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• Canada signals further tariffs on Chinese, batteries, tech and critical minerals
• US, Britain stress unity towards China as new strategic dialogue opens in London
• Can China’s export momentum last? 5 takeaways from August trade data
• Why Super Typhoon Yagi wrecked one wind farm in China but the rest stood their ground
• China to train 3,000 foreign law enforcement officers to protect overseas interests
• EU proposes lower tariffs on Chinese-made electric vehicles after input from car makers
• Chinese FA bans 38 players for life in corruption crackdown
• US and China hold high-level military talks in effort to stabilise ties
• China’s EV makers must overcome trust gaps to win over global buyers, survey says
• Group of mainland Chinese tourists taken to hospital in Hong Kong after suffering suspected food poisoning
• After US university cuts China ties, experts worry over ‘continued downturn’ in exchanges
• Why are young Chinese lying flat? They need hope and opportunities
• Apple’s AI delay dents iPhone 16 enthusiasm in China, as Huawei gets ready to pounce
• [Sport] Row over aircons in classrooms as China swelters
• Chinese food delivery giant Meituan brings Keeta app to Saudi Arabia in overseas foray
• China writes off more interest-free loans to Africa, but is the move just symbolic?
• Why China is much more to Africa than development ATM
• US private-equity firm L Catterton invests in Stenders as China’s consumer trends shift
• South China Sea: Malaysia shadows Chinese research ship, asserting energy rights
• China’s carbon market to expand, adding steel, cement and aluminium by year’s end
• China targets new money-laundering risks, including cryptocurrency
• China father dies of heart attack after having 23 teeth extracted, 12 implants placed in 1 day
• China’s new ambassador to Germany pledges to seek common ground
• China’s August EV take-up rises to 53.9% as more owners pick batteries over petrol engines
• South China Sea: Philippines logs record 203 Chinese vessels near its shores in 1 week
• China’s exports show ‘strong competitiveness’ in August, but challenges remain
• Chinese, US theatre commanders talk for first time since 2022 row over Pelosi Taiwan trip
• Why the South China Sea’s impact extends far beyond its waters
• Bill restricting US contracts with Chinese biotech firms among first to pass House in ‘China Week’
• China woman proud to be grandma at 36, slammed for prioritising children over son’s education
• Taiwan firms less worried about possible US-China war compared with 2022
• Grow wages, not night markets: how China can revive consumer spending
• Will weak demand continue in China?: 4 takeaways from August’s inflation data
• China and Singapore must boost coordination as ‘stabilising forces’, Wang Yi says
• China trade officials visit Brussels seeking deal to nix European Union’s EV tariffs
• The US and China must avoid dropping a ‘Silicon Curtain’
• Scared by China’s P2P scandal, new wave of young investors are less willing to risk it all
• US and Chinese troops taking part in joint ‘Formosa’ exercise in Brazil for first time

Canada signals further tariffs on Chinese, batteries, tech and critical minerals

https://www.scmp.com/news/world/united-states-canada/article/3278011/canada-signals-further-tariffs-chinese-batteries-tech-and-critical-minerals?utm_source=rss_feed

Canada signalled on Tuesday that it is likely to impose further tariffs soon on Chinese batteries, tech products and critical minerals.

The announcement of a 30-day public consultation on the proposed measures comes on the heels of 100 per cent tariffs levied on imports of Chinese electric vehicles, due to take effect on October 1.

“Today, I’m announcing a 30-day consultation on imports to Canada from China of batteries and battery parts, semiconductors, critical minerals and metals and solar products,” Deputy Prime Minister Chrystia Freeland told a news conference in Nanaimo, British Columbia where members of the ruling Liberals are meeting.

In a statement, her office accused China of unfair competition in these areas that “threatens Canadian workers and businesses”.

The consultation on “potential surtaxes in response to unfair Chinese trade practices” will seek industry input on the application of a surtax and the timing of its coming into force, it said.

The Canadian tariffs on Chinese EVs announced in late August matched US measures seeking to fend off a flood of Chinese state-subsidised cars into North America.

Ottawa at the time also announced a surtax on imports of steel and aluminium products from China.

China said it would launch an anti-dumping probe into Canadian canola and chemical products, in apparent retaliation.

Canada is among the world’s top producers of canola – an oilseed crop that is used to make cooking oil, animal feed and biodiesel fuel – and China has historically been one of its largest customers.

Beijing has also referred Canada to the World Trade Organization over the EV tariffs, calling it “a classic unilateral and trade protectionist act”.

US, Britain stress unity towards China as new strategic dialogue opens in London

https://www.scmp.com/news/china/article/3278015/us-britain-stress-unity-towards-china-new-strategic-dialogue-opens-london?utm_source=rss_feed

The US and Britain underscored their commitment to a unified approach on China as the long-time allies opened a new bilateral strategic dialogue in London on Tuesday.

US Secretary of State Antony Blinken and British Foreign Secretary David Lammy stressed the importance of their countries liaising on global issues, including their stance towards Beijing, at a news conference at the Foreign, Commonwealth and Development Office.

Lammy, who was named Britain’s top diplomat following the Labour Party’s victory in the national general elections in July, highlighted the value of the new mechanism dubbed the UK-US strategic dialogue.

“This dialogue can identify ways for us to strengthen those connections of course even further and I know that would be a benefit to both of our countries but frankly to much of the global community,” said Lammy, previously a British lawmaker for decades.

He touted the allies’ partnership in the Indo-Pacific region and their dealings with China, saying these issues would play a central role in the strategic talks.

Blinken described Britain as an “indispensable partner” in tackling various global issues, including “the challenge posed by China”.

“We need to make sure that we are fully aligned on the north stars,” America’s top diplomat said. “[That is] where it all starts, so I am very enthusiastic about this process.”

The dialogue comes amid rising global tensions. The US and Britain are seeking to strengthen their position in the Indo-Pacific amid China’s expanding sway there.

The US and China are locked in a contest to gain access to prime maritime routes in the region and rich mineral deposits lining the Pacific floor. Each seeks strategic defence advantages that come from forging alliances with countries across the vast area.

In this vein, Lammy in June said he would undertake “a full audit … of our relationship with China so that we can set the direction and a course” in remarks at an event hosted by London-based think tank Chatham House.

Last month, British Prime Minister Keir Starmer and Chinese President Xi Jinping spoke by phone for the first time and expressed their desire to broaden cooperation between their countries in areas like trade, the economy, combating climate change and ensuring global security.

However, the British side urged “open, frank and honest discussions to address and understand areas of disagreement where necessary, such as Hong Kong, Russia’s war in Ukraine and human rights”, according to the Financial Times.

For his part, Xi said he hoped the new prime minister would be able to “look at China objectively and rationally”.

On Tuesday, neither Lammy nor Blinken elaborated on their country’s China strategy.

Yet their remarks build on earlier US-led efforts to bolster America’s presence in the Indo-Pacific, such as the North Atlantic Treaty Organisation summit held in Washington in July.

At that gathering, the US announced Blinken would meet this year with the foreign ministers of Australia, Japan, New Zealand and South Korea –Nato’s Indo-Pacific partners.

And in late August, US Deputy Secretary of State Kurt Campbell travelled to the region, attending the Pacific Islands Forum leaders’ summit in Tonga as well as the opening ceremony of America’s newest embassy, located in Port Vila, Vanuatu.

Campbell is slated to take part in the UK-US talks on Wednesday.

Can China’s export momentum last? 5 takeaways from August trade data

https://www.scmp.com/economy/economic-indicators/article/3277966/can-chinas-export-momentum-last-5-takeaways-august-trade-data?utm_source=rss_feed

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China’s exports rose 8.7 per cent from a year earlier to US$308.65 billion in August, beating the expected increase of 7.04 per cent surveyed by Chinese financial data provider Wind, and topping the .

Year-on-year export values in August grew at the fastest pace in 17 months, and export volumes hit record highs, according to Zichun Huang, China economist at Capital Economics.

“Exports remained strong in August,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. And ING’s chief economist for Greater China, Lynn Song, said “exports defied expectations”.

“While trade data is difficult to forecast, the upside miss is still notable as the direction was different than expected,” Song said.

“We have had several months of purchasing managers’ index surveys showing slowing new export orders, as well as shrinking orders on hand. This would typically flag gradually weaker exports, as well.

“Official data has managed to buck this trend for at least August, as exports picked up at a 2.7 per cent month-on-month pace.”

Song also pointed to an “encouraging and somewhat surprising development” as auto exports rose in August, which brought year-on-year, year-to-date growth to 20 per cent from 18.1 per cent in July.

China’s imports rose by just 0.5 per cent from a year earlier in August, compared with the 7.2 per cent growth seen in July, and they surprised on the downside, according to Zhang at Pinpoint Asset Management.

Huang at Capital Economics said a higher base for comparison played a role, but import volumes also declined, month on month.

“A less surprising development was on the side of imports. Import growth came in a little lower than forecast, slowing to a tepid 0.5 per cent year-on-year growth level,” said Song at ING.

He added that “import growth remains very uneven”, with the categories seeing strong year-to-date, year-on-year growth primarily tied to national strategic priorities, with automatic-data-processing equipment, semiconductors and hi-tech imports leading the way.

But “other categories have been fairly weak throughout the year”, Song said, pointing to steel, cosmetics and agricultural imports.

China’s August trade surplus stood at US$91.02 billion, compared with US$84.65 billion in July.

“The faster-than-expected export growth and larger-than-expected slowdown of imports led to a larger trade surplus of US$91.02 billion in August,” Song said.

“This positive news comes after disappointing data releases in the last month.”

China’s exports to the Association of Southeast Asian Nations rose by 8.78 per cent in August compared with a year earlier, while exports to Russia rose by 10.37 per cent.

Shipments to the United States increased by 4.94 per cent, representing a third straight month of positive growth, while shipments to the European Union rose by 13.39 per cent.

Shipments to the EU marked their highest export growth in two years. July 2022 saw a growth rate of 23.17 per cent.

Huang at Capital Economics expects China’s exports to remain robust in the near term, supported by a decline in China’s real effective exchange rate.

“Outbound shipments are likely to remain strong in the coming months. Admittedly, more barriers against Chinese goods are being erected,” he said, referring to provisional tariffs by the European Union on Chinese-made electric vehicles, as well as similar moves by the United States and Canada.

“But this won’t significantly impact overall export performance. The tariffs target only a small portion of China’s outbound shipments, and their effect can be mitigated via trade re-routing and exchange-rate moves.”

He also expects imports to rebound in the near term, after having fallen by volume last month.

“A third of imports are intermediate goods used in the export sector. And a pickup in fiscal spending over the remainder of the year is likely to boost construction activity and increase demand for industrial commodities,” he added.

But Zhang at Pinpoint Asset Management questioned how long China’s exports could remain strong given the weakening US economy and the rising trade tensions.

“China’s economy continues to show diverging trends with weak domestic demand and strong export competitiveness, both reflecting the domestic deflationary pressure,” he said. “Strong exports may delay the adjustment in fiscal policy toward a more proactive stance.”

And Song at ING said it remained uncertain whether China’s export momentum could last.

“Aside from incoming tariffs and the sluggish export-orders data of the last few months, if global growth momentum begins to slow too, this could also drag export momentum,” Song added.

Why Super Typhoon Yagi wrecked one wind farm in China but the rest stood their ground

https://www.scmp.com/news/china/science/article/3277996/why-super-typhoon-yagi-wrecked-one-wind-farm-china-rest-stood-their-ground?utm_source=rss_feed

Super Typhoon Yagi – the world’s second most powerful tropical cyclone this year – left a deadly trail of destruction as it swept across southern China last week.

However, while one wind farm was badly wrecked – the rest stood strong.

This came as no surprise to one Chinese wind energy expert, who said: “Typhoons are no longer an insurmountable environmental constraint for China’s wind power development”.

Yagi packed winds of around 245km/h (152mph) near its centre when it made landfall on Friday in Wenchang, in China’s southern island province of Hainan. A wind farm in the city was hit head-on, leaving several turbines lined up along the coastline battered and broken.

The farm was not in operation at the time, as it is undergoing an upgrade that will replace 32 small wind turbines with 16 larger and more efficient typhoon-resistant versions.

Work started earlier this year and was expected to be completed in October. But some of the newly installed turbines were destroyed by Yagi.

At least five turbines had been torn down, a representative from farm owner Huaneng Hainan Power Generation Co told mainland media. The company is a subsidiary of state-owned energy firm China Huaneng Group.

Shanghai-based financial news site Yicai quoted an industry insider as saying that the manufacturing cost of a single wind turbine of this model was close to tens of millions of yuan, the equivalent of millions of US dollars.

Wind power generation involves using the wind to turn the propeller-like blades of a turbine around a rotor, which then spins a generator to produce electricity.

When a strong typhoon hits, the turbine will automatically stop its blades from rotating and then adjust its direction using a yaw control mechanism to reduce wind resistance.

But the yaw system on these turbines was not working because the project had yet to be commissioned.

According to Qin Haiyan, secretary general of the Chinese Wind Energy Association, a government non-profit organisation, if the adjustment system fails and the wind blows in from the side, the wind resistance of a turbine is greatly reduced.

However, technological advances have made such incidents less common in China, Qin told mainland media outlet Jiemian on Sunday.

Tropical cyclones – called typhoons or hurricanes depending on the region – are a familiar threat in certain parts of the world and have long deterred wind farm developers because of their unpredictable and catastrophic nature.

Qin recalled that more than a decade ago, China’s coastal onshore wind turbines would sometimes be damaged by typhoons, leading many to believe that its typhoon-prone southern coast was not suitable for wind power development.

But despite the increasing frequency and intensity of such storms worldwide in recent years, “Chinese wind turbines are rarely destroyed,” Qiu noted.

He attributed this to China’s rapid progress in typhoon-resistant wind farm design.

Yagi hit southern China with lashing rain and winds of up to level 17, the highest on China’s tropical cyclone scale. Both onshore and offshore wind turbines in coastal areas were affected to varying degrees, but some cutting-edge turbines showed excellent typhoon resistance.

Among them was a newly installed wind farm in Hainan featuring turbines from Mingyang Smart Energy, a major private wind turbine manufacturer in China.

They include what the company claims is the “world’s largest single-capacity offshore wind turbine”.

Installation of the advanced turbines – with a capacity of up to 20 megawatts and a modular, lightweight design – was completed only at the end of last month. Yagi arrived days later, but the wind farm survived.

Mingyang issued a press release on Sunday about the outstanding typhoon resistance of its turbines.

According to the release, the mega turbine at the Hainan farm has a rotor diameter of 292 metres (958 feet), covering a maximum wind-sweeping area equivalent to nine football pitches. The bigger rotor diameter boosts the wind energy capture area and accordingly increases power generation efficiency.

The turbine is designed for global deployment in medium-to-high wind speed regions, and is particularly suited to typhoon-prone sites, Mingyang said in the press release.

It said more than 1,700 of its wind turbines across 51 wind farms survived the challenge of Yagi.

The company, a world leader in typhoon-resistant technology, says its turbines are well-suited for installation at deep-sea sites and for operation in high wind speed areas.

A wind farm in the southern province of Guangdong hosts another model from the company, the Mingyang Tiancheng – which it describes as “the world’s largest monolithic floating wind power platform”. It has the ability to make adaptive yaw adjustments based on the direction of the typhoon, so that the turbine is always square to the direction of the incoming wind.

With its abundant wind resources and cost advantages in offshore wind power, China leads the world in operational offshore wind capacity and dominates global wind turbine manufacturing.

