Mistral点评

• US to keep barring Chinese officials over rights concerns in Xinjiang and Tibet
• China’s exports surge, but sustainability questioned: 5 takeaways from June’s trade data
• Can US think tanks put the battle of narratives with China to rest?
• China’s midyear review: what to expect when third plenum opens, and what numbers can reveal
• Banned China love guru teaches women how to marry rich, makes US$19 million a year
• China’s ‘short-sighted’ short-selling curbs may backfire, cause long-term pain: analysts
• South China Sea: Manila sends vessel to Benham Rise. Is it just a symbolic show of force?
• South China Sea: giant ship sent near disputed shoals to show ability to ‘outlast Manila’
• Chinese truck tracker goes offline after user numbers surge in wake of cooking oil scandal
• China’s quest for overseas capital continues as investment restrictions eased in 6 cities
• U.S.-China rivalry enters a new sphere: Who can best carry a tune
• China posts record trade surplus as foreign importers rush to beat tariffs
• App that tracked fuel tankers in China used to transport cooking oil is disabled
• China lashes out at Nato’s ‘groundless accusations’ over Russia
• Philippines on tenterhooks as Beijing deploys ‘darker grey’ tactics in South China Sea
• China’s key SMEs urged to report improper fines, fees as Beijing seeks to ease hardships
• China views America’s presidential nightmare with mirth—and disquiet | China
• China’s iSpace Hyperbola-1 rocket fails soon after launch, losing 3 weather satellites
• China cartoon creator slammed for dumping adopted cat that inspired his hit movie kitty
• China capital praised by Ukraine man after e-bike stays put despite ignition key left in all day
• China’s Three Gorges Dam on flood alert as rain batters megacity Chongqing
• Confrontations in South China Sea surge, raising fears a miscalculation could lead to conflict
• Japan defence white paper says China’s military ambitions ‘greatest strategic challenge’ to the world
• China’s military honours go to PLA ship-borne pilot unit and telecoms expert
• NATO sets its sights on China
• Hungary’s Orban talks ‘peace mission’ with Trump after Ukraine, Russia and China visits
• Controversial multitalented China actor Wang Yibo lands Paris Olympic torch role
• [Sport] China hits back at Nato over Russia accusations
• China’s exports surge 8.6% in June as trade provides economic growth support
• Indonesia taps Japan, India, China expertise for free school meals as Prabowo battles cost concerns
• US professor Feng ‘Franklin’ Tao wins reversal of conviction in Trump-era China probe
• Images of China simulating attacks on US bases in Japan may bring Tokyo closer to its allies
• China flood heroes keep pregnant woman afloat for hours, one shouts ‘save my wife first’
• How a Chinese team used quantum tech to follow electrons on the superconductor trail
• Foxconn factories in China on hiring spree ahead of Apple’s AI-compatible iPhone 16 launch
• In countering China, Indo-Pacific countries rely less on US: Pentagon official for region
• Why this China analyst thinks ‘full decoupling’ is unlikely, and what gets missed in talk of reforms
• US senators introduce bill confronting China’s dominance in critical minerals
• US coastguard spots Chinese naval ships off Alaska island

US to keep barring Chinese officials over rights concerns in Xinjiang and Tibet

https://www.scmp.com/news/china/diplomacy/article/3270322/us-keep-barring-chinese-officials-over-rights-concerns-xinjiang-and-tibet?utm_source=rss_feed

The US said on Friday it would keep denying visas to Chinese officials over human rights concerns in Xinjiang, Tibet and elsewhere, vowing accountability despite a thaw in tensions between the powers.

Unlike previous high-profile actions against Chinese officials, the State Department did not identify or give a number of those who would be denied visas or specify if additional people were being blacklisted.

State Department spokesman Matthew Miller said that the US was restricting visas to current or former officials “for their involvement in repression of marginalised religious and ethnic communities”.

Beijing “has not lived up to its commitments to respect and protect human rights, as demonstrated by the ongoing genocide and crimes against humanity in Xinjiang, the erosion of fundamental freedoms in Hong Kong, persistent human rights abuses in Tibet and transnational repression around the world”, he said in a statement.

He called on China to accept recommendations in the latest UN review of its rights record, including releasing citizens “it has arbitrarily and unjustly detained”.

Under previous president Donald Trump, the US publicly named several officials who would be denied entry including Chen Quanguo, the architect of China’s hardline policies in Tibet and then Xinjiang who has since retired.

Under President Joe Biden, the US has kept up pressure on China, including by expanding restrictions on technology exports, but has also pursued dialogue to keep tensions in check.

The United States says that China is carrying out genocide against the mostly Muslim Uygur people in Xinjiang, pointing to accounts of vast detention camps, allegations strongly rejected by Beijing.

China’s exports surge, but sustainability questioned: 5 takeaways from June’s trade data

https://www.scmp.com/economy/economic-indicators/article/3270230/chinas-exports-surge-sustainability-questioned-5-takeaways-junes-trade-data?utm_source=rss_feed

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China’s exports rose by 8.6 per cent from a year earlier to US$307.85 billion in June, according to customs data released on Friday.

The reading beat the expected rise of 7.44 per cent surveyed by Chinese financial data provider Wind, and was better than the 7.6 per cent increase recorded in May.

“After accounting for changes in export prices and for seasonality, we estimate that export volumes edged up, reaching record highs,” said Zichun Huang, China economist at Capital Economics, adding that export values grew at their fastest year-on-year pace in 15 months.

Analysts at Nomura said the rise in export growth in June was partly due to a low base, and was broad-based across most of China’s major trading partners.

In the first half of 2024, China’s exports also rose by 3.6 per cent year on year.

“While the growth level does not appear too high at first glance, this has been stronger than most market participants were expecting at the start of the year,” said Lynn Song, chief economist for Greater China at ING.

China’s imports fell by 2.3 per cent from a year earlier, compared to the 1.8 per cent growth seen in May, with analysts pointing to softer domestic demand.

“In volume terms, imports also declined. It appears that the stronger government bond issuance since May has not yet fed through to increased infrastructure spending and demand for commodities – imports of industrial metals dropped back last month,” said Huang at Capital Economics.

“But we expect this to occur soon, boosting the import-intensive construction sector.”

The “surprising drop” in import growth pointed to weak domestic demand, said analysts at Nomura.

In the first half of the year, China’s imports grew by 2 per cent.

“The surprise fall in imports for June signals that China’s domestic demand may be losing some momentum and may need to find renewed strength,” said analysts at HSBC.

China’s exports to the Association of Southeast Asian Nations (Asean) rose by 15 per cent in June compared to a year earlier.

The Asean bloc “continued to see strong growth”, said Song at ING.

Shipments to the United States, meanwhile, increased by 6.6 per cent, representing a second straight month of positive growth.

Elsewhere, exports to Russia grew by 3.4 per cent year on year in June, while shipments to the EU rose by 4 per cent.

China’s June trade surplus rose to a record high of US$99.05 billion in June, compared with US$82.6 billion in May.

“The large trade surplus can provide some boost for growth figures, but with domestic demand facing ongoing headwinds, more policy support is needed,” said analysts at HSBC.

China’s trade surplus in the first half of the year stood at US$434.9 billion, according to Song at ING.

Huang at Capital Economics said he expects exports would remain robust in the near term despite increased Western tariffs.

“Tariffs from the US and EU won’t significantly impact overall exports in the short-run. They only target a small portion of Chinese exports. And their effect can be dampened through trade re-routing and exchange rate adjustments,” he said.

“Overall, we expect exports to remain a near-term tailwind to economic growth.”

Exports of motor vehicles remained largely resilient, according to analysts at Nomura, as EU anti-subsidy duties on Chinese electric vehicle imports only took effect in early July.

But Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, cautioned that “trade conflicts are getting worse”.

“Export growth continued to rise, while imports contracted year-on-year. This reflects the economic condition in China, with weak domestic demand and strong production capacity relying on exports,” he said.

“The sustainability of strong exports is a major risk for China’s economy in the second half of the year. The economy in the US is weakening.”

And despite import volumes having dropped back in June, Huang at Capital Economics said they will probably rebound as the recent reacceleration in government bond issuance should translate into increased infrastructure spending, lifting demand for industrial commodities.

Can US think tanks put the battle of narratives with China to rest?

https://www.scmp.com/opinion/china-opinion/article/3270054/can-us-think-tanks-put-battle-narratives-china-rest?utm_source=rss_feed

The New York-based foreign policy think tank known as the Council on Foreign Relations has launched a new project called the China Strategy Initiative. According to its website: “Competition with China poses a challenge unlike any the United States has faced before.” The initiative will aim to “answer the questions that go to the heart of American China strategy”.

This initiative speaks to an overriding US imperative to re-engage a battle of the narratives that can credibly unify as many as possible of its key allies in explaining exactly why China’s rise constitutes an existential threat to the globally benign status quo.

Winning the narrative battle has been pivotal to governments justifying their rule throughout recorded history, and today is no different. That is why victors always write the history books: the story is often more important than the truth.

This Council on Foreign Relations initiative is likely to be important, partly because some inconvenient truths are undermining the credibility of the US narrative. The unifying narrative that has lent authority to the US claim to global leadership since World War II seems increasingly threadbare.

Since the defeat of the Axis powers and the creation of the United Nations and other Bretton Woods Institutions, the US has worked brilliantly to generate a steady narrative justifying the “rules-based order”, which has provided a unifying story for the maintenance of peace and global prosperity. As Alexandra Homolar and Oliver Turner wrote in Oxford Academic in January, this delineated a “morally superior grouping” that “established a benign and mutually beneficial system of international organisation”.

“Overall, the [rules-based order] origin story is one of peace, stability and prosperity”, they wrote. It provided what they call “a unifying story for the maintenance of formal security alliances” that has been “dividing the world into those who belong to the community of righteous actors and those situated outside”.

This narrative has been repeated by the Biden administration, in particular by US secretary of state Antony Blinken. Recall Blinken’s 2022 speech at George Washington University: “China is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military and technological power to do it.”

He framed China as an aggressive and expansive one-party state whose “vision would move us away from the universal values that have sustained so much of the world’s progress over the past 75 years”.

This narrative persists, despite a lack of evidence of military aggression or territorial expansion that would lend it credibility. It is reinforced by claims that China is part of an “axis of evil” comprising China, Russia, Iran and North Korea, and that it is manipulating trade and investment rules with subsidies and protectionist industrial policies, intellectual property theft and “debt-trap” diplomacy.

While all of these claims are underpinned by dubiously concocted facts, and often no facts at all, this does not matter. In the battle for narrative control, the quality of the narrative counts more than the facts.

Over recent years, the US has masterfully created, fuelled and nurtured such narratives, served by think tanks, often based in Washington and well-funded by a wide range of interest groups. Some are more independent than others.

The Council on Foreign Relations is one of America’s most impressive focal points for discussion and analysis of international affairs. The leader of its China Strategy Initiative, Rush Doshi, has impeccable credentials - degrees from Princeton and Harvard and experience at the State Department and the White House. He previously served as the director of the Brookings China Strategy Initiative.

But it is unclear if the Council on Foreign Relations initiative is setting out to burnish a narrative that no longer seems to be working as well as it should, or if it will edit that narrative to make it more credible not just to China, but to a growing number of countries in the Global South that are now queuing to join supposedly unaligned bodies like the Brics or the Shanghai Cooperation Organisation.

As Vu Le Thai Hoang and Ngo Di Lan at the Diplomatic Academy of Vietnam contend, the gap between the US narrative on China and China’s own narrative is too large to not be reconciled. How will the Council on Foreign Relations initiative be able to provide better facts to underpin the charges that China constitutes an existential threat?

How willing will Doshi’s team be to examine China’s own narrative claims – that it is focused on economic recovery after a century of national humiliation, that the US is acting to “contain” China’s recovery and is meddling in China’s domestic affairs and that China’s rise is infused with mutual respect and peaceful coexistence.

In a world where actions speak louder than words, and where social media has the embarrassing capacity to scrutinise false narratives, the initiative will do great good if it can re-audit the often-specious evidence of the rules-based order, not to satisfy officials in the State Department, but to satisfy leaders across the Global South who have experience of a China different from the one described so messianically by Washington.

Perhaps Yale Law School senior fellow Stephen Roach has a point when he says there is neither a China problem nor a US problem, but a relationship problem that needs a relationship solution. I am sure he could weave a narrative for that.

China’s midyear review: what to expect when third plenum opens, and what numbers can reveal

https://www.scmp.com/economy/economic-indicators/article/3270286/chinas-midyear-review-what-expect-when-third-plenum-opens-and-what-numbers-can-reveal?utm_source=rss_feed

Like parents anxiously perusing a child’s report card after a gruelling term of learning curves, eyes that digest Beijing’s midyear economic report on Monday will react accordingly.

On the first day of the reform-centric third plenum, seeing a half-year growth rate above 5 per cent – in line with the annual target – may not be enough to widen eyes. But it would reflect China’s economic resilience and underpin Beijing’s insistence that the 2024 target of “around 5 per cent” can be met.

That is the message repeatedly relayed to investors and consumers as leadership looks to get China’s economic engine purring like it used to.

However, on the minds of many analysts is a contrasting grim reality seen through the lens of high-frequency data, proxy indicators and some official parameters – revealing structural challenges that await solutions from the nation’s leaders.

“Everyone feels that the economy has not yet bottomed out, and there is huge uncertainty about how it will touch bottom,” said Liu Yuhui, an outspoken researcher with the China Chief Economist Forum, a Shanghai-based think tank.

“People’s expectations have persistently weakened over the past three years. The triple threat – demand contraction, supply shocks and weak expectations – is still pervasive.”

While Beijing has opted not to aggressively deploy funds to stimulate consumption and shore up businesses, Liu said leadership should expand its balance sheet to get the economy on surer footing.

Li Ke’aobo, executive deputy director of Tsinghua University’s Academic Centre for Chinese Economic Practice and Thinking, also pointed to a gulf between expectations and how businesses and households actually feel on the ground.

“The actual sense of feeling and strength of growth are lower than expected, with private investment stagnating and people’s wealth shrinking,” he said at a forum last week. “Whether it be from investment returns, employment or prices, enterprises and individuals are under pressure.”

The two are among a surfeit of economists calling for more government action to address major economic challenges, including a real estate crisis and sometimes crippling levels of local-government debt.

The four-day third plenum will see around 370 Communist Party elites discuss a raft of issues revolving around the stated goal of building a high-standard socialist market economy and fostering high-quality development.

During his address at the recent “Summer Davos” in Dalian, Premier Li Qiang assured business leaders at home and abroad that the Chinese economy, which had expanded by 5.3 per cent in the first three months of the year, sustained that momentum heading into the second quarter.

Results of a recent Wind Information survey show that most analysts expect that China’s GDP grew by about 5.08 per cent in the second quarter, and 5-5.2 per cent in the first half of the year.

On Tuesday, the No 2 official also sought to inject a dose of confidence in a dialogue with entrepreneurs, proclaiming that the economy would prevail amid rising complexities.

However, the actual situation on the ground may be far less cut and dry.

In the face of tepid domestic demand, white-hot competition has snared almost all industries and suppressed business profitability, to the point that even leading industry players have voiced concerns.

Robin Zeng, founder of the world’s largest battery maker, CATL, said at a forum last month that the focus should not be on a price war, but on the value of products over their entire life cycle.

Meanwhile, lay-offs and unemployment are on the rise as the nation’s economic slowdown takes a toll on the workforce, with key players almost universally reducing headcounts and slashing salaries.

A Post review of annual reports from 23 Chinese firms – including the top five companies by market cap in real estate, internet, automotive and financial industries, as well as three prominent electric car makers – 14 had downsized their workforces in 2023 while others cut staff-related expenses.

Analysts and economists also warn that some data indicators do not bode well for consumption, credit demand, profitability and employment prospects.

Reflecting feeble credit demand from Chinese households and companies, the M2 money supply – encompassing the aggregate value of liquid assets, including currency in circulation and private deposits – saw record-low growth of 6.2 per cent in June from a year prior while falling short of an economist consensus of 6.8 per cent. The growth has been continuously trending down in recent months, according to People’s Bank of China data released on Friday.

China’s total social financing in the first half of 2024 grew by 18.1 trillion yuan, or 3.45 trillion yuan less than a year prior. New yuan loans in the first half grew by 12.46 trillion yuan, or 3.15 trillion yuan less than a year prior, the central bank said.

While profits among industrial enterprises increased by 3.4 per cent, year on year, in the first five months of the year, profit growth in May slackened to a mere 0.7 per cent, according to the National Bureau of Statistics.

Also, youth unemployment remained in double digits in May at 14.2 per cent.

But some bellwether metrics, including trade, show that economic growth still has legs. Exports surged 8.6 per cent in June from a year prior. And total trade in the first half of 2024, as measured in US dollars, was up 2.9 per cent while the trade surplus rose to US$435 billion, the most since the 1990s.

Fixed-asset investment is expected to have grown in June by 3.9 per cent, year on year, according to a Reuters poll, and retail-sales growth may come in at around 3.99 per cent, according to Wind data.

In the face of the economy’s mixed performance, more prominent experts have joined the chorus of calls for Beijing to show a greater sense of urgency through real action.

Comparing what the Chinese economy has been through in the past two to three years to a minor cold or fever, famed economist Li Daokui warned if this “minor illness” cannot be cured in time, it could worsen and become “pneumonia or heart disease”.

“One may not be able to run fast if his heart functions are impaired,” he said. “If some short-term problems are not resolved now, it will affect long-term GDP growth potential.”

To reflate the economy and, more importantly, see those growth benefits trickle down to a broader swathe of enterprises, Beijing is also being advised to be more proactive in terms of spending and bond issuances for the rest of 2024.

Zhang Bin, vice-director of the Chinese Academy of Social Sciences’ Institute of World Economics and Politics, said that deleveraging is the last thing a government should do when the economy cools down.

