that “it marked a significant step for Zimbabwe’s industrialisation and modernisation”.

In future, the plant will make use of Zimbabwe’s abundant iron ore, chrome, coal, nickel and limestone to make iron and steel products that will help develop the country’s value chain. Raw materials will be mined and processed locally, government officials have said, with enough reserves to last 100 years.

Zimbabwe is rich in natural resources to help lift it out of its economic crisis, including gold, diamonds, nickel, ferroalloys, coke, coal briquettes, chromium ore, tobacco and raw cotton.

Tsingshan, the world’s biggest stainless steel producer, also has other projects in Zimbabwe, including a ferrochrome smelting factory owned by subsidiary Afrochine Smelting in Selous, a village in Mashonaland West province, around 70km west of Harare.

Ferrochrome is an intermediate product used as feed material in the production of value-added materials such as stainless steel. Ferrochrome produced at Selous will be used to make steel at the Mvuma plant.

Tsingshan has also invested in coal for coke processing in the Hwange area of Matabeleland North province. Coking coal will come from the Dinson Colliery in Hwange.

When Zimbabwe President Emmerson Mnangagwa toured the construction site in March, he said there was a shift taking place as the nation moved from being an importer of steel to an exporter.

“It’s pleasing that our iron ore will be fully explored and value-added locally. We would buy iron from South Africa and Kenya and now we will export to them,” Mnangagwa said.

“This iron ore was always there lying idle; we did not know. We would wonder why certain rocks are heavy and we would even build our foundations for houses with iron ore. We are now using iron ore to help us build our nation.”

Last year, Disco signed a deal with the landlocked African nation on the construction and refurbishment of a 1,000km-long railway line so that the company’s products could be transported to Beira, Mozambique, on the east coast of Africa, for export.

“Once we start production, we will be moving a lot of exports and in large quantities to different parts of the world,” the steel producer said.

“Our project will see the construction of Gweru-Mvuma rail, refurbishment of existing infrastructure (we’ll manufacture rail slippers ourselves) and a line to reach the Indian Ocean in Mozambique carrying value-added products. Regional players are excited.”

Dosman Mangisi, chief operations officer at the Zimbabwe Institute of Foundries, termed the start of operations as “a shot in the arm” for Zimbabwe’s iron and steel industry.

“It’s a dream come true to the economy of Zimbabwe,” Mangisi said.

He said it will improve the ease of doing business in the country within the metal foundries industry due to availability of raw materials. That will have the effect of boosting downstream and upstream sectors of the Zimbabwe economy.

“This is the moment the country should enhance the retooling of the strategic sector of iron and steel and foundries for metal castings, both domestic use and export,” Mangisi said.

Many existing processing, or beneficiation, plants in Zimbabwe and other African countries, were built decades ago by European investors and are now outdated.

Mangisi welcomed investments worth millions of dollars from China, saying: “ China has become an Asian ambassador in Africa. This new milestone increases confidence in African economies.

“The advent of the Chinese, who have come with efficient technologies, has brought a great change in the beneficiation of minerals in African economies.”

Zimbabwe has struggled to shake off the economic problems stemming from Mugabe’s time in power. It has been more than two decades since the US and some European countries imposed strict sanctions on the country in response to Mugabe’s human rights abuses and the controversial forced and often violent seizure of land from white farmers.

But China has continued to bankroll major projects in the country, including hydropower dams and airports such as Robert Gabriel Mugabe International Airport in Harare and Victoria Falls International Airport. Chinese firm Shanghai Construction Group built a US$140 million parliament funded by China as “a gift to the people of Zimbabwe”.

Zimbabwe has also emerged as a major source of lithium, an essential raw material for the batteries that power electric vehicles.

Chinese companies, including Zhejiang Huayou Cobalt, Sinomine Resource Group, Chengxin Lithium Group, have invested millions of dollars in the acquisition of lithium mines and more than US$1 billion into building processing plants.

China and EU agree to talks on planned electric vehicle tariffs

https://www.scmp.com/news/world/europe/article/3267679/china-and-eu-agree-talks-planned-electric-vehicle-tariffs?utm_source=rss_feed

China and the European Union have agreed to start talks on the planned imposition of tariffs on Chinese-made electric vehicles being imported into the European market, senior officials of both sides said on Saturday.

Germany’s Economy Minister Robert Habeck said he had been informed by EU commissioner Valdis Dombrovskis that there would be concrete negotiations on tariffs with China.

