Mistral点评

• Germany lobbies fellow EU members to vote against tariffs on Chinese EVs
• Putin orders Russian army to become second largest after China’s at 1.5 million-strong
• US called out China for supporting Russia in Ukraine, says Pentagon
• The Philippines must think fast to handle South China Sea disputes
• Where now for China after economy lost momentum ‘across the board’ in August?
• China reveals how WZ-7 drone and bomber team-up can ‘burst into enemy circle of fire’
• Direct India-China flights could take off again after 4-year halt amid thaw in frosty ties
• With Fed rate cut opening the door, China likely to ease as economic issues grow: analysts
• An American pastor detained in China for nearly 20 years has been released
• [Sport] US pastor freed from Chinese prison after 18 years
• Kanye West performs in China after rare approval by country’s censors
• Is laughter the best medicine for dry eye disease? Chinese and UK scientists investigate
• China landlord tries to evict terminal cancer tenant, fearing death could reduce property value
• China’s soaring low-altitude economy adds ‘new track’ with home-grown blimp delivery
• How will Michel Barnier influence France’s China policy and is he supposed to?
• PwC invests in ‘high quality’ China business to ensure survival after US$62 million fine
• Forest City, Malaysia’s China-backed project, to launch special financial zone on Friday
• China safeguards rare earth reserves with discovery of 5 million tonnes of key metals
• Hong Kong customs seizes record HK$400 million of mainland China-bound electronics
• China’s stealthy yuan support ebbs, denting hot hedge fund trade
• China’s fading hunger for grain spells trouble for world farmers
• China MMA athlete faces online backlash for reporting groping to police and not retaliating
• China’s video game achievement may be anomaly for years to come despite Black Myth: Wukong
• Indonesia’s run-in with Chinese vessels, Southeast Asia visa-free travel: 5 weekend reads
• China hit hard by new Dutch export controls on ASML chip-making equipment
• China newlywed woman blinded by husband after refusing to top up his online gaming account
• China’s security chief calls for ‘resolute crackdown’ on separatists in Tibetan areas
• Why death of star scientist Li Haizeng, 34, has Chinese researchers taking note
• Thousands of rescuers on standby in China as Typhoon Bebinca hits Shanghai
• Trump or Harris? China, Hong Kong stocks offer a hint at their preference as US president
• China’s opportunity? Philippines’ Sabina Shoal withdrawal sparks backlash
• Cheap Chinese goods bring joy to Southeast Asia’s shoppers. What’s the trade-off?
• As Chinese AI and GPU demand heats up, a Hong Kong data centre turns to liquid cooling
• China’s GJ-11 stealth drone sightings hint at future role as fighter jet ‘wingmen’
• Quad plans joint patrols in Indo-Pacific to counter illegal fishing where China’s influence growing
• China frees American pastor David Lin who US claims was wrongly jailed
• Economist Jin Keyu on why the trade war is still a ‘gift for China’

Germany lobbies fellow EU members to vote against tariffs on Chinese EVs

https://www.scmp.com/news/china/diplomacy/article/3278782/germany-lobbies-fellow-eu-members-vote-against-tariffs-chinese-evs?utm_source=rss_feed

Germany and China are actively working to convince European Union members to oppose electric vehicle tariffs during a vote next week, senior EU sources say.

Berlin has been phoning other capitals in a late bid to get them to oppose the duties during a vote planned for September 25.

The development comes as Chinese commerce minister Wang Wentao makes his way around Europe, discussing the high-profile trade dispute with senior figures in influential governments.

Having spent the weekend in Italy, Wang will meet with German economy minister Robert Habeck on Tuesday in Berlin, according to people familiar with the arrangement.

He will sit down with car industry operators from Europe and China in a round table on Wednesday in Brussels, then meet EU trade chief Valdis Dombrovskis in the Belgian capital on Thursday morning in an effort to stop the duties from coming into force.

Germany is comfortably China’s largest trading partner in Europe, and the fortunes of its powerful automotive sector have for decades influenced its policies towards the world’s second largest economy.

Its carmakers are heavily invested in China and would also be subject to punitive tariffs of up to 35.3 per cent when shipping EVs made there back to Europe.

The automotive lobby has campaigned against the duties, which the commission says are necessary to counter the impact of subsidised Chinese models undercutting locally made rivals.

Berlin also fears that German car companies could be the subject of Beijing’s backlash if EU duties are finalised.

On Monday, China’s State Administration for Market Regulation warned companies including BMW, Mercedes-Benz and Volkswagen about antitrust risks, according to a report on the regulatory newswire MLex, after complaints from China’s domestic industry.

While the European Commission is still confident it has enough votes to pass the measures into law, it is not the done deal that was presumed just weeks ago.

Fifteen of 27 member states, accounting for 65 per cent of the EU’s population, would have to vote against tariffs to stop them, otherwise they will take effect for a five-year period. In an indicative vote held in July, only four members voted against, with many abstaining.

But as the vote nears, powerful capitals have come out against the countervailing duties, which were the result of a lengthy investigation that found undeclared subsidies “at every stage” of China’s electric vehicle supply chain.

Last week, Spanish Prime Minister Pedro Sanchez implied that Madrid would flip from a vote in favour of duties to a vote against.

This came after Beijing launched an anti-dumping probe into EU pork imports, a large share of which come from Spain. At the same time, Sanchez was promised large-scale industrial investment during a meeting with Chinese President Xi Jinping.

Among them, the Chinese hydrogen electrolyser manufacturer Envision will build a US$1 billion plant in Spain.

“I have to be blunt and frank with you that we need to reconsider – all of us, not only member states but also the [European] Commission,” Sanchez said during a visit to Kunshan in eastern China.

“We don’t need another war, in this case a trade war,” Sanchez said when asked about how Spain planned to vote.

German Chancellor Olaf Scholz expressed support for Sanchez’s position, saying via his spokesman Steffen Hebestreit that this “direction of travel is one that we share”.

Germany abstained in July’s vote after its divided coalition government could not land on a common position. But Scholz’s stance has led to increased lobbying that has been called “unhelpful” by Brussels sources.

It is a high-stakes gambit from Scholz, whose government has split on whether to take a firmer stance against what Brussels describes as market-distorting behaviour in China’s industrial powerhouse.

Success from Berlin’s perspective would undermine European Commission President Ursula von der Leyen’s de-risking efforts during her second term, even before she puts her senior leadership team together.

Von der Leyen, a German, is set to introduce her proposed college of commissioners on Tuesday. She has vowed to strengthen trade defences against China, arguing that the bloc needs to decrease critical dependencies and bolster its own industrial competition.

“If Scholz is successful in stopping the duties, it may offer some short-term relief for German carmakers who won’t have to worry about Chinese retaliation,” said Noah Barkin, an analyst of EU-China relations at the Rhodium Group.

“But the scars for Europe, in terms of damage to the Franco-German relationship, to the bloc’s leverage with China and to its credibility with G7 allies, would be deep and long-lasting,” he added, referring to Paris’ long-standing support for the measures.

In the meantime, Beijing has been making its own efforts to tip the balance in its favour.

On Sunday, Wang met Robert Vavasorri, chair of the Italian Association of the Automotive Industry, to discuss “the EU’s anti-subsidy case against China’s electric vehicles”, according to a statement on the ministry’s website.

If Italy were to follow Spain and, potentially, Germany in voting against the tariffs, Brussels will have a scrap on its hands since several big states flipping could give smaller countries cover to follow suit.

Over the weekend, meanwhile, a Chinese industrial group said it had coordinated with car companies to offer a new proposal to the commission, which would make fresh commitments around a price floor for the imports, which the commission says are undercutting local competitors.

“China Chamber of Commerce of Machinery and Electrical Equipment has … coordinated companies to submit a perfected price commitment plan to the European Commission, which further considered its concerns,” read a post on the chamber’s WeChat account.

“The deadline for submitting such offers was the 24th of August. There’s no possibility beyond that deadline to offer new price undertakings under the rules for this type of investigation,” EU trade spokesman Olof Gill said, adding that the “Chinese automakers in question have had many weeks before the deadline” to make the offer.

He said the previous proposals had been received on the very last day of the period in which such an undertaking was possible.

“Had it happened at an earlier stage that would have allowed for meaningful engagement on the topic,” Gill said.

“However, the fact of the matter is that all the offers received, all of them were received on the very final day the deadline itself … all the commission could do was thoroughly review them.”

Insiders believe Beijing may be trying to pressure the commission by making offers that are not legally acceptable under EU trade rules.

Several capitals have voiced their hope of a negotiated solution, and the optics of Brussels rejecting a series of proposals from the Chinese side may seem as though it is being unreasonable, various sources implied.

Putin orders Russian army to become second largest after China’s at 1.5 million-strong

https://www.scmp.com/news/world/russia-central-asia/article/3278783/putin-orders-russian-army-become-second-largest-after-chinas-15-million-strong?utm_source=rss_feed

Russian President President Vladimir Putin on Monday ordered the regular size of the Russian army to be increased by 180,000 troops to 1.5 million active servicemen in a move that would make it the second largest in the world after China’s.

In a decree published on the Kremlin’s website, Putin ordered the overall size of the armed forces to be increased to 2.38 million people, of which he said 1.5 million should be active servicemen.

According to data from the International Institute for Strategic Studies (IISS), a leading military think-tank, such an increase would see Russia leapfrog the United States and India in terms of the number of active combat soldiers it has at its disposal and be second only to China in size. The IISS said Beijing has just over 2 million active duty service personnel.

The move, the third time Putin has expanded the army’s ranks since sending his military into Ukraine in February 2022, comes as Russian forces push forward in eastern Ukraine on parts of a vast 1,000km (627-mile) front line and try to eject Ukrainian forces from Russia’s Kursk region.

Although Russia has a population more than three times larger than Ukraine’s and has been successfully recruiting volunteers on lucrative contracts to fight in Ukraine, it has – like Kyiv’s forces – been sustaining heavy battlefield losses, and there is no sign of the war ending any time soon.

Both sides say the exact size of their losses is a military secret.

Andrei Kartapolov, chairman of Russia’s lower house of parliament’s defence committee, said the increase in active troop numbers was part of a plan to overhaul the armed forces and gradually increase their size to match what he described as the current international situation and the behaviour of “our former foreign partners”.

“For example, we now need to form new structures and military units to ensure security in the north-west [of Russia] since Finland, with which we border, has joined the Nato bloc,” Kartapolov told Parlamentskaya Gazeta, the Russian parliament’s in-house newspaper.

“And in order to carry out this process, we need to increase the number of troops.”

Putin since 2022 had previously ordered two official increases in the number of combat troops – by 137,000 and 170,000 respectively.

In addition, Russia mobilised more than 300,000 soldiers in September and October 2022 in an exercise which prompted tens of thousands of draft-age men to flee the country.

The Kremlin has said that no new mobilisation is planned for now, however, and that the idea is to continue to rely on volunteers signing up to fight in Ukraine.

Dara Massicot, an expert in the Russian military at the Carnegie Endowment for International Peace think tank, questioned whether Moscow was ready to foot the bill for the increase in active servicemen.

“There are ways to staff a standing 1.5 million force but the Kremlin will not like them if they are truly grappling with what that requires,” Massicot wrote on X, formerly Twitter.

“Are they really able to boost the defence budget to sustain procurement AND this requirement?”

Massicot, who has released a report on Russia’s drive to regenerate its army, said Moscow could take the unpopular and difficult decision of expanding the draft size or change the law to allow more women to work in the military to reach such a goal.

“Look for signs that this is a real initiative to recruit and expand, and not a kind of show to intimidate others. The current volunteer method is working but has strains. This [the expansion] means more expense/strain,” she said.

US called out China for supporting Russia in Ukraine, says Pentagon

https://www.scmp.com/news/china/article/3278789/us-called-out-china-supporting-russia-ukraine-says-pentagon?utm_source=rss_feed

A US Defence Department official highlighted “China’s support for Russia’s defence industrial base” and “aggressive PRC harassment” in the South China Sea as top concerns that he conveyed to Chinese Defence Minister Dong Jun in a round of talks in Beijing last weekend.

“China’s support for Russia’s defence industrial base and the impact that support is having on European and transatlantic security” was among “a range of regional and global security issues” that Michael Chase, deputy assistant secretary of defence for issues relating to China, discussed with Dong, according to a statement released by the Pentagon on Monday.

Chase’s delegation also attended the 11th Xiangshan Forum, which is seen as Beijing’s answer to the Shangri-La Dialogue in Singapore, though Chase did not give any public speeches at the event.

He and his team “also reaffirmed the US commitment to defending its Indo-Pacific allies”, the Pentagon said.

“And the department emphasised the importance of respect for freedom of navigation as guaranteed under international law in light of ongoing aggressive [People’s Republic of China] harassment against lawfully operating Philippine vessels in the South China Sea,” it said.