“There could be a stampede if the government seeks to deleverage when the private sector is already [doing so by] shedding its debt,” said Zhang, who attended a meeting held by President Xi Jinping in May to put forth policy recommendations.

China issued 1.5 trillion yuan worth of special bonds in the first half of the year, according to Shanghai Securities News, compared with the 3.9 trillion yuan approved at the parliamentary session in March, and the pace of issuance lags the corresponding period in 2023.

Zhang said weak credit demand creates a vicious circle and requires decisive actions “much bigger than expectations” to turn the tide.

Banned China love guru teaches women how to marry rich, makes US$19 million a year

https://www.scmp.com/news/people-culture/china-personalities/article/3269739/banned-china-love-guru-teaches-women-how-marry-rich-makes-us19-million-year?utm_source=rss_feed

Qu Qu is one of China’s most controversial internet celebrities and reportedly earns 142 million yuan (US$19 million) a year dishing out dating and financial advice.

Using the online alias “Ququ Big Woman”, her real name is Le Chuanqu and she has gone from singer to relationship influencer.

In August last year, she captured attention with a live-stream in which a young woman sought advice on choosing between her wealthy boyfriend and a wealthy admirer.

The woman explained that her current boyfriend, who was three years older than her, promised her a four-million-yuan bride price, but delayed payment.

Her admirer, who is 15 years older, offered a monthly allowance of 30,000 yuan (US$4,000) and a 20-million-yuan (US$2.8 million) flat in Shanghai.

Qu Qu advised the young woman to stick with her boyfriend, considering him a better long-term option.

She refers to herself as the “McKinsey of relationships” and views relationships and marriage as steps to climb on the social ladder for financial gain.

In her videos, she bluntly states: “All relationships are essentially about benefit exchanges. Everything should be used to boost my advantage and empower me.”

To navigate the sensitivities of live-streaming platforms and avoid being banned, Qu Qu has even created a unique vocabulary.

She refers to being married as “inside the fortress”, money as “rice”, pregnancy as “carrying a ball”.

The influencer reportedly earns 142 million yuan a year.

A one-on-one consultation during her live-streams costs 1,143 yuan (US$155), and one of her most popular courses called “Valuable Relationships” costs 3,580 yuan.

Private counselling packages can cost more than 10,000 yuan a month.

However, last December, her operation faced a setback when Weibo suspended her account for “repeatedly promoting unhealthy relationship views to gain attention and profiting from selling courses and conveying incorrect values”.

But she was undeterred.

Qu Qu now uses artificial intelligence techniques to promote herself and her business. She also directs customers to private channels to protect herself.

Public opinion on the so-called love guru is divided.

One supporter said: “Her approach is understandable. What’s wrong with wanting both love and money? This is a realistic society. Why shouldn’t people strive for better?”

“She has profoundly impacted me this year. I’ve learned fundamental concepts like goal orientation and leveraging everything to empower myself. Her insights into recognising a man’s true nature are invaluable. I highly recommend her,” said another.

However, one critic said: “She teaches girls to use men as cash cows and encourages competition among women. But she herself earns her living by working hard and relying on her own efforts. Isn’t that hypocritical?”

While another added: “In the competitive world of monetising beauty, the successful ones are just outliers. These wealthy men are not fools. They won’t fall for obvious schemes.”

China’s ‘short-sighted’ short-selling curbs may backfire, cause long-term pain: analysts

https://www.scmp.com/business/china-business/article/3270224/chinas-short-sighted-short-selling-curbs-may-backfire-cause-long-term-pain-analysts?utm_source=rss_feed

China’s latest move to curb short selling to prop up the flagging stock market drew scepticism about its effectiveness from market observers, with some saying the crackdown would bring only fleeting relief but has the potential to cause long-term fallout.

The new restrictions on short selling, announced on Wednesday, will drain liquidity and discourage new participants in the long term, according to KCM Trade and SPI Asset Management. Everbright Securities described the step as “short-sighted”, saying it was an overkill given the already low level of shorted positions.

“From a regulatory standpoint, tightening the screws on short selling is one way of implementing a quick fix,” said Tim Waterer, chief market analyst at KCM Trade. “However the longer-term effects are rather more murky, and such measures don’t always yield the desired consequences. While short selling activity can create volatility, it is far from the only factor influencing market sentiment and patterns. Long-term headwinds include economic slowdown, geopolitics and domestic demand challenges.”

The China Securities Regulatory Commission (CSRC) surprised the market on Wednesday night by announcing an immediate suspension of the so-called securities relending business by state-backed margin finance firm China Securities Finance – the most common mechanism used for short selling. Under the relending business, China Securities Finance borrowed stocks from institutional investors such as asset managers and insurance firms, and then lent these to brokerages on demand from short sellers.

The CSRC also boosted the margin deposit ratio for short selling to 100 per cent of the shorted stocks from 80 per cent. The ratio is 120 per cent for hedge funds. The regulator also said that it would hammer out more specific rules to slow down high-frequency algorithmic trading.

The CSI 300 Index rose 0.1 per cent on Friday, extending a 1.1 per cent gain on Thursday for the biggest rise in two months.

“As securities relending is the key mechanism for short selling, we think its suspension could support short-term market sentiment, particularly that of retail investors, as the move sends the signal that the regulator is determined to keep market valuations stable,” Everbright Securities said in a report on Thursday.

The clampdown on short selling came as a rebound in Chinese stocks, spurred by state intervention, stalled, with investors locking in profits amid lacklustre economic data and a lack of more forceful growth-bolstering measures. The CSI 300 has dropped almost 6 per cent from this year’s high in May.

Increased scrutiny of short selling is part of a drive by the CSRC to arrest the decline in the market and restore investor confidence. Over the past year, the watchdog has banned the expansion of securities relending, barred big shareholders from lending locked-up shares for short selling and required brokerages to strengthen customer management.

As a result, the outstanding value of shorted stocks on the mainland’s exchanges declined 66 per cent from a year earlier to 31.8 billion yuan (US$4.38 billion) as of Thursday, Bloomberg data shows. The value of the stocks that are shorted daily, as a percentage of average overall transactions, dropped to 0.2 per cent from 0.7 per cent, according to the CSRC.

“The move has limited immediate material impact given its small scale,” Everbright Securities said in the report.

The curb may also backfire by discouraging investors from identifying poorly run and fraudulent listed companies, defying the goal set by the State Council of improving the quality of publicly traded companies, the brokerage said.

“It’s like a temporary balm that soothes the nerves,” said Stephen Innes, a managing director at SPI Asset Management in Bangkok. “But heavy-handed interventions can spook investors and suck the life out of trading volumes. For market-efficiency purists, it feels like another chapter in the saga of China assets. Maybe not a dramatic death, but definitely a drift towards the murky waters.”

South China Sea: Manila sends vessel to Benham Rise. Is it just a symbolic show of force?

https://www.scmp.com/week-asia/politics/article/3270233/south-china-sea-manila-sends-vessel-benham-rise-it-just-symbolic-show-force?utm_source=rss_feed

The Philippines’ deployment of a flagship frigate to the resource-rich Benham Rise near the South China Sea marks a show of force to assert sovereign rights, but the move is expected to fall short as Manila lacks the ability to maintain a naval presence across the contested waters.

Following recent sightings of Chinese vessels near the region, Manila on Tuesday deployed the BRP Jose Rizal to the region, three days before the eighth anniversary of the 2016 Hague tribunal ruling on maritime territory in Manila’s favour.

Benham Rise is a resource-rich shelf on the Philippines’ east coast that is part of its exclusive economic zone. The United Nations in 2021 declared Benham Rise as part of the Philippines’ continental shelf.

Abdul Rahman Yaacob, a research fellow with the Southeast Asia programme at Australian think tank Lowy Institute, said the Philippines had to do more than conduct symbolic deployments, noting a constant naval presence was needed across the economic zone and archipelago, especially in the contested area.

“Diplomacy and deterrence are critical to managing tension and disputes. The current strategy of assertive maritime transparency is useful, but to a certain extent only. Publishing China’s aggressive actions in the disputed areas enables the narrative that China is the big bully [and] influences like-minded countries’ perceptions of China,” he said.

Yaacob, also a PhD candidate at Australian National University’s National Security College, noted Manila’s surface fleet had limited missile capabilities and was ill-equipped to conduct modern naval warfare.

“The latest inclusion of two missile frigates does not bolster the Philippine navy’s capabilities significantly. These frigates will only be fully armed with surface-to-surface and surface-to-air missiles,” he said, referring to the BRP Jose Rizal and BRP Antonio Luna.

“Given the urgency of threats to its maritime interests and financial constraints in the immediate and medium term, the Philippine navy should first strengthen its surface fleet, both in terms of numbers and capabilities.”

Diplomacy is critical, Yaacob says, suggesting that the Philippines and China maintain negotiations and ensure open diplomatic channels.

“The Philippines could also conduct a diplomatic campaign to convince other Asean members regarding the South China Sea disputes. ”

The BRP Jose Rizal deployment reflected Manila’s resolve to defend the country’s rights in the West Philippine Sea and Benham Rise, said political analyst Sherwin Ona, an associate professor of political science at Manila’s De La Salle University.

“It is a way to show our people and the world that even if we are a small country, we value our rights and we have the courage to express it,” Ona said.

Manila and Beijing have been locked in an increasingly contentious territorial row in the South China Sea for several months, with the latest skirmish on June 17 between the Philippine navy and Chinese coastguard at the disputed Second Thomas Shoal.

Several Filipino sailors were injured during the incident, with one suffering a severed thumb. The Philippine side was attempting to resupply troops stationed on a military outpost at the shoal.

Joshua Espeña, a resident fellow and vice-president of the International Development and Security Cooperation think tank, said Manila’s deployment to Benham Rise was long overdue and that China might have already exploited the waters, after two Chinese research ships entered the region in March.

“China remains firm in its repudiation of [The Hague’s 2016] ruling. However, enforcement is possible only under the terms of deterrence. That will not happen overnight. It will take so much resources and political capital. The Philippines must project real, and not just symbolic, capability,” Espeña said.

Manila took Beijing to the international court in 2012 after alleging that Chinese naval vessels obstructed its entry to Scarborough Shoal, which China claims and calls Huangyan Island.

In 2016, a UN arbitration court ruled in favour of the Philippines, finding China’s claims to historic and economic rights in most of the South China Sea had no legal basis, a ruling China has rejected.

South China Sea: giant ship sent near disputed shoals to show ability to ‘outlast Manila’

https://www.scmp.com/news/china/diplomacy/article/3270209/south-china-sea-giant-ship-sent-near-disputed-shoals-show-ability-outlast-manila?utm_source=rss_feed

China’s most advanced civilian patrol vessel was spotted in the South China Sea and appeared at one time to be headed towards reefs also claimed by the Philippines, open source data showed.

According to global shipping trackers MarineTraffic, the Haixun 09 was patrolling in waters east of Vietnam earlier this week before it turned to sail towards the Philippine west coast – close to the disputed Spratly Islands, claimed by China as the Nansha Islands.

But on Friday, the 10,700-tonne vessel was detected as sailing north, potentially back to home shores, following a U-turn away from the disputed area.

A maritime observer read the move as Beijing’s latest effort to showcase its ability to “outlast Manila” in the contested South China Sea after deploying the world’s largest coastguard vessel there earlier this month.

However, he said neither side was expected to provoke further conflict after a string of confrontations over the past year.

On Thursday, the Huaxun 09 was spotted nearest to the western Philippine island of Palawan, and apparently closing in on the Spratlys – which include the Second Thomas Shoal, known as Renai Jiao in China, and the Sabina Shoal.

Both shoals have seen tense stand-offs between the Chinese and Philippine coastguard in recent months.

According to Collin Koh, a senior fellow at the S. Rajaratnam School of International Studies in Singapore, the deployment of the vessel aimed to demonstrate Beijing’s ability to “outlast Manila” in the long-running dispute, “by showing it has more of these much larger vessels”.

The Huaxun 09’s patrol followed close on the heels of the latest confrontation with the Philippines involving the world’s largest coastguard vessel near the Sabina Shoal.

The 12,000-tonne CCG-5901 was sent to patrol the seas near the Sabina Shoal where the Philippine BRP Teresa Magbanua was also active.

The Philippines said it would not move its vessel despite intimidation from the Chinese “monster ship”, which is around five times its size.

The 165-metre (541 feet) Haixun 09 is equipped with water cannons, an aerial tracking system, medical rescue capabilities and a helicopter landing deck, according to official data.

But, unlike the CCG-5901, it is not part of the China Coast Guard (CCG), a quasi-military force often referred to as “China’s second navy”.

The Haixun 09 was commissioned in 2021 by the China Maritime Safety Administration (MSA) of the southern province of Guangdong. Its publicly acknowledged patrols have hitherto been largely limited to waters off the southern provinces, including Guangdong, Guangxi and Hainan.

“The MSA usually doesn’t conduct sovereignty assertion patrols with such regularity as the CCG, which remains the workhorse in this effort,” Koh said.

He said that the force only has one other vessel on a par with the CCG-5901 and because “they are also expensive to build, operate, and maintain, it is not feasible to rely on this limited force”.

Koh also said this type of muscle-flexing would continue but neither side intended to scale up the confrontation.

“There’s not likely going to be an escalation though, but we can expect this face-off between the rival maritime forces to persist for quite a while. Ultimately, none of the concerned parties at present – China, the Philippines, and the US – is interested in provoking conflict.”

The United States last month reiterated its “ironclad” commitment to the Philippines under a 1951 mutual defence treaty citing “China’s dangerous and escalatory actions”.

But despite months of confrontations, China and the Philippines earlier this month agreed to keep talking to ease maritime tensions.

Song Zhongping, a former PLA instructor, expects Beijing to build even more powerful ships to continue South China Sea patrol missions.

“The construction tonnage of China’s maritime patrol vessels is getting bigger and bigger because China’s maritime territory is very large and the entire South China Sea is a big span, so these large maritime patrol vessels are increasing their tonnage to enhance the control capability of maritime territory in the South China Sea,” he said.

“Previously, China’s ability to control the sea was weak. That’s why a large number of islands and reefs have been occupied by other countries and regions, so our ability to manage and control the sea should be improved.”

Beijing claims almost the whole of the South China Sea under what it calls its “historic nine-dash line”, claims contested by Vietnam, Malaysia and Brunei as well as the Philippines.

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Chinese truck tracker goes offline after user numbers surge in wake of cooking oil scandal

https://www.scmp.com/news/china/politics/article/3270255/chinese-truck-tracker-goes-offline-after-user-numbers-surge-wake-cooking-oil-scandal?utm_source=rss_feed

A Chinese web platform tracking truck movements has stopped sharing information after visitor numbers surged in the wake of the cooking oil scandal.

The platform, Fahuobang, had a feature that allows users to track the routes taken by trucks over the previous six months, but it went down earlier this week and as of Friday afternoon it was still unavailable.

On Thursday, its customer service told 21st Century Business Herald that the function is undergoing maintenance ahead of an upgrade and it was not known when it would be restored.

The Post’s calls to the same service line went unanswered.

The site was designed primarily for logistics firms and the mobile app allowed cargo owners to pay to track a specific truck.

But this week it saw visitor numbers spiking as members of the public started trying to follow the routes taken by trucks alleged to have been used to transport both fuel and cooking.

The app began to restrict tracking queries on Tuesday, before taking down the function the following day, according to 21st Century Business Herald.

Last week The Beijing News, a state-backed newspaper, said it was an “open secret” in the industry that the same tankers were being used for both fuel and food deliveries, including cooking oil, and the vehicles did not get cleaned between deliveries to save money.

It named a subsidiary of state stockpiler Sinograin, and the Hopefull Grain and Oil Group, a private firm, as two of the companies affected.

On Tuesday, an influencer known as Gaojianli, who has 190,000 followers on the video streaming site Bilibili, used Fahuobang to track the movements of one of the trucks involved.

The site’s suspension generated further public suspicion as discussions started trending on social media platform Weibo.

Hu Xijin, an outspoken commentator and former editor-in-chief of the nationalist newspaper Global Times, wrote on Weibo: “If the feature was removed due to external demands and interventions, regardless of who made these demands and interventions, and regardless of their intentions, the actual effect is damaging trust in our society, and, ultimately, it is official credibility that will suffer the most.”

Gaojianli’s video showed that since March the vehicle in question had visited several provinces carrying cargoes that included chemical oils, vegetable oils and animal feed.

One of the routes shows that the vehicle collected a cargo of soybean oil from Sinograin’s subsidiary China Grain Reserves Oil and Fat (Tianjin) in the northern port city and delivered it to a food processing firm in Hanzhong, a city in the northwest province of Shaanxi.

The food processing firm Mianxian Xinli Oil Company said it was a “victim”, adding that the cargo in question had been sealed and stored on July 3 in the wake of an investigation by the local authorities.

A local vocational school confirmed that the company was a supplier and it is waiting for the results of the investigation, domestic media outlet Caixin reported.

Public records also show that the company had previously supplied a local university and public service providers for vulnerable groups.

Sinograin and the Hopefull Grain and Oil Group have not confirmed or denied the details of The Beijing News report but have said they are conducting their own investigations into the report.

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China’s quest for overseas capital continues as investment restrictions eased in 6 cities

https://www.scmp.com/economy/china-economy/article/3270256/chinas-quest-overseas-capital-continues-investment-restrictions-eased-6-cities?utm_source=rss_feed

China’s State Council has relaxed restrictions on foreign participation in the service sector for six Chinese cities – including regional powerhouses Guangzhou and Hangzhou – in a pilot programme keeping with Beijing’s wider efforts to appeal to overseas capital, stimulate economic activity and boost growth.