After Hainan on Friday afternoon, Yagi made landfall again in Xuwen, Guangdong, during the night.

China’s first deep-sea floating wind turbine, “Fuyao”, installed in the Xuwen sea area, took a direct hit. According to its manufacturer – the state-owned China State Shipbuilding Corporation Haizhuang Windpower – it withstood the hurricane force winds for up to five hours.

The company said in a press release today that “Fuyao” is designed to withstand typhoons, corrosion and other complex marine environments, and has been tested by at least three strong typhoons.

As of last year, China had more than 160 offshore wind farms across 12 coastal provinces, with total installed capacity exceeding 39 million kilowatts, according to the China Renewable Energy Society, a Beijing-based research NGO.

China to train 3,000 foreign law enforcement officers to protect overseas interests

https://www.scmp.com/news/china/politics/article/3277957/china-train-3000-foreign-law-enforcement-officers-protect-overseas-interests?utm_source=rss_feed

China will help to train 3,000 foreign law enforcement officials over the next year to tackle global security issues and better protect Chinese interests beyond its borders, the country’s public security minister said.

Wang Xiaohong made the pledge in a speech on Monday at the opening of the 2024 Conference of the Global Public Security Cooperation Forum in Lianyungang, in eastern China’s Jiangsu province, China Daily reported.

China will also send police consultants and working units to countries to help improve their law enforcement capacity, conduct joint patrols and investigations, and tackle cross-border crime, Wang said.

Beijing is seeking ways to boost its presence beyond its borders to protect overseas interests while offering an alternative to Western-led global security governance.

In the past year, China has worked with all parties to implement in-depth global security initiatives, and will continue to promote the development of the global public security governance system in a “more fair, reasonable and efficient direction”, Wang said, according to state news agency Xinhua.

This year’s conference was themed “Win-win cooperation under changing circumstances: building a global public security community”. More than 2,100 people from 122 countries, regions and international organisations attended this year’s event, which also featured forums on tourist security, police education and law enforcement capacity building, according to The Paper.

On Monday, Wang met security officials from Malaysia, Myanmar, Zambia, Nicaragua and Russia, and told them that China was willing to cooperate in the fight against telecoms fraud, drug trafficking and other cross-border crimes, boost security along belt and road infrastructure projects and offer criminal judicial help, Xinhua reported.

Francisco Javier Diaz Madriz, director general of Nicaragua’s national police, told Xinhua his country was “looking forward to learning from China’s successful experience”.

At last year’s conference, Wang discussed the need to build a cooperative public security network, and said global powers “with more resources and advantages” should take the lead in upholding fairness and justice in the international community and take a stand against hegemony.

That forum also issued several documents, including proposals on data security, artificial intelligence governance, and a talent programme for global public security.

Beijing released a concept paper in February 2023 on its Global Security Initiative, a plan announced by President Xi Jinping almost a year earlier, as China tries to take a bigger role in global governance and security.

In the paper, Beijing repeated a call for countries to strengthen strategic dialogue to improve mutual trust and manage differences.

EU proposes lower tariffs on Chinese-made electric vehicles after input from car makers

https://www.scmp.com/news/china/diplomacy/article/3277991/eu-proposes-lower-tariffs-chinese-made-electric-vehicles-after-input-car-makers?utm_source=rss_feed

Punitive European Union tariffs on Chinese-made electric vehicles will be lowered following consultations with the companies affected, according to sources familiar with the matter.

Tesla will once again be the big winner, having its proposed tariff rate lowered for a second time to 7.8 per cent from 9 per cent.

Chinese firms SAIC and Geely will have their rates lowered from 36.3 per cent to 35.3 per cent and from 19.3 per cent to 18.8 per cent, respectively.

These duties will be applied in addition to the base rate 10 per cent tariff the EU applies to all EV imports. The news was first reported by MLex, a regulatory news service.

Chinese government officials have been scrambling to strike a deal with the European Commission to end the dispute before the EU’s 27 member states hold a vote later this month that could see the duties written into law for a five-year period.

During the vote, 15 of 27 member states accounting for 65 per cent of the bloc’s population would have to go against the tariffs to stop them.

On Monday, the vice-minister of commerce Li Fei sat down with senior EU officials in Brussels for talks ahead of a meeting expected to take place next week between Commerce Minister Wang Wentao and outgoing EU trade chief Valdis Dombrovskis.

“The electric vehicle anti-subsidy case is complex and has a wide impact. It is challenging for China and the EU to reach an agreement through consultations,” the Chinese commerce ministry said on Tuesday.

It urged the EU to “show sincerity” and said the two sides could resolve each other’s concerns, adding: “China is willing to continue to work closely with the EU to reach a solution that is in the common interests of both sides and in line with WTO rules as soon as possible.”

Although Brussels is willing to talk, there is scepticism as to whether it is possible to cut a grand bargain: any Chinese proposal would have to mirror the effect of the anti-subsidy duties, which would be applied by October 31 at the latest.

The EU says Chinese subsidies are allowing companies to export their cars to Europe at a discount, making locally made models less affordable. Beijing has denied that this is the case, and said that the sector’s success is a result of planning and innovation.

Even the EU’s top tariff – the 35.3 per cent plus 10 per cent base rate for SAIC – is low compared with some other major Western markets, including the United States and Canada, which have moved to impose 100 per cent import duties.

In a report published on Monday, the former Italian prime minister Mario Draghi said that higher tariffs elsewhere will continue to make the EU an accessible market for subsidised Chinese products.

“In response to perceived unfair competition, an increasing number of countries are raising tariff and non-tariff barriers against China, which will redirect Chinese overcapacity towards the EU market,” the former European Central Bank chief added.

He said that keeping the EU market open to Chinese-made EVs would “be unlikely to succeed” since it could jeopardise jobs.

“According to ECB simulations, if the Chinese EV industry were to follow a similar trajectory of subsidies to that applied in the solar PV industry, EU domestic production of EVs would decline by 70 per cent and EU producers’ global market share would fall by 30 percentage points,” he wrote.

The EU-China EV dispute has threatened to spiral into a broader trade war with Beijing triggering investigations into food and drink imports and threatening action against European car firms.

However, there have been signs in recent weeks that both sides are keen to avoid a major conflict. Last week China declined to impose provisional duties on French cognac, despite publishing evidence of dumping in the sector. However, the industry expects duties to be imposed at a later date.

Chinese FA bans 38 players for life in corruption crackdown

https://www.theguardian.com/football/article/2024/sep/10/chinese-fa-corruption-crackdown-players-club-officials-banned-match-fixing-gambling

The Chinese Football Association has banned 38 players and five club officials for life after a two-year investigation into match-fixing and gambling. The investigation, part of a crackdown on corruption in the sport, found that 120 matches had been fixed, with 41 clubs involved, according to the official Xinhua news agency. The report did not say whether all the matches were in China.

The former China internationals Jin Jingdao and Gu Chao and the South Korea midfielder Son Jun-ho were among those banned for life, according to findings made public on Tuesday.

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None of the players have made any public comment. Son’s agent, Park Dae-yeon, said it was “ridiculous” to accuse his client of match-fixing and that they would hold a press conference “to say everything we have to say”. Son was released in March after being detained for 10 months in China and returned to South Korea, where he plays for Suwon.

The club’s sporting director, Choi Soon-ho, said they would continue to field Son unless ordered not to do so because the CFA ruling “doesn’t apply to us”. Choi said: “He vehemently denied bribery charges when he signed with us and I respect that.”

Zhang Xiaopeng, from the ministry of public security, said 44 individuals faced criminal penalties for bribery, gambling and the illegal opening of casinos, and 17 others were found to have engaged in bribery and match-fixing.

The CFA’s president, Song Kai, said 43 of the 44 had been banned for life from football-related activities and 17 others received five-year bans. The sport has long grappled with corruption, which fans have blamed for the underperformance of the men’s national team.

In August, a former vice-president of the CFA was sentenced to 11 years for accepting bribes and a former director of the competition department was sentenced to seven years for the same offence. A former chairman of the CFA was sentenced to life in prison in March.

US and China hold high-level military talks in effort to stabilise ties

https://www.theguardian.com/us-news/article/2024/sep/10/us-and-china-hold-high-level-military-talks-in-effort-to-stabilise-ties

The United States and China have held high-level commander talks for the first time, Chinese authorities said, amid efforts to stabilise military ties and avoid misunderstandings, especially in regional hotspots such as the South China Sea.

Washington hopes to open new channels of regular military communication with Beijing after ties sank to a historic low when the United States downed a suspected Chinese surveillance balloon last year.

Adm Sam Paparo, the head of the US Indo-Pacific command, on Tuesday held a video call with his counterpart, Wu Yanan, of the southern theatre command of the People’s Liberation Army (PLA).

The US Indo-Pacific command’s areas of responsibility include the South China Sea and the Taiwan strait, two hotspots for regional tension that are also flashpoints in US-China bilateral ties.

Both sides had an “in-depth exchange of views on issues of common concern”, the Chinese defence ministry said.

Paparo urged the PLA “to reconsider its use of dangerous, coercive, and potentially escalatory tactics in the South China Sea and beyond”, the Indo-Pacific command said in a statement that described the exchange as “constructive and respectful”.

He also stressed the importance of continued talks to clarify intent and reduce the risk of misperception or miscalculation.

The call followed a meeting in Beijing last month between the US national security adviser, Jake Sullivan, and the Chinese leader Xi Jinping’s leading military adviser, at which the talks were agreed.

US and Chinese troops were also taking part in large-scale military exercises led by the Brazilian armed forces this week in the Brazilian city of Formosa in the state of Goiás.

American and Chinese troops had not trained side by side since 2016, when Beijing participated in the rim of the Pacific exercise, or Rimpac, led by the US Indo-Pacific command.

Most two-way military engagements between the US and China were suspended for almost two years after Nancy Pelosi, then speaker of the US House of Representatives, visited Taiwan in August 2022.

“I certainly worry about an unintended conflict between our military forces, an accident, an accidental collision,” Nicholas Burns, the US ambassador to China, told the magazine Foreign Policy in an online interview.

Later this week, the US plans to send a senior Pentagon official to a major security forum in China.

China’s EV makers must overcome trust gaps to win over global buyers, survey says

https://www.scmp.com/economy/global-economy/article/3277963/chinas-ev-makers-must-overcome-trust-gaps-win-over-global-buyers-survey-says?utm_source=rss_feed

China’s electric vehicle (EV) exporters must contend with a lack of “trust” and brand awareness in some overseas markets by emphasising their strengths – particularly the “value for money” their products represent – said professional services firm Ernst & Young in a study on Monday as the pillar industry grapples with a series of tariff hikes from the West.

Gaps in trust for brands or products explain why 35 per cent of Asia-Pacific consumers and 30 per cent of Europeans would not opt for a Chinese vehicle, Ernst & Young’s automotive team said in its 2024 Annual Global Mobility Consumer Index, a yearly report on the state of the global EV sector.

More than one in five buyers from both regions said they know little about Chinese brands, study authors said.

But 59 per cent of Europeans and Latin Americans interested in Chinese brands cite their relative value as a prime reason for consideration.

“Chinese brands offer a compelling value proposition for consumers, with a wider selection of affordably priced EVs loaded with technology features not found in comparable gasoline or diesel vehicles,” said the firm’s mobility leader Martin Cardell.

“However, the lack of brand awareness and a growing issue with trust remains a challenge.”

Age appeared to have some correlation with trust levels, with 36 per cent of Gen Z calling trust a factor compared to 41 per cent of millennials. Trust in Chinese brands may also reflect people’s trust in China as a whole, said Chen Zhiwu, chair professor of finance at the University of Hong Kong.

Global intent to buy EVs is “levelling off” after growing from 30 to 55 per cent between 2020 and 2023, the study said, with the figure now standing at 58 per cent. Its findings were based on surveys of 19,000 people from 28 countries.

Report authors said EV demand is slowing, at least in part, because consumer concerns remain high over a lack of charging infrastructure.

China is the world’s largest producer of EVs and exported about US$34.1 billion worth of the vehicles last year, drawing consumers with relatively low unit prices.

However, exporters have had to come to terms with a more combative trade environment, as the US quadrupled EV import tariffs to 100 per cent in May and Europe followed suit in July with tariffs of up to 37.6 per cent.

In response, Chinese carmakers such as BYD, Great Wall and SAIC Motor are expanding their production capacity in Europe, Fitch Ratings said in a second-quarter research note.

In China, 79 per cent of citizens who plan to buy new cars say they will go for an electric model, Ernst & Young found. The same figure for Indian consumers stands at 73 per cent and the world average is 58 per cent.

China’s market accounts for nearly 60 per cent of all EV purchases worldwide, according to data from the International Energy Agency.

“The increase in car buying demand has been driven by emerging markets, China and India among them, and Chinese EV brands have had a strong 12 months,” Ernst & Young said in its summary of the study.

Group of mainland Chinese tourists taken to hospital in Hong Kong after suffering suspected food poisoning

https://www.scmp.com/news/hong-kong/health-environment/article/3277979/group-mainland-chinese-tourists-taken-hospital-hong-kong-after-suffering-suspected-food-poisoning?utm_source=rss_feed

A group of mainland Chinese tourists was suspected to have suffered food poisoning after developing diarrhoea and vomiting in Hong Kong, with a dozen ambulances called to take them to hospitals on Tuesday.

Police said they received a report at 12.33pm that 11 people had fallen ill in To Kwa Wan and were later sent to Queen Elizabeth Hospital.

A source familiar with the case said they were among a tour group of 61 visitors who arrived from the mainland and checked into a hotel in Tsing Yi on Sunday.

The insider said 11 of them started vomiting and experiencing diarrhoea after they had dinner at a To Kwa Wan restaurant on Monday night.

They complained of feeling unwell while shopping in Hung Hom on Tuesday.

Eight men and three women, aged 53 to 68, were taken to hospital for treatment.

A government spokesman said 12 ambulances were dispatched to the scene.

Photos posted online showed a middle-aged man throwing up on the street and another tourist sitting on a bus while holding a plastic bag.

The Post has reached out to the Centre for Health Protection for further details.

After US university cuts China ties, experts worry over ‘continued downturn’ in exchanges

https://www.scmp.com/news/china/diplomacy/article/3277986/after-us-university-cuts-china-ties-experts-worry-over-continued-downturn-exchanges?utm_source=rss_feed

The end of a decade-long partnership between a leading public research university in the United States and China’s Tianjin University was a “direct consequence” of a US strategy to decouple from China in hi-tech fields, and a worrying sign of dwindling academic exchanges between the two countries, analyst have warned.

The Georgia Institute of Technology announced last week that it would sever its relationship with the Georgia Tech Shenzhen Institute (GTSI) – a joint venture with Tianjin University – and shut down its degree programmes in China’s technology hub.

The announcement by one of the country’s leading technological universities followed accusations from US lawmakers that the school’s partnership with blacklisted Tianjin University might have compromised US national security.

In May, the House Select Committee on the Chinese Communist Party opened an investigation into its collaborations with Tianjin University and asked Georgia Tech’s leaders to clarify details of their research collaboration on semiconductor technologies.

The committee said China’s military-civil fusion strategy, which is aimed at as part of the country’s military build-up, leverages civilian companies, universities and technologies for military ends, and that Tianjin University was “deeply embedded” in the system.

The lawmakers said the relationship was problematic since Georgia Tech was home to the Georgia Tech Research Institute, which collaborates with the US Department of Defense on national security issues.