The confirmation came after China’s commerce ministry said its head Wang Wentao, and Dombrovskis, executive vice-president of the European Commission, had agreed to start consultations over the EU’s anti-subsidy investigation into Chinese EVs.

“This is new and surprising in that it has not been possible to enter into a concrete negotiation timetable in the last few weeks,” Habeck said in Shanghai.

He said it was a first step and many more will be necessary. “We are far from the end, but at least, it is a first step that was not possible before.”

The minister had said earlier on Saturday that the European Union’s door was open for discussions regarding EU tariffs on Chinese exports.

“What I suggested to my Chinese partners today is that the doors are open for discussions and I hope that this message was heard,” he said in his first statement in Shanghai, after meetings with Chinese officials in Beijing.

Habeck’s visit is the first by a senior European official since Brussels proposed hefty duties on imports of Chinese-made electric vehicles to combat what the EU considers excessive subsidies.

Habeck said there is time for a dialogue between the EU and China on tariff issues before the duties come into full effect in November and that he believes in open markets but that markets require a level playing field.

Proven subsidies that are intended to increase the export advantages of companies cannot be accepted, the minister said.

Another point of tension between Beijing and Berlin is China’s support for Russia in its war in Ukraine. Habeck noted Chinese trade with Russia increased more than 40 per cent last year.

Habeck said he had told Chinese officials that this was taking a toll on their economic relationship. “Circumventions of the sanctions imposed on Russia are not acceptable,” he said, adding that technical goods produced in Europe should not end up on the battlefield via other countries.

The EU’s provisional duties of up to 38.1 per cent on imported Chinese EVs are set to apply by July 4, with the investigation set to continue until November 2, when definitive duties, typically for five years, could be imposed.

“This opens a phase where negotiations are possible, discussions are important and dialogue is needed,” Habeck said.

Proposed EU tariffs on Chinese goods are not a “punishment”, Habeck told Chinese officials earlier in Beijing. “It is important to understand that these are not punitive tariffs,” he said in the first plenary session of a climate and transformation dialogue.

Countries such as the US, Brazil and Turkey had used punitive tariffs, but not the EU, he said. “Europe does things differently.”

Habeck said the European Commission had for nine months examined in detail whether Chinese companies had benefited unfairly from subsidies.

Any countervailing duty measure that results from the EU review “is not a punishment”, he said, adding that such measures were meant to compensate for the advantages granted to Chinese companies by Beijing.

Zheng Shanjie, chairman of China’s National Development and Reform Commission, responded: “We will do everything to protect Chinese companies.”

Proposed EU duties on Chinese-made EVs would hurt both sides, Zheng added. He told Habeck he hoped Germany would demonstrate leadership within the EU and “do the correct thing”.

He also denied accusations of unfair subsidies, saying the development of China’s new energy industry was the result of comprehensive advantages in technology, market and industry supply chains, fostered in fierce competition.

The industry’s growth “is the result of competition, rather than subsidies, let alone unfair competition,” Zheng said during the meeting.

After his meeting with Zheng, Habeck spoke with Chinese Commerce Minister Wang Wentao, who said he would discuss the tariffs with EU Trade Commissioner Valdis Dombrovskis on Saturday evening in a video conference.

“There’s room for manoeuvre, there’s room for discussion and I hope that this room for manoeuvre will be taken,” Habeck said.

In case the negotiations did not reach a deal, Chinese carmaker SAIC Group has designed an array of creative products in response to the threat of tariffs.

Shao Jingfeng, chief design officer of the SAIC Motor R&D Innovation Headquarters, released pictures on his Weibo social media account showing products such as skateboards, hoodies, trainers, cups, umbrellas and table tennis paddles, mainly yellow and black in colour and emblazoned with the EU emblem and the figure “38.1” – a reference to the level of the EU’s tariffs.

“What doesn’t kill you makes you stronger,” Shao wrote on Weibo.

“Let us remember 38.1.”

Will China’s third plenum bring a solution to its local fiscal woes as debts snowball?

https://www.scmp.com/economy/china-economy/article/3267548/will-chinas-third-plenum-bring-solution-its-local-fiscal-woes-debts-snowball?utm_source=rss_feed

The Communist Party of China is about to hold its much-delayed third plenum, traditionally a time for unveiling major economic strategies for the next five to 10 years. In this, the third of a six-part preview series, we look at the potential reforms to China’s fiscal policies.

On a morning in early April, when the onset of spring could feel like winter in China’s coldest region, commuters headed to work, unaware of the inconvenience that awaited.