A statement, issued on Thursday by the national cabinet, said the government will adjust certain rules related to the management and entry of foreign entities into designated non-profit organisations, travel agencies and entertainment. The other cities included in the plan – all capitals of their respective provinces – are Shenyang, Nanjing, Chengdu and Wuhan.

Beijing has ramped up its efforts to entice foreign investment in recent months, with local governments introducing a number of incentives to induce inflows from overseas. Official figures from the Ministry of Commerce show the country’s foreign direct investment dropped 28.2 per cent in the first five months of 2024 to US$57.94 billion.

“This is a welcome step in the right direction of opening up services to foreign investment, [but] they are piecemeal measures,” said Wang Zichen, a research fellow at the Beijing-based Centre for China and Globalisation think tank.

“China could use more ambition in this regard, as services have proved to be the biggest job creators compared to the much-vaunted manufacturing.”

The country’s gross domestic product data for the second quarter is expected to be released next Monday, coinciding with the start of the third plenum of the Communist Party’s Central Committee. The long-awaited conclave will reveal the priorities of China’s leadership, and their outlook on overall economic development for the coming years.

Peng Peng, executive chairman of the Guangzhou-based think tank the Guangdong Society of Reform, added that growth in the service sector can increase consumption and the relaxation on rules around entertainment should be attractive to investors based in Hong Kong.

According to the council’s statement, adjustments to rules on setting up entertainment venues and the management of performances will be made in Nanjing, Hangzhou, Wuhan, Guangzhou and Chengdu – with northeastern metropolis Shenyang not included.

“Any unproven concern, for example over controversial shows or performances that could create problems in China, must be overridden by economic development as the No 1 priority,” Wang said.

Other industries included in the easing of restrictions included non-profit medical and elder care institutions, travel, telecommunications and social surveys. Most still maintain some statutory limitations – for instance, the adjusted rules on social surveys mandate a minimum shareholding ratio of 67 per cent for Chinese nationals.

“Among the sectors covered are …[what] China and its consumers desire but are in short supply,” Wang said. “They are also where foreign investors’ interest and China’s talent and experience converge, creating potential for a win-win-win [scenario].”

Peng said the way specific business behaviours change will depend on the actual policies, but competition between these pilot cities could activate “hidden possibilities”.

U.S.-China rivalry enters a new sphere: Who can best carry a tune

https://www.washingtonpost.com/world/2024/07/11/china-singer-united-states-adam-lambert/2024-06-25T03:30:01.181Z

American pop star Adam Lambert toned down his flamboyant look to appear on one of China’s biggest music shows: His nail polish was removed, his makeup toned down and his suit covered his tattoos.

In a packed television studio in the central Chinese city of Changsha, a silver-haired Lambert belted out “Whataya Want From Me,” one of his best-known songs, as the audience, which included several Chinese pop idols, sang along at full volume.

The Chinese contestants on Singer 2024, however, looked less excited when the camera cut to backstage. Lambert was showing them up with his pitch-perfect live performance, and if Lambert won, one of them stood to be eliminated.

Some viewers joked on social media that Lambert had come to start a “bloodbath” and teach China’s music industry a lesson.

Singer 2024 is a Eurovision-style singing competition where the performers are rated by a jury of 1,000 judges, both Chinese and international.

It positions itself as a “truly international music stage” that showcases diverse styles and facilitates cultural exchanges, according to Zhang Danyang, executive director of the program. This fits into top leader Xi Jinping’s call to promote mutual learning among civilizations and to strengthen people-to-people ties between China and the United States.

But that ambition sometimes goes awry and even a music show can turn into a geopolitical showdown between East and West.

Chinese audiences are used to a high level of lip-syncing and auto-tuning in their “live” performances. Singers on the state broadcaster’s must-watch Spring Festival gala have long been accused of lip-syncing on the show and a hit musical in 2019 was found to have played a prerecorded tape for the leading actress who got sick.

Chinese regulations penalize lip-syncing in ticketed concerts and other commercial performances, but they don’t apply to TV and web shows.

That made Singer 2024 a rarity because all its performances are live and unedited, and established artists vie to be the best live performer. This has won approval from viewers and reviewers: the first episode alone garnered 135 million views in 24 hours after its premiere, sending the shares of the parent company soaring.

The show’s decision to go live is “the right thing to do” and has “raised the bar” for other Chinese shows, said Chinese-Canadian music producer JKAI (Jay-Kai), who joined remotely as an international jury member for the first episode. “In previous years, none of it was like really this live.”

The show features seven competitors — four Chinese, one Taiwanese, one American and one Moroccan-Canadian — and one-off guest performers like Lambert. A producer for the show said many Chinese artists they approached didn’t have the “capability” and “guts” to sing live.

View this post on Instagram

A post shared by Chante Moore (@iamchantemoore)

The American contestant is Chanté Moore, a 57-year-old R&B singer from San Francisco. Moore “exudes the kind of ease, freedom and genuineness that you don’t see very often here,” said Celeste Hua, a 30-year-old resident in Shanghai.

Hua became a fan after Moore performed “If I Ain’t Got You,” by Alicia Keys with a flex: she added some Mariah Carey-style high notes into her powerful rendition.

As if to show she was aware of her vocal superiority, Moore said in a widely circulated behind-the-scenes interview that she thought she was joining the show as a judge, not a singer.

The other Westerner, Faouzia, a 24-year-old from Canada with Moroccan heritage, has gained a loyal following for her use of opera skills and Arabic music elements in pop songs. Moore and Faouzia have consistently been in the top three.

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A post shared by faouzia (@faouzia)

The Chinese performances have not been as consistent.

Silence Wang, one of the country’s best-selling recording artists, struggled with high notes. The folksy chanting of Liang Long, the lead singer of alternative rock band Second Hand Rose, has drawn comparison to a disturbing shamanic ritual.

After a Chinese singer who has enjoyed three decades of popularity, Na Ying, delivered a relatively solid performance in the first episode, viral memes caricatured her as a one-person army besieged by foreign forces.

The lopsided nature of the contest has sparked a wave of nationalist sentiment about a show that was meant to be pure entertainment.

Music critic Zou Xiaoying wrote online that the Singer show “is no Olympics” and, “I’m not going to vote for any foreigners no matter how good they are.” “Also, are they really that good?” he asked, in a post that got 67,000 likes.

Ardent fans of the show, disappointed with the Chinese performers, have appealed to other local singers who they believe have a vocal versatility on par with Moore and Faouzia, in hope of reinforcing Team China and upholding “national honor.” More than a dozen singers expressed interest.

“I’m Chinese singer Han Hong. Send me to battle!” a People’s Liberation Army-affiliated musician with 16 million followers wrote on Weibo, tagging the official Singer account. Her post got 1.5 million likes and further ignited nationalist sentiments.

The show’s production team thanked fans for the unsolicited brainstorming and the singers who volunteered before urging everyone to focus on music, friendship and communication instead of winning.

State media outlets have also weighed in.

Elevating an entertainment topic to a level of “geopolitical fight is both misleading and not fun,” state-run Chengdu Economic Daily wrote in a commentary. The People’s Daily, the mouthpiece of the ruling Communist Party, commented that “there’s no need to overplay the rivalry” despite the Chinese and the two foreign singers being mismatched in live performance.

While “nationalism sells,” said Sara Liao, a media scholar at Penn State University, commercial television channels have to practice caution because they face “the risks of repercussion simultaneously” from the government, which decides what can air, and from public scrutiny.

The Singer show in fact has its genesis in geopolitical conflict.

It was originally called “I Am a Singer,” based on a South Korean show of the same name. But when South Korea opted in 2017 to deploy the U.S. missile defense system THAAD, an upset China banned K-pop acts and the show rebranded itself. Also in 2017, Hong Kong singer Hins Cheung was kicked off the show for allegedly supporting the independence movement, an accusation he denied.

Moore’s chances of winning grew slimmer with last week’s episode, when she came in last after her rendition of Beyoncé’s “Halo”.

But if she or Faouzia win, like when British singer Jessie J became the first international winner on the show in 2018, it would be more about their talent, voice and artistry than their fame, said Rozette, a Canadian singer and vocal coach who has been commenting on the show in her YouTube channel.

“The role of those [foreign] artists, I guess, is to be a juxtaposition, to show the different palettes from different cultures,” Rozette said in an interview. “At the end of the day, they are there to be and represent a different sound: Pop music from America might as well be world music to many Chinese ears.”

China posts record trade surplus as foreign importers rush to beat tariffs

https://www.theguardian.com/business/article/2024/jul/12/china-posts-record-trade-surplus-as-foreign-importers-rush-to-beat-tariffs

China posted a record $99bn (£76.4bn) trade surplus last month amid signs of importers bringing forward orders to beat higher tariffs on goods from the world’s second biggest economy.

The latest official figures from Beijing showed exports growing at their fastest rate in 15 months, while the weakness of China’s domestic economy resulted in falling imports.

The size of China’s trade surplus was far bigger than the $85bn expected by the financial markets and comes at a time of heightened concern in developed countries about Chinese exports.

Higher US tariffs on Chinese-made electric vehicles and other hi-tech products come into force on 1 August, while higher EU import duties on Chinese electric vehicles came into force earlier this month.

Analysts said the disparity between booming exports and sluggish imports highlighted the reliance of China’s economy on access to the west’s affluent consumers and would put pressure on Beijing to do more to stimulate domestic demand.

“This reflects the economic condition in China, with weak domestic demand and strong production capacity relying on exports,” said Zhiwei Zhang, the chief economist at Pinpoint Asset Management.

“The sustainability of strong exports is a major risk for China’s economy in the second half of the year. The economy in the US is weakening. Trade conflicts are getting worse.”

Exports grew by 8.6% year on year in June to $308bn and over the first half of 2024, China’s exports totalled $1.7tn, up by 3.6% year on year.

Auto exports rose by 18.9% in terms of value in the first half of 2024 and by 25.3% in volumes amid lower export prices.

Lynn Song, the chief China economist at ING Bank, said there was likely to be a front-loading effect before auto tariffs from the EU and US came into effect, “but tariffs could lead to a slowdown in auto exports towards the end of the year”.

Household electronics sales climbed by 14.8% in value terms but showed even faster volume growth of 24.9%.

Semiconductor exports grew by 21.6% year on year in terms of value, and by 9.5% in terms of volume. “Strong semiconductor export growth shows that China’s self-sufficiency push in tech and its pivot towards hi-tech manufacturing is starting to pay some dividends,” Song said.

Kelvin Lam, a China economist at Pantheon Macro, said there had been a pickup in Chinese exports to the US, the UK and Germany last month. “Export growth of hi-tech products, mechanical and electrical items, cars, and ships is outperforming those low value-added products that China thrived on in the 1990s.”

App that tracked fuel tankers in China used to transport cooking oil is disabled

https://www.theguardian.com/world/article/2024/jul/12/app-that-tracked-fuel-tankers-in-china-used-to-transport-cooking-oil-is-disabled

An app that allows users to track trucks across China has been disabled following a scandal in which reporters discovered that tankers used to transport fuel were also being used to transport cooking oil, without proper cleaning in between.

On Thursday, Chinese media reported that the tracking function on Shipping Help, an app used to track cargos had been disabled. The app displayed a message saying that the service was being “upgraded” and was therefore “temporarily unavailable”.

Previously, Shipping Help’s tracking function could be used by normal people and businesses to inquire about the location of specific trucks, using satellite monitors.

The app reportedly received a surge in queries this week after reports emerged about long-distance tankers used for transporting fuel being loaded up with edible oil for their return journeys, without the tankers being disinfected in between loads. The reports led to fears that oil that may be contaminated with toxic chemicals is finding its way into people’s food.

The news caused outrage in China, with the government vowing to investigate and punish rule-breakers. There are widespread concerns about food safety among the Chinese public, with many people fearing that health and safety standards are not properly enforced.

After the scandal was first reported by Beijing News, a state-run outlet, earlier this month, people started to independently track where the potentially contaminated oil ended up. Some reports suggested that the tankers delivered oil to packaging facilities run by household brand names in China, including Jinlongyu, a soya bean oil that is widely available in Chinese supermarkets. The company said that its trucks meet requirements.

There has been some surprise that a state-run outlet was allowed to publish such a damning report, given the government’s strict censorship regime. Some netizens speculated that the removal of Shipping Help’s tracking function was motivated by a desire to limit the size of the scandal.

“In the information age, data is power,” one Weibo user wrote. “However, this power sometimes makes people feel helpless. I hope that every “system upgrade” is to better serve users, not to cover up the problem”.

China lashes out at Nato’s ‘groundless accusations’ over Russia

https://www.scmp.com/news/china/diplomacy/article/3270251/china-lashes-out-natos-groundless-accusations-over-russia?utm_source=rss_feed

Foreign Minister Wang Yi said China would not accept “groundless accusations” after Nato leaders called Beijing a “decisive enabler” of Russia’s war in Ukraine.

In a phone call with his Dutch counterpart Caspar Veldkamp on Thursday, Wang urged Nato not to “incite confrontation” with China or interfere in its affairs in response to a Nato joint declaration issued after its summit in Washington.

Wang said Nato “made groundless accusations against China, which China will never accept”, according to a Chinese foreign ministry statement.

“On issues of peace and security, China is a major country with the best record in the world and has always been a force for peace and stability in the international community,” Wang said.

“China and Nato countries have different political systems and values, but this should not be a reason for Nato to incite confrontation with China … Nato should abide by its duties and not interfere in Asia-Pacific affairs, interfere in China’s internal affairs, and not challenge China’s legitimate rights and interests.”

He said China was willing to maintain contact with Nato on the basis of “equality” and “mutual respect”.

The transatlantic security alliance put on a united front against Russia and China this week. In the joint declaration, Nato leaders for the first time denounced Beijing’s support for Moscow and urged it to “cease all material and political support” for Russia.

China and Russia have remained close throughout the Ukraine war despite growing Western scrutiny of their trade and defence ties. Chinese companies have been accused of circumventing Western sanctions and supplying dual-use goods that empower Russia’s defence base.

Beijing has insisted the Western accusations have no legitimacy and that the sanctions are “one-sided” and disrupt international trade.

The Nato declaration also stressed the Indo-Pacific’s importance to Euro-Atlantic security, to which China continued to pose “systemic challenges”.

Nato Secretary General Jens Stoltenberg said the alliance would continue coordination with Indo-Pacific partners such as Australia, New Zealand, South Korea and Japan to increase deterrence against China, including through military drills and collaboration on artificial intelligence.

On Thursday, China’s foreign ministry lashed out at Nato’s efforts to boost defence ties in the region, saying it was destabilising. The ministry also accused Nato of spreading false information from the US about China and undermining China-EU relations.

Those relations have been tense over Ukraine and the bloc’s commitment to de-risk ties with China amid a large trade imbalance and growing national security concerns.

In line with EU policy and a US call to curb China’s hi-tech development, the Netherlands has restricted exports of the lithography machines used for chipmaking. Dutch firm ASML is the world’s top producer of the machines.

During Thursday’s phone call with the Dutch foreign minister, Wang said Beijing believed the Netherlands would help to promote an objective and rational view of China in the EU.

“China supports the integration process of Europe, supports the development and growth of the EU, and its adherence to strategic autonomy,” Wang said.

“The Netherlands was founded on trade and has always supported free trade. China is willing to strengthen cooperation with the Netherlands to jointly maintain the stability of the global production and supply chain.”

Veldkamp said the Netherlands did not want to decouple from China, one of its major trade partners in Asia, and supported constructive relations between China and the EU, according to the Chinese foreign ministry readout.

The Dutch foreign minister has been in the job for less than two weeks. Veldkamp was sworn in on July 2 as part of a right-wing coalition cabinet headed by new Prime Minister Dick Schoof.

Schoof took over from Mark Rutte, who has been tapped as the next Nato secretary general.

During Rutte’s 14 years in power, the Netherlands increased military activities in the Indo-Pacific, including sending warships and aircraft to the region. In June, the Dutch defence ministry said its frigate was approached by Chinese military aircraft in an “unsafe” manner over the East China Sea, where China has a territorial dispute with Japan. China said its operation was a warning over “intrusion” into its territory.

Separately on Thursday, China and South Korea held their first export control dialogue in Beijing, a mechanism set up during a trilateral summit with Japan in May.

South Korea has also been urged by the US to restrict exports of chipmaking equipment and technologies to China, and Washington reportedly continued this push with allies at this week’s Nato gathering.

US President Joe Biden met South Korean leader Yoon Suk-yeol on Thursday on the sidelines of the summit. Biden also met leaders of America’s key Indo-Pacific partners – South Korea, Japan, New Zealand and Australia – to discuss China, North Korea and other regional security issues.

Philippines on tenterhooks as Beijing deploys ‘darker grey’ tactics in South China Sea

https://www.scmp.com/week-asia/politics/article/3270237/philippines-tenterhooks-china-deploys-darker-grey-tactics-south-china-sea?utm_source=rss_feed

Recent skirmishes in the disputed South China Sea show that Beijing has begun deploying “darker grey” tactics, analysts say, taking more aggressive actions without crossing the threshold for armed conflict.

Observers point to the June 17 clash between China coastguard (CCG) personnel and Philippine Navy officers at the Second Thomas Shoal, which led to a Filipino officer losing a thumb, as a pivotal turning point in the conflict between Manila and Beijing over their overlapping maritime claims.

“China has indeed been evolving its grey zone actions. We are seeing more tactics being used, such as blocking supply missions and a greater willingness to engage in direct confrontations as evidenced by the June 17 incident in Ayungin Shoal,” Dindo Manhit, president of the Stratbase ADR Institute think tank, told This Week in Asia, referring to Manila’s term for the Second Thomas Shoal.

Defence analyst V.K. Parada said the incident was the first recorded instance of Chinese personnel deliberately boarding a commissioned Filipino vessel, unlike previous stand-offs between both countries.