Tianjin University was added to the Commerce Department’s Entity List in late 2020, which restricts the export, re-export and transfer of items to entities believed to be involved in activities that threaten US national security.

The committee said that such activities include the theft of trade secrets and research collaboration to advance China’s military.

Soon after, Georgia Tech started re-evaluating its partnerships in China, halted plans to introduce PhD programmes, and limited enrolment to just 10 per cent of its initial target, a school official said.

“To date, Tianjin University remains on the Entity List, making Georgia Tech’s participation with Tianjin University, and subsequently GTSI, no longer tenable,” the institute said in a statement published last week.

The institute said that about 300 students currently enrolled in programmes in Shenzhen would be able to complete their degree requirements, adding that the university would continue to offer global experiences to students, including in Shenzhen.

In 2016, Georgia Tech collaborated with Tianjin University and Shenzhen’s municipal government to establish the GTSI, which began offering master’s degrees in engineering programmes in 2021.

Academic exchanges and cooperation between Tianjin University and Georgia Tech date back to 2009, with nearly 800 students exchanges since then, according to the GTSI website.

In 2014, the two universities launched a joint master’s programme in electrical and computer engineering in Shenzhen, after it was approved by China’s education ministry.

The GTSI had planned to expand its campus area with a new construction project in Shenzhen’s Nanshan district in beginning in 2022, but the sudden departure of Georgia Tech has further clouded the institute’s future operations.

The Post has contacted GTSI for comment.

Georgia Tech’s exit not only mirrors the broader challenges facing academic exchanges, but also underscores the growing unease in interuniversity partnerships as American academic institutions get caught in the crossfire of intensifying strategic and technological competition between Beijing and Washington.

Zhu Feng, executive dean of Nanjing University’s School of International Studies, said Georgia Tech’s exit from its association with Tianjin University is a direct consequence of America’s ongoing strategy to decouple from China in hi-tech fields.

He warned that the sudden end of the partnership signaled a “continued downturn” in academic and scientific collaborations between the two nations.

“Amidst escalating strategic and technological rivalry between the two global powerhouses, American institutions would inevitably become vigilant over any future partnerships with Chinese counterparts,” he said.

Diao Daming, a professor of international relations at Beijing’s Renmin University, said that the termination of such cooperation has been excessively politicised by the US.

“The incident demonstrated a widespread application of ‘securitisation’, leading to an outcome where the concept of security exceeds its proper boundaries,” Diao said, adding that the approach is now evident across multiple facets of US-China interactions.

He added that maintaining this approach would undermine regular interactions and constructive engagement between the two countries, ultimately impeding the continuous development of the US itself.

“Although it may seem that only some cooperative projects are being disrupted now, in the long run, these actions are eroding the foundation of stable public opinion necessary for sustaining stable ties between the US and China,” Diao said.

Other American universities have also faced public scrutiny over their ties with Chinese universities.

In June last year, the same US select committee expressed “grave concerns” and launched an investigation into ties between the University of California, Berkeley, and Tsinghua University.

It targeted the Tsinghua-Berkeley Shenzhen Institute, a joint initiative established in 2014, and questioned whether the university had adequately disclosed China’s funding for the institute.

The lawmakers also focused on the institute’s ties with Chinese universities and companies that have faced US sanctions, such as the National University of Defense Technology and telecoms giant Huawei.

Also in June 2023, Alfred University in New York found itself at the centre of a controversy and subsequently closed its Confucius Institute. The spotlight intensified when it was revealed that the university had received a defence department grant for hypersonic weapons research while simultaneously hosting the Confucius Institute.

A month before the closure, the House Select Committee on the Chinese Communist Party had launched an investigation into the university.

In 2018, Cornell University suspended a partnership with China’s Renmin University due to concerns over academic freedom. Two undergraduate exchange programmes have been suspended due to concerns that the Chinese partners had taken disciplinary actions, monitored or suppressed students who advocated for workers’ rights during a labour dispute at the time.

Why are young Chinese lying flat? They need hope and opportunities

https://www.scmp.com/news/china/politics/article/3277987/why-are-young-chinese-lying-flat-they-need-hope-and-opportunities?utm_source=rss_feed

Many young people in China have been “lying flat” – or doing the bare minimum to get by – in recent years, or at least talking about it.

Local government cadres have meanwhile been accused of lying flat at work.

The social movement known as tang ping in Chinese grew out of a meme that went viral in 2021. Now, to lie flat is to stop striving to meet society’s expectations – from career goals to accumulating wealth – and instead embrace a slower, more passive lifestyle.

While it has been criticised by official media, this has become a prevailing sentiment among young Chinese. It has also been linked with another online buzzword, nei juan – or “inward roll” – which metaphorically refers to the intense competition among a group of people of similar age or background.

Academics and educators have pointed to a lack of hope about the opportunities available to young people in China, even if they work hard.

The country is grappling with a sluggish economy after the pandemic, and youth unemployment is high. University graduates face fierce competition for jobs – or postgraduate courses if they want to delay the job-hunting process. And the outlook is even more grim for those who do not have a degree from what is seen as a good university.

This all contributes to the widespread apathy felt by young Chinese.

Many of those in their twenties were told from a young age that their future would be bright if they studied hard and got a good university education, but it turns out that is not the case.

For those who are not academic, there is also a lack of opportunity to climb the social ladder whether through creative or technical skills.

There are other factors at play for the civil servants accused in state media reports of lying flat in the workplace.

During the pandemic, many had to work overtime to carry out the draconian restrictions imposed on society and they also faced punishment if there was a Covid-19 outbreak in an area under their administration.

The high cost of measures such as mass testing and makeshift hospitals also depleted resources, and combined with the ongoing economic and property market woes it has meant cash-strapped local governments have had to cut officials’ pay.

Some cadres are also opting to do less because they fear making mistakes and being punished, according to state media and the party’s disciplinary watchdog.

In most countries, the private sector and civil society play an important role in motivating and innovating, creating the impetus needed for change and progress.

But in mainland China, private entrepreneurs are under pressure – including from a weak retail market or difficulty getting loans – despite repeated pledges of support from the government.

Civil society is also curtailed by restrictions imposed on non-governmental organisations. Instead of allowing people to set up their own NGOs, for example, those who want to volunteer to help others usually have to join a government initiative.

The apathy and urge to lie flat seen among young people today presents a stark contrast to the sense of excitement and hope during the market reform initiated by former leader Deng Xiaoping in the 1980s. That reform also gave rise to corruption and social injustice and caused social discontent, but it was a period when many people felt motivated to change their lives.

President Xi Jinping has introduced the notion of the Chinese dream, but his approach centres on collectivism and nationalism. The aim is for national rejuvenation, with individuals submitting to collective goals laid down by the party so they can have a good life.

There is nothing wrong with envisioning a China that is prosperous and strong. But that goal can only be achieved when people have hope and they feel motivated, and when they believe they have the opportunity to pursue their own dreams.

Apple’s AI delay dents iPhone 16 enthusiasm in China, as Huawei gets ready to pounce

https://www.scmp.com/tech/big-tech/article/3277959/apples-ai-delay-dents-iphone-16-enthusiasm-china-huawei-gets-ready-pounce?utm_source=rss_feed

Apple’s launch of the iPhone 16 has failed to impress consumers in China hoping to get a taste of its artificial intelligence (AI) technology, as the US tech giant grapples with competition from local behemoth Huawei Technologies, which launched a rival device just hours later.

The Cupertino, California-based smartphone maker on Monday unveiled the highly anticipated iPhone 16 series, its first AI-powered smartphone line-up. While many Chinese users have expressed excitement about Apple Intelligence, the firm’s on-device AI system, others pointed out that the feature will not be available in the Chinese language until next year.

Some consumers also questioned whether Apple’s promise to roll out the AI function in Chinese-speaking regions will cover the mainland, where generative AI technology is heavily regulated. To date, China’s Ministry of Information and Industry Technology has approved 188 large language models for public use in the country, none of which are released by foreign companies.

Globally, Apple’s built-in AI is powered in part by OpenAI’s GPT models, which have not been made available in China. Apple said on its website that the launch date of its AI feature in China will depend on the decision of Chinese regulators.

“The absence of AI in China is akin to cutting one of Apple’s arms,” one commentator said on microblogging site Weibo. “With the biggest selling point unavailable, shouldn’t you charge us half the price?” read a popular comment.

Apple introduced four models of the latest version of its flagship device: the iPhone 16, iPhone 16 Plus, iPhone 16 Pro and iPhone 16 Pro Max, with prices starting at 5,999 yuan (US$843). Pre-orders will start on Friday, with shipments commencing on September 20.

Demand for the new iPhones in China is expected to come mainly from existing users because of the delayed arrival of Chinese-language AI, according to Ivan Lam, a senior analyst at consultancy Counterpoint Research.

“Apple Intelligence has not shown a clear advantage over the AI functions offered by other Chinese brands either, so the impact of AI will be limited for iPhone,” he added. Lam expects Apple’s sales growth in China to slow substantially next year, although fourth-quarter sales this year could be higher than the year-earlier period.

Arthur Guo, a senior analyst with research firm IDC, said Apple shipments in mainland China are forecast to decline 0.8 per cent to 46.7 million units this year, although iPhone sales could pick up in 2025.

The lack of major hardware innovations in the iPhone 16 also drew the scorn of some consumers in China, who compared the launch to desperately squeezing the last bit of toothpaste out of the tube. The analogy became a trending term on Weibo on Tuesday morning.

Many users compared the iPhone 16 to Huawei’s first tri-fold smartphone, the XT, which was launched just hours after Apple’s debut event. Faced with mounting competition from local brands, Apple recently fell out of the in the world’s largest smartphone market.

Hong Yi, a programmer who uses the iPhone 15, said he will not upgrade because it is unclear when iPhone’s AI capabilities will come to China.

But Mark Ma, a media professional based in Beijing who uses an iPhone 11, plans to buy an iPhone 16. “I don’t think the new iPhone lacks capabilities,” he said, although the price did give him a pause. Still, he called the latest model “a bang on the buck”.

[Sport] Row over aircons in classrooms as China swelters

https://www.bbc.com/news/articles/ce9zlkz0ypyo

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Chinese food delivery giant Meituan brings Keeta app to Saudi Arabia in overseas foray

https://www.scmp.com/tech/big-tech/article/3277919/chinese-food-delivery-giant-meituan-brings-keeta-app-saudi-arabia-overseas-foray?utm_source=rss_feed

Chinese on-demand food delivery platform Meituan has expanded its international service Keeta to Saudi Arabia, as the company searches for growth opportunities abroad amid a softening economy and heightened competition at home.

Beijing-based Meituan on Monday introduced its food ordering and delivery service in Al-Kharj, a central city in the Gulf nation, according to an in-app announcement. The platform also appears to be launching soon in Saudi Arabia’s largest city, the capital Riyadh, according to a profile description of its verified account on X.

A Meituan representative confirmed that Keeta began a trial operation in Al-Kharj.

To attract new customers and gain a foothold in the market, Keeta is offering free delivery for orders that reach 25 riyals (US$6.66), as well as nearly 70 per cent off discounts on select combo meals. Delivery time is usually within 30 minutes. Customers can also pick up their meals from restaurants, the app shows.

Meituan’s foray into Saudi Arabia, the largest economy in the Middle East after Turkey, followed Keeta’s successful debut in Hong Kong – the beachhead of Meituan’s push outside mainland China.

After launching in the city in May last year, Keeta quickly surpassed London-based Deliveroo and Berlin-based Foodpanda in order numbers to lead with a 43 per cent market share in the first quarter of this year, according to data from local analytics firm Measurable AI. However, Keeta still lagged Foodpanda by order value.

In Saudi Arabia, Meituan faces stiff competition from local players, including Jahez, Talabat and Foodpanda’s sibling Hungerstation. The country’s online food delivery market is expected to reach US$11.74 billion this year, and grow at an annual rate of 5.2 per cent to reach US$15.13 billion by 2029, according to data provider Statista.

While Meituan is still in the early stages of its overseas expansion, it will continue to evaluate opportunities in different regions, founder and CEO Wang Xing told analysts in a post-earnings call last month. He added that “the overseas market is the right long-term strategy for Meituan”.

Meituan posted a 21 per cent jump in revenue to 82 billion yuan for the second quarter, bolstered by steady growth in its local commerce operations for food and grocery deliveries despite competition from rivals including Alibaba Group Holding’s Ele.me and ByteDance’s Douyin.

Alibaba owns the South China Morning Post.

China writes off more interest-free loans to Africa, but is the move just symbolic?

https://www.scmp.com/news/china/diplomacy/article/3277691/china-writes-more-interest-free-loans-africa-move-just-symbolic?utm_source=rss_feed

China has announced another round of write-offs on interest-free loans to more than two dozen African countries, but observers say the relief addresses only a small fraction of the overall debt burden on those countries.

At the Forum on China-Africa Cooperation (FOCAC) summit in the Chinese capital last week, Beijing said it would waive intergovernmental interest-free loans to 33 African countries due by the end of this year.

Interest-free loan forgiveness is a regular feature of FOCAC. Two years ago, China announced it would forgive 23 loans that had matured in 2021 for 17 African countries.

The loans are extended by the China International Development Cooperation Agency, Beijing’s foreign aid agency. But they account for just a small fraction – about 5 per cent – of the total loans China has provided to African countries, according to observers.

Most of the other loans from China are from its policy banks – including China Exim Bank and China Development Bank – and mostly fund projects under the Belt and Road Initiative, Beijing’s strategy for building global trade and infrastructure links.

On this portion of loans, Chinese banks, including Chinese policy lenders, are more likely to lengthen the repayment period for troubled borrowers, add a new grace period, or refinance the loan, rather than write down the principal amount.

Deborah Brautigam, a professor emerita in international political economy at Johns Hopkins University’s school of advanced international studies, called China’s decision a “symbolic gesture”.

“This … refers only to the unpaid balance of these 20-year loans, which many governments routinely treat as grants, given that China has been writing them off since 2000,” said Brautigam, who is the founding director of the China Africa Research Initiative (CARI).

She said that according to Boston University data on 199 of these interest-free loans between 2000 and 2023, “the largest write-off was in 2007, when the Chinese cancelled about US$715 million in overdue principal for these loans”.

Since 2007, China has cancelled interest-free loans owed by African countries more than a dozen times. For instance, China wrote off US$190 million of the debt in 2019, and it waived US$24.89 million in 2018, while in 2017, Beijing cancelled US$114.74 million in interest-free loans, according to CARI data.

Kai Xue, a Beijing-based corporate lawyer who advises on foreign direct investment, outbound mergers and acquisitions, and cross-border financing at DeHeng Law Offices, agreed that interest-free loans were a small part of the whole, but they nevertheless were “symbols of friendship”.

Xue said interest-free loans were generally allocated to projects such as the construction of stadiums or hospitals.

“It’s not surprising to see these loans being written off,” Xue said.

An expert on Chinese lending to Africa, who did not want to be named, said that this time around, interest-free loan forgiveness seemed to be a substitute for a more comprehensive pronouncement on how China would approach debt restructuring as part of the Group of 20’s (G20) Common Framework.

Under the framework, China and other bilateral creditors, including those under the Paris Club, are supposed to jointly provide debt relief for some of the world’s most distressed countries, including Zambia, Ethiopia, Chad and Ghana. But the process has faced delays.

“African governments are impatient with the process and China is reluctant to disclose its bargaining position,” the expert said, adding that China appeared to prefer ad hoc treatments.