US President Joe Biden’s administration has been increasingly vocal about its assessment that Chinese companies are providing what Russia needs to continue its war against Ukraine, which has been grinding on for more than two and a half years.

Last week, US Deputy Secretary of State Kurt Campbell told reporters in Brussels that China was providing direct assistance to “sustain, build and diversify various elements of the Russian war machine”.

Moscow was reciprocating by sharing sensitive military technologies with Beijing, he added, including those related to submarine operations, stealth aircraft design and missile capabilities.

The US Treasury Department began putting pressure on China through sanctions in May, when it announced moves against 20 and mainland Chinese companies for their alleged roles in the development of Russia’s industrial base and military.

The department largely trained on entities in Hong Kong and mainland China to curb the flow of goods that support the ability of Russia’s defence industry to continue the offensive.

The Pentagon’s statement about clashes between Chinese and Philippine coastguard vessels in contested waters in the South China Sea underscored speculation over whether the Pentagon will intervene under the authority of a defence treaty that Washington has had with Manila since 1951.

The Mutual Defence Treaty calls on both sides to help each other in times of aggression by an external power, making these confrontations increasingly tense regional events.

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 dispute.

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

Summing up the meeting, which also touched on “ongoing provocations from North Korea” and included a request for China “to encourage stability and de-escalation in the Middle East”, the Pentagon reiterated a refrain that Biden officials in the State Department and National Security Council also regularly proclaim.

“[China] continues to be the only US competitor with the intent and, increasingly, the capability to overturn the rules-based infrastructure that has kept peace in the Indo-Pacific since the end of the Second World War,” the Pentagon statement said.

The Philippines must think fast to handle South China Sea disputes

https://www.scmp.com/opinion/asia-opinion/article/3278438/philippines-must-think-fast-handle-south-china-sea-disputes?utm_source=rss_feed

“Every option between the two sovereign nations in terms of our mutual defence, escort of one vessel to the other, is an entirely reasonable option within our Mutual Defence Treaty, among this close alliance between the two of us” said the US Indo-Pacific Command chief, Samuel Paparo, during a recent trip to Manila amid rising tensions in the South China Sea.

“We certainly have prepared a range of options and [we stand] ready, if so called, after consultations in accordance with the treaty, to execute those shoulder to shoulder with our ally,” he said, underscoring a growing sense of urgency in Washington over its ally’s near-clashes with China in the hotly-disputed waters.

Months after an escalating stand-off over the Second Thomas Shoal, last month the Philippines and China found themselves at loggerheads over yet another strategic feature, the Sabina Shoal. Both neighbours accused each other of provocative actions after Chinese and Philippine coastguard vessels collided.

The Philippine coastguard says that its flagship vessel sustained damage, raising fears over Manila’s ability to sustain its patrol and resupply missions across the South China Sea

What particularly alarms Filipinos is China’s overall preponderance of force, including the ability to deploy a massive armada across disputed areas. As many as 203 Chinese militia and coastguard vessels were recently stationed in contested waters.

Influential Filipino strategists have called on the Ferdinand Marcos Jnr administration to seek military help from allies for joint resupply and patrol missions in the South China Sea. Nevertheless, Philippine officials are still divided on the course ahead.

Some top officials have called for a fundamental rethink of the country’s alliance with America, including a review of the Philippine-US Mutual Defence Treaty. The Philippine defence chief is advocating for a multilateral force of like-minded nations to resist China’s expanding footprint in adjacent waters.

In fairness, the Philippines can claim a major strategic victory, namely its ability to not only resupply but also fortify its de facto naval base in the Second Thomas Shoal.

Despite constant harassment from Chinese maritime forces and near-clashes over the disputed feature, which led to the injury of a Philippine serviceman earlier this year, the Southeast Asian nation has managed to fortify the BRP Sierra Madre, a dilapidated grounded ship hosting a contingent of Filipino troops over the past quarter-century. The Philippine Navy reportedly shipped enough construction materials to stabilise and fortify the structure for the next decade.

Confronted with Manila’s strategic defiance, Beijing has reportedly settled for an indeterminate “provisional agreement”, which has seemingly led to rapid de-escalation of maritime stand-off over the Second Thomas Shoal. China claims that the Philippines has agreed to coordinate any future resupply missions. The Philippines insists that it has not agreed to any conditions on its sovereign prerogatives.

Nevertheless, China has deftly leveraged its force to steadily degrade the Philippines’ ability to sustain a robust presence in disputed waters without resorting to kinetic force.

With the Marcos Jnr administration confronting hard choices in the South China Sea, three major options are now being publicly debated.

Several top Filipino strategists openly advocated for US escort of Philippine patrol missions in the disputed areas. Most prominently, former Supreme Court Associate Justice Antonio Carpio, who has been a key proponent of the Philippines’ legal warfare strategy against China, called on the Philippine Navy to “determine if it is time to accept the US offer to escort our resupply [missions]” to contested shoals and islands.

But others insist that it’s still too early and unwise to solicit direct American military help. No less than Armed Forces of the Philippines chief General Romeo Brawner Jnr has maintained that “[they] will depend on ourselves first and we will try to exhaust all the options first before asking for help”, insisting that the country would only seek America’s help as a last resort.

Having turned down US offers to help directly, the Philippines’ military chief has instead called for the acquisition of high-end weapons systems from allies. The rapid transfer of patrol vessels and recently-decommissioned vessels from the US or Japan is another option for those who prefer the status quo.

Other top officials, however, have advocated for more drastic measures. Philippine Defence Secretary Gilbert Teodoro Jnr has called for “a stronger collective multilateral action against China” and has – despite the efforts of Philippine diplomats – repeatedly questioned the value of diplomatic engagement, openly criticising Beijing’s actions.

Accordingly, the Philippines has been aggressively pursuing closer defence cooperation with a whole host of nations from India to France and Poland.

Meanwhile, Philippine Navy vice-admiral Alexander Lopez, who also serves as the spokesperson of the National Maritime Council, has publicly argued that “it’s high time now to make the review” of the Philippine-US Mutual Defence Treaty, which has failed to deter China’s so-called “grey zone” tactics in the disputed waters. Currently, there are ongoing discussions to adjust the threshold for the treaty’s activation to potentially cover non-kinetic actions that could cause injury or death among Philippine troops.

It remains to be seen what course of action the Marcos Jnr administration will take in the coming months, especially if Beijing continues to flex its superior naval muscles. What’s clear is that the Philippines is fast realising that standing up to China will require constant policy recalibration and strategic innovation to avoid war and undermining its core interests.

Where now for China after economy lost momentum ‘across the board’ in August?

https://www.scmp.com/economy/economic-indicators/article/3278695/where-now-china-after-economy-lost-momentum-across-board-august?utm_source=rss_feed

China released key economic data for August on Saturday, including key retail sales and investment figures, having a day earlier published new bank lending figures.

Retail sales in China, a key gauge of consumption, rose in August by 2.1 per cent, year on year, after registering 2.7 per cent growth in July.

The reading fell short of the 2.68 per cent projected by Chinese financial data provider Wind and barely managed to avoid reaching a new post-pandemic low, said Lynn Song, chief economist for Greater China at ING.

“The data continues to paint a clear picture of cautious household spending,” said Song, who added that discretionary consumption categories – including gold, jewellery, cars and cosmetics – were hit particularly hard in August.

Property investment in China – a figure that has sagged amid persistent uncertainties in the real estate market – dropped by 10.2 per cent, year on year, in the first eight months of the year, matching the fall recorded in the January-July period.

“The main drag on growth still stems from the property sector,” said analysts at HSBC.

China’s overall fixed-asset investment, which includes major items such as infrastructure construction, manufacturing and property spending, rose by 3.4 per cent in the first eight months of the year, compared with a rise of 3.6 per cent in the first seven months.

Private investment from January to August, meanwhile, dropped by 0.2 per cent from the same period a year earlier, while its proportion in overall fixed-asset investment dipped to 50.98 per cent – down from 51.16 per cent in July.

“We continued to see many of the same trends of the last few months play out,” Song said. “Private investment growth, which had been gradually slowing in previous months, finally tipped into negative territory. Cautious sentiment continues to limit private investment.”

China’s industrial output rose in August by 4.5 per cent, year on year, lower than the 5.1 per cent growth seen a month earlier, as growth momentum dipped for a fourth straight month.

The 4.5 per cent year-on-year growth rate was tied with several other months for a 13-month low, and came in a little weaker than consensus forecasts, according to Song at ING.

“Industrial production saw its growth momentum soften again in August amid a higher base and softer demand. Despite the stronger-than-expected export growth figures, softer domestic demand likely held back production growth,” added analysts at HSBC.

China’s overall urban unemployment rate stood at 5.3 per cent in August, compared with 5.2 per cent a month earlier.

New bank lending in China jumped less than expected in August as Chinese banks extended 900 billion yuan (US$126.86 billion) in new yuan loans in August, up by 246 per cent from July but short of analyst expectations, according to People’s Bank of China figures released on Friday.

“Both broad-credit and bank-loan growth slowed in August, coming in below expectations. While stronger government spending should give the economy a boost over the coming months, that doesn’t seem likely to be helped by any pickup in private credit demand,” said Leah Fahy, China economist at Capital Economics.

And according to analysts at Goldman Sachs, more than half of the 900 billion yuan net increase in August was driven by bill financing – a form of short-term bank lending often used to fill lending quota when loan demand is lacking.

Analysts at Goldman Sachs responded to the “disappointing” August data by cutting their forecast for China’s overall economic growth this year from 4.9 per cent to 4.7 per cent.

They also pointed to the rising concerns over deflation after China’s consumer price index grew only 0.6 per cent in August, while the producer price index also fell short of expectations.

And Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, said that if the current economic momentum continued, China’s gross domestic product growth would likely undershoot the “around 5 per cent” target for this year.

“Economic momentum slowed across the board in August. These macro data [points are] consistent with signals from high-frequency data. There is still no sign of a significant change of the fiscal policy stance,” he said.

Sunny Liu, lead economist at Oxford Economics, maintained expectations of a mild sequential slowdown in the Chinese economy at the end of the year, aligning with a forecast of 4.8 per cent GDP growth this year.

“August’s data showed a further loss of momentum across the board. Growth in consumer spending remained flat amid low confidence while the rate of expansion in infrastructure and manufacturing investments (as traditional demand-side growth drivers) softened further,” Liu said.

Song at ING said that it would be “challenging” for China to reach its “around 5 per cent” growth target without significant changes, and that “time is running low for policymakers to introduce measures to buoy the economy amid numerous headwinds”.

He said the call last week by President Xi Jinping for officials to “strive to fulfil the economic and social-development goals and tasks for the whole year” could increase the short-term urgency of policy roll-out.

“Data largely came in weaker than already cautious forecasts, and with a less supportive base effect we will need to see a significant stimulus push to reach this year’s growth target,” he said.

“While we have seen many supportive policies announced this year, they have been piecemeal and have not yet been sufficient to turn the momentum around.”

Analysts at HSBC expect China’s economic growth to reach 4.9 per cent this year, but with domestic demand softening, it would likely require more policy stimulus, they added.

“Growth continues to face headwinds in China as the August activity data missed expectations across the board,” they said.

“This should prompt further policy action by Beijing in order to help stabilise growth, especially given renewed calls to reach this year’s growth targets.”

China reveals how WZ-7 drone and bomber team-up can ‘burst into enemy circle of fire’

https://www.scmp.com/news/china/military/article/3278740/china-reveals-how-wz-7-drone-bomber-joint-action-can-burst-enemy-circle-fire?utm_source=rss_feed

The Chinese military has showcased reconnaissance WZ-7 drones and crewed fighter jets working together in a video highlighting the country’s growing aerial scouting capacity.

According to a retired People’s Liberation Army colonel, such coordination will improve strike capability against fast-moving targets, which is “a lesson that China has learned from the Ukraine war”.

The video is the first official footage of its kind and was aired on Sunday by state broadcaster CCTV.

The WZ-7 was seen carrying out oceanic reconnaissance missions, with a Xian H-6 jet bomber later launching anti-ship missiles based on the location data transmitted by the drone.

A large naval fleet with multiple vessels and some fighter jets – including electronic-warfare aircraft and the Shenyang J-16 multiple-role strike fighter – was also seen in the exercise footage.

The exact location and time of the drills were not given.

In the programme, PLA Air Force officer Li Zhengwei said that backed by the WZ-7, Chinese air forces could “burst into the enemy’s circle of fire”.

The reconnaissance drone can do “what manned aircraft cannot do” in terms of its “survivability, battle loss ratio, and cost-effectiveness”, according to Li.

He also said that with “upgraded equipment, algorithms, and intelligence acquisition capabilities”, the air force could use drones to “find and see [enemies] within hundreds of kilometres (hundreds of miles)” and acquire information in record time.

The WZ-7, dubbed “Xianglong” or Soaring Dragon, has an unusual tandem, joined-wing design and can be used for border reconnaissance and maritime patrol missions.