“They seized the supplies and firearms aboard and threatened Navy personnel aboard with melee weapons – like pirates,” Parada said. The Filipino officer’s injury was the most serious incident since the Philippines began its resupply missions to the grounded BRP Sierra Madre vessel on the Second Thomas Shoal, he added.

Observers pointed to more aggressive manoeuvres from the CCG and Beijing’s maritime militia.

Manila has accused the CCG of blocking its supply missions and delaying the provision of humanitarian aid, such as the rescue of injured Filipino fishermen whose boat engine exploded near Scarborough Shoal on June 29, and the evacuation of a sick sailor aboard the BRP Sierra Madre on July 7.

Earlier this month, Beijing anchored its 165-metre coastguard ship, dubbed “The Monster”, near the Sabina Shoal in the Spratly Islands, 130km off the coast of the Philippines’ Palawan province.

In addition to its “intimidation tactics” at sea, Manhit said Beijing has intensified its information warfare by rapidly publicising its narratives about the bilateral dispute to shape external perceptions.

China has long claimed most of the South China Sea as part of its territory based on “historical rights” through its so-called nine-dash line on its maps, overlapping with the Philippines’ 200-nautical mile exclusive economic zone, the latter of which is recognised under the United Nations Convention on the Law of the Sea.

In 2016, the Philippines won an arbitral ruling at The Hague, which ruled that China’s historical claims ran counter to international maritime law and lacked historical basis, a decision that Beijing has continuously rejected.

China has long deployed grey zone tactics against the Philippines and other claimants in the South China Sea to strengthen its position in the maritime region. Apart from the two countries, Malaysia, Vietnam and Brunei also claim parts of the disputed waters.

Long-simmering tensions between the Philippines and China have threatened to boil over, with Manila taking a harder stance under President Ferdinand Marcos Jnr, a stark departure from the Beijing-friendly foreign policy of his predecessor Rodrigo Duterte.

“When the Philippines refuses to acknowledge what China believes to be the truth, it [Beijing] punishes the former through darker grey zone tactics. Some notable examples are seizing airlift supplies, violent boarding of rafts and ramming. I’d say this becomes much more dangerous but calculated on the Chinese side than water cannons and laser tagging [in previous incidents],” said Joshua Espeña, vice president of the International Development and Security Cooperation.

China’s increasingly assertive stance in the West Philippine Sea – Manila’s term for an area of the South China Sea that includes its exclusive economic zone – is not surprising as it is aimed at testing the Philippines’ defence pacts with other countries, notably its mutual defence treaty (MDT) with the United States, analysts say.

Manila and Tokyo signed a reciprocal access agreement this week to enable both countries’ forces to enter each other’s territory for bilateral military exercises.

Despite experiencing some backlash, China has not suffered significant damage to its reputation as Southeast Asian countries have taken a “soft stance” on the territorial dispute, said Matteo Piasentini, a lecturer at the University of the Philippines’ political science department.

“The Philippines has [since firmed up its tone] and has been very vocal by setting red lines and mentioning the MDT on multiple occasions. This prompted China to test Manila’s resolve through escalation,” Piasentini said.

Potential ‘slippery slope’

Analysts say China’s evolving grey zone tactics reflect the country’s growing confidence in asserting its claims and its intent to alter the status quo in the region.

Marcos Jnr’s comment in May that Manila and its allies would respond “if a Filipino citizen is killed by a wilful act” was a strategic misstep as he had revealed his hand to Beijing, Parada said.

“Demarcating the threshold for invoking the MDT means that Beijing simply has to ‘lower the goalposts’ and continue escalation until it reaches just a hair’s breadth of war or casualties,” he said.

While the Philippines and China committed themselves to de-escalating tensions at a bilateral meeting in Manila earlier this month, whether this would be reflected on the ground remains to be seen, analysts say.

“The next resupply mission to Ayungin Shoal can offer a glimpse of whether the meeting was a success in avoiding another violent episode,” said Lucio Blanco Pitlo III, a research fellow at the Asia-Pacific Pathways to Progress Foundation.

As Chinese vessels remain present and assertive in the South China Sea, the Philippines could find itself on a “slippery slope” to maintain its “high ground”, Parada said.

“[China is maintaining] below the threshold of armed conflict – enough to intimidate and injure but not necessarily lead to loss of life. The goal is to apply constant yet gradual pressure against the other party and force it to make a mistake.”

Parada added that China’s tactics were similar to those it has used against other rivals, such as its border clashes with India in 2020 and 2021.

The Philippines is finding itself in a tight spot as it seeks to de-escalate tensions against China, according to Parada.

While the country has refused help from the US for its resupply missions to the Second Thomas Shoal, it also has to assuage Filipinos’ fears over the South China Sea, said Parada, who called for a fundamental shift in Manila’s response.

“That means establishing clear rules of engagement that don’t compromise the lives of our servicemen, finding new ways of conducting resupply missions at Ayungin Shoal and figuring out what exactly our end goal is in the South China Sea.”

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China’s key SMEs urged to report improper fines, fees as Beijing seeks to ease hardships

https://www.scmp.com/economy/china-economy/article/3270218/chinas-key-smes-urged-report-improper-fines-fees-beijing-seeks-ease-hardships?utm_source=rss_feed

China’s industry ministry will seek to hunt out inappropriate fines and biased administrative fees to reduce the burden on companies and promote the development of small and medium-sized enterprises (SMEs) as Beijing seeks to offer more support to the key sector.

The Ministry of Industry and Information Technology would gather public information from Thursday to July 26 on problems faced by businesses, such as arbitrary fees, fines and government-mandated service provision by businesses, it said on Thursday.

The ministry is also soliciting public complaints about local governments defaulting on corporate debts and irregularities in the enforcement and inspection of businesses.

The investigation, which is dedicated to promoting new industrialisation, reducing burdens on enterprises and supporting the development of SMEs, offers a complaints platform and encourages business owners owed money by authorities, institutions and large enterprises to lodge complaints.

The announcement came as China seeks to revive its private sector, which remains low in confidence after Beijing’s crackdown on the internet and off-campus education in 2021, with consumer spending recovering slowly.

With the property downturn having reduced the incomes of local governments having relied heavily on land revenues, some have sought to increase their declining revenues by illegally fining private companies.

Bazhou city in the northern Hebei province imposed an average of 26,400 yuan (US$3,633) in fines and arbitrary fees on 2,547 enterprises and individual businesses in the fourth quarter of 2021, amounting to 80 times the total amount of fines imposed on enterprises in the first three quarters, according to the Shanghai-based The Paper.

After publicly criticising Bazhou, China’s cabinet has repeatedly issued policies to strictly prohibit local governments from illegally charging SMEs and self-employed enterprises in the past two years.

The industry ministry would focus on supervising the implementation of structural tax and fee reduction policies targeting private firms, including in transport and logistics, water, electricity, gas, heating, finance and intermediary services involving charges to enterprises, it said.

In addition, the ministry plans to monitor the progress of the supply chain, including maintaining the share of the manufacturing sector, improving the resilience and security of the industrial supply chain and pushing the renewal of equipment and technological upgrading in the industrial sector.

The ministry also vowed to investigate and monitor government support for SMEs, including the provision of services, alleviation of difficulties in financing and clearing outstanding debts.

Beijing is striving to improve the business environment for SMEs, as they contribute around 50 per cent of tax income, 60 per cent of gross domestic product, 70 per cent of technological innovation and 80 per cent of jobs.

China views America’s presidential nightmare with mirth—and disquiet | China

https://www.economist.com/china/2024/07/11/china-views-americas-presidential-nightmare-with-mirth-and-disquiet

Chinese officials scorn President Joe Biden’s view that the world is engaged in a “battle between democracy and autocracy”. In their view this is dangerous cold-war talk. But they are tough fighters themselves, ever keen to sow misgivings at home and abroad about Western democracy’s failings. The weaknesses revealed by America’s presidential contest and, in particular, the debate between Mr Biden and Donald Trump on June 27th may help their case. The Communist Party’s Schadenfreude, though, is mixed with apprehension.

Unlike Russia’s president, Vladimir Putin, who was said to be asleep during the encounter (it began at 4am in Moscow), China’s leader, Xi Jinping, was about to deliver a speech on Chinese diplomacy in Beijing (it was 9am there) as the debate began. He was in full flow—reading confidently from a script—as the befuddled American president struggled against his waffling, truth-dodging rival. Mr Xi did not mention America, let alone the debate, but took a swipe at American anxiety about China’s rise. “Every increase of China’s strength is an increase of the prospects of world peace,” he said.

Chinese netizens were quick to heap scorn on the Biden-Trump encounter. Clips showing Mr Biden’s confused and fumbling remarks circulated widely on China’s social media. “One is a ‘mentally deranged felon’ and the other is an ‘elderly narcoleptic’,” said one commenter on Weibo, an X-like platform. “Two people who are about to enter their coffins are fighting back and forth,” said another. “Western politics is truly ruptured. There’s no one left.” Posts on Weibo with tags relating to the debate gained well over 100m views and attracted thousands of comments.

China’s iSpace Hyperbola-1 rocket fails soon after launch, losing 3 weather satellites

https://www.scmp.com/news/china/science/article/3270187/chinas-ispace-hyperbola-1-rocket-fails-soon-after-launch-losing-3-weather-satellites?utm_source=rss_feed

A Chinese rocket start-up has suffered another launch failure, resulting in the loss of three satellites as part of a commercial constellation being assembled for global weather forecasting and earthquake prediction.

Hyperbola-1 – a 24-metre (79ft) high solid-fuel rocket produced by iSpace – lifted off on Thursday from the Jiuquan Satellite Launch Centre in northwestern China’s Gobi Desert at 7.40am Beijing time, the company said in a post on its official WeChat account.

“The rocket’s first, second and third stages flew normally, but the fourth stage suffered an anomaly and the launch mission ended in failure,” the company said, adding that the specific reasons for the failure would be announced as soon as possible after detailed investigations.

The relatively small Hyperbola-1, which can deliver a 300kg (661 pound) payload into a 500km (311 mile) sun-synchronous orbit, was carrying Yunyao-1 weather satellites 15, 16 and 17 for the Tianjin-based Yunyao Aerospace Technology company. The satellites did not reach orbit.

Yunyao Aerospace Technology had planned to launch nearly 40 satellites this year to complete its 90-satellite Yunyao-1 constellation by next year.

“Our constellation will break a foreign monopoly and provide high-resolution, high-precision, and all-scale weather monitoring and earthquake early warning services to Belt and Road Initiative countries,” a Yunyao Aerospace representative told Tianjin Daily in January.

In 2019, iSpace became the first private rocket company in China to reach Earth orbit with Hyperbola-1. But since then, the rocket has failed on three consecutive occasions. Problems have ranged from a first-stage steering fin being damaged by falling insulation foam, to a fuel leak in the altitude control system of the second stage.

Thursday’s launch marked Hyperbola-1’s fourth failure out of seven orbital launch attempts – an exceptionally high failure rate among rocket start-ups in China.

The company has also been working on a medium-lift, reusable rocket known as Hyperbola-3, which burns methane and liquid oxygen. In 2020, iSpace raised US$173 million in series B-round fundraising to develop the rocket.

In November, iSpace conducted a successful vertical take-off-vertical landing experiment with a Hyperbola-3 test rocket at the Jiuquan Satellite Launch Centre. The rocket reached an altitude of 178 metres during a 51-second flight, before landing safely.

The company on Thursday said it extended “deepest apologies to all friends who have continuously supported us. We are acutely aware of the importance of your expectations and trust”.

“We have promptly initiated a thorough and meticulous review process, with a rigorous, prudent and coordinated approach to ensure a comprehensive analysis of the issues, and lay a solid foundation for the success of our future missions,” it said on WeChat.

China cartoon creator slammed for dumping adopted cat that inspired his hit movie kitty

https://www.scmp.com/news/people-culture/china-personalities/article/3269891/china-cartoon-creator-slammed-dumping-adopted-cat-inspired-his-hit-movie-kitty?utm_source=rss_feed

Ahead of the sequel to a hit Chinese animated film featuring a beloved stray cat called Luo Xiaohei, the creator has been slammed for abandoning the animal that inspired the feline character.

Zhang Ping, 39, an artist known by his pen name MTJJ, rose to fame in the 2010s as one of the country’s most successful cartoonists, thanks to his animated version of the cat.

The cartoon kitty, with its huge round eyes and pointed ears, was modelled after a stray black cat Zhang adopted.

Starting in 2011, the cat became the protagonist of an animated television series and a sensation on mainland social media.

In 2019, it starred in a feature-length film that earned 315 million yuan (US$43 million) at the box office.

The success of the film led many to hail Zhang as a key figure in the revival of Chinese anime.

The film tells the story of Luo Xiaohei, whose home was destroyed leaving him to wander the streets alone. The cat encounters a human and the duo embark on a fantastic adventure together.

The film’s sequel was originally scheduled for release next year.

However, Zhang recently sparked outrage after it was discovered in an online interview he had abandoned the real-life animal that had inspired his successful animated character.

In an interview, he revealed he had “given away” the cat six months after adoption, because it was “hard to domesticate”.

“It remained wild and untrainable, so I had to let it go,” a smiling Zhang said.

“Is it doing well in another home?” the host asked.

“It’s not in another home. I released it into the wild,” Zhang replied.

He said he had created Luo Xiaohei to “commemorate” the cat after he had “returned” it to the streets.

Online observers highlighted the irony as the theme song and promotional posters of the film include the chorus, “You’ll never have to roam the streets again.”

“No more roaming? How ironic!” one person said.

Others pointed out that stray cats rarely survive after being abandoned.

“He made a fortune from the cat that probably died in winter, how ridiculous,” said another person.

“If you did not want to keep it, even secretly dropping it off at a pet hospital would have been better than abandoning it in the wild,” wrote a third.

Although the interview was released in 2019, it only recently triggered a furious reaction, probably because of his recent outspoken views.

Zhang accused the developers of a video game of sexism, which led gaming fans to scrutinise his past.

The five-year-old interview was then shared widely on social media, with the related hashtag attracting 27 million views on Weibo.

Many fans are calling for a boycott of the coming film sequel, which is currently in production.

China capital praised by Ukraine man after e-bike stays put despite ignition key left in all day

https://www.scmp.com/news/people-culture/trending-china/article/3269926/china-capital-praised-ukraine-man-after-e-bike-stays-put-despite-ignition-key-left-all-day?utm_source=rss_feed

A Ukrainian man has been left hugely impressed by the honesty of people in Beijing after he left the ignition key in his electric bike and returned 14 hours later to find it still there.

Yegor Shyshov has lived in China’s capital city for 16 years, but he continues to be in awe of how safe the city is.

On July 6, he posted a video on his Douyin account, which has 127,000 followers.

Speaking fluent Mandarin with a Beijing accent, Shyshov, 35, said he left the key in the ignition of his electric bike after he parked it at a metro station to catch a train to work at 7am.

At first he thought he had lost the key, but when he returned to the station at 9pm, he realised he had not lost it and was surprised to find it still there.

“This is Beijing. This is safety. I am so blessed,” he said.

The post attracted 33,000 likes and 4,500 comments. Some agreed with him, others said it was pure luck.

“I often forget the key on my bike. It is never stolen,” one person wrote.

“Try leaving some small items in your basket, like a cardboard box or a water bottle,” another person said, suggesting they would attract the attention of scavengers.

“My son lost his electric bike two days ago. There are still thieves out there,” said another Beijing resident.

Beijing ranked 46 out of 311 countries and cities, and third in China after Hong Kong and Shenzhen, on global internet database Numbeo’s 2024 Midyear Safety Index.

Shyshov moved to Beijing in 2008 after receiving a scholarship to study. He became an actor and television host and married a Chinese woman.

In April, he proudly showed his new permanent ID card, widely known as the “five-star card”, which is said to be one of the world’s most difficult residency permits to obtain.

Only foreigners who have made special contributions to China, have invested more than US$500,000 in the country, or who have been married to a Chinese citizen for more than five years qualify.

“China finally welcomed me. I need to pay back China,” Shyshov said in his Douyin video, which attracted 750,000 likes.

Some foreigners in China have deliberately left valuables such as a wallet or laptop in a public place to prove the country is safe and honest.

Chinese people did not fail them, and their videos all went viral.

Not all reactions were celebratory though.

One person warned: “There are good and bad people everywhere. Do not risk your fortune.”

China’s Three Gorges Dam on flood alert as rain batters megacity Chongqing

https://www.scmp.com/news/china/article/3270222/chinas-three-gorges-dam-flood-alert-rain-batters-megacity-chongqing?utm_source=rss_feed

Devastating rains struck Chongqing municipality in southwest China, while the Three Gorges Dam, one of the world’s largest dams, is on high alert for a new round of flooding.

Six people have died from the heavy rains in Chongqing’s Dianjiang county, with four of them killed by “geological disasters” that followed the rain and two who drowned as of Thursday, state broadcaster CCTV reported.

The rainfall in Dianjiang reached a record high for single-day precipitation, affecting more than 40,000 people, damaging nearly 1,800 hectares (4,448 acres) of crops, and causing direct economic losses of around 82 million yuan (US$11.3 million), CCTV said.

The Flood Control and Drought Relief Headquarters in Chongqing raised the flood emergency response to Level 3 for 14 districts and counties and the geological disaster alert to Level 3 for nine areas on Thursday. The alerts are part of a four-tier system in which Level 1 is the most severe.

“As flood preparedness and response enter a critical period, we should strengthen warnings and monitoring and timely evacuate people in areas at risk of geological disasters. It’s better to be extra careful to prevent any potential losses,” Chongqing’s mayor Hu Henghua said on Thursday.

Four counties in Chongqing experienced heavy downpours, with the most severe rainfall exceeding 250mm (9.8 inches), while 14 other counties and districts recorded precipitation ranging from torrential rain to downpours on Thursday, according to the Chongqing Hydrological Monitoring Station.