“Beijing won’t want to be pinned down to a generic approach that would be expected to be applied in multiple cases.

“Interest-free debt forgiveness at FOCAC 2024 is all China is prepared to offer on the fundamental question of debt. Nevertheless, a complete omission of the topic would have created an awkward vacancy.”

China says it has provided debt relief and restructuring for many African countries, and other players need to do more.

As the biggest creditors of developing countries, multilateral financial institutions, such as the World Bank, and commercial creditors must play an active role in debt relief and suspension and provide more resources for developing countries, China says.

That message was telegraphed at FOCAC last week in the action plan for 2025-2027.

“Africa appreciates China’s positive contribution to helping African countries address debt issues through multilateral and bilateral channels, and urges other bilateral official creditors, commercial creditors and multilateral creditors to participate in the handling and restructuring of African countries’ debts under the principle of joint actions and fair burden-sharing,” the plan states.

At least one thing is clear, according to London-based economic research firm Capital Economics: debt restructuring talks are taking too long, locking countries out from the finance needed for development.

“China’s role in debt talks has often been a hurdle, either through its own tactics or the concerns of Western investors and institutions of more favourable treatment towards China,” Jason Tuvey, deputy chief emerging markets economist at Capital Economics, said in a research note.

Tuvey said a compromise was needed on issues such as the comparability of debt relief to “ensure the tortuous negotiations … are an exception rather than the rule, while also ensuring debt agreements are not simply pushing debt crises into the future”.

Why China is much more to Africa than development ATM

https://www.scmp.com/opinion/world-opinion/article/3277800/why-china-much-more-africa-development-atm?utm_source=rss_feed

At the Forum on China-Africa Cooperation in Beijing last week, China pledged 360 billion yuan (US$50 billion) worth of support to Africa. Perhaps more important than the scale is the evolving nature of such contributions.

China is diversifying its African lending from energy and infrastructure mega projects to smaller projects in green energy and industrial initiatives. Instead of construction and financing, where China can bring the greatest impact, Africa will increasingly turn to Beijing for knowledge and industrial resources.

Foreign powers have long been interested in Africa’s natural resources. However, resources are susceptible to elite capture and are seldom a basis for building a broad-based middle class or path to sustainable national prosperity.

Equatorial Guinea, with its high oil reserves and small population, once had the highest per-capita GDP in continental Africa, a position it no longer holds with declining oil and gas production. With high inequality and widespread poverty, the central African country’s fading oil fortunes only enriched the few. Zimbabwe might have large lithium reserves, but it is Morocco which is leveraging its phosphate resources for industrialising in the battery value chain.

In 1950, East Asia and sub-Saharan Africa were similarly poor in terms of per-capita GDP. The divergence in economic development in the ensuing decades is astounding. As shown in East Asia, human resources rather than natural resources provide the foundation for economic growth.

Just like East Asia, the textile and garment sector represents a good starting point of industrialisation for Africa, which has been targeted by the likes of Benin and Ethiopia. The latter is also attempting to move into manufacturing electric vehicles. Whether in labour-intensive or technology-based manufacturing, the labour productivity of a quality workforce is key. Developing human capital is an essential step towards industrialisation.

Going beyond sponsoring African students to pursue higher education in China, China has promised to bring vocational education to Africa. China can go one step further into upgrading Africa’s K-12 education, something which has been foundational to China’s success.

In 2026, designated the Year of China-Africa People-to-People Exchanges, China plans to begin its programme of sending STEM teachers to Africa to teach maths and science at model schools as well as train local teachers. With more than 11 million college students graduating each year, China can launch a programme with a far greater scale and impact than the US Peace Corps that President John F. Kennedy initiated in 1961.

In addition to education, public health is an important component of human development. Africa is dealing with the lingering hold of HIV in several countries and the spreading mpox outbreak in central Africa. Chinese support in creating an African centre for disease control headquarters and regional centres would be helpful.

Perhaps in tandem with the World Bank, New Development Bank and other partners, China could help fund the accelerated manufacturing and low-cost distribution of mpox vaccines in Africa. From investing in healthcare infrastructure, targeted deployment of public health and medical personnel to providing HIV test kits and supplying affordable antiretroviral drugs, China and developed nations can work together to control HIV in Africa.

Public order and personal safety are also foundational to human well-being. The ongoing war in Sudan has resulted in 10 million people being displaced and 2 million facing the prospect of dying of hunger-related causes by year’s end, yet it has received far less attention than Russia’s invasion of Ukraine and Israel’s war in Gaza. Estimates suggest Sudan could face up to 10 million deaths from starvation by 2027.

Unlike the foreign powers supporting either of the warring factions, China’s neutrality allows it to influence the actors involved to adopt a perspective that looks beyond their narrow interests. The European Union should have a strong interest in working with China to bring about peace in Sudan, given the need to ensure stability in the Suez Canal and handle the flow of refugees into Europe.

Meanwhile, beyond seeking Chinese investment and new loans, African heads of state who visited Beijing last week would also have been concerned with tackling their high sovereign debt burdens. Africa as a whole is expected to spend US$163 billion this year to service some of its US$1.15 trillion in external debt.

Diverting spending to service a country’s debts squeezes out resources that are needed for healthcare, education and longer-term economic development. African countries are dealing with a complex situation partly precipitated by the current environment of elevated interest rates.

Private sector debts for sub-Saharan Africa were almost 2.5 times those of all such debts held by China in 2022. While Beijing can be part of the solution in addressing the heavy debt burden of African countries, there also needs to be reform in financial government elsewhere to harmonise the equitable treatment of capital markets, private lenders and public creditors.

China’s relationship with Africa has moved from Beijing being a buyer of commodities and lender of last resort to something more diverse. China is becoming more of a consumer market and industrial partner for African countries. As Africa industrialises, its economic interactions with China will deepen and create an intercontinental ecosystem of intertwined prosperity.

From agricultural development and industrialisation to education and training, China can make effective contributions in Africa. The expanded Brics grouping can bring about regional peace in Africa. Disease control and debt restructuring for the continent will require broad-based global coordination.

Instead of viewing Africa as another arena of geopolitical competition, the West and China should engage in productive collaboration to help Africa unlock its immense potential, ultimately benefiting the whole world.

US private-equity firm L Catterton invests in Stenders as China’s consumer trends shift

https://www.scmp.com/business/banking-finance/article/3277826/us-private-equity-firm-l-catterton-invests-stenders-chinas-consumer-trends-shift?utm_source=rss_feed

US private-equity firm L Catterton has acquired a majority stake in Chinese-owned bath and body care company Stenders in a rare transaction amid a consumption decline and lacklustre foreign investment in mainland China.

The acquisition through L Catterton’s Asia fund platform marks the consumer sector-focused firm’s fourth investment in China in the past 12 months, with deployment totalling US$200 million. The firm said it was able to identify companies with “favourable risk and reward profiles” despite the challenges in the world’s second-largest economy.

“Bleak headline numbers about China’s consumer sector oversimplify the story and do not show the whole picture,” said Scott Chen, Asia managing partner at L Catterton. “We believe the present is a good time for us to lean in.

“Challenging times like this can also reveal which companies have truly differentiated offerings, strong brands and loyal customers.”

Backed by luxury-goods conglomerate LVMH, L Catterton has US$34 billion of assets under management and counts footwear brand Birkenstock and restaurant chain Crystal Jade in its Asia portfolio, according to its website.

Stenders captures consumer trends that involve a heightened focus on well-being and premium and natural products, L Catterton said on Tuesday. The size of the investment was not disclosed.

The premium segment of China’s bath and body care market expanded by 14 per cent annually over the past six years and is expected to reach around US$1.2 billion in 2028, according to industry estimates.

Stenders’ sales in China, its largest market, rose by around a fifth annually over the past four years. L Catterton’s China portfolio – Stenders plus plant-based beverage company Viee, kids personal care brand Hi!Papa and synthetic collagen maker Trautec – recorded 60 per cent higher sales and 140 per cent higher profits last year, compared with 2022.

That stands in stark contrast to the sluggish growth in China’s retail sales despite a raft of policies designed to buoy spending. July’s retail sales grew by 2.7 per cent year-on-year, according to the National Bureau of Statistics, missing consensus estimates.

Anbound, a Beijing think tank, said in a report that Chinese consumers are gravitating towards higher quality products to satisfy their needs, while investments in premium shopping have outpaced those in traditional consumer sectors as well as high-end luxury markets.

In 2018, Chinese businessmen Yang Gang and Zhao Yang, and China’s state-owned investment bank CICC, bought Stenders, a brand founded in Riga, Latvia, in 2001. It is understood that Yang and Zhao will retain a significant minority stake in Stenders after the sale to L Catterton. Information on whether CICC is still a shareholder was not disclosed.

“L Catterton has a proven track record of creating value for its portfolio companies, and we are keen to tap into its insights, operating know-how, and network as we continue to expand across various geographies,” said Kristine Grapmane, Stenders’ chief operating officer.

L Catterton’s Chen said the firm is able to leverage its experience in other geographies to replicate successes in China, where it observes that consumers have increasing preferences for clean labels, better-for-baby products and items that promote active longevity.

“The fundamentals which underpin the long-term growth of China’s consumer sector remain intact, and consumption is set to play an increasingly important role in the country’s economy,” Chen said.

A record high of more than US$20 trillion in household savings will also be released “after the uncertainties around the country’s real estate sector, which are causing consumers to be conservative, firmly dissipate”, he added.

South China Sea: Malaysia shadows Chinese research ship, asserting energy rights

https://www.scmp.com/week-asia/economics/article/3277915/south-china-sea-malaysia-shadows-chinese-research-ship-asserting-energy-rights?utm_source=rss_feed

Malaysia has reportedly begun shadowing Chinese vessels operating within its claimed waters, in what observers call a bold assertion of its maritime rights amid Beijing’s attempts at obstructing oil-exploration efforts.

The Ke Xue San Hao – a Chinese research vessel accused of conducting unauthorised surveys at Ardasier Bank, 150 nautical miles (278km) from Kota Kinabalu – was closely monitored by Malaysian patrol ship the KD Sundang, according to Stanford University’s Gordian Knot Centre for National Security Innovation in a Saturday report.

This is not the first instance of Malaysia standing firm against China’s maritime claims, said Collin Koh, a senior fellow at the S. Rajaratnam School of International Studies in Singapore.

Diplomatic tensions flared previously, particularly during a notable incident in 2020, when Beijing issued stern warnings to halt energy exploration off Sarawak. Then, China’s Haiyang Dizhi 8 entered Malaysian waters and followed a vessel carrying out exploration activities.

“Before that incident and after, Beijing has regularly issued diplomatic notes of warning to Kuala Lumpur to cease energy work off Sarawak,” Koh said.

But despite these pressures – and Chinese maritime forces operating in the area – Malaysia’s state oil company has continued its operations.

“Petronas has continued to pursue those energy projects despite China’s warning, and the Malaysian government has been slowly but surely trying to beef up its maritime presence,” Koh said.

Plans to build a new naval base at Bintulu in Sarawak have “been conceptualised for years”, he added – though it remains to be seen how this strategic posture will influence Malaysia’s relationship with China.

In a diplomatic note sent to the Malaysian embassy in Beijing in February, published by the Philippine Daily Inquirer on August 29, China demanded that Malaysia immediately cease all activities in a resource-rich maritime area off Sarawak on Borneo island.

Publication of the note, which accused Malaysia of infringing on Chinese territory, prompted the Southeast Asian nation’s foreign ministry to announce an investigation into the leak.

Malaysian Prime Minister Anwar Ibrahim has rejected Beijing’s demands, asserting on Thursday last week that the country would not halt its oil and gas exploration in the South China Sea, as he said these activities fell within Malaysia’s territorial waters.

The foreign ministry said on Monday it had “taken note” of reports regarding the presence of a foreign naval vessel near one of Malaysia’s offshore oil rigs, adding it was “unable to comment on their accuracy or specifics regarding the movements of military vessels, as these matters fall under operational security and defence authorities”.

Malaysia would “continue to engage diplomatically with all relevant countries”, it said.

The Malaysian defence ministry said last month that it was in the final stages of negotiating with the Sarawak state government for the construction of a new naval base at Bintulu, facing the South China Sea.

Once complete, it will be designated as the Royal Malaysian Navy’s Fourth Naval Regional Headquarters (Mawilla 4), the ministry said.

Malaysian foreign policy analyst Azmi Hassan noted that the act of shadowing Chinese vessels serves as a form of “diplomatic protest”.

He expressed optimism that the development was unlikely to escalate tensions between Malaysia and China.

“It is good that Beijing resorted to a diplomatic note since they believed in a diplomatic solution,” said Azmi, who is also a fellow at Malaysia’s National Council of Professors.

Koh agreed, emphasising that given Anwar’s amicable relations with Beijing, there was little incentive for China to alienate a Southeast Asian country with which it shares a positive rapport.

Following Chinese Premier Li Qiang’s visit to Malaysia in June, Anwar described China as a “true friend”, while Li praised the relationship as a model for bilateral ties in the region.

China has been Malaysia’s top trading partner since 2009, with bilateral trade reaching US$98.8 billion last year, accounting for 17 per cent of the Southeast Asian nation’s total trade.

Both sides would seek a “business as usual” approach, Koh said, noting that it was strategically beneficial for Beijing to maintain positive relations with the rest of the Association of Southeast Asian Nations while it focused squarely on the Philippines.

“China will strive to alienate the Philippines and portray it as an outlier” among South China Sea claimant states, Koh said. “[This is] typical of its ‘salami-slicing’ approach towards Asean.”

Tensions in the contested waters have escalated in recent weeks. Manila accused a Chinese coastguard ship of deliberately ramming a Philippine vessel near Sabina Shoal earlier this month and has previous levelled allegations of Beijing employing grey-zone tactics, including the use of water cannons and high-intensity lasers against Philippine vessels.

Benjamin Blandin, a maritime security expert and network coordinator at the Yokosuka Council on Asia-Pacific Studies, said that China was “expanding the perimeter of its asymmetric warfare by going after Malaysia”.

Beijing was “challenging the red line on a daily basis”, he said, adding that it had been unable to counter Vietnam’s land reclamation and militarisation of islands in the South China Sea, and was reaching the limits of what it could do to intimidate the Philippines without provoking conflict.

Since 2022, Vietnam has reclaimed about 1,438 acres (5.8 sq km) around the disputed Spratly Islands, bringing its total land reclamation in the archipelago to about 2,360 acres.

Blandin said Malaysia has become increasingly assertive in defending its interests in recent years, especially as its oil production declines and the need for exploration to open new wells grows.

“Therefore, China is increasing the pressure by patrolling areas it did not patrol before, or rarely,” he said, adding that an unwritten agreement between the two countries had allowed China to refrain from deploying navy ships or maritime militia vessels within Malaysian waters, but that dynamic may be shifting.

Kuala Lumpur has continuously monitored Chinese movements using its navy, coastguard vessels and aircraft, as well as drones provided by the United States, Blandin said. Washington also supplies satellite imagery and conducts surveillance from airfields in Indonesia, the Philippines and Malaysia.

“So they are just doing what they have always been doing, but perhaps from a closer distance than in the past,” he said.

China’s carbon market to expand, adding steel, cement and aluminium by year’s end

https://www.scmp.com/business/china-business/article/3277950/chinas-carbon-market-expand-adding-steel-cement-and-aluminium-years-end?utm_source=rss_feed

China will expand its national carbon trading market to cover the steel, cement and aluminium sectors by the end of this year, bringing the three emissions-heavy industries into the fight to meet the country’s decarbonisation goals.