At bus stops across Nenjiang, a northeastern rust belt city of 400,000 people in Heilongjiang province, notices proclaimed that “all urban bus routes are suspended”.

“Bus operators have suffered heavy losses due to an adjustment of the government’s bus subsidies, oil-price hikes, driver wage increases, and the falling population,” said the notice that went viral on Chinese social media.

It marked another example of a Chinese city having found itself in dire financial straits amid a post-pandemic economic slowdown, property crisis and crippling debt, with at least 20 having reported suspensions of bus services since 2022.

And even though such interruptions are quickly addressed, with local authorities vowing to step in with emergency funding, such instances are widely regarded as a sign of weakening local fiscal capabilities.

Other signs include lower wages, or even missed salary payments, among public servants and public institution workers; a sharp rise in local borrowing; and large fines for corporations.

“The government’s economic capability to enforce social and administrative governance has been greatly weakened,” said Zhou Tianyong, a professor with the Dongbei University of Finance and Economics and a former senior researcher with the Central Party School in Beijing.

“The decline in taxes and fees, either in relative or absolute terms, is the result of an economic slowdown, straining public revenues and expenditures and subsequently resulting in a weakening of economic governance capability,” he wrote on his social media account on Monday.

There are some glaring causes for these local-level fiscal dilemmas, including the pandemic-induced slowdown, as well as falling property taxes and land sales.

However, economists also point to China’s 30-year-old fiscal and taxation system, saying it allocates most of the fiscal revenue to central government coffers, and has led to a massive amount of unregulated borrowing and frenzied land sales at local levels to fund their operations and grow their economies.

“The fiscal and taxation reform 30 years ago has not been thoroughly implemented. Problems have built up to make the situation more complex, and they have reached a point that changes must be made,” said Tang Dajie, a senior researcher with the China Enterprise Institute, a Beijing-based private think tank.

“A core task is the need to redefine the [economic] relationship between the central and local governments, and to boost the local taxation system.”

Beijing had launched reforms three decades ago to recentralise fiscal revenues, and in the first year of its implementation in 1994, the central government’s fiscal revenue nearly tripled to 290.7 billion yuan, while local revenue fell by nearly a third to 231.2 billion yuan, according to the National Bureau of Statistics.

Today, a vast majority of provinces or cities have to shoulder a wide range of expenditures – including payroll for public servants, public transport operations, the construction of hospitals and schools and basic urban developments.

And many are resorting to off-budget revenue – such as from land sales and local government financing vehicles – to meet the funding gap despite having been allowed to issue municipal bonds since 2015.

The local debt piles and deteriorating credit profiles have grown so problematic that some regions have reached out to Beijing for help.

Authorities in one debt-ridden province, Guizhou, did this in an online post last year, and it was cited by several news sources before being deleted.

Late last year, China’s leaders were expected to gather for their third plenum – a critically important meeting of the Central Committee of China’s Communist Party that addresses economic challenges and serves to help chart a sustainable growth path, but the meeting was delayed.

And since Beijing announced in late April that the gathering would take place in July, expectations have been running high for leadership to offer some impactful remedies to what ails the nation’s economy.

Jia Kang, former head of the Ministry of Finance’s research institute, said that the 1994 fiscal and taxation system contributed greatly to establishing a framework of “division of economic power”, but such tax-sharing happens only between central and provincial governments.

“A major problem is that, in the past three decades, no real tax-sharing was institutionalised below the province level,” said an excerpt from one of his speeches, posted to his WeChat account in late May.

“This is a very important reason behind the current mess – the difficulties of grass-root operations, hidden liabilities, and short-sighted behaviour such as the reliance on land-sale revenue.”

Local government debt stood at 41.7 trillion yuan (US$5.75 trillion) as of April, according to the Ministry of Finance, but market institutions are nervously watching what could be a ticking debt bomb – the local implicit debt accumulated among financing vehicles, state-owned enterprises or other entities, which could be larger and more dangerous.

While tax revenues and land incomes have fallen, many municipal- and county-level governments are increasingly relying on the central government.

Transfer payments from Beijing reached a record high of 10.3 trillion yuan last year, which was only slightly less than the local fiscal revenue of 11.7 trillion yuan.

Meanwhile, non-tax income – including administrative fees, government funds, land income, fines, and confiscated assets – has continued to rise. In 2023, 16.4 per cent of China’s fiscal revenue came from non-tax items, the Ministry of Finance figures showed.