Rainfall is categorised into three levels in China, with torrential rain defined as 50-99.9mm, a downpour defined as 100-249.9mm, and rainfall of 250mm or more classified as a heavy downpour.

Due to the rain, a provincial highway collapsed in Chongqing’s Kaizhou district, disrupting traffic. Chongqing Railway Station was also affected, with 26 train trips suspended on Thursday, according to CCTV.

The inland megacity of Chongqing sits along the upper reaches of the Yangtze River.

China faces further challenges along the Yangtze River basin as the water level of the Three Gorges Dam reservoir has reached 161.1 metres (528.5 feet), the highest for any July on record, according to the Ministry of Water Resources.

The Changjiang Water Resource Commission, a department that specialises in Yangtze River flood prevention and water pollution, stated that there would be heavy rainfall in the upper reaches of the river in the next 10 days, and a new round of floods would flow into the Three Gorges Dam reservoir around July 16.

A flood with a peak flow of 45,000 cubic metres per second (1.59 million cubic feet per second) is expected to enter the reservoir on Friday, and two other significant water surges are expected in mid-July.

The commission decided to increase the reservoir’s outflow on Thursday afternoon, according to CCTV.

The commission said that future flood conditions were “highly uncertain”, and after floodwater increased in the reservoir, water levels in the Yangtze’s lower reaches would rise.

The Ministry of Water Resources announced on Thursday that the Yangtze was experiencing its second serious flood of 2024.

The river’s first serious flood of the year was announced on June 28, and by Tuesday morning the floodwater had flowed into the East China Sea, state news agency Xinhua reported.

A wide area of the middle and lower reaches of the Yangtze River were affected by the earlier flood, and provinces including Hunan, Hubei, Jiangxi and Anhui were swamped by rainstorms.

Confrontations in South China Sea surge, raising fears a miscalculation could lead to conflict

https://www.theguardian.com/world/article/2024/jul/12/south-china-sea-conflict-philippines-coast-guard

Reports of aggressive and dangerous conduct by Chinese vessels in the fiercely contested South China Sea have surged over the past 17 months, as tensions mount in one of Asia’s biggest flashpoints.

Since February 2023, the Philippines has accused China of unsafe behaviour on at least 12 occasions, often within the water of its exclusive economic zone (EEZ), according to Philippine government data compiled by the thinktank the International Institute for Strategic Studies (IISS), which tracks incidents as part of its regional Asia-Pacific Regional Security Assessment.

It comes as the Philippines marked the eight-year anniversary of a Hague tribunal ruling that overwhelmingly backed the Philippines, and rejected China’s sweeping claims over the South China Sea.

The Philippine ambassador to the United States, Jose Manuel Romualdez, told the Guardian tensions and “aggressive movements” needed to be reduced to “avoid a situation where something really major, conflict, can happen”.

On Friday, the Philippines national security adviser, Eduardo Ano, said the country would not back down. “We will continue to stand our ground and push back against coercion, interference, malign influence and other tactics that seek to jeopardise our security and stability,” Ano said.

Reported incidents include accusations China has rammed Philippine vessels, used water cannon on them, damaging their ships, deployed a military-grade laser against its coast guard, and, most recently, used knives to puncture its rubber boats.

Previous years might see fewer or more minor incidents recorded, although Meia Nouwens, senior fellow for Chinese security and defence policy and head of the China Programme at IISS, said collating data on confrontations was difficult as it was possible that some incidents were not publicly disclosed by past governments.

The frequency of encounters between Chinese and Philippine coast guard or navy personnel that involve contact is also higher than in recent years, when reports of rammings or water cannon deployment were rare, and analysts say the current tensions have risen to levels not seen over the past 10 years.

“The recent tensions have been much more physical, there’s been a lot more contact between Philippine and Chinese ships,” said Harrison Prétat, deputy director and fellow with the Asia Maritime Transparency Initiative, who added that while there have previously been spikes in tensions between Vietnam and China, the Philippines is a US treaty ally. “One factor that makes this situation perhaps even more concerning is that there is this treaty obligation of the United States to the Philippines.”

The US has pledged to defend Manila in the event of an armed attack, and as reported incidents become more frequent and more intense, there are growing concerns that a miscalculation could pull the US into direct confrontation with Beijing.

The dispute over the South China Sea is long-running and volatile, and China has for years been accused of aggressive acts against neighbouring country’s vessels.

China has repeatedly denied acting unprofessionally, saying its coast guard operates legally and with restraint. However, video and images released by the Philippines coast guard has frequently appeared to support its allegations, as has independent media reporting.

The South China Sea is one of the world’s most important trade routes, and a strategically important waterway, but it is at the centre of a fierce dispute. Beijing claims the majority of the sea through a controversial demarcation known as the nine-dash line – despite a ruling by a Hague tribunal finding such claims to be without legal basis. Its claims not only clash with those of the Philippines, but also Vietnam, Malaysia, Brunei and Taiwan.

Dangerous confrontations have mostly occurred when Philippine vessels attempt to conduct resupply missions to a small contingent of troops based at Second Thomas Shoal, a submerged reef in the Spratly Islands that sits within the Philippines’ EEZ. The soldiers are based at a rusting and dilapidated ship, BRP Sierra Madre, which was deliberately grounded at the shoal in 1999 by the Philippines to underline its claim to the shoal, and which continues to serve as an unlikely military outpost.

China has demanded the ship’s removal and argues that Manila’s resupply mission are trying to deliver construction materials to reinforce the ship.

Analysts say Beijing has essentially imposed a blockade on the Sierra Madre, which is severely degraded after more than two decades at sea, and warn China could take the shoal in the event the ship crumbles.

Romualdez said the Philippines “cannot and will not” abandon its presence at the shoal, but he added that its coast guard was committed to acting with restraint.

Deliveries had been “misconstrued as construction material”, he said, adding the purpose was not offensive in nature but intended to make the Sierra Madre safe for those who are based there. “It’s the typhoon season right now, a big typhoon can very well happen, and then our soldiers who are there can obviously be in harm’s way,” he said.

Facing China’s ‘monster’ ship

In addition to unsafe conduct, the Philippines has also accused China of wider intimidation tactics, including the anchoring of a 12,000-ton Chinese coast guard, known as “the monster”, due to its size, inside Manila’s EEZ, just 730 metres (800 yards) away from a Philippine coast guard ship at Sabina shoal. A state’s EEZ extends 370km (200 nautical miles) from the coast, and it has special rights to exploit resources and construct in this area.

In June, China also introduced a new regulation that empowers its coast guard to detain foreigners accused of trespassing, and detain them for up to 60 days without trial, a move that has created greater anxiety among Filipino fishing communities.

The Philippines has insisted it will not relent in defending its waters, however it faces a difficult decision about how to continue resupplying the Sierra Madre.

“It’s getting more and more clear that this is a blockade,” said Ray Powell, director of SeaLight, a maritime transparency project at Stanford University. “China’s got almost a semi-permanent [presence], they’ve their own small boats in and around the Sierra Madre, with a tight cordon.”

Philippine president Ferdinand Marcos said last month that if any Filipino serviceman or citizen were killed by a wilful act in the South China Sea, this would be “very, very close to what we define as an act of war, and therefore, we would respond accordingly”.

Japan defence white paper says China’s military ambitions ‘greatest strategic challenge’ to the world

https://www.scmp.com/news/asia/east-asia/article/3270181/japan-defence-white-paper-says-chinas-military-ambitions-greatest-strategic-challenge-world?utm_source=rss_feed

Joint military activities around Japan by China and Russia are of “grave concern” and North Korea poses a greater threat than ever, Tokyo’s defence ministry said on Friday.

In its annual white paper, the ministry outlined its stance on issues from tensions around Taiwan to the intensifying rivalry between Beijing and the United States.

Repeated joint sorties by Chinese and Russian ships around Japan “are clearly intended as a demonstration of force against Japan and are a grave concern from the perspective of national security,” it said.

North Korea, meanwhile, which often conducts missile tests in Japan’s direction, poses a “more grave and imminent threat to Japan’s national security than ever before”.

In previous years, the defence paper has raised the need to counter regional threats including growing Chinese military clout and a nuclear-armed North Korea.

Japan plans to double its defence spending to the Nato standard of two per cent of GDP by 2027, although the falling value of the yen may dent its purchasing power.

This year, the paper noted that Beijing regularly sends ships to areas close to disputed islands in the East China Sea – reiterating that China’s military ambitions are “the greatest strategic challenge” to Japan and the world.

It seems mainland China intends to make increased military activities around Taiwan a new normal for the region, said the paper, which also listed heightened defence risks associated with AI, cybersecurity and disinformation.

“The international community is facing its greatest trial since World War II and competition among states, especially between the US and China, and it is set to intensify,” the white paper said.

Japan is forging closer defence ties with like-minded countries in the region including Australia and South Korea, and on Monday signed a key defence pact with the Philippines to allow the deployment of troops on each other’s territory.

The Philippines and Japan are both long-time allies of the US, which has been strengthening defence ties in Asia to counter China’s growing military might and influence.

Chinese officials have accused the US of trying to create an Asia-Pacific version of Nato.

On Thursday, Japan’s top government spokesman declined to comment on a report by Kyodo News that said a Japanese destroyer had made a rare entry into China’s territorial waters this month, prompting a complaint from Beijing.

China’s military honours go to PLA ship-borne pilot unit and telecoms expert

https://www.scmp.com/news/china/military/article/3270124/chinas-military-honours-go-pla-ship-borne-pilot-unit-and-telecoms-expert?utm_source=rss_feed

Chinese President Xi Jinping has awarded merit citations to a ship-borne pilot unit of the People’s Liberation Army (PLA) and a military cyber expert, in moves seen as underlining Beijing’s defence priorities.

Xi, who is also chairman of the Central Military Commission, signed an order of commendation on Tuesday to present the PLA Navy pilot unit, Troop 92950, with a first-class merit citation, according to state news agency Xinhua.

The order also included a third-class merit citation for defence science and technology, presented to Liu Aijun, former president of a military academy specialising in telecommunications under the Army Engineering University of the PLA.

The reasons for the awards have not been made public.

Navy pilot Zhang Min, the unit chief of staff for Troop 92950, was among this year’s recipients of the China Youth May Fourth Medal – considered a top honour for Chinese aged under 40.

He became an aircraft carrier fighter pilot in 2015 and has taken part in missions aboard both the PLA Navy’s active carriers, the Liaoning and Shandong, according to WeChat posts by Zhang’s university alumni association and the PLA’s news and communication centre.

An order of commendation for military units and individuals is signed every year by the CMC chairman in recognition of their achievements.

Last year, first-class merit citations went to a nuclear submarine unit overseeing the South China Sea and an office of the CMC’s equipment development department.

This year’s awards come as China builds up its naval capabilities amid heightened regional tensions. Its third and most advanced aircraft carrier – the Fujian – began sea trials in May, and a version of its new fifth-generation fighter jet with ship-borne potential is reportedly ready for service.

The FC-31 Gyrfalcon stealth fighter, with a variant officially revealed earlier this month as the “J-31B”, is expected to complement the J-20, China’s most advanced stealth fighter.

China says the Fujian, its first domestically designed carrier, is the world’s largest conventionally powered warship. It is also the first Chinese carrier to be equipped with electromagnetic catapults, which means it will be able to fit more aircraft and launch them more quickly than the PLA’s two existing carriers.

Chinese naval and air capabilities are seen as crucial to tackling any conflict in the Taiwan Strait separating mainland China from the self-governed island of Taiwan, or around disputed islands in the South China Sea, where Chinese and Philippine vessels have clashed repeatedly over the past year.

China is also focusing more on cybersecurity and information systems as they become a key part of warfare, such as in Ukraine, with Xi ordering the PLA to be well-prepared for information-focused wars.

Inaugurating a new PLA information support force earlier this year, Xi called for the building of a “network information system” suited to modern warfare and for improved joint operations capabilities.

NATO sets its sights on China

https://www.washingtonpost.com/world/2024/07/12/nato-summit-china-ukraine/2024-07-10T15:37:07.965Z

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In Washington, as NATO’s leaders commemorated the 75th anniversary of the alliance, China readied its troops along a member state’s border. Alongside their Belarusian counterparts, Chinese forces participated in 11-day joint military exercises not far from Polish territory.

The exercises, reportedly involving a mixture of hostage rescue drills and counterterrorism training, are conspicuously timed. Speaking in a briefing last week, a senior Belarusian commander framed the maneuvers as a reaction to the “West’s aggressive foreign policy toward Belarus” — a key Russian vassal — and the strengthening of NATO’s presence in neighboring Poland. The two autocracies have never coordinated exercises on this scale before.

The moment reflects the growing place that China inhabits in NATO’s strategic outlook. A decade ago, the country was a non-factor in NATO deliberations, with the Northern Atlantic alliance focused on its traditional mission of safeguarding the territorial integrity of much of Europe and deterring the ambitions of the Kremlin. But the explosion of the war in Ukraine and the increasingly global nature of security threats — with the alliance more preoccupied by challenges in the realms of cybersecurity and space — has thrust the Asian juggernaut into the spotlight.

At this week’s summit, NATO leaders issued a joint communiqué that claimed China’s “stated ambitions and coercive policies continue to challenge our interests, security and values” and said the “deepening” Russo-Chinese alliance was working “to undercut and reshape the rules-based international order.” In remarks Wednesday, Jens Stoltenberg, outgoing NATO Secretary General, cast China as the chief “enabler” of Russia’s war in Ukraine — a reference to the transfer of dual-use goods and electronics from China that’s helping Russia supply its war machine — and warned Beijing that it “cannot have a normal relationship” with the West if it “continues to fuel the war in Europe.”

Beijing reacted angrily to the events in Washington. Chinese foreign ministry spokesman Lin Jian rehashed his government’s customary talking points at a Thursday briefing, denouncing NATO as an anachronism suffused with a “Cold War mind-set” and saying that the United States should “not come stir up trouble in the Asia-Pacific after messing up Europe.”

But China’s own frictions with countries in Asia have provoked a sharpening set of security partnerships around the region, especially among the United Stes’ closest allies. At the NATO summit, top officials from the Indo-Pacific “four” of Australia, Japan, New Zealand and South Korea convened as part of the gathering, despite not being members of the alliance.

“China is seeking to shape the world around it in ways that we’ve not really seen prior to the last decade or so and that does engage our national interests,” Richard Marles, Australia’s deputy prime minister and defense minister, told me, while also acknowledging the deep trade and economic links most Asian countries have with China.

Marles, the senior-most Australian official in attendance in Washington, pointed to the moment China and Russia signaled their “no-limits” friendship on the eve of the full-scale Russian invasion of Ukraine in 2022. “A war in Eastern Europe suddenly became deeply relevant to the Indo-Pacific,” he said, gesturing to a “connectedness” between Asia and the West that many governments “feel and see very clearly.” He added that he and his Asian counterparts have aired their concerns to China, and are simply focused on “the maintenance of a system that sees countries resolve their differences through the rule of law.”

Japanese Prime Minister Fumio Kishida has repeatedly said that the “Ukraine of today may be East Asia of tomorrow.” His government has left open the option for NATO to launch a liaison office in Tokyo — something that has more symbolic than practical relevance, but that irks Beijing, which sees the potential “NATOization” of Asia as a challenge to its rise. But nobody is actually talking about an “Asian NATO” to confront China.

“We know that NATO is the North Atlantic Treaty Organization,” a senior Japanese government official told me, speaking on the condition of anonymity. “We don’t expect any kind of physical intervention in the region, but we need strong partnership and collaboration with NATO.” The official highlighted Russia’s recent military agreements with North Korea as a reminder of developments that undermine the stability and security of both regions. The risk of China “using unilateral action to change the status quo” — a reference to Beijing’s assertiveness over Taiwan and maritime disputes elsewhere in the region — could be dented by the involvement of a broader “international coalition,” the official said.

Some analysts are wary that NATO’s increased engagement with the region will provoke China. “Even though concerns about Chinese aggression and lack of respect for international norms in arenas such as the South China Sea are steadily growing, most Asian countries tend not to perceive Beijing as an existential threat and in turn are unwilling to pick a side in the U.S.-Chinese rivalry,” wrote Mathieu Droin, Kelly Grieco and Happymon Jacob in Foreign Affairs. “Depending on the issue at hand, Asian countries may seek to work with China, the United States, neither, or both.”

The authors of the Foreign Affairs essay argue that the current atmosphere is “the worst of all worlds: it feeds fears about the alliance’s intentions and infuriates Beijing without giving Asian partners the means to further deter China.”

“Half-measures meant to counter China could end up sparking the very conflict the alliance is seeking to defuse,” the authors added.

Such a view has sympathizers within NATO. “NATO is a defense alliance … we can’t organize it into an anti-China bloc,” Hungarian foreign minister Peter Szijjarto told reporters. His boss, Prime Minister Viktor Orban, arrived in Washington after a controversial tour through Moscow and Beijing, underscoring his government’s defiance of the West’s liberal establishment.

Turkish President Recep Tayyip Erdogan also recently met Chinese President Xi Jinping at a gathering of the Shanghai Cooperation Organization, a Chinese-led Eurasian security and economic bloc that includes countries like Belarus. Numan Kurtulmus, speaker of the Turkish parliament, rejected the idea that there was any contradiction between Turkey’s membership in NATO and increased participation in the SCO.

“If we see the world from a bipolar perspective, it is a danger,” Kurtulmus told me, gesturing to the Cold War politics of the 20th century. “If you look upon the upcoming developments from the perspective of a multipolar word, it means you can develop partnerships according to the interests of both countries.”

Kurtulmus said the United States’ ignominious withdrawal from Afghanistan in 2021 signaled the end of a certain era of U.S. dominance on the world stage, a moment where Washington thought it could call all the shots. “We are in the new age, just in the beginning, but this new situation of the world system is much more in favor of creating peace,” he told me. “It shows us that no country can dominate or manipulate the world system and that we need a kind of balance of powers.”