The high-altitude long-endurance drone debuted at the premier Zhuhai air show in 2021, and is one of China’s largest such aircraft – with a 24-metre (78 feet) wingspan and length of 14 metres. It is also seen as China’s answer to the US military’s Global Hawk surveillance drone.

WZ-7 spy drones were spotted by the US in the Taiwan Strait in 2019 and by Japan over waters between its southwestern Okinawa and Miyako Islands in January last year.

The PLA did not confirm either identification.

WZ-7s have also been spotted in China’s Tibet autonomous region bordering India, and Jilin province on the border with North Korea and Russia, as well as Hainan province, which overlooks the contested South China Sea.

Yue Gang, a retired PLA colonel, said combining reconnaissance drones with fighter jets allowed for better attacks on flexible wartime targets, by cutting the time lag between gathering information and launching an attack.

“The information-gathering methods through satellites do not have real-time capability, while through the cooperation of WZ-7 and crewed aircraft, it will be possible to strike the discovered targets immediately without giving the enemy time to react,” he said.

He said the PLA was likely to have learned from Russia’s difficulty in destroying the highly manoeuvrable MIM-104 Patriot surface-to-air missile systems and M142 Himars light rocket launchers on the Ukrainian battlefield.

This may have spurred the PLA to seek to closely incorporate the WZ-7 into its fighter fleet, Yue said.

Yue added that unmanned reconnaissance aircraft had the attributes of commandos, as they could strike more accurately “deep into enemy fire”.

“With the drones in the fleet, it basically means the fighter jets are equipped with telescopes.”

Last year, a mainland Chinese military magazine highlighted the vital role drones would play in the event of a war across the Taiwan Strait.

The article in Ordnance Industry Science Technology said drones could be used to “assassinate enemy leaders” and that their use could minimise casualties by shortening the conflict. They could also be used to target Taiwan’s mobile missile launchers and heavy weaponry, it said.

Beijing sees Taiwan as part of China to be reunited by force if necessary. The United States, like most countries, does not recognise Taiwan as an independent state, but is opposed to any attempt to take the self-governed island by force and is committed to supplying it with weapons.

The Pentagon last year unveiled plans to field thousands of drones by 2025, a programme analysts have called a significant move for possible conflicts in the Taiwan Strait where these could put pressure on Beijing.

Direct India-China flights could take off again after 4-year halt amid thaw in frosty ties

https://www.scmp.com/week-asia/economics/article/3278765/india-direct-flights-china-could-take-again-after-4-year-halt-amid-thaw-frosty-ties?utm_source=rss_feed

India looks set to resume direct passenger flights to China after a four-year halt, signalling a potential thaw in relations between the two nations as border tensions ease and industry voices call for increased economic cooperation.

Flights between the two countries were halted during the pandemic in 2020 and, except for a few repatriation flights, never resumed even after New Delhi and Beijing lifted Covid-19 travel restrictions.

India’s Civil Aviation Minister Kinjarapu Rammohan Naidu met his Chinese counterpart, Song Zhiyong, at the Asia-Pacific Ministerial Conference on Civil Aviation in Delhi last week.

Naidu later wrote on social media platform X that the two sides had discussed “further strengthening civil aviation cooperation between the two countries, especially promoting early resumption of scheduled passenger flights”.

“I think it is high time that full-blown flights are resumed and not just to Beijing but also to Chinese provinces. There is so much lost trade between the two countries,” said Mark D Martin, CEO of aviation consultancy Martin Consulting.

“Our economies are intermeshed with each other. We are part of Brics [the bloc consisting of Brazil, Russia, India, China and South Africa] and we are also emerging markets,” he said, noting that traders and businessmen as well as holidaymakers were likely to be keen to fly.

Sections of Indian industry, especially electronics manufacturing, have been urging the government to relax restrictions on trade and cross-border travel, although others are cautious about easing curbs too quickly.

China had been pressing India for a resumption of flights for some time, according to local media reports. No firm date has been announced for flights to be resumed, but Indian tourism industry officials are quietly optimistic.

“People are going to China via third countries. They fly via Thailand, Cambodia, Myanmar and Hong Kong. It is better that Indian and Chinese airlines restart flights [as soon as possible] rather than giving business to third countries’ airlines,” said Subhash Goyal, chairman of the aviation and tourism committee at the Indian Chamber of Commerce.

Goyal said flights between the two sides were always nearly full before the services were stopped. “From a commercial point of view, it makes little sense not to have direct flights,” he said.

The first hint of a relaxation in India’s policy towards Chinese investments came last month with the publication of the country’s economic survey, which typically provides insight into the government’s thinking.

The survey is released annually ahead of the federal government’s budget that forms the centrepiece of the nation’s economic policy.

The economic survey said more foreign direct investment from China would bring several benefits for India, such as improving local manufacturing and exports, as India might not yet be able to take up completely Chinese slack in global manufacturing amid Western companies diversifying from China.

Restarting flights between the two countries would help both sides, but is likely to benefit China more, given its recovery in air travel post-Covid has been relatively slow.

Direct India-China flights peaked in December 2019, with a total of 539 scheduled flights by the likes of IndiGo, Air India, China Southern, China Eastern, Air China and Shandong Airlines, according to a Reuters report citing data from aviation analytics firm Cirium. Chinese carriers scheduled 371 of those flights, more than double the 168 from Indian airlines.

Martin said both countries should seek to build on each other’s strengths, with India one of the fastest-growing major economies and China being an established global manufacturer.

“It is high time we used each other’s economic dominance to make each other stronger. Air transport has always been a sign of strong economic and commercial ties,” he said.

China and India at the end of last month pledged to work towards finding an early solution to their decades-old Himalayan border dispute. Both countries pledged to strengthen connections and continue to de-escalate tensions at the border.

Local media reports said troops had agreed to disengage from certain border areas that indicated improving ties after months.

In a recent report by India’s leading online travel firm, Hong Kong emerged as one of the most searched destinations for business class travel. Experts say the city’s multifaceted culture and reputation as a gateway to mainland China are key reasons for its popularity.

If trade curbs are relaxed, greater movement of professionals is bound to follow, they add.

“I think it is critical that economic ties between two of the largest economies in the world be strong. Yes, there are political differences, no doubt. [But] there is enormous potential for cross-border tourism which benefits both sides,” said Rajeev Kohli, joint managing director at Creative Travel.

“The lack of direct flights simply does not support that. I think it is a good move [to resume flights].”

With Fed rate cut opening the door, China likely to ease as economic issues grow: analysts

https://www.scmp.com/economy/global-economy/article/3278731/fed-rate-cut-opening-door-china-likely-ease-economic-issues-grow-analysts?utm_source=rss_feed

An interest-rate cut by the US Federal Reserve could give China room to ease its monetary policy and reduce capital outflow risks for the world’s second-largest economy, according to analysts.

And although an interest rate cut by China may not be imminent, a cut in the reserve requirement ratio (RRR) – the amount of cash that commercial banks must hold as reserves - may be more preferred, they added.

Markets widely expect the US central bank to lower its benchmark borrowing rate by at least 25 basis points from its 5.25 -5.5 per cent range when its Federal Open Market Committee convenes this week.

The People’s Bank of China has been widely seen as refraining from cutting interest rates as the differential with the United States, and the impact of low rates on China’s banks, represent major concerns for the central bank.

But with the US Federal Reserve rate cut opening the door, and persistently weak domestic economic activities, calls for more easing, including rate cuts, have grown.

Sunny Liu, lead economist at Oxford Economics, expected further rate cuts by the PBOC over the next two quarters and continued fiscal support to boost demand.

“August’s data showed further loss of momentum across the board. Growth in consumer spending remained flat amid low confidence while the rate of expansion in infrastructure and manufacturing investments, as traditional demand-side growth drivers, softened further,” Liu said on Monday.

On Saturday, China confirmed its key retail sales rose by just 2.1 per cent year on year last month, adding to concerns for the world’s second-largest economy.

Zou Lan, head of the PBOC’s monetary policy department, said at the start of September that there is room to cut the RRR that would free up more liquidity at banks.

But Zou also expressed concerns over their shrinking net interest margins, a key gauge of profitability, which he said would constrain further cuts in the deposit and lending rates by the central bank.

“I think the message is clear,” Li Xunlei, chief economist at Zhongtai International, told the Shanghai-based business and financial media outlet Yicai last week.

“In other words, they may not cut interest rates now.”

In July, China’s central bank lowered the rate of the one-year medium-term lending facility by 20 basis points to 2.3 per cent, representing the first reduction of the policy rate in almost a year.

Another consideration for the PBOC when it comes to a rate cut is the depreciation pressure on the yuan, which has eased since August, gaining 1.9 per cent against the US dollar.

“Currency stability remains a priority for the PBOC, but the depreciation pressure on the yuan has eased significantly over the past month or so,” said Lynn Song, chief Greater China economist of ING, who expects the PBOC to cut rates at least once by the end of the year.

“As the scale of PBOC rate cuts are most likely going to be significantly smaller than what we see from the Fed, yield spreads should still move in favour of the yuan.”

Guan Tao, chief economist with Bank of China International, said the PBOC would take into account the impact of a rate cut on China’s public debt, bond markets and the financial industry.

“If the US Federal Reserve doesn’t cut rates on a large scale, the yuan’s exchange rate will certainly go both ways,” Guan also told Yicai last week.

“China’s economy isn’t doing that well, but it isn’t doing that badly. I don’t think people should be too pessimistic about it.

“But the reality is, the US economy is outperforming which has strengthened the outlook for the US dollar. So if the US’s economy doesn’t perform as well, China’s economy won’t be seen as weak in comparison.”

The PBOC has pushed back against rallies in long-dated Chinese treasury bonds that have evolved from verbal warnings to direct intervention.

China’s investors have flocked to safe-haven assets as a combination of the nation’s economic malaise, sinking equities and slumping property prices have continued to damage risk appetite.

But price pressure continues to be a dampener in China’s economic recovery, with former PBOC governor Yi Gang having called for Beijing to address falling prices at a forum in Shanghai at the start of September.

“I have said that the size of the 1 trillion yuan special treasury bond programme is too small. I suggested 5 trillion special treasury bond issuance every year for the next 10 years – if we can see that, A shares would certainly go up,” Li at Zhongtai added, referring to domestic shares of mainland Chinese firms denominated and traded in yuan by mainland Chinese residents.

Rory Green, head of Asia research at GlobalData TS Lombard, said a narrower rate differential would help ease pressure on the yuan and fund outflow from China, but Beijing might take into account the political risk from the US presidential election on its economic policies in the coming months.

“We think Beijing is likely holding back stimulus in case [Donald] Trump is elected and China needs to counteract significantly higher tariffs,” Green said.

“In contrast, [Kamala] Harris is highly likely to follow the [Joe] Biden playbook of tighter tech restrictions, but leave tariffs broadly unchanged.

“Clarity on trade and US-China relations will help confidence and Chinese assets, and allow Beijing to bring forward the timing of stimulus rather than waiting for Trump tariff announcements.”

Lorraine Tan, director for equity research for Asia at American financial services firm Morningstar, said the stock market would only benefit if there was evidence that demand in China was improving.

China’s CSI 300 index, which tracks blue chips listed in Shanghai and Shenzhen, is nearing the lowest levels since January 2019.

“We also want to see stability in property prices, but we think this may only happen in mid-2025,” Tan said.

An American pastor detained in China for nearly 20 years has been released

https://apnews.com/article/china-american-detainee-released-pastor-ad3a2104bac2490f0d7eb773faaeafdaRyan Wesley Routh takes part in a rally in central Kyiv, Ukraine, Saturday, April 30, 2022. (AP Photo/Efrem Lukatsky)

2024-09-16T13:48:41Z

WASHINGTON (AP) — A Christian pastor from California has been freed from China after nearly 20 years behind bars and is back home in the U.S., the State Department said Monday.

David Lin, 68, was detained after he entered China in 2006, convicted of contract fraud and sentenced to life in prison, according to the U.S. Commission on International Religious Freedom and the Dui Hua Foundation, a humanitarian group that advocates for prisoners in China.

The foundation calls it a charge frequently used against leaders in the house church movement, which operates outside state-sponsored faith groups, and a crime that Lin denied. The commission on religious freedom says “those who participate in and lead house churches often face intimidation, harassment, arrest and harsh sentences.”

“We welcome David Lin’s release from prison in the People’s Republic of China. He has returned to the United States and now gets to see his family for the first time in nearly 20 years,” the State Department said.

His sentence had been reduced and he had been due for release in April 2030. The commission on religious freedom noted in a 2019 news release that there were reports Lin was in declining health and faced possible threats to his safety in prison.

It comes after national security adviser Jake Sullivan visited China late last month, where he met with Chinese President Xi Jinping and other top officials, in a bid to keep communication open as tensions have increased between U.S. and China.

The Chinese foreign ministry didn’t immediately respond to requests for comment.