With the additions, the national emissions trading scheme (ETS) is expected to cover around 60 per cent of China’s carbon emissions, the Ministry of Ecology and Environment (MEE) said Monday in a draft plan seeking public opinions. The ETS is already the world’s largest carbon-trading market even though it currently only covers the country’s power sector.

Under the scheme, companies in the three sectors will be given emissions quotas for each plant based on carbon emissions per unit of output. They can buy carbon credits if they need to emit more than their quota, or sell them if they manage to emit less.

According to the MEE, the three sectors will add about 1,500 companies – each with annual direct emissions equivalent to more than 26,000 tonnes of carbon dioxide – to the ETS, increasing its coverage by about 3 billion tonnes of emissions.

“After further consolidation of the data, hardware and policy foundations of the cement, steel and aluminium industries, all preparation work for the market coverage expansion is ready,” MEE said in the draft plan.

The expansion has been long-awaited since the ETS launched in July 2021. The scheme is considered a major tool to realise China’s dual targets of peaking nationwide emissions by 2030 and reaching net-zero emissions by 2060. It currently covers 2,257 emitters in the power-generation sector with annual emissions of 5 billion tonnes, or about 40 per cent of China’s overall emissions.

The initial plan was for the scheme to expand to the cement and aluminium sectors as early as 2022, but constraints like poor data quality and concerns about pressurising industries at a time of economic hardship delayed the move.

By 2025, the national ETS is slated to include all eight of China’s big carbon-emitting sectors: power generation, oil refining, chemicals, steel, building materials, non-ferrous metals, paper and aviation. This would cover about 75 per cent of China’s overall carbon-dioxide emissions, according to the government’s plan.

The cost of emitting carbon dioxide in China has nearly doubled over the past three years, although analysts have said the ETS still has “a long way to go” before catching up with its European peers and becoming an effective tool for cutting emissions.

The carbon price on the ETS closed at 92.84 yuan per tonne on Monday, nearly double the opening price of 48 yuan per tonne on July 16, 2021, the day the market launched.

Cumulative trading volume of carbon-emission allowances from the launch to Monday reached 474.69 million tonnes, with transaction value reaching 27.81 billion yuan (US$3.9 billion), according to the Shanghai Environment and Energy Exchange, which oversees the ETS.

The Chinese ETS’ focus on emissions per unit of output makes it less effective than the European Union’s ETS, which uses a cap-and-trade approach and therefore addresses total emissions, according to analysts.

China targets new money-laundering risks, including cryptocurrency

https://www.scmp.com/economy/policy/article/3277965/china-targets-new-money-laundering-risks-including-cryptocurrency?utm_source=rss_feed

China’s lawmakers will seek to “monitor and analyse new money-laundering risks”, with a particular focus on emerging technologies such as cryptocurrency, as they review a draft amendment this week.

The draft revision to the Anti-Money Laundering Law will undergo its second round of review during this week’s session of the Standing Committee of the National People’s Congress, China’s top legislative body.

“[The revision] will set requirements to monitor new types of money laundering … to improve the ability to monitor and analyse new money-laundering risks,” Wang Xiang, spokesman for the Legislative Affairs Commission of the Standing Committee, said on Monday.

The revision also refines the definition of anti-money-laundering, with seven types of predicate offences - a crime that is a component of a more complex criminal activity, often associated with money laundering or organised crime - listed.

A catch-all provision to expand the scope of the offences, which aims to better align with the relevant provisions in China’s Criminal Law, will also be added.

The proposed changes will help China to bolster a crackdown on illegal activities and address cryptocurrency-related risks, measures that would also align its practices with global standards as it faces stricter international scrutiny.

China does not recognise virtual currencies as legal tender and strictly prohibits their circulation in the market.

“The rapid development of new technologies and business forms has increased the difficulty of detecting and investigating money-laundering activities, which is a common problem faced by countries around the world,” Wang added.

To address the difficulty, the draft revision also includes provisions for the central bank, in cooperation with relevant authorities, to issue guidelines to monitor new money-laundering risks.

Financial institutions are also required to evaluate and address money-laundering risks posed by new business models, said Wang.

Last month, the Supreme People’s Court and the Supreme People’s Procuratorate listed cryptocurrencies, online game coins and tipping during live streaming as channels of money laundering.

And earlier this year, authorities in Beijing dismantled a money-laundering gang that had used virtual currencies to illegally trade foreign currencies, with transactions totalling over 2 billion yuan (US$281 million).

In 2022, authorities in the Inner Mongolia autonomous region charged 63 individuals involved in using blockchain networks to exchange virtual currencies for money laundering in a case involving as much as 12 billion yuan (US$1.7 billion).

The new revision also introduces terms to better balance between managing money-laundering risks and optimising financial services, in particular to protect data and information security, Wang added.

Anti-money-laundering measures should be proportional to the risk involved to ensure the normal flow of capital and the provision of financial services, in terms of the proposed changes, according to Wang.

Financial institutions are required to conduct customer due diligence based on the nature of the transaction and its associated money-laundering risks, with simplified procedures for lower-risk cases, he added.

The amount of virtual currencies involved in criminal cases rose sharply to 430.72 billion yuan (US$60.6 billion) in 2023, more than 12 times the amount in 2022, according to the Beijing-based Safeis, a Chinese tech service firm specialising in global blockchain ecosystem security.

China father dies of heart attack after having 23 teeth extracted, 12 implants placed in 1 day

https://www.scmp.com/news/people-culture/trending-china/article/3277773/china-father-dies-heart-attack-after-having-23-teeth-extracted-12-implants-placed-1-day?utm_source=rss_feed

The death of a Chinese man 13 days after a major dental procedure, where 23 teeth were extracted and 12 implants were inserted on the same day, has shocked the mainland.

The case came to light through an online post on September 2 by the man’s daughter, surnamed Shu, from Jinhua, Zhejiang province in eastern China.

She revealed that her father, surnamed Huang, whose age was not disclosed, underwent the extensive procedure at Yongkang Deway Dental Hospital on August 14.

According to the signed consent form, the surgeon used the “immediate restoration” method, in which 23 teeth were extracted and 12 implants placed during one procedure.

The surgeon, surnamed Yuan, has five years experience and specialises in root canal treatment, impacted wisdom tooth extraction, and complete dentures.

After the treatment, Huang reportedly endured constant pain.

On August 28, he suffered a sudden cardiac arrest and died.

“I never thought my dad would pass so quickly. He did not even get the chance to drive the new car we bought him,” Shu said.

While the total cost of the procedure was not disclosed, the latest price for one dental implant at this hospital is 1,500 yuan (US$210), reported Modern Express Post.

On September 3, an official from the Yongkang Municipal Health Bureau said: “Since there was a 13-day gap between the tooth extractions and his death, we are still investigating the cause.”

On September 6, a clinic staff member told the Post: “We will not be responding to this matter now as it has been handed over to our lawyer.

“If there are any updates, we will issue a statement; however, the investigation is ongoing.”

Xiang Guolin, director of the Dental Medicine Centre at the Hospital of Universal Love in Wuhan, told Jimu News there are no official guidelines for the number of teeth that can be extracted at one time, but the maximum is generally 10.

“Extracting 23 teeth is quite a lot. It requires a clinic and dentist with sufficient qualifications and experience. It’s also essential to consider the patient’s physical capacity to handle such an extensive procedure,” he said.

The news has left many Chinese online observers astounded.

“Removing 23 teeth in one day? How could they even consider doing that? I once asked to have two wisdom teeth taken out at the same time and the dentist refused,” one person commented.

“I’m a dentist, and I never extract more than three teeth at one time unless they’re very loose. The doctor must have lost his mind. It sounds more like a human experiment than a dental procedure.”

In January, an elderly man from Shanghai was the victim of clumsiness during a dental implant procedure where five teeth were being implanted for 25,000 yuan (US$3,500).

During the surgery, a metal implement was accidentally dropped into the patient’s throat and he visited five hospitals that day before the object was finally removed using an endoscope.

China’s new ambassador to Germany pledges to seek common ground

https://www.scmp.com/news/china/diplomacy/article/3277939/chinas-new-ambassador-germany-pledges-seek-common-ground?utm_source=rss_feed

China’s new ambassador to Germany has pledged to work to develop a “mutually beneficial relationship” and to try to avoid fundamental conflicts.

Deng Hongbo, the former deputy director of the Central Committee’s Office of the Foreign Affairs Commission, marked his arrival in Berlin with a speech published on the embassy’s website.

“Against the backdrop of accelerating changes in the world over the past century, China and Germany joining hands to strengthen cooperation not only serves the common interests of the two countries and their peoples, but will also inject more stability and certainty into the Eurasian continent and even the entire world,” he said.

“China has always believed that China and Germany share extensive common interests, there is no fundamental conflict of interest between them, and mutually beneficial cooperation is full of opportunities.”

He said the two sides should show “mutual respect” and “seek common ground”.

He also added he looked forward to connecting with officials and personnel from government and different sectors in Germany to “extend communications and improve understanding”.

Deng replaces Wu Ken who recently left Germany after more than five years in the post.

Deng’s career has mainly been focused on US affairs, including a stint at China’s embassy in Washington and as deputy director-general of the foreign ministry’s Department of North American and Oceanian Affairs.

His arrival comes at a time of growing tensions with the European Union, which is pursuing a “de-risking” strategy to counter what Brussels sees as China’s increasing “assertiveness” internationally.

The bloc’s member states must soon decide whether to approve a proposal by the European Commission to impose tariffs of up to 36.3 per cent on Chinese-made electric vehicles accused of flooding the market.

Germany, China’s biggest trading partner in the bloc, abstained in an advisory vote as it warned against possible retaliation that would affect its own car industry. German carmakers sell around a third of their vehicles in China, according to industry data.

China has also opened anti-subsidy investigations into European food and drink imports.

But despite attempts to preserve their economic ties, Germany’s relations with China have long been clouded by espionage accusations and other national security concerns.

In July, Germany formally decided to ban Huawei and ZTE from its 5G network, aligning with most of its Western allies.

Earlier this year, it also arrested four Germans accused of spying for Beijing, prompting China to summon the German ambassador to China.

The two countries’ relations also remain strained over Beijing’s close ties with Russia following its invasion of Ukraine.

Other recent personnel changes in the Chinese foreign ministry include the departure of Yang Tao, as director-general of the Department of North American and Oceanian Affairs.

Yang, who was part of the team that met US national security adviser Jake Sullivan recently, will move to a new role as vice president of the Chinese People’s Institute of Foreign Affairs, a non-governmental organisation.

He will be replaced by Cai Wei, former director-general of the foreign ministry’s Department of Latin American and Caribbean Affairs.

Cai was the former consul-general in Houston when the consulate was closed by Donald Trump in 2020 over accusations – which Beijing denied – that it was involved in spying and stealing American scientific research.

China’s August EV take-up rises to 53.9% as more owners pick batteries over petrol engines

https://www.scmp.com/business/china-business/article/3277901/chinas-august-ev-take-rises-539-more-owners-pick-batteries-over-petrol-engines?utm_source=rss_feed

Electric vehicle (EV) adoption rate in mainland China exceeded 50 per cent for the second consecutive month in August, even as overall vehicle sales fell in the world’s largest automotive market.

Sales of electric vehicles – comprising battery-driven models and hybrids that run on petrol-and-battery engines – jumped by 43.2 per cent to 1.03 million units last month, making up 53.9 per cent of nationwide deliveries, according to the China Passenger Car Association (CPCA). That was the second consecutive month for EVs to outsell petrol-guzzling cars, after EV adoption rate reached 51.1 per cent in July.

The data underscores how quickly China’s vehicle owners have shifted to electrification, as dozens of carmakers jockey to offer long-range, fast-charging EVs with smart applications at steep discounts. The pace of adoption may even surpass UBS’ forecast, which sees three of every five new vehicles to be powered by electricity by 2030.

The shifting pattern casts a pall over the assemblers of vehicles that run on internal combustion engines, where sales shrank to 870,000 units last month, 28 per cent fewer than a year ago. Sales in the overall market fell by 1 per cent to 1.91 million units last month, the CPCA’s data showed.

Government subsidies helped to make EVs more attractive, CPCA said. Buyers stand to get 20,000 yuan (US$2,808) per vehicle if they replace a petrol-guzzler with an EV, according to a July announcement by the government, which doubled the incentive from April. The current perk for switching from petrol engines to batteries is 15,000 yuan per vehicle.

“Since EV buyers can receive 5,000 yuan more than the buyers of petrol car, electric car assemblers stand to benefit from the new policy,” said Eric Han, a senior manager at Suolei, an advisory firm in Shanghai. “A rapid increase of EV ownership has made it difficult for many conventional carmakers to survive the fierce competition.”

China is also the world’s largest EV market where sales of pure electric and hybrid cars represented 65 per cent of the global total in the first half of this year.

Sales of hybrid EVs in August surged 96.9 per cent on year to 444,000 units, which made up 43.2 per cent of total EV sales, down 1.9 percentage points from the previous month.

BYD, the world’s largest EV builder, delivered a record 373,083 cars to customers at home and abroad in August, up 36 per cent from the same period in 2023. The Shenzhen-based carmaker outsold all other EV or petrol car assemblers.

Despite a rising EV adoption, most Chinese electric car makers – except for BYD and Li Auto, Tesla’s nearest rival on the mainland – have yet to turn profitable amid a brutal discount war.

BYD said last month that its gross margin narrowed 3.2 percentage points to 18.7 per cent in the second quarter of 2024 because of the price cuts. Li Auto’s gross margin narrowed by 1.1 percentage points to 19.5 per cent in the three months ending June due to the incentives it offered to customers.

South China Sea: Philippines logs record 203 Chinese vessels near its shores in 1 week

https://www.scmp.com/week-asia/politics/article/3277831/south-china-sea-philippines-logs-record-203-chinese-vessels-near-its-shores-1-week?utm_source=rss_feed

The Philippines logged a record 203 Chinese maritime militia vessels and warships operating within waters it claims as its own between August 27 and September 2 – an unprecedented surge that intensifies concerns centred around Sabina Shoal, a newly emerged flashpoint in the ongoing South China Sea dispute.

Analysts describe the increased Chinese maritime activity, which was logged by the Philippine Navy in the country’s exclusive economic zone, as “a critical development”, consistent with Beijing’s long-standing strategy of “swarming” in contested waters.

The surge follows a series of confrontations at Sabina Shoal, where the Philippine coastguard has stationed the BRP Teresa Magbanua in response to reports of Chinese reclamation efforts in the area.

“China has been utilising its large force” to intimidate and dominate, said Don McLain Gill, geopolitical analyst and lecturer at De La Salle University’s department of international studies in Manila. “Particularly for the purpose of swarming.”

The number of Chinese vessels was “similar to what we’ve seen on other occasions”, said Matteo Piasentini, an analyst with the Italian think tank Geopolitica – reflecting patterns observed during the Balikatan joint military exercises conducted with US forces in April.

In their most recent clash, Chinese and Philippine coastguard vessels collided near Sabina Shoal, resulting in damage to two Philippine ships, with each side accusing the other of misconduct.

In the weeks before, a Chinese aircraft was accused of firing flares at a Philippine civilian plane conducting routine surveillance over Scarborough Shoal and Subi Reef, while Manila’s National Task Force for the West Philippine Sea reported a Chinese coastguard vessel ramming and obstructing a Philippine fisheries boat delivering aid to fishermen.