That’s not exactly the way many lawmakers in Washington see things. At NATO’s public forum, Sen. James E. Risch (R-Idaho), an inveterate foreign policy hawk, made clear what he thought the real priorities were. “What’s going on with Russia is a warm-up for this century. China is the issue,” he said, before later adding: “The challenge for us in this century is how we all occupy this planet without killing each other.”

Hungary’s Orban talks ‘peace mission’ with Trump after Ukraine, Russia and China visits

https://www.scmp.com/news/world/united-states-canada/article/3270172/hungarys-orban-talks-peace-mission-trump-after-ukraine-russia-and-china-visits?utm_source=rss_feed

Hungarian Prime Minister Viktor Orban met with Donald Trump on Thursday and the pair discussed the “possibilities of peace”, a spokesperson for the prime minister said as he pushes for a ceasefire in Ukraine.

Trump and Orban met at Trump’s Mar-a-Lago home in Florida “as the next stop of his peace mission,” Orban’s spokesperson said. “The discussion was about the possibilities of peace”.

Nationalist leader Orban, a long-time Trump supporter, made surprise visits to Kyiv, Moscow and Beijing in the past two weeks on a self-styled “peace mission”, angering Nato allies.

In China, Orban met with President Xi Jinping, where he described China as a stabilising force amid global turbulence and praised its “constructive and important” peace initiatives.

His meeting in Moscow with Russian President Vladimir Putin in particular vexed some other Nato members, who said the trip handed legitimacy to Putin when the West wants to isolate him over his war in Ukraine.

Orban travelled to Kyiv before visiting Moscow but did not tell Ukrainian President Volodymyr Zelensky about his mission to Russia, Zelensky said, dismissing Orban’s ambition of playing the peacemaker.

“Not all the leaders can make negotiations. You need to have some power for this,” Zelensky said earlier at a news conference at the Nato summit.

White House National Security Adviser Jake Sullivan, when asked about Orban’s initiative, said Ukraine would be rightly concerned about any attempt to negotiate a peace deal without involving Kyiv.

“Whatever adventurism is being undertaken without Ukraine’s consent or support is not something that’s consistent with our policy, the foreign policy of the United States,” Sullivan said.

Orban’s self-styled peace mission has also irked many members of the European Union, whose rotating presidency Hungary took over at the start of this month.

The Hungarian embassy in Washington declined to comment on the planned meeting with Trump, which was first reported by Bloomberg.

Orban has been attending a Nato summit hosted by Democratic President Joe Biden. Hungary’s delegation voiced opposition to key Nato positions, while not blocking the alliance from taking action.

Foreign Minister Peter Szijjarto told Reuters on Wednesday that Hungary believes a second Trump presidency would boost hopes for peace in Ukraine.

Orban hoped to bring an end to the war through peace talks involving both Russia and Ukraine, according to Szijjarto.

Trump has said he would quickly end the war. He has not offered a detailed plan to achieve that, but Reuters reported last month that advisers to the former president had presented him with a plan to end the war in part by making future aid to Kyiv conditional on Ukraine joining peace talks.

In the past several months, foreign officials have regularly sought meetings with Trump and his key advisers to discuss his foreign policy should he beat Biden in the November 5 election. Polls show Trump widening his lead over Biden.

One adviser, Keith Kellogg, has met with several high-ranking foreign officials on the sidelines of the Nato summit, Reuters reported this week.

Orban appeared isolated at the opening of a Nato meeting on Ukraine on Thursday, sitting alone while other leaders talked in a huddle.

Two European diplomats told Reuters that Nato allies were frustrated with Orban’s actions around the summit, but stressed that he had not blocked the alliance from taking action on Ukraine.

Multiple EU leaders made clear Orban was not speaking for the bloc in his discussions on the war in Ukraine.

“I don’t think there’s any point in having conversations with authoritarian regimes that are violating international law,” said Finnish President Alexander Stubb.

Hungary also diverged from its Nato allies on China, which the alliance said is an enabler of Russia’s war effort and poses challenges to security. Hungary does not want Nato to become an “anti-China” bloc, and will not support it doing so, Szijjarto said on Thursday.

Controversial multitalented China actor Wang Yibo lands Paris Olympic torch role

https://www.scmp.com/news/people-culture/china-personalities/article/3270059/controversial-multitalented-china-actor-wang-yibo-lands-paris-olympic-torch-role?utm_source=rss_feed

The multitalented and controversial mainland actor Wang Yibo will be one China’s Olympic torch-bearers at the Paris Games this month.

On July 14 he will carry the torch on the final leg of its journey through the heart of the French capital, according to Hongxing News.

Known for his prowess as a professional motorcycle racer and his exceptional street-dancing ability, Wang opted to pursue a career as an actor.

Aged just 13, he entered a national street dance contest, competing against dancers of all ages, and reached the top 16 in the hip-hop category.

Between 2020 and 2022 he led a team on the popular Chinese TV show Street Dance of China.

His ability has received widespread praise, famously in particular from renowned Japanese dancer Koharu Sugawara who said playfully of his skills.

“When I saw his moves, I felt like I could not compete. Maybe I should quit dancing.”

Wang is also a professional motorcycle racer.

In 2019, after only a year of training, he competed in the Asia Road Racing Championship and came first in the rookie category.

After each race, he reviews the process on Weibo and posts photos of his motorcycle helmet, with fans playfully referring to it as his “girlfriend”.

Unsurprisingly, Wang has 41 million followers on the Weibo platform.

In 2022, he was an ambassador for ice and snow sports at the Beijing Winter Olympics.

“He has always been passionate about sport...,” one of his fans wrote on Weibo.

“You are the highly anticipated torch-bearer representing China on the world stage, I will always support you,” said another.

His China fans also refer to Wang as the “iceberg beauty” thanks to a role he played in the 2019 TV drama The Untamed, which was adapted from a popular boy’s love novel.

He played a main character called Lan Wangji, who appears cold-hearted on the outside but is actually gentle and sensitive.

In 2023, he won the Most Media-Attention Male Lead Actor award for the spy thriller film Hidden Blade, in which he co-starred in with Hong Kong actor Tony Leung Chiu-wai.

However, despite his many successes, the promising young actor has been embroiled in several controversial racist scandals.

In May, Wang was criticised for appearing in blackface make-up in a film about Chinese peacekeepers in war-torn Africa, sparking allegations of racial hostility and ignorance.

In 2019, he was caught on camera making a “slant-eyes” pose at a fashion event, which is considered a racist depiction of Asians.

[Sport] China hits back at Nato over Russia accusations

https://www.bbc.com/news/articles/cxx24850k8yo

AFP

China’s exports surge 8.6% in June as trade provides economic growth support

https://www.scmp.com/economy/economic-indicators/article/3270165/chinas-exports-surge-86-june-trade-provides-economic-growth-support?utm_source=rss_feed

China’s export surged in June, providing strong support for economic growth, however, analysts warned that foreign trade is expected to face increased pressure amid escalating geopolitical tensions for the remainder of the year.

Exports rose by 8.6 per cent from a year earlier to US$307.85 billion in June, according to customs data released on Friday.

The reading beat the expected rise of 7.44 per cent surveyed by Chinese financial data provider Wind, and was better than the 7.6 per cent increase in May.

Imports, meanwhile, fell by 2.3 per cent from a year earlier, compared to the 1.8 per cent growth seen in May.

Elsewhere, China’s June trade surplus stood at US$99.05 billion, compared with US$82.6 billion in May.

Exports have been a bright spot over the past six months, supporting China’s aim to achieve its annual economic growth target of around 5 per cent this year.

However, the sector is facing increased pressure as the European Union’s punitive tariffs on Chinese electric vehicles took effect last week, while more countries, in addition to the United States, are considering tariff increases.

China’s exports are likely to peak in the middle of the year before declining, according to Wen Bin, chief economist at China Minsheng Bank, with annual export growth of around 5 per cent.

Escalating global trade protectionism and the possibility of Donald’s Trump’s re-election as US president are expected to exert pressure on China’s future exports, Wen said on his Sina blog on Monday.

“If exports tumble, it could exacerbate domestic overcapacity, leading to lower prices and higher real interest rates. This, in turn, may reduce both enterprise investment and consumer spending, causing the property market to continue fluctuating and see a bottom,” he said.

“In this context, Beijing is expected to further support policies on infrastructure, large-scale equipment trade-in, and property destocking in the second half of the year.”

More to follow …

Indonesia taps Japan, India, China expertise for free school meals as Prabowo battles cost concerns

https://www.scmp.com/week-asia/economics/article/3270155/indonesia-taps-japan-india-china-expertise-free-school-meals-prabowo-battles-cost-concerns?utm_source=rss_feed

Indonesian president-elect Prabowo Subianto’s ambitious plan to introduce free school meals nationwide to tackle child malnourishment has sparked concerns about its potential drag on the country’s finances.

Prabowo’s team is hoping to address these concerns by looking to countries such as Japan, China and India, which have implemented and spent prudently on such programmes.

Analysts warn that Indonesia faces multiple economic and logistical challenges that would make it difficult for Prabowo to adopt the regional models.

The free school meal programme was one of the key election campaign promises of Prabowo, who will take over from President Joko Widodo in October.

The 72-year-old defence minister has said the scheme offering school students free lunches and milk was a “necessity” to curb child malnourishment in the country.

Data from the country’s health ministry shows 21.6 per cent of Indonesian children under the age of five experienced stunting – stunted growth and other developmental problems caused by malnutrition.

Prabowo hopes the free meal programme will help reverse this trend. Most Indonesian schools do not provide free food to students. His programme envisions free meals for 83 million underprivileged children and is estimated to cost 71 trillion rupiah (US$4.35 billion) in 2025.

Prabowo’s team estimates the initiative will cost up to 450 trillion rupiah (US$27 billion) when it is fully implemented in 2029 and boost economic growth by 2.6 percentage points.

To achieve this, Prabowo is said to be considering measures including tightening tax enforcement and cutting the budget for Widodo’s US$32 billion capital relocation project.

The meal programme has been criticised by the World Bank and the International Monetary Fund, which say it would raise the country’s budget deficit level.

Prabowo’s team has promised to meet the legal debt limits requiring Indonesia’s budget deficit to be capped at 3 per cent of gross domestic product. Jakarta has set a deficit target of 2.3 per cent for this year.

Muhammad Rafi Bakri, a data and financial analyst at the Audit Board of Indonesia, said that the programme would require a “very significant” budget. Cost concerns were warranted since Indonesia has large expenditures in the pipeline including the capital relocation, he added.

Successful models

Indonesia is expected to look at cost management by regional countries that have implemented such programmes.

In Japan, government data shows nearly 99 per cent of primary schools provided lunch to students in 2023. The meals are not always free of charge, with some students paying an average of 50,000 yen (US$300) annually but many municipalities fully subsidise these costs.

In September, the Japan International Cooperation Agency (JICA) will host Indonesian officials in Nagasaki prefecture to train and help them understand Japan’s century-long experience of providing free school meals.

“Nagasaki shares the island characteristic with Indonesia, making it an ideal setting,” JICA said in a statement to This Week in Asia.

“Through this initiative, JICA seeks to support Indonesia in addressing its nutritional challenges, drawing on Japan’s extensive experience while respecting Indonesia’s unique needs and circumstances.”

During his visit to Beijing in March, Prabowo reportedly visited a school in the capital’s Dongcheng district to learn about its free lunch programme for students.

In April, vice-president-elect Gibran Rakabuming Raka told state news agency Antara that an Indonesian team was sent to India to understand the country’s free lunch programme.

Gibran said the Indian ambassador to Indonesia, Sandeep Chakravorty, informed him that India’s programme costs 11 US cents per child per day because of logistical efficiencies. In comparison, the Prabowo team estimates a cost of 94 US cents per child per day for the Indonesian programme.

According to Josua Pardede, chief economist at Permata Bank in Indonesia, the Chinese and Indian programmes are tailored according to local requirements and factors.

“China’s free meal policy began in 2011 and is not universal, it is very well-targeted, aimed only at the poor in remote rural areas,” Pardede said. Its programme started in several remote villages before it was expanded over the years, he added.

In India, funding for the programme to provide daily lunches to over 100 million students was shared between the central and local governments, Pardede said.

First launched in 1995, India’s programme cost about US$2.6 billion in 2023, in which the federal government and the state governments pay 60 per cent and 40 per cent, respectively.

Rafi said India and China could run their programmes successfully as they grew much of the food for domestic consumption. In Indonesia, food production would typically fluctuate from year to year and any shortfall would have to be met through imports, he added.

Indonesia ranked 84th out of 113 countries in terms of food availability, way behind India in 42nd place and China in 2nd place, according to the 2022 Global Food Security Index.

Concerns about Indonesia’s capacity to fund the programme were valid due to Indonesia’s weak financial position and heavy economic dependence on commodities, whose prices were typically volatile, Pardede said.

“This situation alarms investors because ... the policies to boost state revenue and reduce the current account deficit remain inadequate.”

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US professor Feng ‘Franklin’ Tao wins reversal of conviction in Trump-era China probe

https://www.scmp.com/news/world/united-states-canada/article/3270157/us-professor-feng-franklin-tao-wins-reversal-conviction-trump-era-china-probe?utm_source=rss_feed

A US appeals court on Thursday tossed the conviction of a former University of Kansas professor for making a false statement related to work he was doing in China, marking a new setback for the Department of Justice in a Trump administration-era crackdown on Chinese influence within American academia.

The Denver-based 10th US Circuit Court of Appeals on a 2-1 vote held that prosecutors offered insufficient evidence at trial to support the sole remaining count on which jurors convicted Feng “Franklin” Tao in 2022.

Peter Zeidenberg, Tao’s lawyer, in a statement called the case a misguided prosecution that authorities pursued despite having no evidence that Tao engaged in espionage. He said the case had virtually bankrupted Tao’s family and led to his firing.

“Dr Tao is grateful that this long nightmare is finally over,” Zeidenberg said.

The Justice Department declined to comment.

Tao was among about two dozen academics who were charged as part of the “China Initiative”, which launched in 2018 during Republican former US president Donald Trump’s administration and aimed to counter suspected Chinese economic espionage and research theft.

The Justice Department under Democratic President Joe Biden in 2022 ended the China Initiative following several failed prosecutions and criticism that it chilled research and fuelled bias against Asians, although the department said it would continue pursuing cases over national security threats posed by China.

Prosecutors said Tao, who worked on renewable energy projects, concealed his affiliation with Fuzhou University in China from the University of Kansas and two federal agencies that provided grant funding for his research.

Tao was indicted in 2019. A jury in April 2022 convicted him of four of the eight counts against him, but a trial judge later overturned three wire fraud convictions, citing a lack of evidence, and sentenced him to time served.

That left a single conviction for making a false statement by failing to disclose his affiliation with Fuzhou University on a form submitted to the University of Kansas. Prosecutors said that information was relevant to the funding decisions of the agencies, the US Department of Energy and the National Science Foundation.

But US Circuit Judge Nancy Moritz, writing for the majority, said Tao’s statement was incapable of influencing an actual funding decision. She said that was because neither agency had any proposals before them to consider from Tao when he made his statement.

Moritz, writing for the majority, said that meant prosecutors failed to prove the statement was material.

Images of China simulating attacks on US bases in Japan may bring Tokyo closer to its allies

https://www.scmp.com/week-asia/politics/article/3270108/images-china-simulating-attacks-us-bases-japan-may-bring-tokyo-closer-its-allies?utm_source=rss_feed

The recent discovery of satellite images showing dummy US fighter aircraft on a Chinese military range in the Taklamakan Desert is expected to galvanise Tokyo to seek closer ties with the United States, Nato and other potential security partners.

Analysis by Turkey-based Clash Report and Bulgarian Military Network suggests that as the US positions its most advanced fighters at Marine Corps Air Station in Iwakuni and Kadena Air Base in Japan, the Chinese military has set up replicas of these bases and their air assets for more realistic training exercises.

An international relations expert told This Week in Asia the latest development was not a first, citing a similar case years ago, in which China seemed to have simulated US and Japanese naval facilities in Japan.

The latest aircraft images, first captured by Google Earth on May 29, revealed more than 20 mock-ups of US F-22 Raptors and F-35 Lightning II stealth fighters in the Xinjiang desert.

This Week in Asia has not been able to verify the images and there has been no official comment from China.

A number of the dummy aircraft appear to be significantly damaged, possibly as a result of simulated missile, drone, or ground-attack assaults by Chinese aircraft.

“All militaries have to train for all eventualities, so I’m not very surprised by these latest images,” said James Brown, a professor of international relations at the Tokyo campus of Temple University.

“But it is very much a reminder that both the US and China are preparing for the possibility of a conflict breaking out between the two sides.”

It will also further focus the minds of the Japanese government and military, he suggested, as the outbreak of any hostilities in the region – notably over Taiwan or the Philippines – would inevitably see attacks on US bases in Japan.

Despite the apparent threat to Japanese territory, Brown believes there is little that Tokyo can do in response.

“China can simply deny anything, while we also have to remember that the Japanese Self-Defence Forces all regularly practise for the eventuality of conflict,” he said.

“Rather, this will suggest to Japan that it needs to take more measures for its own self-defence, to work more closely with the US in the region and to develop security ties with other nations to supplement that security alliance with the US,” Brown said.

And with debate on the images emerging while Prime Minister Fumio Kishida is in Washington for talks with the leaders of Nato, then the timing is fortuitous, Brown suggested.

Reports in the Japanese media about China apparently training to attack military bases in Japan have caused concern on social media, with one message linked to a Kyodo News report on Yahoo Japan’s website stating: “In other words, if war breaks out, bases in Japan will be the first to be attacked.”

Others, however, suggested that China’s actions, of marking out mock-ups of airbases in Japan and leaving damaged replicas of US fighters visible, are meant as a warning to Beijing’s enemies.