[Sport] US pastor freed from Chinese prison after 18 years

https://www.bbc.com/news/articles/c0kjj18n821o

Reuters

Kanye West performs in China after rare approval by country’s censors

https://www.theguardian.com/music/2024/sep/16/kanye-west-performs-in-china-after-rare-approval-by-countrys-censors

When Ye, the artist formerly known as Kanye West, took to the stage in Haikou on Sunday, his Chinese fans could barely believe it. One of the biggest and most controversial foreign acts in the world had been allowed in by China’s notoriously censorious regime.

Ye’s only China show – all the more shocking for skipping big cities in lieu of the holiday island of Hainan – was announced just days earlier, and more than 42,000 tickets sold out within minutes. It was his first time back in the country for 16 years. In that time the Chinese government’s tolerance for western musicians has diminished, while Ye’s reputation for controversy has grown.

The Communist party strictly censors domestic publications, performances and social media postings. It also controls the flow of art and content from foreign producers hoping to tap the lucrative market of 1.4 billion Chinese people.

Chinese authorities will often require foreign artists to submit set lists and song lyrics before getting approval to tour – and even then acts are often unsuccessful. Under the rule of Xi Jinping the flow of visiting talent has become a trickle – fewer than 40 non-Chinese movies receive approval each year, and few of the biggest musical tours of recent years – including Billie Eilish, Coldplay and Taylor Swift – have included a stop in China. In 2017, Justin Bieber was barred from China because of his reputation as a “badly behaved entertainer”. In 2016, Lady Gaga’s entire repertoire was reportedly banned after she met the Dalai Lama.

The decision to allow Ye to perform raised eyebrows inside China, although many noted his year of living in Nanjing as a child while his mother taught at a university. A string of incidents including antisemitic comments, suggestions that slavery in America was a choice made by Black people and his endorsement of Donald Trump are among reasons that fans and brands have cut ties with Ye.

Those incidents, as well as his long-running feud with Swift and sexist themes in his song lyrics, were all cited by social media users in China, incredulous that Ye’s show was approved.

Haikou city authorities reportedly received several complaints about the themes of Ye’s work and his history of controversial and offensive statements. One letter – attributed to a Swift fan group but not confirmed by the Guardian – said that Ye’s “lyrics and public behaviour do not meet the standard of cultural and artistic activities in China, and may have a negative impact on society”.

Ye’s name and the show announcement had more than 160m interactions on Weibo in the last few days. One hashtag specifically about his event being approved by the authorities received more than 1.7m, many of them asking simply: “how?”

“The review suddenly became ridiculously broad, with very flexible standards,” said one commenter.

“The government must regret not bringing in Taylor Swift’s concert, and is using Kanye West to make up for the regret.”

China’s economy is struggling amid a property crisis, youth unemployment and low retail spending, but statistics show a rising domestic demand for live entertainment and an increasing willingness to travel for it. More than 90% of the tickets sold to Ye’s gig went to people who lived outside Hainan province. Regions like Hainan, which rely heavily on the tourism and entertainment industries, appear increasingly frustrated by missing out on big international tours. In July, government advisers in Shanghai said they wishedthey could bring in the “walking GDP” of artists such as Swift more easily.

“This is the largest and highest-grossing personal concert tour in history, having generated over US$5bn in consumer spending so far” the advisers’ article, published on the Shanghai municipal government’s WeChat account, said, referring to Swift’s Era’s tour.

Ye had been scheduled to perform in Taiwan, but less than a month ago organisers announced the show had been cancelled because of “unforeseen circumstances”. It was not clear if those circumstances were related to the apparently last minute approval to play in China – where the government claims Taiwan as a province and strongly objects to any act which legitimises Taiwan’s sovereignty.

Additional research by Chi-hui Lin

Is laughter the best medicine for dry eye disease? Chinese and UK scientists investigate

https://www.scmp.com/news/china/science/article/3278342/laughter-best-medicine-dry-eye-disease-chinese-and-uk-scientists-investigate?utm_source=rss_feed

Laughter may be as effective as eye drops for people who suffer from dry eye disease, according to scientists in China and Britain, with the therapy offering a cheaper treatment for the condition.

Affecting around 360 million people globally, the chronic eye condition is becoming more prevalent due to an ageing population, air pollution and increased screen time.

Typically, artificial tears are used to alleviate the discomfort from dry eyes and stabilise tear film (the three layers that make up tears), with 0.1 per cent sodium hyaluronic acid one of the most commonly used artificial tears, according to the research team from Sun Yat-sen University, Xiamen University and Queen’s University Belfast.

“Dry eye disease is a chronic condition worldwide linked with psychological stress and poses an economic burden of long-term use of artificial tears,” the researchers wrote in a paper published in peer-reviewed journal The BMJ on Wednesday.

But instead of reaching for the eye drops, sufferers may simply need to have a good laugh, according to the researchers.

Laughter therapy or exercise is already used to reduce symptoms associated with mental health conditions. Now the team has suggested it could be a cheaper and more environmentally friendly treatment for dry eye disease in patients with limited corneal abrasions.

“In this study, we conducted a randomised trial to compare the effectiveness of laughter exercise versus artificial tears in treating symptomatic dry eye disease,” the team said.

This study was a non-inferiority trial, which aims to see if a new treatment is not worse than the active treatment it is being compared to.

Nearly 300 participants with symptomatic dry eye disease were randomly divided into two groups, with one group taking part in laughter therapy and the other group applying eye drops. Both groups undertook their therapy four times a day for eight weeks.

“The laughter exercise group viewed an instructional video and participants were requested to vocalise the phrases, ‘Hee hee hee, hah hah hah, cheese cheese cheese, cheek cheek cheek, hah hah hah, hah hah hah,’ 30 times per five-minute session,” the researchers wrote.

“To standardise the laughter exercise and enhance facial movements throughout the session, participants used a face recognition application on their mobile devices that had been designed by authors, named ‘laughing face’, at the start of each session.”

The main measurement outcome was a mean change in ocular surface disease index, a validated questionnaire tool for assessing dry eye disease.

The researchers also measured secondary outcomes, including the time it took for the first dry spot to appear on the cornea after a blink, and the function of the meibomian oil gland, which prevents tears from evaporating too quickly.

The results of the study found that laughter exercise was “non-inferior” to eye drops in alleviating dry eye disease symptoms.

“Additionally, we found that laughter exercise appeared to improve tear film stability and the meibomian gland function,” the researchers said.

“These benefits persisted for at least four weeks after discontinuation of the exercise,” they said. “Such lasting efficacy was not noted in [the] 0.1 per cent sodium hyaluronic acid group.”

While the specific biological mechanisms require further study, the researchers said the involvement of muscles and nerves during laughter could stimulate tear secretion. Laughter could also improve mental health, which has been linked to incidence of dry eye disease.

“As a safe, environmentally friendly and low-cost intervention, laughter exercise could serve as a first-line, home-based treatment for people with symptomatic dry eye disease and limited corneal staining,” the team wrote.

China landlord tries to evict terminal cancer tenant, fearing death could reduce property value

https://www.scmp.com/news/people-culture/trending-china/article/3278580/china-landlord-tries-evict-terminal-cancer-tenant-fearing-death-could-reduce-property-value?utm_source=rss_feed

A landlord in Beijing is facing immense criticism after he sent an eviction order to a tenant with late-stage cancer because he was worried that the property would lose value if she died there.

According to Red Star News, the tenant, who goes by the surname Wang, chose to rent the flat due to its convenient location near a hospital.

The landlord, Zhang, stated that he agreed to lease the flat below market value at 5,500 yuan (about US$770) per month as he was actively looking to sell the property.

In the lease agreement, Zhang requested that Wang and her husband accommodate property viewings for potential buyers. The couple was slated to reside there until mid-November, per the contract.

However, on September 4, the landlord issued a formal notice on their door, requesting that they vacate the premises within a week.

Zhang stated he made the decision to evict the couple after noticing Wang’s baldness during a property viewing, which led him to enquire about her health.

Wang’s husband revealed that she was terminally ill with cancer. He expressed that he had not disclosed her condition to Zhang previously, as it was a private health matter and not relevant to their rental agreement.

Concerned about potential implications for the property’s value, Zhang urged the couple to leave quickly, fearing that the flat could be perceived as a “haunted house” should Wang pass away there.

He claimed that this perception could lead to a significant decrease in the property’s value, estimating a potential loss of between 500,000 to one million yuan (US$70,000 to US$140,000).

In addition to evicting the tenants, Zhang requested that Wang and her husband sign an agreement stipulating they would compensate him if the flat’s market value decreased due to their occupancy.

The couple refused to sign this agreement, stating they would not vacate the property unless Zhang provided compensation for terminating the lease, a request he declined.

As a result, the conflict between Zhang and the couple remains unresolved, with both sides holding firm to their positions.

The incident has captivated Chinese social media and sparked a heated debate, with 5,000 comments on Douyin alone.

One observer expressed outrage, stating: “It is too much for the landlord to behave like this. He is inhumane!”

However, another viewpoint emerged: “I understand the landlord’s frustration. Selling a property plagued by issues is challenging, but he should provide compensation for breaching the leasing contract.”

China’s soaring low-altitude economy adds ‘new track’ with home-grown blimp delivery

https://www.scmp.com/economy/china-economy/article/3278738/chinas-soaring-low-altitude-economy-adds-new-track-home-grown-blimp-delivery?utm_source=rss_feed

China has added a new element to its growing low-altitude economy, that is already populated by commercial-use drones and flying cars, with the maiden delivery of its first home-grown “civil manned airship” blimp.

An AS700, manufactured by the Special Vehicle Research Institute under the Aviation Industry Corporation of China (AVIC), was delivered to Guangxi Guilin Ark General Aviation in Yangshuo county in the southern Guangxi Zhuang autonomous region on Saturday, Chinese media outlets reported.

China Daily also reported on Saturday that two other clients had ordered a combined 12 AS700 airships, which can hold a maximum weight of 4,150kg (9,149 pounds), fly up to 700km (435 miles) and stay airborne for as long as 10 hours, according to the People.cn news website.

Guangxi Guilin Ark General Aviation will use the 10-seat blimp for aerial sightseeing in a part of China known for karst peaks.

The Unesco World Heritage Convention said the karst features - formed by the dissolution of soluble carbonate rocks such as limestone and dolomite - and geomorphological diversity in southern China are widely recognised as among the best in the world.

The AS700 will join China’s low-altitude economy, which so far has revolved around unmanned activities below 1,000 metres (3,280 feet).

Dominant players include agricultural-use drones and electric vertical take-off and landing (eVTOL) aircraft, also known as flying cars, that can also be used to deliver cargo.

The value of China’s low-altitude economy reached 506 billion yuan (US$71 billion) last year, growing by about 34 per cent over 2022, according to a report in April from a research institute under the Ministry of Industry and Information Technology.

Aerial sightseeing, skydiving and paragliding already have followings in China and contribute to the low-altitude economy.

Helicopters and hot-air balloons have previously carried out aerial tourism trips, but balloon operators face strict regulations due to safety issues following a series of crashes.

Guangxi Guilin Ark General Aviation chairman Hu Yingjie said that low-altitude trips had become a “new track highly anticipated by the tourism market”, according to People.cn.

Aerial scenic tours by helicopter, lasting around 20 minutes, cost about 1,000 yuan (US$141) per passenger, offering some appeal in southwestern Chinese scenic spots, but pale in comparison to the popularity of buses or hiking, said Steven Zhao, Guilin-based chief executive of the China Highlights online travel agency.

“The tickets are definitely expensive and we have other options,” Zhao said.

The AS700 “is a good invention, but not too many people will use it” due to safety fears, he said.

“I think the best sectors are military operations, emergency and rescue operations and package delivery, if safety can be assured.”

How will Michel Barnier influence France’s China policy and is he supposed to?

https://www.scmp.com/news/china/diplomacy/article/3278240/how-will-michel-barnier-influence-frances-china-policy-and-he-supposed?utm_source=rss_feed

President Emmanuel Macron picked Michel Barnier to be the new French prime minister in a bid to end two months of political chaos after his centrist alliance lost its relative parliamentary majority in a snap July election.

Barnier, a former foreign minister who recently served as the EU’s Brexit negotiator, is unlikely to put a dent in France’s China policy or the deteriorating trade relations between Beijing and Brussels, according to observers.

Despite his reputation as a veteran centre-right politician, the 73-year-old Barnier – who became the oldest prime minister in the history of modern France when he took office earlier this month – is expected to have little sway on foreign policy decisions, they said.

Wang Yiwei, a Europe specialist and professor of international relations at Beijing’s Renmin University, said Barnier was a compromise choice and likely to be a transitional figure.

“Like his predecessors, Barnier is expected to be responsible mainly for economic and internal affairs, without much real power, especially in diplomacy, which is controlled by Macron himself,” he said.