The task force, comprising key representatives from various government agencies, underscores the Philippines’ commitment to safeguarding its maritime interests.

Chester Cabalza, president of the Manila-based International Development and Security Cooperation think tank, criticised China’s “might-is-right” approach, which he said seeks to restrict Philippine access to contested areas.

De La Salle University’s Gill elaborated on Beijing’s provocative manoeuvres, suggesting it was becoming increasingly frustrated with the Philippine coastguard’s ability to maintain a presence at Sabina Shoal, “especially since China intends [to] pursue its reclamation activities discreetly”.

At a marine conservation forum last month, Philippine military spokeswoman Colonel Francel Padilla highlighted alarming reports of dead coral being dumped around Sabina Shoal, known as Escoda Shoal by Manila, warning that such actions could pave the way for further island-building and territorial claims.

Padilla cited estimates from the Centre for Strategic and International Studies indicating that nearly 21,000 acres – or around 85 million square metres – of coral reef have been damaged by Chinese island-expansion initiatives.

While reports suggest that Chinese vessels departed with the arrival of Typhoon Yagi, analysts predict their inevitable return and a continuation of aggressive tactics.

“The challenge here … is how Manila can impose the right amount of risk and cost on China’s belligerent activities,” Gill said.

Cabalza, meanwhile, pointed out that Beijing’s “geographic revenge to Manila’s stout and robust collective response” had faced resistance, with other claimant states, including Vietnam and Malaysia, also asserting their rights by deploying naval forces to confront Chinese vessels.

Ray Powell, director of the maritime transparency initiative Sealight, recently tracked Malaysian navy ships intercepting Chinese vessels patrolling Ardasier Bank, an area claimed by Malaysia as part of its exclusive economic zone.

Piasentini emphasised the necessity for the Philippines to solidify its maritime presence.

“It’s about signalling the intention to uphold the country’s maritime rights without allowing de facto accommodation,” he said. “To do this successfully, however, Philippine naval forces must be prepared for further incidents and escalatory tactics by Chinese vessels.”

Experts suggest it may be time for Manila to embrace the US offer to accompany Philippine vessels on resupply missions – a strategy Piasentini describes as “a long and strenuous game of asserting sovereign rights”.

Cabalza warned that Sabina Shoal, the largest reef in the Spratly Islands, represents a “lucrative” target for Chinese expansion.

“As the third hotspot from Scarborough Shoal and the Second Thomas Shoal, Manila should rethink and reconsider American support for joint resupply missions,” he said, adding that such an escort arrangement would have a “multiplier effect to weaken China’s defence posture”.

China’s exports show ‘strong competitiveness’ in August, but challenges remain

https://www.scmp.com/economy/economic-indicators/article/3277873/chinas-export-growth-tops-expectations-august-challenges-remain?utm_source=rss_feed

China’s export growth in August surpassed market expectations, continuing a strong trend seen throughout the year, but import growth slowed, and analysts cautioned that shipments could face increased volatility due to front-loading.

Exports rose by 8.7 per cent from a year earlier to US$308.65 billion in August, up from the 7 per cent increase in July, according to customs data released on Tuesday.

The reading beat the expected increase of 7.04 per cent surveyed by Chinese financial data provider Wind.

The growth figure is likely to have benefited from the base effect, as exports had contracted by 8.8 per cent during the same period last year.

Imports, meanwhile, rose by 0.5 per cent from a year earlier in August, compared to the 7.2 per cent growth seen in July.

“China’s trade data shows strong export competitiveness and weak domestic demand. With the much higher inflation globally, Chinese firms are trying to export for higher profit margins,” said Gary Ng, senior economist at Natixis Corporate and Investment Banking.

Ng said the thriving trade sector was providing a cyclical buffer to the economy, where domestic confidence is yet to recover from the lingering weakness in real estate and consumer sentiment.

Elsewhere, China’s August trade surplus stood at US$91.02 billion, compared with US$84.65 billion in July.

Despite strong export performance this year, the world’s second-largest economy is still experiencing a mixed economic landscape, and rising trade tensions are starting to risk cooling its key growth engine.

In terms of trade partners, China’s exports to the Association of Southeast Asian Nations rose by 8.78 per cent in August compared to a year earlier, while exports to Russia decreased by 10.37 per cent.

Shipments to the United States increased by 4.94 per cent, representing a third straight month of positive growth, while shipments to the European Union rose by 13.39 per cent.

According to a report by Huachuang Securities last week, China is in a more vulnerable position compared to the peak of the trade war with the United States in 2018-19, due to weaker domestic demand, a higher concentration of investigations against exports in value-added industries and trade sanctions from a wider range of countries.

“As exporters rush to front-load shipments, this will disrupt the pace of exports, intensify the volatility of export data and introduce uncertainty around investment,” said the report by economists Zhang Yu and Xia Xue.

“Current exports may appear highly robust due to this front-loading, but it could also mean ‘overdrafting’ future demand, potentially leading to a sharp drop in exports once the tariffs are lifted.”

More to follow …

Chinese, US theatre commanders talk for first time since 2022 row over Pelosi Taiwan trip

https://www.scmp.com/news/china/military/article/3277878/chinese-us-theatre-commanders-talk-first-time-2022-row-over-pelosi-taiwan-trip?utm_source=rss_feed

China and the United States have held the first video call between their theatre commanders in more than two years amid tensions in the South China Sea.

Wu Yanan, commander of the People’s Liberation Army’s Southern Theatre Command, and Samuel Paparo, commander of the US Indo-Pacific Command, held a video call on Tuesday morning to “have an in-depth exchange of views on issues of common concern”, China’s defence ministry said.

The command theatre-level channel was among US-China communication channels cut off by Beijing following a visit by then US House speaker Nancy Pelosi to Taiwan in August 2022.

Senior officials from both countries have said on several occasions they could resume communication mechanisms at the theatre command level.

The resumption of such dialogue was also part of the consensus reached at a summit between Chinese President Xi Jinping and US President Joe Biden in San Francisco in November.

It was reaffirmed when US national security adviser Jake Sullivan visited Beijing at the end of August and met Chinese foreign minister Wang Yi.

More to follow …

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Why the South China Sea’s impact extends far beyond its waters

https://www.scmp.com/news/china/series/3277861/why-south-china-seas-impact-extends-far-beyond-its-waters?utm_source=rss_feed

Bill restricting US contracts with Chinese biotech firms among first to pass House in ‘China Week’

https://www.scmp.com/news/china/article/3277859/bill-restricting-us-contracts-chinese-biotech-firms-among-first-pass-house-china-week?utm_source=rss_feed

In the first legislative moves of “China week”, the US House passed a bill on Monday that would restrict federal government from contracting with Chinese biotech firms involved in the US medical supply chain, along with over a dozen bills targeting Beijing’s political, economic and technological influence.

The Biosecure Act, which passed 306-81, targets five Chinese companies – BGI Group, Complete Genomics, MGI, and – and establishes an inter-agency process for identifying additional companies.

Meant to encourage US firms to reduce their reliance on Chinese manufacturing and limit the risk of American health data going to Beijing, the bill – a version of which has cleared a Senate committee – has faced backlash from biotech executives who contend it could contribute to widespread drug shortages in the US.

In response, lawmakers had extended the deadline for halting existing contracts with the named Chinese firms to January 2032.

Having enjoyed bipartisan support, it was not expected to face hurdles on the House floor. But Democratic congressman Jim McGovern of Massachusetts cast doubt on the process used for determining the list of targeted companies, and garnered the support of House Democratic leadership in voting against the bill.

“If we’re going to name companies, there ought to be a clear, transparent process,” said McGovern, whose district is home to a facility that Wuxi Biologics is building. .

McGovern, a human-rights hawk serving on the Congressional Executive Commission on China, said he could not get a straight answer from the bill’s sponsors about why the companies were on the list. He called for more evidence to show that the companies had been exploiting the American pharmaceutical industry on behalf of the Chinese government.

All bills that pass the House must also clear the Senate before they can be sent to the president’s desk to be signed into law. Votes and debates were ongoing on Monday night. More votes are expected later in the week.

Meanwhile, voting on a bipartisan bill that could close Hong Kong’s diplomatic offices in the US was postponed until later in the week.

The Hong Kong Economic and Trade Office Certification Act would require the US secretary of state to review the city’s three American trade missions – in New York, San Francisco and Washington – and strip them of privileges if they are found not to operate with a “high degree of autonomy” from the People’s Republic of China.

“At one time, the Hong Kong economic and trade offices in the United States represented a city whose prosperity was based on its protection of fundamental human rights and freedom of the Hong Kong people,” said Chris Smith, Republican of New Jersey, the Hong Kong bill’s sponsor, during the bill’s debate on Monday.

“But three years after the [Chinese Communist Party] imposed the national security law on Hong Kong … the Hong Kong all of us knew, loved and respected, is gone,” he continued.

Tech was another focus of Monday’s votes.

The Countering CCP Drones Act, which would add China-based drone manufacturer DJI Technologies to a national-security list operated by the Federal Communications Commission, passed by voice vote.

That bill would restrict new products from the company from operating on US communications infrastructure.

Another bill, requiring congressional notification before the US and China could enter, extend or renew any agreement on science and technology cooperation also passed. Just two weeks ago, one such long-standing Sino-American agreement .

Other tech-related bills that passed Monday focused on improving transparency on the risks of foreign-made routers and other telecommunications infrastructure.

Additional bills that passed on Monday required the US to oppose efforts to raise the weight of Chinese currency in special financial assets issued by the restrict the Department of Homeland Security from procuring Chinese-made batteries; sanction Chinese officials and their immediate families if they act to threaten Taiwan’s security; and restrict Beijing from recruiting researchers into their foreign-talent programmes.

A bill that would create a fund for media, research and civil society projects to oppose Chinese influence passed 351-36.

But even as the first votes took place, observers noted that some of the most highly anticipated China-related legislation did not make the cut for floor consideration.

“House leadership seems to have carefully balanced advancing some very tough-on-China measures while deliberately sidestepping some of the more regulatory, heavy bills currently being debated on Capitol Hill,” said Craig Singleton of the China programme at The Foundation for Defence of Democracies.

These bills included one restricting outbound investment to China and another that would close what advocates have called the “de minimis loophole”, a policy allowing imported packages that fell below a certain price threshold to receive less oversight in the US customs process.

The investment restriction has faced opposition from Republican congressman Patrick McHenry of North Carolina, the outgoing chairman of the House Financial Services committee, who argues that it would dampen US influence in corporate China.

According to Singleton, changing the de minimis rule could increase the price on consumer goods, making it potentially untenable on the campaign trail ahead of the November elections.

But he added that both the de minimis and outbound investment bills may resurface in the “lame-duck” session, which occurs after the November elections and before the new US president is sworn in next January.

China woman proud to be grandma at 36, slammed for prioritising children over son’s education

https://www.scmp.com/news/people-culture/trending-china/article/3277748/china-woman-proud-be-grandma-36-slammed-prioritising-children-over-sons-education?utm_source=rss_feed

A woman in China proudly became a grandmother at the age of 36 after her 18-year-old son welcomed his first child, igniting a heated debate across the country about early marriage and parenthood.

The young grandmother, surnamed Liu, hails from Huizhou city in southern China’s Guangdong province and works in the interior decorating industry.

On August 22, she posted a video of herself on Douyin smiling and holding her newborn grandson.

Liu captioned the video, “I’m so happy and proud to have such an adorable grandson. My daughter-in-law has worked hard.”

As the baby’s father is only 18, he and his 20-year-old wife are unable to legally register their marriage.

In China, the legal marriage age is 22 for men and 20 for women.

Liu said her husband was also very excited to become a grandfather at 38.

She mentioned that her family has a long tradition of early marriage and childbirth. Her mother, the newborn’s paternal great-grandmother is only 58 years old.

On September 4, Liu shared a video of herself shopping with her daughter-in-law, saying: “At 36, I can hang out and have fun with my 20-year-old daughter-in-law just like close friends.”

The family’s situation has sparked a heated discussion on mainland social media about whether early marriage and childbirth should be encouraged, with related topics garnering 52 million views on Weibo.

Some supporters of young grandmothers defended the family’s decision.

“At 36, I’m still overwhelmed by work, but Liu has entered a new phase of life early – she is so lucky to be a real winner in life,” one Weibo user wrote.

Others criticised them for starting a family instead of pursuing further education.

“At 18, the son should be going to university, not becoming a father. The education level of this family needs improvement,” another commented.

There have been increasing calls for the prevention of early marriage and childbirth, suggesting that youthful parenting can be detrimental to both well-being and child development.

“Parents who are too young often aren’t psychologically mature or knowledgeable enough to provide proper care for newborns,” one individual commented.

There have been many other reports about young grandmothers across Asia.

In April, a 34-year-old woman from Singapore proudly said she had inspired her son to become a father at 17.

In July 2022, a woman from central China surnamed Zhang, sparked controversy after becoming a grandmother at 36. However, she stated that she would not encourage others to have children at an early age.

Taiwan firms less worried about possible US-China war compared with 2022

https://www.scmp.com/news/china/politics/article/3277835/taiwan-firms-less-worried-about-possible-us-china-war-compared-2022?utm_source=rss_feed

Taiwanese companies are continuing to do business with mainland China and appear to be less concerned about a possible war compared with two years ago, a new survey has found.

Instead companies are adopting a variety of strategies to hedge risks, according to the report by the Centre for Strategic and International Studies, a Washington-based think tank

The report found that companies’ expectations of a conflict between China and the United States had dropped by 10 points compared with 2022, which in turn made them more reluctant to fully move out of the mainland.

“The most notable change is a drop in the proportion of those expecting a US-China military conflict in the next five years, falling over 10 percentage points, from 38.7 per cent to 28.2 per cent,” the report said.

The number who believed that Taiwan’s semiconductor industry was a disincentive for the mainland to attack also fell – from 50.5 per cent to 45.6 per cent – as did the number believing the industry would be an incentive for the US to come to the island’s aid, which dropped from 54.8 per cent to 48.9 per cents.

The number who thought Beijing’s zero-Covid policies had a negative impact on their business remained steady at 45.5 per cent.

“The overarching conclusion from the latest survey is that although worries about the risks of doing business with China have modestly receded – in part due to the thaw in US-China relations and the end of zero-Covid – anxieties remain high,” the report, written by Scott Kennedy and Andrea Leonard Palazzi, said.

The study questioned 610 Taiwanese firms about their views on the international environment last year, compared with 523 companies that were questioned in the 2022 survey, which took place shortly before the then US House speaker Nancy Pelosi visited the island.

That trip caused intense anger in Beijing, which regarded it as a breach of the US one-China policy. In response, Beijing conducted a series of large-scale live-fire war games blockading the island.

Beijing sees Taiwan as part of China that must be reunited with the mainland, by force if necessary. Most countries, including the US, do not recognise Taiwan as independent, but Washington is opposed to any attempt to take the island by force and is committed to supplying it with weapons.

For years mainland China accounted for around 40 per cent of Taiwanese exports. Last year this total dropped to 35 per cent, but it remained the island’s largest market.

The report indicates that to hedge risks, Taiwanese firms have adopted a variety of strategies, including expanding involvement in regional trade and broadening commercial ties with the US.

They have also expanded research and development, nurtured their workforce to protect Taiwan’s technological advantages and shifted some of their operations away from the mainland and Taiwan.

The report added: “Although the proportion of firms moving remains high, they are moving as part of a variety of diversification strategies, not outright abandoning China altogether.