“The vertical structural imbalance between the central and local governments within the fiscal system is the root cause of constraints on the healthy and sustainable development of the fiscal system,” a government-linked think tank, the National Institution for Finance and Development (NIFD), said in a report last month.

China has yet to develop a legal framework to specify the powers of tax legislation between the state and local governments.

The State Council, China’s cabinet, has relied on written rules to regulate tax and debt collections, and local governments have been warned not to run afoul of such guidelines.

The central government takes care of expenses related to defence and diplomacy, but local governments have a growing responsibility in spending related to science and technology, as well as financial regulatory matters.

Localities also shoulder costs associated with education; culture and media; social security and employment; medical and healthcare; infrastructure; and environmental protection.

In 2023, 99.8 per cent of spending in urban and rural community affairs came from local government coffers, the NIFD said.

“Therefore, the new round of fiscal and taxation system reform should further reform the revenue and expenditure structure of central and local governments, especially the powers and expenditure responsibilities,” it suggested.

In an article published last year, former finance minister Lou Jiwei, who helped design the 1994 fiscal and tax system, listed three key tasks to tackle, including the establishment of a local tax system, resolving implicit local debt and setting up a system aligning administrative power with expenditure responsibilities.

“Property tax is the most suitable type for the local tax system,” he said, adding that pilot programmes “should be expanded as soon as the economy recovers”.

A US-style property tax had been billed as a new source of tax revenue for indebted local governments, however, it was shelved by China’s top legislature last year in the midst of a property market crisis that has sent housing prices plunging.

Lou also suggested revamping the consumption tax, by turning it into a source of revenue shared by central and local governments, however, he acknowledged the difficulty of administrative power reform.

“It involves relations between the government and the market, the government and society, as well as central and local governments, and it covers a wide field such as politics, economy, society, culture and ecological civilisation,” Lou said.

“It is a complex, systematic project.”

Xu Shanda, former deputy director of the State Administration of Taxation, has advocated for the central government to take over the costs of social security, though he said the state should be responsible for only minimum pension provisions.

“The obstacles to tax reform are similar to the obstacles to rebalancing the economy away from investment and toward consumption,” said Logan Wright, director of China markets research at the US-based Rhodium Group.

“The intent to shift the tax system will coincide with a more concerted effort to rebalance the economy – but it is not evident at present.”

In its 2021-25 development plan, Beijing outlined intentions to “gradually” raise the proportion of the so-called direct tax in its overall revenue, to improve the local tax system, to cultivate local tax sources, and to enhance the personal income tax structure.

But local fiscal conditions have been deteriorating at an accelerated pace.

In recent weeks, tax investigations by municipal governments into listed companies, including the Shanghai-listed VV Food and Beverage, resulting in some having to repay tax bills dating back 30 years, sent shock waves through business communities and illustrated how urgently the fiscal system needs to be reformed.

And while Beijing could opt to ramp up support and offer greater lifelines at the third plenum, some analysts are curbing their expectations.

“The new round of tax reform is not a major overhaul of the current tax system, but is based on the established main framework of the modern tax system,” Yue Shumin, a finance professor at Renmin University, said during a webinar in April.

“[The goal] is to ensure smooth operations and enhanced functionality, and to steadily advance the maturity and standardisation of the modern tax system.”

Other pundits are expecting low-hanging fruit, such as an expansion of the scope of personal income tax to address income inequality, or the simplification of the rates of value-added tax (VAT) – the top source of income for the Chinese government.

VAT revenue saw a year-on-year drop of 7.6 per cent to 2.58 trillion yuan (US$355 billion) in the first four months of 2024, according to government data.

China employs a three-tier system for VAT rates, and has said it would simplify to two-tiers, although the changes may reduce VAT revenue. However, such changes have yet to materialise.

VAT forms a substantial part of China’s revenue, accounting more than a third of China’s overall tax revenue, and is shared between the state and local governments.

Streamlining the collection of VAT could also help companies receive refunds quicker, and Chinese lawmakers are in the process of drafting a VAT law, with a third reading expected at the end of 2024.

Some options that have been put forward by scholars that could boost China’s tax base is a digital services tax, which could capture the rapid growth of the e-commerce industry, as well as expanding the scope for environment protection taxes to cover more areas to help reduce waste and carbon emissions.

“I don’t think that the third plenum will be able to completely solve the problems that have emerged during China’s economic and social transition in one step, but it will certainly break new ground,” said Jia, the former finance ministry researcher.

Jia added that China needs “round after round of reform” that would be difficult, but urged “patience and courage” to seize opportunities.

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