According to a survey published on Sunday by French newspaper Le Journal du Dimanche, 52 per cent of respondents were satisfied with Barnier’s appointment, but 74 per cent believed he would not last long in the post.

The Ifop poll was released after more than 100,000 left-wing demonstrators rallied across France on Saturday to protest against the nomination of Barnier as prime minister and denounce Macron’s “power grab”.

Philippe Le Corre, a senior fellow at the Asia Society Policy Institute, said that French foreign ministry officials tend to take their steer these days from Macron on China – an issue the two-term president has clear feelings on.

“I don’t think Barnier has ever said much on China, even as foreign minister. In France, like Germany, the China question has become an issue handled by the top level,” he said.

“This was the case when Barnier was foreign minister in 2004, and it is still very much the case under President Macron.” The dynamic is likely to continue, because of Macron’s relative popularity in Beijing, according to Le Corre.

“First of all, Macron chose someone that will pursue the general orientations of his own policy. Secondly, foreign policy and defence remain the president’s ‘reserved domain’,” said Marc Julienne, director of the Centre for Asian Studies at the French Institute of International Relations.

“The main focus right now in France is domestic policy: public debt, employment, wages … and above all political stability, which is quite a challenge. So one should not expect too many changes in France’s foreign policy.”

Julienne also observed that, even though Barnier is in place, the rest of the government has yet to be appointed – including the position of foreign minister.

Ding Chun, director of Fudan University’s Centre for European Studies in Shanghai, described Barnier as “cautious, pragmatic and balanced” in his approach to China, but said the prime minister’s focus would primarily be on the pressing challenges at home.

The political turmoil that has roiled Macron’s presidency is expected to “distract the French leaders from forging closer economic and trade ties with China and playing a leading role in resetting China-EU ties”, he said.

On the occasions when Barnier has weighed in on China-related issues, he has complained about market access for European firms and chastised Beijing for its policies towards Taiwan.

In 1996, after the PLA “fired four missiles without explosive charges into international waters near Taiwan”, Barnier – as France’s minister for European affairs and standing in for the foreign minister – took Beijing to task.

“It would be appalling and dangerous for France and Europe if an ill-considered military act were to compromise economic progress in this area and the architecture of regional security that is being built,” he said.

In 2004, then foreign minister Barnier signed off on the joint construction of China’s first P4 laboratory – signifying the highest level of safety and security standards to work with dangerous biological agents – under a bilateral cooperation agreement.

The laboratory, located in Wuhan, went operational in 2018 during Macron’s first state visit to China and became known around the world a few years later, as the centre of controversy on the origin of Covid-19.

In 2014, on a visit to Beijing as EU commissioner for the internal market, Barnier met the then-finance minister Lou Jiwei and bemoaned the lack of access for European financial services firms.

“Chinese banks are some of the biggest and most powerful banks in the world … they shouldn’t and do not fear competition,” Barnier told journalists at the time.

Three years earlier, when holding the same role, Barnier told French journalists in Beijing that “European companies in China should receive the same treatment as Chinese companies in Europe”.

EU-China relations analyst Francois Chimits, with the Mercator Institute for China Studies, said that Macron’s unpopularity at home is likely to keep the president’s focus on issues outside France, leaving some domestic issues to Barnier.

“Nothing I see indicates any divergence from the previous strategy. With Macron more restrained on the domestic front, you might see more of him at the EU and international level, possibly instilling extra traction on the more de-risking approach supported by the French.”

Barnier’s appointment comes at a critical moment in China’s ties with both France and the EU, which have been strained over a litany of economic and trade disputes, as well as Beijing’s quasi-alliance with Moscow amid the latter’s aggression against Ukraine.

As US-China rivalry deepened, Beijing tried to stabilise ties with Europe, issuing invitations to the prime ministers of Italy, Norway and Spain in the past month, following President Xi Jinping’s state visits to France, Serbia and Hungary in May.

But a joint communique from the leaders of 32 Nato members, including 30 European countries, issued after a Washington summit in July slammed Beijing as a “decisive enabler” of Russia’s invasion of Ukraine.

Renmin University’s Wang said Beijing was keenly aware of France and Europe’s dilemma in balancing between China and the US.

While Macron’s domestic crisis was “far from over”, there were also “headaches and challenges” between Paris and Beijing, he said, pointing to France’s leading role in launching anti-subsidy investigations into China’s electric vehicle imports.

Although Beijing has publicly rejected the EU’s designation of China as a simultaneous partner, competitor and systemic rival, it has largely accepted Brussels’ assessment of the complex Sino-European relationship, Wang noted.

“China hopes to highlight cooperation while downplaying the negative impact of competition and the possibility of confrontation. For Beijing, competition is not necessarily that bad or zero-sum, but it needs to make sure that France and Europe do not follow the US in suppressing China in the name of competition,” he said.

“With Europe deeply divided and the France-Germany leadership axis in decline, China has consistently praised France and the EU for their geostrategic importance and diplomatic autonomy”, in a bid to pull European countries away from Washington’s orbit, he said.

As Foreign Minister Wang Yi put it at this year’s annual session of the National People’s Congress, “as long as China and Europe engage in mutually beneficial cooperation, no attempt to create bloc confrontation will succeed; as long as China and Europe stay committed to openness and win-win, deglobalisation will not prevail”.

According to Wang of Renmin University, “China’s ties with the EU will continue to deteriorate in the long run”, because of the US factor and Beijing’s strategic pivot to Moscow in the midst of the Ukraine war.

“As long as the Russia-Ukraine conflict continues, it will be hard for China to clear its image of being closely tied to Russia. But even if the Ukraine conflict ends, it would still be difficult for Sino-EU relations to substantially improve and return to the past.”

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PwC invests in ‘high quality’ China business to ensure survival after US$62 million fine

https://www.scmp.com/business/banking-finance/article/3278710/pwc-invests-high-quality-china-business-ensure-survival-after-us62-million-fine?utm_source=rss_feed

PwC is making “tangible investments” to ensure the Big Four firm has high quality and sustainable business in China, it said in a memo to staff after Chinese regulators on Friday hit the company’s mainland unit with a record penalty.

PwC Zhong Tian was hit with a six-month suspension and a fine of 441 million yuan (US$62 million) on Friday over the firm’s audit of failed property developer China Evergrande Group.

Chinese authorities have been examining PwC’s role in Evergrande’s accounting practices since the country’s securities regulator accused the developer in March of a US$78-billion fraud over a period of two years through 2020.

“We want to recognise that this has been an extremely challenging period for all of you,” said the PwC internal memo issued late on Friday after the regulatory penalty announcement, and reviewed by Reuters.

“The PwC network has also shown continued support for our China firm throughout this period … They are making tangible investments to ensure we have long term, high quality and sustainable business in China,” it said.

PwC did not immediately reply to Reuters’ query on Monday.

“I know that the coming weeks will not be easy as we put in place a detailed remediation plan and begin to position the business for future success,” the firm’s new China territory head, Hemione Hudson, said in the memo.

PwC appointed its global risk and regulatory leader Hudson to replace China territory senior partner Daniel Li as part of its remedial actions. Li stepped down given his “former responsibilities” as head of the local auditing business.

The firm said that its leadership team would help staff “navigate any questions or concerns” they might have related to the Chinese regulatory announcements.

“One of my areas of focus will be on spending time with you and looking at ways of further developing our talent, including investing in you as our people,” Hudson said in the memo.

The memo also said that PwC China had a long history of high-quality audits.

“We do not believe that the behaviour of a very small number of engagement team members is representative of the work of the vast majority of PwC China’s 18,000 professionals,” it said.

Separately, regulators are continuing their investigation into PwC’s work by its Hong Kong unit in relation to China Evergrande, which is a Hong Kong listed entity, according to mainland and Hong Kong regulatory statements on Friday.

The penalty announced by the mainland regulators “has laid an important landmark in cross-boarder law enforcement of China Evergrande”, said a statement by Hong Kong’s Accounting and Financial Reporting Council on Friday.

“Our independent investigation into China Evergrande will roll out in an orderly way,” it said.

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Forest City, Malaysia’s China-backed project, to launch special financial zone on Friday

https://www.scmp.com/news/asia/southeast-asia/article/3278719/forest-city-malaysias-china-backed-project-launch-special-financial-zone-friday?utm_source=rss_feed

Forest City’s special financial zone (SFZ) will be launched on Friday with various incentives and packages to stimulate investment, growth and economic activities in Johor.

Johor Investment, Trade, Consumer Affairs and Human Resources Committee chairman Lee Ting Han said Finance Minister Amir Hamzah Azizan is expected to grace the event and explain the significance of the SFZ.

“Packages and incentives will be offered to insurance finance companies and others,” he said.

On August 25 last year, Malaysian Prime Minister Anwar Ibrahim announced the formation of SFZ for the China-backed Forest City and incentives to boost Johor’s economic activities and surrounding areas.

On Johor’s main export contributing sectors after recording RM5.2 billion (US$1.2 billion) million) in July exports, Lee said petrochemicals and chemicals, electricity and electronics (E&E), and non-metallic materials were among those sectors.

“The petrochemicals and chemicals sector was among the contributors. We have industrial areas such as Pengerang, Pasir Gudang and also Tanjung Langsat.

“Meanwhile, the E&E sector involves semiconductors and non-metallic materials which also contribute to the basic manufacturing materials for other sectors,” he said.

Malaysia’s chief statistician Dr Mohd Uzir Mahidin reportedly said Johor, Selangor and Penang dominate Malaysia’s exports, contributing 70.6 per cent of July 2024’s total exports.

July exports were worth RM131.1 billion, a 12.3 per cent rise from RM14.4 billion a year ago.

The rise was influenced by higher exports in most states.

China safeguards rare earth reserves with discovery of 5 million tonnes of key metals

https://www.scmp.com/economy/china-economy/article/3278718/china-safeguards-rare-earth-reserves-discovery-5-million-tonnes-key-metals?utm_source=rss_feed

China is set to further safeguard its reserves of rare earth elements by about 5 million tonnes amid increasing international competition, especially with the United States, following a discovery in the southwestern Sichuan province.

Rare earth specialists told a symposium held last week by China Rare Earth Group that 4.96 million tonnes of rare earths – which are crucial to tech development, ranging from electric vehicles to wind turbines, robots and military weapons – had been found in the Liangshan Yi autonomous prefecture, which is one of the poorest regions in China.

China is the world’s top producer of rare earth elements, that includes 17 metal oxides, with 44 million tonnes of deposits, according to the US Geological Survey.

“In the face of the new situation of international competition … the group will keep the nation’s greater interests in mind, to make new, significant contributions to safeguarding China’s rare earth resource security,” the state-owned China Rare Earth Group said in a statement on its official website on Saturday.

China’s rare earths dominance has increasingly raised geopolitical concerns amid the escalating tech rivalry between China and the US.

The world’s second-largest economy has been restricting its supply and export of rare earth elements, which were earlier this year identified by the Ministry of State Security as strategic mineral resources “directly related to national security”.

Pan Helin, an economist and adviser to the Ministry of Industry and Information Technology, told the state-owned China Securities Journal on Saturday that the discovery in Sichuan would enhance China’s resource advantage in the global rare earth market.

“While consolidating resource advantages is crucial, China’s rare earth industry must also expand into downstream sectors, improve resource utilisation efficiency, and enhance the technological edge of enterprises,” Pan said.

China accounted for between 80 and 90 per cent of global rare earth production in the early 2010s, but that dominance waned to around 70 per cent by 2023 amid a global increase in the supply of rare earths, according to the US Geological Survey.

The China Rare Earth Group was formed in 2021 following a merger of units under three state firms, seen by industry analysts as marking a significant step toward bolstering China’s rare earth production dominance.

“[The group] will enhance its core function in safeguarding the security of rare earth resources … focusing on six key objectives [in rare earth] – expanding resources, increasing reserves, boosting production, stabilising supply, reducing costs and ensuring security,” the company statement added.

Last month, the Ministry of Industry and Information Technology and the Ministry of Natural Resources jointly set the upper limit for the year’s second batch of rare earth mining output at 135,000 tonnes and smelting at 127,000 tonnes.

Combined with the first batch, the two batches this year stand at 270,000 tonnes and 254,000 tonnes, respectively, representing a year-on-year increase of 5.9 per cent and 4.2 per cent, respectively, from the first two batches of quotas released last year.

China’s rare earth exports in the first eight months of the year rose by 6.4 per cent year on year to 38,755 tonnes, while the export value plunged by 40.2 per cent to US$341.2 million , customs data showed.

Hong Kong customs seizes record HK$400 million of mainland China-bound electronics

https://www.scmp.com/news/hong-kong/law-and-crime/article/3278700/hong-kong-customs-seizes-record-hk400-million-mainland-china-bound-electronics?utm_source=rss_feed

Hong Kong customs officers have confiscated HK$400 million (US$51.3 million) worth of computer and electronic products from a seaborne shipment of citric acid destined for mainland China, the biggest haul of its kind so far this year.