“China is still seen as an important trading partner; Taiwanese businesses are still not convinced India and Southeast Asia are sufficient substitutes; and companies are only moving a portion of their operations.”

It also said: “In the face of similar risks faced by Taiwanese industry, the US government has launched a range of initiatives to address a list of economic security concerns, including dual-use technologies, supply chain resilience, economic coercion, and human rights abuses.

“If Washington’s approach becomes overly focused on imposing restrictions and shifts from a goal of managing risks to decoupling, it could very well find itself out of step with Taiwan, and most likely with other like-minded partners as well.:

The report also argued that instead of increasing military pressure against Taiwan and imposing a variety of tailored restrictions, “Beijing will need to adjust its policies if it wants to achieve progress on both political issues and economic ties.”

For Taipei, the survey results suggest that “policy steps to radically expand restrictions against the mainland would not be welcomed by local industry, which instead still sees China as an important location for production and a large market.”

The continued anxiety about a possible war and supply chain disruptions means Taipei must work to reassure local industry about the island’s commercial environment.

“Strengthening business confidence is central to maintaining the island’s economic vibrancy and security,” it stresses.

The proportion of respondents saying they favoured Taiwanese independence also fell to 13.9 per cent last year compared with 23.2 per cent in 2022.

While 58.5 per cent of the respondents supported maintaining the status quo compared with 69 per cent in 2022, 25 per cent favoured cross-strait unification as opposed to just 6.1 per cent in 2022.

“The timing of this new survey – coming after a general stabilisation in US-China ties – and the skewing of the sample in a pro-unification direction would, all else being equal, suggest a lower proportion of companies would be moving their operations, whether from mainland China or Taiwan,” it suggests.

Grow wages, not night markets: how China can revive consumer spending

https://www.scmp.com/opinion/china-opinion/article/3277722/grow-wages-not-night-markets-how-china-can-revive-consumer-spending?utm_source=rss_feed

It has always been a challenge to find out the income and wealth situation in China due to the country’s complicated social and economic landscape. But there are growing signs that wages have stagnated nationwide, or even started to decline in certain sectors, threatening Beijing’s efforts to boost consumer spending.

To be sure, headline income figures published by the Chinese government still paint a rosy picture.

According to the National Bureau of Statistics, China’s per capita disposable income in the first half of 2024 rose 5.4 per cent from a year earlier to 20,773 yuan (roughly US$3,000). The income growth was on a par with the nation’s nominal economic growth rate and far higher than consumer inflation, showing that people’s living standards and spending power continued to improve.

However, anecdotes on the ground and other official data show a different scene. The Chinese finance ministry, for example, published data showing that personal income tax revenues in the first half dropped 5.7 per cent compared with a year ago. Since China had not rolled out any income tax cut, the fall in tax revenues directly reflected shrunken income for the country’s wage earners.

Chinese social media are filled with stories of salary and job cuts. The abrupt lay-off of over 1,000 employees at IBM in China is just one recent example of widespread job losses at foreign businesses. Multinationals with a presence in the world’s second-largest economy going back decades, from car manufacturers to pharmaceuticals, are scaling down their local operations.

China’s internet service and finance industry, the two sectors that once offered the best packages, are also in a process of consolidation. From banks to brokerages, salary cuts or even demands for staff to return a portion of their pay have become a trend, as jobs that were once considered “golden rice bowls” lost their shine.

For jobs paid by the local fiscal books, salary cuts have become common. As land sales revenues dried up, local governments are struggling to stay out of de facto bankruptcy. In a sign of desperation, a number of them have publicly sworn to “smash the pot, sell the iron”.

While local authorities have yet to lay off cadres en masse, there are increasing reports of reductions in bonuses, subsidies and allowances for local government employees and those working in public institutions, such as hospitals and bus companies.

For other social groups, such as migrant workers and “gig economy” employees, the income situation is already bleak amid the economic downturn.

The construction and manufacturing sectors used to employ nearly half of China’s 300 million migrant workers, but property woes and automation are killing low-skilled jobs. For gig jobs with low entry barriers, such as taxi hailing and food delivery, the competition is so brutal that hourly wages can hardly grow.

The wage stagnation comes at a time when Chinese household wealth, of which 80 per cent is in the form of property, is shrinking. The combination of slow income growth and the disappearing “wealth effect” have pushed Chinese consumer confidence to near historic lows. That is having a visible impact on discretionary consumer spending.

In Beijing, for instance, combined profits of major restaurants plunged 88.8 per cent in the first six months of the year compared with a year ago.

The Chinese government has made a lot of effort to boost consumer spending over the past two years, focusing on supply-side changes. Those efforts generally assume that Chinese consumers are not spending because products and services in the market are not good enough.

But such an assumption is problematic, and these superficial efforts, such as opening night markets, are largely useless because the fundamental constraint of consumption lies in low household income.

After more than four decades of economic boom, a redistribution of income in favour of households is needed to upgrade the Chinese economy. A proven feasible approach is for the state to retreat from economic activities, downsize its bureaucratic apparatus, and significantly cut taxes for households.

Will weak demand continue in China?: 4 takeaways from August’s inflation data

https://www.scmp.com/economy/economic-indicators/article/3277807/will-weak-demand-continue-china-4-takeaways-augusts-inflation-data?utm_source=rss_feed

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China’s consumer price index (CPI), a key gauge of inflation, grew by 0.6 per cent year on year in August, compared to an with analysts attributing the improvement to food reflation.

The overall CPI reading fell short of the expected 0.71 per cent growth projected by economists polled by Chinese financial data provider Wind.

Vegetable prices rose by over 20 per cent year on year due to extreme weather, which pushed food inflation up from zero per cent year on year to 2.8 per cent, according to Gabriel Ng, assistant economist at Capital Economics.

“Despite a weather-related surge in vegetable prices, a fall in energy prices and core inflation meant CPI only rose a touch,” Ng said.

On a month-on-month basis, China’s inflation in August remained positive after increasing by 0.4 per cent following a 0.5 per cent increase in July, according to the National Bureau of Statistics.

“Deflation remains a major risk for China’s economy. CPI inflation in August edged higher, mostly driven by food prices due to temporary factors such as heavy rainfalls. Excluding food, CPI inflation dropped by 0.3 per cent month-on-month in August,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.

Tan Junyu, a regional economist for North Asia with credit insurance company Coface, said the improvement in food prices remains susceptible to fluctuating weather conditions and capacity changes.

“The upcycle in pork prices held up, but the still higher-than-normal inventory level may limit the extent of further rises. Vegetable prices have risen well above historical patterns due to record rainfall, but the gains caused by supply constraints will erase once weather conditions return to normal,” he added.

China’s producer price index (PPI) – which measures the cost of goods at the factory gate – slipped by 1.8 per cent last month, falling for the 23rd consecutive month, compared with a fall of 0.8 per cent in July.

The reading surpassed the expected 1.4 per cent decrease projected by Wind.

This was in line with the weak output price component of the manufacturing purchasing managers’ index (PMI), according to Ng at Capital Economics.

Tan at Coface said PPI deflation worsened more than expected due to broad-based declines in fuel and metal prices.

In month-on-month terms, the fall in factory-gate prices deepened from 0.2 per cent in July to 0.7 per cent in August, suggesting that overcapacity was still worsening, Ng added.

China’s core inflation, which excludes volatile food and energy prices, rose by 0.3 per cent last month compared to a year earlier, reaching its lowest point since 2021 after falling from 0.4 per cent in July.

“Volatile components aside, core inflation has not shown much sign of rebounding and has even deteriorated amid falling tourism expenses,” Tan at Coface said.

Both core goods and services inflation softened, a sign that domestic demand is failing to keep pace with the supply-side expansion of the economy, according to Ng at Capital Economics.

Last week, former People’s Bank of China governor Yi Gang called on Beijing to address falling prices by active fiscal policy and loose monetary policy, saying it was the right time to “focus on fighting deflationary pressure”.

“Yi Gang acknowledged the risk of deflation in China at a conference last week. It is helpful to have an open discussion of this issue, so that the potential damage is well recognised,” Zhang at Pinpoint Asset Management added.

“The fiscal policy stance needs to become more proactive in order to prevent the deflationary expectations from becoming entrenched.”

Ng at Capital Economics expected inflation to remain very low over the medium term.

“We think increased fiscal spending will drive an uptick in domestic demand over the coming months,” he said.

“But government policy is still too skewed toward investment, and so increased fiscal spending may ultimately exacerbate the overcapacity problem.”

Analysts at Japanese investment bank Nomura expect PPI inflation to dip further to minus 2.5 per cent in September, while they also cut their 2024 PPI inflation forecast from minus 1.5 per cent to minus 1.9 per cent.

“Both readings suggest weak demand continued over the summer holiday season and are consistent with our broad view on economic activity in August,” they said.

China and Singapore must boost coordination as ‘stabilising forces’, Wang Yi says

https://www.scmp.com/news/china/diplomacy/article/3277843/china-and-singapore-must-boost-coordination-stabilising-forces-wang-yi-says?utm_source=rss_feed

China and Singapore must strengthen their strategic coordination and communication amid a world of turmoil, foreign minister Wang Yi told his visiting counterpart Vivian Balakrishnan in Beijing on Monday.

The meeting was their second in less than two months after the envoys spoke on the sidelines of a regional ministerial conference in Vientiane, Laos, on July 27.

“China is willing to work with Singapore to better connect each other’s development strategies and put into practice the new positioning of an ‘all-round, high-quality and forward-looking partnership’ that had been jointly established by the leaders of the two countries,” said Wang, according to a Chinese foreign ministry read-out.

The upgrade of the bilateral relationship as the ministry described the partnership was announced in April last year, when then-Singaporean prime minister Lee Hsien Loong met with Chinese President Xi Jinping in Beijing.

Lee stepped down in May following more than two decades in office and was succeeded by Lawrence Wong, under whom the new Singaporean government is “committed … to enhancing and deepening our relationship with China”, Balakrishnan told Wang.

Wang said China and Singapore served as two “stabilising forces” in a world of turmoil and chaos and that the two countries must increase coordination and communication.

The ministry’s statement did not mention any other countries by name.

China’s top diplomat praised Singapore’s early participation and role in the mainland’s reform and opening up. He suggested more frequent leadership exchanges and enhancing dialogue at all levels.

Areas for closer cooperation could include a “new land-sea corridor” linking China’s western provinces and Southeastern Asian nations as well as digital economy, green development and maritime energy, according to the Chinese ministry’s read out.

Wang also highlighted the use of visa-exemption preferences to encourage personnel exchange, talent training, youth development, local cooperation as well as think tanks and media

On February 9 this year, China and Singapore implemented a new entry policy for their citizens, allowing visa-free stays of up to 30 days.

Previously, Singaporeans could stay in China for up to 15 days without needing to apply for a visa, whereas Chinese nationals had to apply for visas to visit the Southeast Asian city state.

Balakrishnan said the upgrading of the bilateral relationship in 2023 reflected “the unique, long-standing and very close ties” between the two countries and noted 2025 would mark their 35th anniversary of diplomatic ties.

The Singaporean foreign minister reiterated his country’s long-held position regarding the one-China policy and clear opposition to Taiwanese independence, the Chinese foreign ministry’s read-out stated.

Beijing sees Taiwan as part of China to be reunited by force if necessary. Most countries, including the US, do not recognise Taiwan as an independent state, but Washington is opposed to any attempt to take the self-governed island by force and is committed to supplying it with weapons.

“Singapore firmly supports free trade and the expansion of two-way investment in China and Asean,” Balakrishnan was quoted as saying.

“[Singapore] is willing to work with China to safeguard the multilateral trading system centred on the World Trade Organization to ensure the smooth flow of production and supply chains and to promote world peace, development and prosperity.”

The statement made no mention of tensions in the South China Sea, where the Philippines and China have repeatedly engaged in confrontations.

Singapore is a member of the Association of Southeast Asian Nations and has been vocal in urging that the disputes be resolved diplomatically.

While visiting the Philippines in April, for instance, Balakrishnan described Singapore as a non-claimant that did not take sides.

“We uphold the right of all states to freedom of navigation and overflight and support the peaceful resolution of disputes in accordance with universally recognised principles of international law, including Unclos,” he said, referring to the United Nations Convention on the Law of the Sea.

China trade officials visit Brussels seeking deal to nix European Union’s EV tariffs

https://www.scmp.com/news/china/article/3277846/china-trade-officials-visit-brussels-seeking-deal-nix-european-unions-ev-tariffs?utm_source=rss_feed

A delegation of senior Chinese trade officials is visiting Brussels this week, as Beijing scrambles for a deal to nix coming punitive tariffs on the country’s electric vehicles.

The group met with senior European Union counterparts on Monday, according to several sources, and was led by vice-commerce minister Li Fei, one source said.

On the EU side, Sabine Weyand, the bloc’s director general for trade, led the talks before briefing members of the European Parliament’s trade committee on the ongoing tensions with China.

The meetings are designed to pave the way for ministerial-level discussions next week when Chinese Commerce Minister Wang Wentao will be in Brussels to meet with the EU’s trade commissioner, Valdis Dombrovskis.

The diplomatic flurry comes ahead of a crunch vote later this month, when member states will decide whether to impose additional tariffs of up to 36.3 per cent on Chinese-made electric vehicles.

Fifteen of the bloc’s 27 member governments would have to vote against the duties – decided upon after a European Commission anti-subsidy investigation – otherwise they would be set in place for five years.

Chinese businesses and government officials have been frantically lobbying for some reduction or even a total removal of the punitive duties.

Brussels has argued the measures are necessary to bring cheaper subsidised Chinese imports in line with market prices in Europe.

The affected Chinese car companies have already offered to implement a price floor on their EV exports to the EU. Some have also proposed a quota mechanism whereby shipments below a certain volume would escape punitive tariffs.

Those proposals are not thought to be binding enough or go far enough to appease EU authorities, sources said. In the eyes of some commission officials, they would not conform to World Trade Organization rules.

Others still harbour uncomfortable memories of a similar agreement reached with the Chinese solar sector more than 10 years ago.

That agreement was subsequently sacrificed when France and Germany cut their own deals with China, after Beijing went after their wine and automotive industries, respectively.

In Beijing on Monday, EVs featured on the agenda when Spanish Prime Minister Pedro Sanchez met Chinese leaders, including President Xi Jinping and Premier Li Qiang.

Spain has been a strong supporter of the EU’s anti-subsidy duties, and in an indicative vote in July, was one of the larger member states to vote for them. Madrid sees the duties as a way of luring Chinese companies to build factories in Spain.

While a Spanish government read-out did not mention the topic, Beijing’s version did.

“It is hoped that the two sides will strengthen cultural exchanges and deepen cooperation in areas such as economy, trade and new-energy vehicles,” the Chinese foreign ministry quoted Sanchez as saying.

“Spain is willing to provide a good environment for Chinese companies,” it added.

Xi told Sanchez, meanwhile, that “it is hoped that Spain will continue to provide a fair, equitable, safe and non-discriminatory business environment for Chinese companies to invest and start businesses in Spain”, the Chinese read-out stated.

The Brussels meetings happened on a day dominated by the publication of ex-Italian prime minister Mario Draghi’s report on the future of European competitiveness.

“Super Mario”, as he was nicknamed for his role in ending the bloc’s sovereign-debt crisis more than a decade ago, painted a bleak picture of Europe’s ability to compete with Chinese and American rivals in industries including EVs.

“The automotive sector is a key example of lack of EU planning, applying a climate policy without an industrial policy,” Draghi wrote.