On July 10, the US Department of Defence announced that it would be increasing its air capabilities in Japan by deploying for the first time 48 F-35 aircraft to Misawa Air Base, in Japan’s northeast prefecture of Aomori, to enhance “regional deterrence”.

The aircraft will replace 36 older F-16 fighters and, in the same announcement, the Pentagon said it would also be replacing 48 F-15 Eagle fighters at Kadena Air Base with upgraded aircraft. It added that it would be altering the number of F-35s at Iwakuni, although it did not elaborate whether that would see more of the aircraft at the base or fewer.

China flood heroes keep pregnant woman afloat for hours, one shouts ‘save my wife first’

https://www.scmp.com/news/people-culture/environment/article/3269879/china-flood-heroes-keep-pregnant-woman-afloat-hours-one-shouts-save-my-wife-first?utm_source=rss_feed

Three men in China who kept a pregnant woman afloat in flood water for more than three hours before rescue teams arrived have been hailed as heroes on mainland social media.

In July, heavy rainfall pounded central and southern parts of the country.

Central Hunan province was one of the worst hit with severe flooding and landslides.

As continual downpours drenched the area, rescue teams raced against time in motorboats to save residents trapped in their homes.

On July 1, a street in the province’s Pingjiang county was hit by flood water, submerging ground-floor homes and shifting masses of debris including computers and household appliances.

At one point, three men, almost shoulder-deep in water, grabbed a bedsheet hanging from a second-floor window of a house to stabilise themselves and avoid being swept away by the debris.

While doing so, two of them supported an exhausted pregnant woman with their legs and torsos, while the third constantly shouted for help.

The trio took turns supporting the woman in the water for more than three hours until help finally arrived.

When the rescue boat reached them, one of the men shouted: “Save my wife first. She has no strength left and she is pregnant.”

The rescue team pulled all four of the exhausted survivors aboard.

They were suffering badly from the effects of being immersed in the water for so long.

Despite trembling uncontrollably, the husband repeatedly said to the rescue team: “Thank you for saving our lives.”

Liu Jun, one of the rescuers, said: “It was very brave and strong of them to support the pregnant woman for over three hours there.”

The heroic trio moved many people on mainland social media.

“Thumbs up for these three civilian heroes. They are really selfless,” one online observer wrote on Weibo.

“Humans may seem insignificant in the face of natural disasters, but humanity always shines with warmth,” another said.

The flood in Hunan province has been described as the worst in nearly 70 years.

As of July 3, reports showed that floods in 14 cities in the province had killed 27 people. Eight more remain missing.

In the hardest-hit area of Pingjiang county, residential communities and streets were submerged in muddy flood water, with levels reaching up to three metres. The water even engulfed traffic lights.

A total of about 360,000 people in the county were affected and more than 1,200 homes were damaged.

How a Chinese team used quantum tech to follow electrons on the superconductor trail

https://www.scmp.com/news/china/science/article/3270118/how-chinese-team-used-quantum-tech-follow-electrons-superconductor-trail?utm_source=rss_feed

A Chinese team has built a quantum computer that can simulate the movement of electrons in a solid-state material, a task that could be a springboard for applications that are so far well beyond the ability of the world’s fastest supercomputers.

Tracking such subatomic particles is central to a number of scientific questions, such as what makes magnets attract each other. Unlocking such fundamental science could help crack the code to creating high-temperature superconducting materials, potentially revolutionising electricity transmission and transport.

“Our achievement demonstrates the capabilities of quantum simulators to exceed those of classical computers, marking a milestone in the second stage of China’s quantum computing research,” team leader Pan Jianwei said in a statement from the Chinese Academy of Sciences on Thursday.

The research was published in Nature on Wednesday. Pan, from the University of Science and Technology of China, co-authored the paper with USTC colleagues Chen Yuao and Yao Xingcan.

The Nature reviewers described the work as “an important step forward for the field”.

There are three generally accepted stages in the evolution of quantum computing.

The first, known as “quantum supremacy”, is when quantum computers outperform classical supercomputers on specific tasks. This goal has been met with developments such as Google’s Sycamore processor, and China’s Jiuzhang and Zu Chongzhi series of quantum prototypes.

The second – the focus of academic research today – involves creating specialised quantum simulators that can tackle important scientific problems beyond the capacity of classical computers.

The third stage will aim to achieve universal, fault-tolerant quantum computing with the assistance of quantum error correction.

Pan’s team reached the second stage by simulating the fermionic Hubbard model, a simplified model describing electron motion in lattices proposed by British physicist John Hubbard in 1963.

This model is useful in explaining high-temperature superconductivity, and superconductivity can be applied in fields including power transmission, information technology and transport. But even supercomputers struggle to simulate it.

“Simulating the movement of 300 electrons using classical computers would require storage space … exceeding the total number of atoms in our universe,” Chen said in the CAS statement.

To achieve their goal, Pan – who is best known for leading the construction of the world’s first quantum satellite – and his team had to overcome three major challenges: creating optical lattice with a uniform intensity distribution, achieving sufficiently low temperatures, and developing new measurement techniques to accurately characterise the states of the quantum simulator.

To this end, the team combined machine-learning optimisation techniques with their earlier work on homogeneous Fermi superfluids in box-shaped optical traps to prepare degenerate Fermi gases at ultra-low temperatures.

This enabled the team to observe a switch in a material from paramagnetic to an antiferromagnetic state – or from being weakly attracted to a magnet to largely insensitive to one.

The research lays the groundwork for a deeper understanding of high-temperature superconductivity mechanisms.

“Once we fully understand the physical mechanisms of high-temperature superconductivity, we can scale up the design, production, and application of new high-temperature superconducting materials, potentially revolutionising fields such as electric power transmission, medicine, and supercomputing,” Chen said.

Foxconn factories in China on hiring spree ahead of Apple’s AI-compatible iPhone 16 launch

https://www.scmp.com/tech/big-tech/article/3270115/foxconn-factories-china-hiring-spree-ahead-apples-ai-compatible-iphone-16-launch?utm_source=rss_feed

Contract electronics manufacturer Foxconn is ramping up hiring in the world’s biggest iPhone plant in Zhengzhou, capital of central Henan province, as Apple gears up for the launch of its next-generation handset this autumn.

The iPhone assembler, also known as Hon Hai Precision Industry, is offering a 25 yuan (US$3.44) hourly rate and a bonus of up to 7,500 yuan for returning workers previously employed by the Zhengzhou factory, according to recruitment posts published by the company this week.

The package is a step up from the 6,000 yuan bonus offered a month ago by Foxconn’s “A” unit, formerly known as the Integrated Digital Product Business Group, which is the company’s main iPhone production team.

“The peak season for Foxconn’s Zhengzhou plant is happening now: high-paying jobs for temporary workers and returning employees,” read a job post by a local labour agency, one of several promoting opportunities at the factory.

Apple’s next smartphone launch is one of its most anticipated in recent years because all models of the coming iPhone 16 are expected to support the US tech giant’s new artificial intelligence (AI) features arriving early next year.

The Cupertino, California-based company is counting on the AI upgrade to boost sales, with the goal of shipping at least 90 million iPhone 16 devices in the second half of this year, a 10 per cent growth compared to the previous generation, according to a report by Bloomberg on Thursday citing unnamed sources.

However, it remains unclear when Apple’s AI features will become available in China, where the internet services market is heavily regulated, and domestic brands are already aggressively adopting AI in their handsets.

Apple, which led smartphone sales in mainland China in the fourth quarter last year, lost its throne after sales fell 19.1 per cent in the first quarter amid rising competition from local rivals including Huawei Technologies, according to market research firm Counterpoint.

The US brand currently ranks third in the country, behind Vivo and Huawei spin-off Honor.

Apple has sought to defend its position by offering steep discounts on iPhones, a move that helped increase sales by 2.7 per cent year on year during China’s midyear online shopping season known as 618, Counterpoint data showed.

In preparation for the new iPhone, Foxconn is also increasing salaries at its campus in China’s southern tech hub of Shenzhen to between 21 yuan and 22 yuan for temporary workers, job posts published by various recruitment agencies this week showed.

The factory, located in the city’s Longhua district, is promising returning permanent workers a monthly salary of up to 6,000 yuan for the first three months and a pay rise if they stay longer, according to the plant’s official recruitment post on Monday.

In countering China, Indo-Pacific countries rely less on US: Pentagon official for region

https://www.scmp.com/news/china/article/3270150/countering-china-indo-pacific-countries-rely-less-us-pentagon-official-region?utm_source=rss_feed

Indo-Pacific countries are starting to rely less on US leadership as they increasingly pursue initiatives to counter threats they see in China on their own, American and North Atlantic Treaty Organisation officials said on Thursday.

Responses within the region to incidents like the recent attack by Chinese vessels on Philippine forces within the island nation’s exclusive economic zone support goals the administration of US President Joe Biden set forth when it began building cooperative frameworks, the Pentagon’s top official for the region said.

“The new convergence in the Indo-Pacific won’t always start or include the United States … nor should it,” said Ely Ratner, the US assistant secretary of defence for Indo-Pacific security affairs, at a Centre for Strategic and International Studies event.

“That’s why … we are really encouraged by the important opportunities that will emerge from the reciprocal access agreement announced just this week between Japan and [the] Philippines.”

Annual meetings between the defence chiefs of Australia, Japan, the Philippines and the US in Hawaii – the countries’ first joint naval exercises – and other American-led engagements with all four in different formats have “reached an escape velocity of its own that is creating even more momentum and new opportunities”, Ratner added.

The Pentagon official also cited the Indo-Pacific Partnership for Maritime Domain Awareness – established last year by the Quadrilateral Security Dialogue comprising Australia, India, Japan and the US – as an effort helping to spawn new partnerships in the region independent of Washington.

The IPMDA aims to provide Indo-Pacific countries with an integrated and cost-effective, near-real-time method of monitoring their surrounding waters.

Ratner on Thursday said plans were under way to launch “IPMDA 2.0”, which would potentially offer new capabilities as well as training for some of the host countries “to be able to use and absorb the information”.

Much of Biden’s foreign policy has focused on strengthening existing alliances, including Nato, and building new international partnerships to counter Chinese influence while maintaining dialogue with Beijing.

That effort became more urgent after Russia invaded Ukraine in 2022.

Biden’s top officials have increasingly pointed to China’s trade relationship with its northern neighbour as a key support for Moscow’s continued military campaign against the former Soviet-bloc country.

The acknowledgement of Indo-Pacific powers’ strategic importance in supporting Euro-Atlantic countries in countering Russia and China figured prominently at this week’s annual Nato summit in Washington.

The transatlantic security alliance’s four Indo-Pacific partners – South Korea, Japan, New Zealand and Australia – have been regularly invited to high-level Nato events since the start of the Ukraine war.

On Thursday, Nato launched four new projects with the Asia-Pacific powers. They harness capabilities in cybersecurity, artificial intelligence and fighting disinformation as well as extend support to Ukraine.

“Our security is not regional, it is global,” said Jens Stoltenberg, Nato’s secretary general, during his meetings with IP4 leaders.

With its partners, Nato “will address our shared challenges, including Russia’s war against Ukraine, China’s support for Russia’s war economy and the growing alignment of authoritarian powers”, he added.

Stoltenberg called for the allies and partners to work together “ever more closely”, describing security in East Asia and Europe as “inseparable” while thanking Japan for its support for Ukraine.

Tokyo has emerged as one of Kyiv’s most important allies, spending billions in aid.

This week, the first shipment of four mine-clearing vehicles from Japan reached Ukraine. About 20 more units are due to be delivered this year. Japan has also signed a security pact with the war-ravaged country.

South Korea, which has pledged to provide about US$300 million this year in short-term aid to Ukraine and US$2 billion in long-term assistance, signed an airworthiness certificate with Nato on Thursday.

The first deal of its kind between Nato and an Asian country, the pact is expected to boost interoperability in air combat. Both sides further agreed to enhance intelligence sharing on North Korea.

The IP4 leaders also met with Biden on Thursday. According to a White House read-out, the leaders discussed their “shared concerns” relating to China’s support for Russia’s defence industrial base.

Earlier in the summit, Stoltenberg said Nato and its Indo-Pacific partners were “carefully watching” what Russian President Vladimir Putin was offering China, North Korea and Iran in exchange for their help against Ukraine.

The Nato chief noted that Nato countries were seeking cooperation in defence production and more naval exercises with IP4 countries.

However, at the Nato Public Forum on Thursday, South Korean President Yoon Suk-yeol spoke of his country’s long history of economic and social exchanges with China, despite “different” systems and institutions with the mainland.

Seoul would continue to communicate on a strategic level with Beijing, he said, and based on mutual respect, reciprocity and international norms, “we’re going to continue to have that relationship with China”.

Bec Strating of Australia’s La Trobe University said concern had been building among some policymakers in her country about how far Washington would back initiatives like Aukus, a security alliance between the US, Britain and Australia, if Biden were to lose his re-election bid in November against former US president Donald Trump.

Trump has threatened to pull the US out of Nato and has spoken sceptically of the bloc. Many within and outside the alliance worry the Republican would drop American support for any or all of the international partnerships Biden has championed.

“There’s uncertainty about what a returned Trump administration might look like, what this would mean for alliance structures, what this mean would mean for US commitment and resolve in the region,” said Strating at the CSIS event.

Policymakers harbouring such fears were “trying to develop a plan B that hedges against dependence by building relations between the other spokes, such as the Philippines, Japan and [South] Korea”, she added.

Why this China analyst thinks ‘full decoupling’ is unlikely, and what gets missed in talk of reforms

https://www.scmp.com/economy/china-economy/article/3270078/why-china-analyst-thinks-full-decoupling-unlikely-and-what-gets-missed-talk-reforms?utm_source=rss_feed

Arthur Kroeber is founding partner of Gavekal Dragonomics, a China-focused economic research firm. Before founding Dragonomics in 2002, Kroeber worked for 15 years as a financial journalist and economic analyst. He is an adjunct professor at New York University’s Stern School of Business, a member of the Council on Foreign Relations and the National Committee on US-China Relations. His book, China’s Economy: What Everyone Needs to Know, was published in 2020. For other interviews in the Open Questions series, click .

Using the word “reform” to talk about what’s going on in China is not all that helpful. The reason is when people outside China, particularly from the United States or Europe, they specifically mean reforms to reduce the role of the state in the economy and increase the role of markets in the private sector. China really is not doing very much of that.

In my opinion they should be doing a lot more to reform the financial and fiscal systems and improve market regulation, to enable core dynamism and private-sector activity, and boost productivity across the board.

But when the Chinese leadership talks about reform, they mean something different. They believe they are doing a lot of reform in the sense of changing forms of organisation, regulatory systems, and the way that capital flows around the economy with the objective of sustaining economic growth and accelerating the pace of technological change.

Now, if you go back to the 2013 third plenum document, one major point was that the market would play a decisive role in resource allocation. This implied a mandate for more market reforms.

Then almost immediately after that, it says the state will continue to have a dominant or leading role in the economy.

This reflected the fact that the document was somewhat political, it was trying to placate a wide range of different constituencies within the government – the pro-market people and the pro-state people.

It also reflects a pretty fundamental perspective that has been true throughout Chinese economic history of the last 40 or 50 years, that they do see a large role for markets but also a very large role for the state.

They are not aiming for an American-style or European-style system. They are aiming for a system which has a lot of market forces in it and a lot of private enterprises, but also has a much larger role for the state in terms of overall direction and coordination.

The case for the advocates of a bigger state role grew in 2015, when there was a big stock market crash. There were a lot of capital outflows, and it took them quite a while to stabilise the financial situation of the country.

They had to impose a lot of regulations in the stock market. They had to impose capital controls. That whole episode made the senior leadership think, “What can we do if we go too far with this market stuff? It will just become destabilising.”

And then you look at the internet companies, they got very big, very powerful and arguably not very accountable. So the government decided they weren’t regulating things tightly enough.

Basically all of the policies of the last five or six years have focused on increasing regulation in the financial sector and the internet sector; and most recently in the property sector. All of these areas were seen as areas of risk that were created by uncontrolled marketisation.

So now the view of the government is we have maintained this anti risk policy, but then we also need to promote new sources of growth, particularly since they’ve had this big crackdown on the property sector, which accounts for about one-fourth of the economy.

You need another growth engine. The idea of new productive forces is basically to mobilise huge technological investments to drive productivity growth in the future.

What we’re likely to see in the third plenum is a restatement and elaboration of this sort of general industrial policy-led growth model, maybe a little bit more colour on exactly how they expect this to work.

You don’t want to look at China’s share of total global exports. You want to look at their share of manufactured exports. That’s been quite stable at around a little over 20 per cent for the last several years.

There does not seem to be any indication that it is significantly shrinking. China is so far doing a pretty good job of retaining its competitiveness and maintaining a fairly stable share of global trade and manufacturing.

It is sometimes misleading to look at the headline value of exports. So for example, if you look at the headline numbers, Chinese exports to the United States have taken a big hit.

It used to be that China accounted for about 22 per cent of goods imported to the US, and that’s now down to 14 per cent. So you would say China is losing a lot of market share in the United States. The problem with that is, a lot of that reduction in value is not real.

So for example, you’re a Chinese maker of solar panels. You can’t send your stuff directly to the United States because of tariffs. You set up a factory in Vietnam and Malaysia and you send it there, the value of that product is still overwhelmingly as a Chinese-made product.

If today I’m exporting 100 solar panels from China to the US and then tomorrow I’m exporting zero solar panels from China to the US, but 100 from Vietnam to the US, that would show up as a reduction in China’s export share to the US, but in reality the trade was just diverted through a third country.

So Apple has started to move some of its cellphone production out of China. But if you look at those iPhones, where are the components coming from?