The smuggled goods, hidden in more than 2,000 cardboard boxes, were discovered packed in a cargo container last week before it was loaded onto a Tianjin-bound vessel at a Kwai Chung container terminal, according to the Customs and Excise Department.

A source familiar with the matter said on Monday that the seized contraband included high-performance computer products such as central processing units and display cards, each costing several thousand dollars.

The insider said the computer products could be used to play online games amid the rise of the popular Chinese video game “Black Myth” on the internet.

“They are brand new products. We don’t rule out the possibility that part of the haul is designed to meet the demand of online game enthusiasts on the mainland,” the source said.

Black Myth: Wukong, China’s first AAA video game, broke records and became the most played title of its kind on the first day of release on the Steam digital game store – a milestone for its mainland developers.

The source said more than HK$50 million in tariffs could have been evaded if the consignment had successfully been smuggled into the mainland.

He said customs officers would exchange intelligence with mainland authorities to track the consignee and find out the final destination of the contraband.

Senior Inspector Chow Chun-hung of customs’ syndicate crimes investigation bureau said the shipment was selected for inspection last Monday (Sept 9) because citric acid was rarely imported into the mainland.

Chow said when the container was opened for inspection at the Kwai Chung Customhouse on the same day, “40 pallets loaded with more than 50 boxes of computer and electronic products each” were found inside with no trace of citric acid.

He said the haul had an estimated street value of HK$400 million, adding that it was the biggest seizure of its kind this year.

He added that an investigation into the origin of the contraband was ongoing.

It was the third seaborne smuggling case customs officers foiled in three weeks.

On September 3, customs officers seized HK$85 million worth of smuggled goods in two containers bound for Port Klang in Malaysia. The haul contained more than 100,000 items of second-hand computer and electronic goods.

The two containers declared carrying aluminium alloy were selected for inspection at a Kwai Chung shipping terminal before it was loaded onto a Malaysia-bound oceangoing vessel.

On August 20, they seized HK$15 million worth of used computer and electronic products from another container, also bound for Port Klang. The container was declared carrying aluminium materials.

The senior inspector said in these two cases, a layer of aluminium goods was placed near the door of each container to camouflage the contraband products.

Chow said computer and electronic products were commonly smuggled to the mainland, which was believed to be the ultimate destination for the two shipments.

He believed that the two Malaysian-bound shipments were designed to evade around HK$13 million in tariffs.

So far, no arrests have been made in the three cases.

Between April 1 and August 15, Hong Kong customs foiled 10 other Malaysia-bound shipments involving HK$547 million worth of contraband products.

One of the cases was discovered on July 30 when customs officers seized HK$150 million worth of electronic components in a cargo container bound for the Southeast Asian country.

The source said smugglers always changed tactics and routes to transport the contraband in an effort to evade detection.

In Hong Kong, exporting and importing unmanifested cargo is punishable by up to seven years in prison and a HK$2 million fine.

China’s stealthy yuan support ebbs, denting hot hedge fund trade

https://www.scmp.com/business/markets/article/3278674/chinas-stealthy-yuan-support-ebbs-denting-hot-hedge-fund-trade?utm_source=rss_feed

A lucrative trade that offered hedge funds a way to ratchet up profits on Chinese debt instruments is starting to lose its charm.

Data due this week may show a popular strategy – which had resulted in a fourfold increase in foreigners’ holdings of Chinese bank notes over the past year – has lost momentum in August, analysts said.

The trade involves overseas investors lending out their dollars in return for the yuan and using the proceeds to buy short-term bonds. Returns on the strategy have dwindled due to a lower demand for foreign-exchange in the swaps market.

The development is significant because it is partly due to easing dollar borrowing by Chinese state banks, which had been using foreign-exchange obtained in the swaps market to support the yuan in spot trading. Now with the Chinese currency stabilising, the need for such a tacit way of intervention has moderated.

But that is bad news for hedge funds. China’s short-term bank debt had been a favourite for them – the securities attracted inflows for a record-smashing 11 straight months – even when government and quasi-sovereign notes were losing buyers. It is likely to narrow investment options for global investors in China as a sluggish economy and geopolitical tensions hurt sentiment in yuan assets.

“Foreign inflows should have slowed a lot,” said Becky Liu, head of China macro strategy at Standard Chartered. “The bigger risk is the fourth quarter and the first half. If the trade becomes less attractive when those previous trades mature, the portion being rolled over is likely to be smaller.”

One-year dollar-yuan swap points surged the most since 2008 in August and stayed elevated since then, suggesting returns from lending the US dollar in return for the Chinese currency have slumped.

Last month, overseas investors lent out US$1 billion of foreign-exchange with one-year swaps, significantly lower than the amount seen previously, according to two traders. State banks shifted from being net borrowers to lenders of dollars, they added. The traders asked not to be identified as the information was private.

On top of fading intervention by state banks, bets that the Federal Reserve will start slashing interest rates as soon as this week have also contributed to the shift.

The Fed’s rate hikes and Chinese state banks’ efforts to bolster the yuan sent one-year swap points to the lowest since the global financial crisis.

In July, overseas investors bought a net 118 billion yuan (US$16.6 billion) of negotiable certificates of deposit, boosting their holdings of the debt to a record 1.1 trillion yuan, according to the latest data from the Shanghai Clearing House.

The one-year yield on AAA-rated bank bonds climbed to a two-month high at the end of August before easing.

China’s fading hunger for grain spells trouble for world farmers

https://www.scmp.com/business/commodities/article/3278677/chinas-fading-hunger-grain-spells-trouble-world-farmers?utm_source=rss_feed

Warehouses across China are bulging with grain as a deepening economic crisis takes hold, leaving the world’s farmers to grapple with the prospect of a long-lasting slowdown gripping one of their largest customers.

The strain across global markets is already showing. French barley exports to China have been tumbling, and the US has yet to sell a full corn cargo for the new season. Wheat farmers in Australia are likely to be nervous as they prepare to start harvesting their new crop over the coming weeks.

None of this will change soon, and the combination of an ageing population and a cooling economy augurs poorly for the future. Traders and farmers will need to start adjusting to a very different demand outlook. Even if food security concerns keep imports robust for years to come, the meteoritic growth seen through the past two decades is likely over.

“People are getting more pessimistic about the economy and demand,” said Ivy Li, a Shanghai-based commodity markets analyst at StoneX. “Importers will be very cautious, buying more slowly and doing more hand-to-mouth purchases. Impact from the collapse of confidence is all around.”

China’s slowdown and the pain in the country’s property market have battered consumer confidence, pushing money-conscious households to cut back on meat and forgo restaurants, curbing the amount of crops needed to feed a massive pig herd or to fry food.

Beijing has already taken steps to try to protect farmers, asking traders to limit overseas purchases of corn, barley and sorghum – an effort to ease oversupply exacerbated by a buying spree earlier in the year, when merchants snapped up cheap overseas cargoes. These eventually flowed to Chinese ports just as consumption softened. The nation has also moved to reduce the use of soymeal in animal feed.

China’s economic boom at the start of the century transformed the nation into a powerhouse consumer of commodities from grain to metals to oil, and led to resource-rich countries ramping up output to meet surging demand. China’s own agriculture industry is huge, but the need to feed 1.4 billion people mean it has become a behemoth importer of soybeans over the years – and more recently a major wheat buyer.

For the season starting in September, the US has sold only 13,400 metric tons of corn for delivery to China, compared with more than 564,000 tons a year earlier, according to US Department of Agriculture data. Over the course of 2023-24, exports fell 63 per cent. Shipments from Brazil also fell.

Exports of French barley – including malting that is used to make beer – are running almost 50 per cent lower this season from the key Rouen port compared with a year ago. Industry group Intercereales sent a delegation to China seeking clarity from customers on a recent request by authorities to limit imports.

“We are witnessing a bit of a freeze in business,” said Philippe Heusele, the president of international relations at Intercereales.

One key commodity where China will continue to rely heavily on imports is soybeans, with Brazil and the US big winners from the trade. Its domestic output is far from being capable of meeting its needs, even if demand has slowed.

Brazil saw record exports to China earlier this year thanks to cheaper beans, used for cooking oil and animal feed for pigs. But looking ahead, the US has so far sold less than 5 million tons for delivery in the 2024-25 season – the lowest in 16 years outside of the 2018-19 trade war, and down 25 per cent from a year ago.

“Chinese demand is not as strong as it has been in the past,” said Paulo Sousa, the president for Cargill in Brazil. “We are not seeing significant growth like in previous years.”

And local farmers are not the only ones feeling the squeeze, with profits for major catering businesses in Beijing plunging 88 per cent over the first half of the year as consumers became more frugal.

The outlook for the Chinese economy remains bleak, with deflation showing signs of spiralling and the nation’s annual growth target this year looking increasingly out of reach. Some in China’s agriculture industry are starting to run the numbers on what imports in 2024-25 may look like.

Overseas corn shipments could more than halve to 9 million to 11 million tons, while wheat imports may decline to around 7 million to 9 million tons – down from 13 million in 2023-24 – according to traders based in China, who asked not to be identified because they are not authorised to speak to the media.

Beijing “stated earlier this year their goal of improving incomes for Chinese grain producers and to promote increased efficiency in agriculture, which implies China will have greater scrutiny on imports in the future”, said Tanner Ehmke, lead economist for grains and oilseeds at CoBank. “But there’s also the obvious concern about China’s slowing economy.”

While foreign farmers and traders will likely see profits shrink, the upside for global consumers is that cheaper grain could ease pressure on food inflation that surged after the invasion of Ukraine. The other unknown heading into 2025 is the outcome of the US presidential election in November, which could upend trade flows should the winner take a tough stance on China.

A final question mark is the weather, which could yet hit plans to reduce overseas purchases. China was forced to feed a large portion of its wheat to animals last year after rain damage, boosting imports.

China has been the biggest buyer of Australian wheat over the past couple of years. It is now yet another producer country where some farmers are already looking elsewhere.

Farmer Andrew Weidemann usually ships around a fifth of his grain to China, but he is expecting that volume to halve. “Anything that happens in China is going to have a huge impact on the markets everywhere else,” said Weidemann, who operates a farm spanning 4,000 hectares in central Victoria in the southeast of Australia.

China MMA athlete faces online backlash for reporting groping to police and not retaliating

https://www.scmp.com/news/people-culture/gender-diversity/article/3278575/china-mma-athlete-faces-online-backlash-reporting-groping-police-and-not-retaliating?utm_source=rss_feed

A female MMA athlete contacted the Shanghai police after a man attempted to sexually assault her while she was walking home. However, many mainland netizens criticised her for not physically confronting the assailant.

On the morning of September 3, Xu, the woman, was walking in the Jing’an district when a 23-year-old man, surnamed Zhou, began to follow her, as reported by Dute News.

When he asked her for her contact information, he suddenly wrapped his arms around her neck and tried to kiss her. Xu successfully broke free but fell to the ground in the process, only to notice that Zhou was holding a knife. Xu promptly called the police.

The Shanghai police later confirmed on Weibo that Zhou had been detained on charges of “forcibly molesting” a woman. Under Chinese law, such an offence can result in imprisonment for up to five years.

Xu said she was worried about seriously injuring Zhou if she fought back.

“Because I am a professional MMA athlete, my punches are much stronger than the average person, and I was afraid there would be serious consequences if I did not pull my punches,” Xu was quoted as saying. “Plus, if the man was not detained, he would hurt more women, and I want him to receive judicial punishment.”

But Xu said she received a myriad of online abuse in the aftermath of the attack, with people online criticising her unwillingness to fight violence with violence.

“You have received MMA training! Why did you not use your skills to severely punish this evil?” wrote one person on Douyin.

Another person stated: “You would have been justified in attacking him, yet you chose not to. I can’t help but wonder if that implies you were unable to defeat him in the fight.”

Xu, 25, has been practising MMA for four years and had previously been part of the China national judo team before she retired.

“I practise MMA every day to pursue my dream rather than using those skills to resort to violence,” she said.

A core tenet of martial arts is that a person should refrain from using violence unless it is deemed necessary.

Xu suggested other women should pick up some basic fighting training so that “they will feel confident in their personal safety when being assaulted”.

Despite online criticism, Xu also earned a flood of praise from mainland Chinese internet users.

“I support you. You handled this situation well,” said one person online.

Another person echoed the sentiment: “Sister, don’t worry about other people’s thoughts. They don’t understand how powerful an MMA athlete is.”

China’s video game achievement may be anomaly for years to come despite Black Myth: Wukong

https://www.scmp.com/economy/china-economy/article/3278643/chinas-video-game-achievement-may-be-anomaly-years-come-despite-black-myth-wukong?utm_source=rss_feed

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Ahead of the August 20 global release of the video game , anticipation caused so much excitement in China that sales of Sony’s PlayStation 5 skyrocketed over the preceding seven days, leading to long wait times at bricks-and-mortar shops.