The report asserted the EU would need to find more than US$886 billion in investment if it were to survive the US-China race for technological supremacy.

In a press conference on Monday, Draghi accused China of not heeding existing rules and encouraged Brussels to be smart and pragmatic in its dealings with Beijing.

“Europe is the most open economy in the world … when former or current partners don’t play according to the rules any longer, we are more vulnerable than others,” said Draghi.

“Trade policy has to be pragmatic … you asked me, softer or harder [on China]? We can’t be softer or harder across the board. We have to look at specific sectors and decide what we want to do.”

The US and China must avoid dropping a ‘Silicon Curtain’

https://www.scmp.com/opinion/china-opinion/article/3277731/us-and-china-must-avoid-dropping-silicon-curtain?utm_source=rss_feed

I began my career in the technology sector at the American computing giant IBM in Greater China when the “Big Blue” was seamlessly operating across mainland China, Hong Kong and Taiwan. As one of the first tech companies to enter the Chinese market, IBM played a pioneering role in bridging East and West.

Many of IBM’s early executives in Greater China hailed from diverse backgrounds, bringing with them advanced technology and management practices that bridged both the tech and cultural divides.

IBM’s influence also extended beyond its own operations. The company played a key role in helping its customers and partners improve their IT systems and internal processes. For instance, IBM consulted Huawei on its Integrated Product Development project, significantly boosting Huawei’s product development efficiency.

However, China’s tech landscape has changed dramatically. IBM’s recent closure of its China Development Lab and China Systems Lab, following the 2021 shutdown of its China Research Lab, is evidence of this shifting landscape. These changes reflect not just operational adjustments but also the broader challenges that foreign tech firms now face in China.

The challenges IBM encountered go beyond shifting market dynamics; they reflect the growing tech decoupling between China and the United States, fuelled by escalating geopolitical tensions and Beijing’s increasing preference for home-grown technology.

The environment for foreign tech companies in China has become increasingly hostile, a trend that can be traced back to 2010 when Google withdrew its search services from the mainland. In 2014, China launched its “de-IOE” campaign, aimed at reducing reliance on IBM, Oracle and EMC (since merged with Dell), particularly in government and critical infrastructure.

The tech divide between China and the West has deepened in recent years, driven by a geopolitical tug of war. US export restrictions and technology sanctions have accelerated this split. In response, China has fast-tracked efforts to build a tech sector independent of Western control.

An article published on China’s Ministry of Justice website stated that US sanctions would only strengthen China’s resolve to achieve technological sovereignty. This nationalist rhetoric also mirrors broader public sentiment driving China’s push for self-reliance in technology.

China’s growing capabilities in internet platforms, cloud services and artificial intelligence (AI) are also eroding the competitive edge of foreign firms like IBM. US companies operating in China now face not only increased scrutiny and restrictions but also stiffer competition from domestic firms, making it harder to sustain operations.

At the core of this tech decoupling is a deeper ideological divide between the US and China. The US, grounded in liberal democratic values, champions an open internet and the rule of law. In contrast, China’s system prioritises state control and the use of technology for governance.

This ideological rift is not just about different approaches to technology; it reflects fundamentally divergent visions of tech governance. The erosion of trust between the two nations is accelerating, creating significant uncertainties for multinational companies operating in China.

This decoupling may mark the beginning of a Cold War-style divide in technology. Just as the Iron Curtain once split the world into ideological blocs, a “Silicon Curtain” could now divide the global tech landscape into two spheres: one led by the US and its Western allies, and the other by China.

The US is building supply chains independent of China, reshaping global value networks. The US may collaborate with its allies to set tech standards that further disadvantage China, which can accelerate the separation of the global tech ecosystems. Conversely, China is expanding its influence by developing new supply chains and increasing foreign direct investment abroad. For example, in 2023, Chinese foreign direct investment abroad reached above US$160 billion, largely through greenfield investments in the Global South.

In essence, the competition to dominate emerging technologies could escalate tensions further, leading to a race for technological supremacy similar to the arms race of the Cold War. This relentless pursuit of supremacy comes with significant downsides: fragmented global supply chains, rising techno-nationalism and intensified trade restrictions.

Cooperation gives way to competition, and technological progress risks becoming a zero-sum game. All of these have significant consequences for global innovation, as well as security, stability and economic prosperity.

IBM’s retreat from China signals a broader severance of data exchanges, personnel transfers, capital flows and knowledge sharing, posing challenges not only for China and the US but for the entire global tech ecosystem. As the US-China tech rivalry intensifies, nations must rethink their approach to technology governance.

For the US, reducing interventionist policies could help maintain its leadership in entrepreneurship-driven innovation. Washington should also reconsider protectionist trade policies to address global challenges such as climate change and public health. The US should treat China as a collaborator, not a competitor.

For China, creating an open environment that attracts foreign investors and talent is vital. While developing indigenous technologies is critical for reducing reliance on foreign systems, these efforts should be paired with lowered trade and regulatory barriers, higher transparency in governance and stronger intellectual property protections to build trust with Western tech firms.

An open market will not only attract foreign investment but also foster deeper technological integration, positioning Chinese firms as key players in global innovation ecosystems. The technological decoupling between the US and China is one of the defining issues of our time, with far-reaching implications for global security and technology governance.

Policymakers around the world must find new ways to balance concerns for technology sovereignty, national security and global collaboration in research and innovation. Both nations must work together to establish new frameworks for tech governance, addressing critical issues like data security and ethical AI standards.

Scared by China’s P2P scandal, new wave of young investors are less willing to risk it all

https://www.scmp.com/economy/china-economy/article/3277769/scared-chinas-p2p-scandal-new-wave-young-investors-are-less-willing-risk-it-all?utm_source=rss_feed

After five years of sleepless nights and stress following the government’s seizure of an online wealth platform, Stella Guo eventually received news from a local court that she would finally be able to recover some of her investment.

Like millions of retail investors caught up in China’s rampant peer-to-peer (P2P) lending programmes – de facto online wealth management firms which have been plagued by fraud, defaults and even alleged Ponzi schemes – the Shenzhen-based public relations manager had chosen the Tuandai platform.

The firm, which was China’s first licenced peer-to-peer lending platform, was the fifteenth largest online wealth management firm in terms of size and was at one stage backed by the listed arm of Paisheng Technology Group.

Guo wired 200,000 yuan (US$28,000) into the scheme that promised a double-digit annual return.

The sum was equivalent to four years of earnings for an average Chinese resident – per capita disposable income stood at 39,218 yuan in 2023 – but with the one-year bank deposit rate only 1.75 per cent at that time, the offer proved to be too tempting.

“Back then, everyone from university graduates to the wealthy middle class thought P2P was a very high-end, very innovative thing, something the government encouraged,” Guo said.

“My friends and colleagues from Beijing, Hangzhou to Shenzhen were all lured by the [promised] returns to invest in different P2P platforms, and without exception, we all invested in failure and now we don’t even want to talk about the experience.”

In the years of financial innovation, P2P lending schemes had entered China around 2007, and they mushroomed by raising funds from the general public to lend to cash-strapped enterprises or individuals as part of Beijing’s efforts to ease stubborn financing difficulties for private firms.

According to a report by the National Internet Finance Security Technical Expert Committee, by the end of June 2018, China had at least 50 million investors across thousands of online lending platforms, with an average investment of 22,788 yuan (US$3,200) per person.

But seemingly as quickly as they arrived, the platforms were caught up in Beijing’s financial de-risking campaign, as authorities cracked down on unlicensed financial activities and squeezed shadow banking.

A vast majority of the P2P platforms were unlicensed and had little disclosure of their underlying assets and associated investment risks.

And it was ordinary people like Guo who eventually bore the brunt of the spectacular collapse, with authorities closing all P2P lending platforms in 2020, characterising them as illegal fundraisers who used fake investment products to disrupt the financial order, similar to the Bernie Madoff multibillion-dollar Ponzi scheme scandal in the United States.

In the case of Tuandai, about 220,000 investors and loans totalling 14.5 billion yuan (US$2 billion) were involved.

Founder Tang Jun was sentenced to 20 years in prison in 2022 for illegal fundraising following a three-year investigation.

In a separate case, the headquarters of the Hangzhou-based JC Group were also raided by police in April 2019, with its founder arrested on charges of illegal fundraising.

The company had managed at least 350 “private equity funds”, raising about 70 billion yuan having promised investors, including Feng Mei, a 12 per cent annual return.

Feng, 70, and her relatives invested millions of yuan in “wealth management products”.

And despite only eventually receiving around 12 per cent of her investment back, forcing her to live on a pension of around 4,000 yuan (US$561) a month, Feng still felt lucky as several P2P victims she knew had died before receiving any money.

“I am already in my 70s and going back to a normal life is impossible,” Feng lamented.

“[However,] if you ask young people nowadays, who can remember the P2P boom back then?

“The new wave of young people are definitely less willing to invest in large quantities, and live in the present.”

The ongoing economic slowdown, including the sluggish property and stock markets, means many in China are now less willing to make risky investments.

The Shanghai headquarters of the People’s Bank of China also vowed in its midyear conference in August to continue dealing with the aftermath of the P2P.

The joy of receiving her payment of 50,000 yuan, though, did not last for Guo, who used the money to pay off some of her mortgage.

“It was just that we, as young people, had positive expectations, believing that investing in the Chinese market was safe, would continuously appreciate, and that the future was always bright. So we actively invested,” she said.

“This is the way it is in the era, it was not my fault.”

Guo has now seen her 8 million yuan (US$1.1 million) property investment in 2021 shrink by nearly 3 million yuan.

“Compared to this loss, my loss in P2P is not really worth mentioning,” she said. “The mortgage situation is very stressful.”

And Guo is not alone, with growth of residential home purchase, consumption and corporate revenues slowing, while savings accelerate.

According to the 2024 China Wealth Management Services Report released in July by Beijing News, from the end of 2013 to the end of 2016, the scale of wealth management in China had grown rapidly from 6.5 trillion yuan to 23.1 trillion yuan.

At the end of 2016, the ratio of wealth management to personal deposits had reached 38.6 per cent.

However, as of the end of February, China’s personal deposit balance reached 142.7 trillion yuan (US$20 trillion), but the ratio of wealth management to personal deposits had fallen to only 19 per cent.

A survey of middle-class Chinese aged between 31 and 40 by independent financial media company Wu Xiaobo Channel showed that wealth growth slowed last year.

Only about 17.5 per cent said the value of their assets expanded in 2023, citing bottlenecks in increasing their wealth, according to the “2023 White Paper on the New Middle Class”.

The report showed 46.1 per cent of respondents said they had become more conservative with their investments, representing an increase of 10.6 percentage points from 2022.

Only 9.8 per cent said they were more aggressive in their investment, down from 21.4 per cent in 2022.

Even more surprisingly, by age group, 66.7 per cent of the young middle class aged between 26 and 30 said their investment attitude had become conservative, much higher than older groups.

In terms of consumption, saving and investment willingness, the central bank’s “Urban Depositor Questionnaire Survey Report” in the first quarter of 2024 showed that 61.8 per cent of households preferred to save more, up 0.7 percentage points from the previous quarter.

It also showed 14.9 per cent of residents tended to “invest more”, a decrease of 0.7 percentage points from the previous quarter.

The P2P lending industry in China has virtually disappeared, and those still looking to recover losses are finding it hard to have their voices heard in public.

The latest data released in March 2022 by the China Banking and Insurance Regulatory Commission – which has since been replaced by the National Administration of Financial Regulation – showed P2P lending platforms owed more than 800 billion yuan (US$112.8 billion) to investors in 2020, but that this had dropped to 490 billion yuan in 2022, according to Guo Shuqing, the then-chairman of the banking watchdog.

At the start of August, China’s central bank said authorities would keep promoting liquidation for the P2P victims, but released few details on the development.

P2P firms had initially provided an efficient and innovative way to bridge capital supply and demand, offering low borrowing rates and high lending efficiency, but also high risks.

But since the P2P scandal, the borrowing behaviour of small and medium-sized (SMEs) enterprises has become more prudent, shifting from “unable to borrow money” to “needing but not daring to borrow money”, according to a report by the Inclusive Finance and Legal Supervision Research Base at Peking University,

Most SMEs, the report added, can borrow funds easier in 2023 than previous years.

But the report said they should be aware that more financial institutions are leaning towards a small number of scientific and technological innovation or high-quality SMEs, and that it is still difficult for ordinary start-ups to obtain loans.

US and Chinese troops taking part in joint ‘Formosa’ exercise in Brazil for first time

https://www.scmp.com/news/china/military/article/3277850/us-and-chinese-troops-taking-part-joint-formosa-exercise-brazil-first-time?utm_source=rss_feed

For the first time, American and Chinese troops are taking part in a joint military exercise led by the Brazilian Armed Forces, Brazil’s navy has announced.

Operation Formosa, one of Latin America’s largest military exercises, has been held since 1988. The operation takes place near the city of Formosa, Brazil, and is unrelated to Taiwan, which officially went by the same name in 1895.

About 3,000 military personnel began training on Wednesday, with the exercises expected to continue until next Tuesday, according to the Brazilian defence ministry.

Last year at Operation Formosa, the US sent troops from the US Southern Command, while China took part as an observer.

This year marks the first time both countries have sent military personnel to the exercise, with 33 from the Chinese Navy and 54 from the US Navy, a Brazilian Armed Forces spokesperson told the Post.

Officers from Argentina, France, Italy, Mexico, Nigeria, Pakistan, the Republic of Congo and South Africa are also taking part in the exercises.

“It is customary to invite friendly nations to participate in these exercises,” the Brazilian Navy said in a statement on Saturday.

“The importance of such invitations is directly linked to the opportunity to promote greater integration between the Brazilian Navy and the forces of friendly nations.”

When asked about the operation, the US Department of Defence referred the Post to US Southcom, which could not immediately be reached for comment.

Brazil’s defence ministry said the purpose of the exercises was to simulate amphibious operations in which warships conduct attacks on a hostile coastal region and plan to land on a designated beach.

It added that “all weapons used will use live ammunition”, facilitating interoperability and integration of the navy, army and air force “in addition to promoting the exchange of experiences with allied forces from other countries”.

The Chinese and American militaries have not held joint military exercises since 2016, when Washington invited Beijing to the Rim of the Pacific Exercise, also known as Rimpac. For that, Beijing sent five warships and about 1,200 troops.

However, in subsequent editions of Rimpac, the Pentagon withdrew its invitation as punishment for China’s “continued militarisation of disputed features in the South China Sea”, according to then-Pentagon spokesman Christopher Logan.

The most recent Rimpac took place in July this year and the Chinese military was again excluded because of Beijing’s “reluctance to adhere to international rules or norms and standards”, said US Navy Vice-Admiral John Wade, who commanded the exercise.

China’s involvement in Operation Formosa marks the latest step in expanding military cooperation between Beijing and Brasilia.

In 2015, Chinese troops took part in training programmes at Brazil’s Jungle Warfare Training Centre in Manaus, Amazonas state. This collaboration was later extended to the Brazilian Peace Operations Joint Training Centre, which hosted Chinese students in 2017.

Last year, officers from the PLA Navy visited Rio de Janeiro and Brasilia for discussions with their Brazilian counterparts.

And in July, General Tomas Miguel Ribeiro Paiva, commander of the Brazilian army, visited Beijing to “strengthen cooperation in academic affairs” and explore “collaborations in the fields of science, technology and defence industry,” according to the local newspaper Estadao.