In many cases, they’re coming from China, and going to India or Vietnam just for the final assembly. Again, the ability of Chinese producers to sell stuff into the American market is much larger than is shown by headline trade data.

China will continue – for quite a few years – to have a very robust position in global manufactured trade, including in the developed markets.

It’s going to be very difficult to fully decouple the developed country markets from China, because China is just too important in too many supply chains.

The short answer is that there is no “next China”. There’s no one else.

In China, as they have moved up the value chain and started to be much more successful in machinery, they are still very competitive in these traditional sectors.

They are broadly competitive across low-value sectors and high-value sectors. They have such an enormous labour pool and such effective infrastructure that they are able to be competitive across a wide range of goods.

Supply chains are very sticky. China has a tonne of comparative advantages in terms of size, the productivity of its workforce, the quality of its infrastructure and the industrial ecosystem it has created in many sectors.

If you look at the candidates for who could replace China, they all have problems. India has a big workforce. But it is not as well-educated as China.

Female labour force participation is very low. That’s a big problem, because if you look at a lot of industrial history in East Asia, the female workforce has been a very important part of building up manufacturing systems. Quality of infrastructure is extremely poor.

You look at a country like Vietnam, which in many ways has similar endowments in China in terms of high-quality workforce, and a communist party-led government that is very development-focused. They have a lot of pro-growth policies. But they don’t have the scale.

There are many countries that can replicate some part of the Chinese system, but there’s no one who is even close to being able to do the whole set of things.

The constraint obviously is the advanced chip controls that have been placed on China by the United States. So for instance, some of the more advanced AI applications require much more high-powered chips.

The real question about the pace of Chinese AI development is how quickly China will be able to come up with adequate substitutes for the high-powered AI chips that they can no longer source from the United States. Most people think that’s going to be a period of several years, at least, for them to be able to fully replicate those capabilities they’re now being deprived of.

This is a good moment to talk about the Chinese government’s overarching policy framework, which they call “new productive forces”. It’s now been incorporated in a lot of the top-level economic planning, documents and policies.

It’s a new formulation of a comprehensive, technologically driven development strategy which Xi Jinping has been pushing forward for a decade. And part of what they’re talking about is figuring out ways to use industrial automation, whether it’s robots, AI, or some other kind of technology to improve the productivity of existing manufacturing.

Part of that also is replacing factory floor labour, because of the demographic changes. It’s very clear that policymakers in China understand there’s a problem here that they need to deal with.

Fundamentally, the Chinese leadership has been very clear that maintaining a large industrial economy is the goal. They don’t accept the idea that China should just become a pure services and consumer-driven economy.

The basic thing that they are doing is making sure all kinds of sectors stay in China. They have a lot of tools to work with – creating favourable financing conditions for industrial companies, incentive programmes for technological development, and continued investments in infrastructure.

This is not necessarily good for financial investors who are just looking at corporate profits of domestic companies in highly competitive sectors. But for corporate investors who invest in physical production or services in China, it’s a very different story.

China is still a non-optional market for many international companies. It is very large. It’s still a big source of incremental growth. If you look at this whole debate about electric vehicles (EVs), the companies that are most opposed to putting tariffs on Chinese EV imports are the German carmakers.

These are the guys who are going to be most affected by cheap Chinese EVs. Why aren’t they in favour of tariffs? They want to maintain their market access in China. And they’re afraid that if these tariffs get approved, then the retaliation will be government policies that restrict their ability to operate within China.

Clearly it’s very difficult for Chinese companies to invest in the United States. There is some evidence now that it’s difficult for Chinese companies to invest in Europe as well. But there are large swathes of the world where Chinese investment is very strong.

The whole of Southeast Asia, Latin America, increasingly the Middle East. There will be political barriers to Chinese investment in some places, but there will be plenty of opportunities for Chinese companies to invest elsewhere.

It’s important to remember that there’s been very little Chinese private sector investment in the rest of the world relative to the size of China’s economy. China is in the very early stages of its companies going out and figuring out how to operate in other environments.

What President Xi Jinping really wants is for China to become more technologically advanced. So the purpose of economic policy is to promote the creation of a technologically advanced economy.

The growth objective has been downgraded quite substantially from the past. If China grows by only 3 to 4 per cent on average for the next decade but continues to advance technologically at a rapid pace, that will be fine.

Outside China, there’s a very strong tendency for people to go to extreme views. You say either China is going to take over the world tomorrow or is unsustainable and will all collapse. Both those views have been proven wrong.

China has done very well. It hasn’t taken over the world. And it still has a lot of problems and contradictions. There have been many predictions of collapse or crisis that have just not panned out over the years.

If you look at financial fragility, China has a lot of debt. There are a lot of problems in the financial sector, but it also has a national savings rate of over 40 per cent of GDP.

The amount of money that exists in the system to fund the financial sector is very large, and capital controls prevent that money from flowing out to the rest of the world.

China now is sometimes compared to Japan in the 1990s, but the basic problem is that China is a very different economy than Japan in 1990. In Japan, there was essentially a single national balance sheet – the financial system and the real economy were tied together.

So if you’re a bank and you own shares in Mitsubishi, then you care a lot about what Mitsubishi’s stock price is. Similarly, Mitsubishi cares a lot about what the bank’s stock price is. If all of the stock prices go down at once, both the financial sector and the real sector will be in trouble.

The other issue was that there was a lot of lending on land. Land prices, property prices were way more extravagant in Japan in 1990 than they have been recently in China. And as those asset prices fell, the combined balance sheet of “Japan, Inc.” took a huge hit.

China does not permit these kinds of cross-shareholdings between banks and companies. So when you look for heavily indebted entities, you can find many. But you can also find plenty of companies, particularly in the industrial sector, that are not particularly leveraged and are unaffected by debt problems that exist elsewhere in the economy.

You have a fragmented balance sheet, and you have asset prices that did not get as crazy as they did in Japan.

There is going to be a problem with the property sector for the rest of this decade. That’s going to be a big drag. Prices still have to fall quite a bit.

That’s going to be a big problem for a lot of the smaller banks in the Chinese system. It’s going to be a problem for local governments that rely on land sales for revenue.

But because it is fragmented, there are many other parts of the economy, in the industrial sector and services, that can keep growing relatively well.

We used to think of China as an economy that grew by 10 per cent a year, and then 7 per cent a year until recently. Now maybe it’s around 5 per cent. Those are real growth rates. But the really important thing is the slowdown in nominal growth, which has been much greater. If you look at nominal growth in the first decade of the 2000s, it was almost 20 per cent a year.

Today, nominal growth is only about 4 per cent, less than the real growth rate, which is another way of saying that there’s a lot of deflationary pressure in the economy. Looking ahead over the next several years, China might be growing at 3 or 4 per cent in both real and nominal terms.

The big difference is not about an economy that’s growing in real terms at 3 to 4 per cent instead of 5 per cent. It’s that the economy is growing in nominal terms at 3 to 4 per cent instead of 8 to 10 per cent.

The reduction in nominal growth is what matters for corporate profits.

So that’s where I would have a little bit of a problem with the Chinese way of framing – “Everything’s fine, we’re still going to grow by 5 per cent” – they’re growing at 5 per cent real, but there’s 1 per cent deflation.

Deflation is not a pleasant thing. It creates a lot of problems. China can keep growing, it will keep growing. But it will be slower and more deflationary.

We use the official data a lot because there isn’t that much else out there. So in some sectors – property or automobiles – you have some private sector data sources that are very useful. But for the most part, you have to rely on official data.

If you look at the quality of data in China and then look at the quality of data in India, on average the quality of the Indian data is a bit worse. No one talks about this. The reason is because India is a democratic open system and China is not.

When people say we can’t trust the statistics, they’re not actually making a careful judgment about statistical quality. They are making a judgment about the nature of the political system. And what they’re saying is we don’t trust statements made by the government of China because it’s not democratic.

If the data makes sense over time and triangulates with other data, then it’s probably fine. If it doesn’t make sense, then you start to question it.

Frankly, this is what analysts have to do with any data set, whether it’s China, India, the United States or the European Union. You never take the data at face value. You always ask yourself, “Does this data make sense compared to other things?” If it does, we’ll move on.

If it doesn’t, we need to investigate further. The reality is that we’re able to do a pretty good job of describing what’s going on in China by using the official data.

And there’s some things where we just have to acknowledge the data is really bad and we can’t use it, so that limits our ability to make observations on certain topics.

What you have to do is do the hard work of looking at the data carefully, seeing what makes sense, using the stuff that has proved over time to be consistent and usable and throwing out the stuff that has proved consistently not usable. We do this every day in our work on the Chinese economy.

The final point here is if they were simply making up the numbers, telling false stories about the economy, eventually reality is going to catch up.

Generally speaking, the complaints that you hear about data quality are: I don’t really want to do the work of understanding what’s really going on here. I’m just going to reject the data and make up some story based on some cherry-picked evidence.

I just don’t find that to be analytically very satisfactory, particularly in light of the fact that China has a very long track record of successful growth and is dealing with a wide range of problems.

There are tons and tons of data problems. Some of them are the result of political interference, that is without doubt. And the job of analysts is just to work through that and try to determine the noise.

For essentially three years, China was locked away from the rest of the world. And they’ve been very slow to resume contact. There was a lot of damage done by the three years of Covid isolation. It exacerbated the mistrust between the United States and China.

The Chinese government for the last few years has been very clear that they want to tighten up security across a wide spectrum of things. They’ve been very systematic at increasing security controls of various kinds.

This means a crackdown on various kinds of information-gathering activities. And now the Chinese government wants to regulate them much more tightly.

The problem on the Chinese side is that security forces have been given very wide latitude to go after problems. They are not held accountable for the collateral damage in investor confidence.

China’s efforts to reassure people have not been very convincing, because if you look at the way the law and the way the regulations are written, there are severe penalties for various offences that are not clearly specified.

So people want to know what to do to comply. How can they be 100 per cent sure they can comply?

A lot of it has to do with the greater security focus within China, which is reflective of an environment where many countries are doing the same thing.

You could see a similar thing in the United States, where there’s a lot more emphasis on security support. But the concern of foreign companies is that the Chinese system by its nature is less transparent and less predictable.

I have problems with the term “overcapacity”, because I don’t really know what it means. And it doesn’t really have a precise meaning. This is a somewhat politicised discussion.

These countries want to maintain a certain production structure. They want to have their own carmakers.

As a responsible economy, China should be working on both the supply and the demand side. You can’t just have a supply policy and no demand policy.

The Chinese argument is: “We have a very successful manufacturing economy. Why aren’t you happy that we’re making all of this stuff that’s cheaper?”

So now people can buy electric cars for US$10,000 or US$15,000 instead of a conventional vehicle at US$25,000 or US$30,000. This is a benefit for consumers.

On the Western side, they have this overcapacity thing, which is really a meaningless term. And they’re unwilling to acknowledge the fact that China does have a very effective competitive manufacturing system.

If you have unbalanced policies where you are massively increasing supply – so you have the ability to sell goods in other people’s markets – but you are doing very little to increase demand, you’re not making it easier for other people to sell in your market.

People look at that and say that’s not fair. You want more access to our market and you’re not reciprocating by creating a vibrant domestic market.

Both sides need to rethink what’s the best way to come to an accommodation, because the risk that we have right now is that these tensions are growing so large that it is going to create a lot more friction in the global trading system.

You can have a lot more protectionism, more tariffs, more controls on trade and investment. And if that happens, then everyone becomes poorer.

No. China has a very dynamic industrial ecosystem. There’s a lot of really competitive companies. It has a whole range of infrastructure to support it. The government is committed to funding basic research.

I don’t think this will derail China’s technological development. There is a problem in this “high fence, small yard” thing – the yard keeps getting bigger and bigger.

As successive [US] administrations come in, what they’re probably going to do is impose more controls on the definition. And at the end of the day, I don’t think that’s going to throw China off-course, but it is a constant strain on the relationship.

So the China-US relationship will become more adversarial.

If Trump gets elected – certainly the policies that have been put out by Trump’s people would be highly inflationary. So all these tariffs, not just on imports from China, but on imports from everywhere in the world.

Tighter control on immigration would reduce labour supply, which will push up wages. Everything they say they will do would contribute to inflation.

Will they actually do all those things? Trump is very good at reading the mood of the room. At some instinctive level, he might recognise that the inflationary policies he pursued between 2016 and 2020 are much less appropriate in today’s environment.

Now, the US economy is clearly inflationary. And if you throw in more inflationary policies, you could have a big problem. Trump might be a sufficiently smart politician to recognise that’s dangerous.

On the broader China question, it’s very uncertain. If Trump is elected, there’s no question that the security side – the defence department, state department – will become more hawkish than under Biden, and will be inclined to be antagonistic towards China.

The final thing is that – if you look at the original Trump presidency, he had some very hawkish people on China. But at the treasury department, in particular, he had people who were trying to be very nuanced and have a constructive relationship with China.

So it’s quite possible that we’ll have a similar dynamic in the second Trump term. There are different people in different parts of the administration that have different views.

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US senators introduce bill confronting China’s dominance in critical minerals

https://www.scmp.com/news/china/science/article/3270148/us-senators-introduce-bill-confronting-chinas-dominance-critical-minerals?utm_source=rss_feed

A bipartisan group of US senators introduced sweeping legislation on Thursday strengthening diplomatic and financial tools to counter China’s dominance over critical minerals.

The Global Strategy for Securing Critical Minerals Act of 2024 would require an assessment of imposing duties on critical minerals from China, create a fund to support investments in critical minerals, and develop workplace programmes to train Americans on managing the life cycle of the minerals.

The 44-page bill would also create a diplomatic mechanism to support overseas American private-sector projects related to critical minerals; enhance public-private information sharing on “manipulative adversary practices”; and expand collaboration with Nato countries and non-Nato allies and partners.

“Currently, China dominates the critical mineral industry and is actively working to ensure that the US does not catch up,” said Senator Mark Warner, the Virginia Democrat who is the bill’s lead sponsor.

“The US must, alongside allies, take meaningful steps to protect and expand our production and procurement of these critical minerals,” he continued, adding that his legislation would serve as a “road map” to doing so.

Other sponsors of the bill include Democrats Chris Coons of Delaware, Mark Kelly of Arizona and John Hickenlooper of Colorado; Republicans Marco Rubio of Florida, Bill Cassidy of Louisiana and Thom Tillis of North Carolina; and Angus King, independent of Maine.

Thursday’s bill represents the latest in Washington’s efforts to deal with the fact that China produces and processes the bulk of the world’s rare earths and critical minerals.

Critical minerals such as lithium, nickel and cobalt are essential inputs for military supply chains and clean energy technologies. Rare earths are a type of critical mineral that are especially hard to extract.

Concerned that Beijing might withhold the materials to undermine US national and economic security, President Joe Biden’s administration has incentivised alternative suppliers to replace Chinese refiners through tax credits, trade deals and government loans.

Last year, the US and European Union began negotiating a critical minerals agreement that would help European mineral processors take advantage of US subsidies and also help the US cultivate the EU’s critical minerals industry as an alternative to China’s.

Legislative efforts to counter China’s dominance of critical minerals have also been steady.

Earlier this year, another bipartisan group of senators introduced a bill to address “information gaps” in Washington’s understanding of critical minerals and establish a process for US companies to divest from mining or processing operations for critical minerals in a foreign country.

Last month the House select committee on China started a working group on critical minerals, which held its second business meeting Wednesday.

Separately on Thursday, Rubio introduced a bill that would impose mandatory tariffs on products that rely on critical minerals coming from China, including electromagnets, permanent magnets, batteries, solar panels and solar wafers.

US coastguard spots Chinese naval ships off Alaska island

https://www.scmp.com/news/world/united-states-canada/article/3270149/us-coastguard-spots-chinese-naval-ships-alaska-island?utm_source=rss_feed

A US coastguard cutter on routine patrol in the Bering Sea came across several Chinese military ships in international waters but within the US exclusive economic zone, officials said.

The crew detected three vessels around 200km (124 miles) north of the Amchitka Pass in the Aleutian Islands, the coastguard said in a statement on Wednesday.

A short time later, a helicopter aircrew from Coastguard Air Station Kodiak spotted a fourth ship around 135km (84 miles) north of the Amukta Pass.

All four of the vessels were “transiting in international waters but still inside the US exclusive economic zone”, which extends 200 nautical miles (370km) from the US shoreline, the statement said.

“The Chinese naval presence operated in accordance with international rules and norms,” said Rear Admiral Megan Dean, Seventeenth Coast Guard District commander. “We met presence with presence to ensure there were no disruptions to US interests in the maritime environment around Alaska.”

US coastguard Cutter Kimball is a 127-metre (418-foot) ship based in Honolulu.

The coastguard did not immediately respond on Thursday to requests from Associated Press for additional information.

The sighting of the ships came a week after the Chinese navy began its annual joint patrol with the Russian navy in the Pacific Ocean. The US Naval Institute said the patrol is scaled down from previous years, including last August when more than 10 ships from China and Russia formed a flotilla off Alaska.

In September 2022, the Kimball spotted several ships from China and Russia in the Bering Sea. And in September 2021, coastguard cutters in the Bering Sea and North Pacific Ocean encountered Chinese ships about 80km (50 miles) off the Aleutian Islands.

“Our military needs to be ready for increasing Chinese, and joint Chinese and Russian military activity near Alaska’s coast,” US Senator Dan Sullivan, an Alaska Republican, said in a statement after being briefed on the Chinese presence.

“I also met yesterday morning with the Chairman of the Joint Chiefs of Staff and specifically raised this issue – how America must be much more prepared for the increasing activity in the Arctic, and to also let Alaskans know that our military is on the job protecting our state and our country,” Sullivan said.

The US military routinely conducts what it calls freedom of navigation operations in disputed waters in Asia that China claims as its own, deploying Navy ships to sail through waterways such as the South China Sea. The US says freedom of navigation in the waters is in America’s national interest.

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