The Wukong mania that swept the nation shows how far the domestic video gaming industry has come in the last 10 years: Sony could not legally sell the PlayStation in China a decade ago, when the country was in its final year of a 15-year console ban.

China’s first AAA video game – an unofficial designation that signifies high costs, long development times and the most demanding graphics – is proving to be a massive success. It sold 10 million copies in less than four days, according to developer Game Science, and its peak simultaneous players measured by the digital game store Steam surged past other hit AAA titles such as Cyberpunk 2077 and Elden Ring.

Importantly, this is not just a win at home like Huawei’s China-made processor, which was considered a win for China but not the semiconductor industry. Black Myth is being praised by gamers worldwide, resulting in a score of 82 on Metacritic. That is not quite Elden Ring territory, with its score of 96, but it is more than respectable, especially for a debut AAA title.

With elements ripped straight from one of the most influential pieces of classic Chinese culture – it is inspired by the 16th century novel Journey to the West, where the Monkey King first appeared – Black Myth’s success has led to questions about whether the country’s massive video gaming industry could finally be boon to national soft power.

Views on this seem to be mixed. Some analysts dubbed it a big win for China’s techno-nationalism and said it would help the country project global influence. But this is just one game. Industry insiders say it could be years before China sees another AAA game with this level of enthusiasm and success. One person estimated that seeing another such title come out of China could be nearly a decade away.

There are a lot of reasons for this, not the least of which is that China has a complicated relationship with video games. Reversing the console ban was not even the end of Beijing’s campaign against video games as “spiritual opium”. One of its biggest crackdowns on the industry was just three years ago, when Beijing limited minors to playing three hours a week and froze licences for new game releases for months.

The crackdown did immense damage to China’s video gaming industry and did not go unnoticed in Beijing, which has since pulled back. In January, regulators retracted a proposal that would have limited spending in games – a move that had wiped US$80 billion from Chinese video gaming stocks. The official in charge of regulating the video gaming industry stepped down earlier in the month.

Another complication is that Game Science – a once low-profile studio that became a national champion overnight – has been the subject of controversy for years. Allegations of misogynistic remarks online from one of the company’s founders, and of a sexist culture in the company, have clouded the developer. Ahead of Black Myth’s release, streamers who got advanced access to the game posted online that they received notices telling them to avoid “feminist propaganda” and other sensitive topics, including Covid-19.

Some people called for boycotts of the game long before its release, but that seems to have had little effect. Still, the game is clearly having a much bigger impact at home than anywhere else.

The benefits of Black Myth go far beyond the video gaming industry. There has been talk of a “Wukong economy”, as the game has spurred all kinds of activity in China – from the sale of tie-in products and services such as coffee and bike sharing to tourism to areas related to the game.

The biggest beneficiary of the game’s success outside Game Science is probably its biggest backer: Tencent, the world’s largest video game company by revenue. The founders of Game Science worked as game designers at Tencent before leaving to start their own studio. Tencent’s fingerprints can be found everywhere in the gaming industry.

Most PC gamers globally are buying Black Myth on Steam, but in mainland China, they are buying on Tencent’s WeGame. There, gamers are still subject to censorship even though the title got a licence back in February. The “wine” in the international version of the game, for example, was changed to “sweet dew” in the domestic version. No one knows how to navigate China’s complicated web of video game regulations and restrictions as well as Tencent.

Technologically and even culturally, Black Myth represents the significant progress that Chinese game developers have made. It also shows the areas in which the industry remains held back. Gamers around the world can rejoice at having another major AAA title to play that, I’m told, is a genuine delight. Black Myth took six years to develop. Great AAA games are not necessarily rare, but neither are they common.

Yet, it is probably a stretch to say this is a big win for Chinese soft power. That remains too soon to tell. Beijing is also not known for speaking softly when it comes to video games, even if Wukong carries a big stick.

60-Second Catch-up

China approves 117 video games in August, the most in 2024, amid Black Myth: Wukong mania.

Video: Who is the Monkey King ‘Wukong’ in China’s hit AAA video game?.

Black Myth: Wukong is increasing China’s appetite for AAA games, but next one could take years.

Opinion: Black Myth: Wukong is a learning moment in soft power.

Will Black Myth: Wukong gaming mania mark a turning point for China’s soft power fortunes?.

Opinion: Why China’s video gaming industry needs more titles like Black Myth: Wukong.

Chinese Nvidia distributor pairs graphics cards with Black Myth: Wukong game in offbeat promotion.

Video: China’s first home-grown AAA game breaks records after debut.

Black Myth: Wukong sends China’s game-friendly hotels into overdrive, boosts room rates.

Opinion: Why Black Myth: Wukong’s success should spark reflection on sexism in gaming.

Podcast: The resurrection of China’s video gaming industry.

Tencent, NetEase rethink Japan investments after yielding few blockbuster video games.

Video: ‘Black Myth: Wukong’ faces possible boycott over Game Science CEO’s sexually explicit remarks.

Opinion: Black Myth: Wukong video game is the latest iteration of 500-year-old Journey to the West.

Deep Dives

Tucked away in the southwest corner of the eastern Chinese city of Hangzhou, security staff stand guard at a few nondescript four-storey villas to dissuade tourists from taking photos. The 24/7 security detail is tasked with an important mission: ensure the developers for the video gaming studio Game Science remain undisturbed.

Since the release of Black Myth: Wukong on August 20, the once little-known Tencent Holdings-backed start-up has become a national champion, attracting fans and news media to the ArtInno Town office park to catch a glimpse of the location where history was made in the form of China’s first AAA video game. Rebuffed by security, reporters were milling about a nearby cafe awaiting a chance to catch Game Science co-founder and art director Yang Qi, according to one staff member.

Read more.

China’s first triple-A video game , rooted in the 16th century novel , is slated for release later this month. And, like the literary classic, it has risen above cultural differences to roaring global success.

The action role-playing game has topped US distributor Steam’s “wish list” chart and is enjoying strong pre-orders, with developer Game Science banking on the enduring appeal of its iconic hero, combined with the newest top-tier mechanics.

Read more.

China’s blockbuster video game Black Myth: Wukong is driving a wave of economic activities across multiple sectors, creating a “Wukong economy” from tourism to computer accessories amid soft domestic demand.

The success of China’s first AAA premium game, based on the literary figure Monkey King from the 16th-century Chinese novel Journey to the West, has led to a travel boom in parts of China, increased demand for gaming hardware upgrades and a surge in spending on drinks and wellness services, according to local authorities and businesses.

Read more.

A province in northern China that has never been a tourist hotspot is suddenly attracting crowds thanks to the hugely popular new online game Black Myth: Wukong that includes scenes from the area.

The blockbuster game, released on August 20, has been a hit both at home and overseas, selling 8.4 million copies in the first three days.

Read more.

Ever since it reportedly sold 10 million copies in the first three days after its August 20 release, Black Myth: Wukong, an action role-playing video game based on the Chinese literary classic Journey to the West, has become a gamer favourite. There is even talk of it being named “Game of the Year” for 2024.

Read more.

Chinese tech giant Tencent Holdings is eyeing growth in the competitive international cloud computing market, hoping to tap into soaring demand for artificial intelligence (AI) technologies and the company’s strengths in video gaming and social media to expand its overseas business.

While Tencent is among the top three cloud computing service providers in China, it remains a relatively smaller player in the global market. But as Tencent’s domestic clients venture abroad, many are expressing interest in using the Shenzhen-based giant’s technologies overseas, according to Dowson Tong, CEO of Tencent’s Cloud and Smart Industries Group.

Read more.

Chinese tech giants Tencent Holdings and NetEase announced back-to-back new title releases, in a sign of intensified competition among the country’s top two video gaming publishers, as other Big Tech firms throw in the towel.

NetEase, the country’s second-largest online gaming firm, plans to release about a dozen new games next week, including titles in collaboration with big-name franchises Marvel Entertainment and The Lord of the Rings, the company announced on Monday.

Read more.

Chinese regulators have retracted a proposal to rein in spending on games, a reversal that comes after the original move battered stocks of the country’s video gaming champions including Tencent Holdings and NetEase.

In an unusual move, the National Press and Publication Administration (NPPA), the regulator answering to China’s propaganda department, removed the notice of the proposed regulation from its website on Tuesday. The draft rule, published in late December, was open for public feedback until January 22.

Read more.

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Indonesia’s run-in with Chinese vessels, Southeast Asia visa-free travel: 5 weekend reads

https://www.scmp.com/news/world/article/3278642/indonesias-run-chinese-vessels-southeast-asia-visa-free-travel-5-weekend-reads?utm_source=rss_feed

We have put together stories from our coverage last weekend to help you stay informed about news across Asia and beyond. If you would like to see more of our reporting, please consider .

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China hit hard by new Dutch export controls on ASML chip-making equipment

https://www.scmp.com/tech/tech-war/article/3278535/china-hit-hard-new-dutch-export-controls-asml-chip-making-equipment?utm_source=rss_feed

Mainland semiconductor factories could face significant production challenges, as the Netherlands bans Dutch chip tool giant ASML Holding from servicing some of its most reliable equipment in China, according to industry insiders.

Earlier this month, Dutch foreign trade and development minister Reinette Klever announced a change to the country’s export controls, requiring ASML to apply for licences to sell its 1970i and 1980i immersion deep ultraviolet (DUV) machines to China-based customers.

In addition, ASML is required to apply for a licence to service, as well as provide spare parts and software updates, for immersion lithography systems previously sold to Chinese customers that have since come under restriction, according to a Reuters report, citing a Dutch government statement.

The move is intended to align Dutch rules with tightened US trade restrictions that went into effect last November, targeting China on national security grounds. The curbs by Washington covered the 1970i and 1980i. The Chinese commerce ministry objected to The Hague’s decision.

ASML, which holds a virtual monopoly in the world’s most advanced chip-making tools, said in a statement that the rule change was “technical” and not expected to have any impact on its financial outlook for this year. It declined to comment on the servicing of newly restricted equipment in China when reached by the Post.

Maintenance service is crucial to maintaining good production yields at foundries. Service engineers are required to stand by 24/7 in case of machine failure. In China, the 1980i has become a workhorse for many semiconductor plants due to its versatility, which enables it to cover various manufacturing nodes, according to semiconductor professionals with experience in mainland foundries.

The short-term impact of losing access to servicing could be huge for the Chinese chip industry, according to a person familiar with ASML’s operations, who declined to be named discussing private business matters.

Since ASML entered the Chinese market in 1988, it has installed over 1,000 machines there, including lithography tools and inspection solutions, Shen Bo, the company’s China manager, said in an interview with state-run China Daily in September last year. ASML has not said how many of those machines are covered by Dutch export controls.

Roger Dassen, chief financial officer of ASML, said in a post-earnings conference call in July that the company still had “eyes on the tools” in fabrication plants operated by Chinese customers.

Still, maintenance is a smaller issue compared to the lack of new advanced lithography machines. Performing maintenance and finding spare parts are relatively less difficult than making lithography systems from scratch, said the source close to ASML.

Mainland China, ASML’s second-largest market by revenue in 2023 after Taiwan, has become the subject of expanding export controls on lithography systems since 2019.

ASML is barred from shipping to China its most advanced EUV systems, necessary for making chips smaller than 7-nanometres, as well as immersion DUV systems, including the 2100i, 2050i, 2000i, 1970i and 1980i, without a Dutch licence.

Current licences tied to blacklisted Chinese companies will no longer be renewed, and future licence applications will be denied, according to Paul Van Gerven, an editor at Dutch tech magazine Bits&Chips. “Should the Dutch start pushing back, the US will most likely introduce additional restrictions of its own.”

The export of dry DUV equipment – older-generation machines that use air instead of water to improve resolution when printing highly complex circuit patterns onto silicon wafers – is unrestricted for now, Van Gerven added.

During the second quarter, ASML’s shipments to mainland Chinese customers totalled 2.35 billion euros (US$2.5 billion), or nearly half of its worldwide systems sales. ASML said in its 2023 annual report that it was only able to fill 50 per cent of orders from China due to a heavy backlog.

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China newlywed woman blinded by husband after refusing to top up his online gaming account

https://www.scmp.com/news/people-culture/trending-china/article/3278574/china-newlywed-woman-blinded-husband-after-refusing-top-his-online-gaming-account?utm_source=rss_feed

A Chinese woman was brutally beaten and blinded by her husband two months after they married because she refused to fund his gaming habit.

The woman, known as Lao Chunxue, 28, from Inner Mongolia in northern China, met her husband, surnamed Xie, who is two years older than her, through an introduction by a relative in 2022.

Despite frequent arguments over his gaming obsession during their relationship, Xie treated Lao with care, which led her to accept his marriage proposal.

After their wedding, the couple relocated to Henan province in central China in search of work, but both struggled to secure employment.

During that period, Xie’s gaming habit intensified, and he began frequently demanding money from Lao to fuel his addiction.

On March 19, last year, two months after their marriage, Xie demanded 10,000 yuan (US$1,400) from her. When she explained that her bride price was depleted and she had no money left, Xie flew into a furious rage and began punching her, causing her nose to bleed.

“He punched me, then hit me with a frying pan,” Lao said.

During the assault, Xie’s mother, who was on a video call, incited his violent behaviour by saying: “If she does not give you money, beat her to death.”

The attack finally stopped when Lao’s cousin intervened after arriving to find Xie strangling his wife with pyjama bottoms.

Lao was rushed to the Fifth Affiliated Hospital of Zhengzhou University, where she was admitted to the ICU and spent three months in a coma.

When she woke up, she discovered she had lost her sight, and that the damage was permanent.

Doctors diagnosed her with optic atrophy resulting from intracranial bleeding, which left her blind. She also suffered other severe injuries that left her unable to care for herself.

Her devastated parents, who travelled from Inner Mongolia after learning of the attack, tearfully said: “Seeing our daughter like this felt like a knife cutting our hearts.”

Her family has spent hundreds of thousands of yuan on medical treatments and even mortgaged their home, but doctors have declared that damage to her optic nerves is irreversible.

In an effort to fund her rehabilitation, Lao attempted to reclaim her assets, only to discover that her husband had secretly transferred her car into his mother’s name.

To date, Xie’s family had contributed 36,000 yuan (US$5000) to her medical expenses following police intervention.

“He comes from a wealthy family, worth millions, but they only gave us 36,000 yuan; a contribution made in the hope it would reduce his sentence,” her mother told Spot News.

On August 30, the People’s Court of Zhongyuan District in Zhengzhou in Henan province sentenced Xie to 11 years in prison for intentional homicide and ordered him to pay Lao 657,000 yuan (US$93,000) in compensation.

Her parents are currently appealing the decision, seeking a life sentence for Xie.

The case, as reported by Weidu News, has sparked widespread outrage online, with many expressing condemnation for Xie’s actions and questioning the leniency of his sentence.

One person said: “Life imprisonment is the only fair sentence. Please share this story with those advocating for marriage; some people reveal their true nature only after tying the knot.”

Another echoed this sentiment: “They met in 2022, and got married in January 2023. It was such a hasty decision. Couples should date for at least a year or two to truly understand each other and prevent future problems.”

A third person added: “This is a crime. When someone maims another person, why do we label it as ‘domestic violence’? We should avoid downplaying the severity of such actions.”

China’s security chief calls for ‘resolute crackdown’ on separatists in Tibetan areas

https://www.scmp.com/news/china/politics/article/3278619/chinas-security-chief-calls-resolute-crackdown-separatists-tibetan-areas?utm_source=rss_feed

Maintaining stability and guarding against independence activities are the top priorities for security personnel in Tibetan areas, China’s security chief said during a trip to the western regions last week.

Chen Wenqing, head of the Central Political and Legal Affairs Commission – the ruling Communist Party’s top security body – said security forces must “resolutely crack down on separatist and destructive activities”.

They must also “resolutely manage religious affairs, while resolutely protecting normal religious activities”, so as to prevent risks, crack down on crimes, and maintain stability, Chen said on the trip that included stops in the Tibet autonomous region as well as the Ganzi Tibetan autonomous prefecture in Sichuan province.

The four-day tour, which ended on Friday, was Chen’s first regional inspection trip since the party’s policymaking third plenum in July, and came in the lead-up to National Day on October 1.

China is preparing to mark the 75th anniversary of the founding of the People’s Republic and security is being tightened in the sensitive Tibet region.

The trip also came less than a month after senior American officials met the Dalai Lama, the exiled Tibetan spiritual leader, in New York.

Chen visited security units in the Tibetan cities of Lhasa and Chamdo, getting updates on operations in the region, Xinhua said.

In Ganzi, he presided over a meeting on “anti-secession work”, and gave instructions on maintaining stability, according to the news agency.

Nearly 80 per cent of Ganzi prefecture’s 1.1 million residents are Tibetan, the second-largest such community in the country.

Chen also ordered security personnel to carry out more propaganda and education campaigns to increase awareness of national identity among the people of all ethnic groups.

Beyond Tibet, there are 10 Tibetan autonomous prefectures across Yunnan, Sichuan, Gansu and Qinghai.

Chen has cast the Tibetan security net wider in recent years to include more surrounding regions with large Tibetan populations.

China’s top judges and prosecutors have also made their rounds of Tibet.

Zhang Jun, president of the Supreme People’s Court, visited Tibetan courts last week and said that it was necessary to hand down tough punishment to keep up the pressure on “violent terrorism, ethnic separatism and other serious criminal crimes”.

Ying Yong, head of the Supreme People’s Procuratorate, also inspected public prosecutors’ offices in Tibet earlier this month.

He also stressed the need for prosecutors to “harshly crack down on all kinds of separatist infiltration, sabotage activities and crimes endangering national security in accordance with the law”.

Why death of star scientist Li Haizeng, 34, has Chinese researchers taking note

https://www.scmp.com/news/china/science/article/3278590/why-death-star-scientist-li-haizeng-34-has-chinese-researchers-taking-note?utm_source=rss_feed

The death of material scientist Li Haizeng from a heart attack at the age of 34 has unsettled China’s research community, even those already mindful of the huge pressure facing the country’s scientists today.

Robotics scientist Geng Tao, who once worked at a British university and is now the founder of a Chinese start-up, said he was aware of the fierce competition in the domestic academic community and the growing tragedy of early death among researchers.

But still, he was shocked by Li’s death on August 29.

Li published dozens of papers as first or corresponding author in top journals in just a few years.

“How diligent one has to be to accomplish that,” Geng said.

Since last month, at least eight young and middle-aged researchers under the age of 60 have died of disease in China, according to openly available information.

Li, who was born in 1990, was a researcher and PhD supervisor at the School of Energy and Power Engineering at Shandong University (SDU), a renowned public university in Jinan, the capital of Shandong province.

His work focused on some of the hottest research areas, including wearable electronics, energy storage, and electrochromic devices that change colour and optical state under certain electrical conditions.

Li published more than 30 papers in major academic journals over the past five years, including in prestigious journals such as Advanced Materials and Advanced Functional Materials. He was granted three Chinese invention patents and one United States patent.

He majored in inorganic non-metal materials engineering during his undergraduate studies at Qingdao University of Science and Technology. After receiving his bachelor’s degree in 2011, Li furthered his materials studies at Donghua University in Shanghai.

During his PhD studies, Li was granted a university scholarship to join a group led by academician Pooi See Lee, a professor at the School of Materials Science and Engineering at Nanyang Technological University.

After graduating in 2016, he worked briefly as a research associate at City University of Hong Kong for a few months before moving to the University of Alberta in Canada to research as a postdoctoral fellow from 2017 to 2020.

The following year, he was selected by the Shandong Province Overseas Excellent Youth Programme, which aims to attract outstanding young scientists to return home from overseas with a fund of 600,000 yuan (US$84,600) over three years. He is also a recipient of several other provincial talent programmes.

In 2021, at the age of 31, Li was recruited by SDU as a full professor, an uncommon achievement in the increasingly competitive domestic academic community.

Xie Jing, a lecturer at Zhejiang University of Finance and Economics whose research interests include the career development of young researchers, commented that Li had climbed his career ladder at a “very fast” pace, saying it normally took an average 13 years to progress from assistant professor to professor in China’s universities.

Li’s outstanding productivity not only earned him promotion opportunities, but also honours. In 2022, he was one of four young Chinese leaders recognised by the Society for Information Display, an international organisation comprising top scientists, engineers and businesspeople in the display industry.

Li’s death from a heart attack in his 30s is not the first such tragedy in China’s science community.

In April, Song Kai, an associate professor in the College of Biology and the Environment at Nanjing Forestry University, died at the age of 38. According to the Shanghai news portal The Paper, Song took his own life after failing an evaluation on his first appointment term.

One month later, Huang Fei, a psychology researcher at Central China Normal University in Wuhan, died aged 41 after becoming ill.

“Young faculty in China now face greater pressure to develop their careers,” Xie said, adding that there could be a number of reasons for this, including a competitive promotion system.

In the current domestic academic environment, she said, early-career researchers who were not ahead at the outset were “constantly falling behind and then losing the game”.

The fear of being left behind drove them to work harder, even at the expense of their well-being and mental health, Xie said.

In a paper published in 2022 in the journal Science and Technology Talents of China, a group of researchers highlighted that long working hours were a major cause of physical and mental health problems among researchers.

According to the survey of more than 15,000 researchers across the country, more than 60 per cent of researchers say their work is stressful and the 36-45 age group has the highest proportion of researchers – nearly 15 per cent – who say they are “not very healthy”.

The authors suggest that to improve the situation, the government should increase financial support for young academic faculty, reduce their administrative duties and provide them with medical and psychological services.

If you have suicidal thoughts or know someone who is experiencing them, help is available. In Hong Kong, you can dial 18111 for the government-run Mental Health Support Hotline. You can also call +852 2896 0000 for The Samaritans or +852 2382 0000 for Suicide Prevention Services. In the US, call or text 988 or chat at 988lifeline.org for the 988 Suicide & Crisis Lifeline. For a list of other nations’ helplines, .

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Thousands of rescuers on standby in China as Typhoon Bebinca hits Shanghai

https://www.scmp.com/news/china/politics/article/3278649/thousands-rescuers-standby-china-typhoon-bebinca-hits-shanghai?utm_source=rss_feed

Emergency crews are on standby in Shanghai as the worst typhoon in 75 years made landfall on Monday morning, according to China’s state broadcaster.

Typhoon Bebinca – with top wind speeds of more than 42 metres per second recorded near its eye – landed in the Chinese financial hub’s Pudong district at 7.30am.

More than 414,000 people in the megacity of 25 million had been relocated by the end of Sunday, and all highways in the city were closed in anticipation of the typhoon. All flights from Pudong and Hongqiao airports were cancelled from 8pm on Sunday.

Ferries have stopped running, while bus services have been suspended in the waterfront district of Fengxian.

According to the CCTV report, more than 2,500 rescue teams of 56,000 personnel are on standby, in preparation for the strongest cyclone to hit Shanghai since Typhoon Gloria in 1949.

The public security department has also assembled 12,000 fire rescue officers, with 415 warehouses of flood prevention material ready to be deployed.

The strong weather system is striking Shanghai hard on the heels of deadly Typhoon Yagi which swept through the Philippines, Hong Kong, three southern Chinese provinces and other Southeast Asian countries after it formed late last month.

Trump or Harris? China, Hong Kong stocks offer a hint at their preference as US president

https://www.scmp.com/business/china-business/article/3278402/us-election-adds-pall-over-chinese-stocks-harris-and-trump-strike-harsh-tones?utm_source=rss_feed

The looming US presidential election is adding to a slew of headwinds for Chinese stocks, as both candidates use hardline rhetoric on economic policy towards Beijing.

US vice-president Kamala Harris and former president Donald Trump agreed on very little during their debate last week, but both favour a tough stance towards the world’s second-largest economy, using technology restrictions or tariff hikes. Regardless of the election outcome, geopolitical tensions will continue to haunt Chinese stocks for another four years, according to Daiwa Securities Group.

Fallout from the debate may exacerbate negative sentiment towards China’s US$8 trillion stock market, where the benchmark CSI 300 Index slumped to its lowest level in more than five years last week amid concerns about a dire growth outlook. The gauge has surrendered all of the gains that direct state buying of stocks and exchange-traded funds sparked earlier this year, underscoring the failure of a regulatory effort to hold the decline in check.

China’s assets and economy may face further downside risks after the US election, and policy support needs to ramp up, according to China Merchants Securities.

“If Harris is elected, she will very likely retain the tariffs imposed by the Biden administration on key Chinese products [such as electric vehicles],” said Zhang Jingjing, an analyst at the brokerage. “If Trump wins, Chinese exports will be front-loaded in the near term before falling afterwards, given all-out tariffs are his fundamental policy. More active domestic policies will be needed to counter the fallout.”

In the debate, Harris criticised her rival for not doing enough to protect US interests against China, accusing Trump of selling American semiconductor chips that Beijing used to enhance its military power. A Harris victory would mean the continuation of the Biden administration’s targeted tech restrictions, which would pose more challenges for China’s tech supply chains, according to Daiwa.

Trump, on the other hand, threatens to impose a 60 per cent tariff on all Chinese imports. The former president placed more than US$300 billion of levies on Chinese goods during his first term, starting a trade war that chilled the relationship between the world’s two biggest economies to the frostiest level in decades.

Tensions between the two nations remain elevated. The House of Representatives last week approved a bill that would ban federal contracts with Chinese biotech companies. That sent shares of Wuxi AppTec and Wuxi Biologics plunging in Hong Kong, as the two rely on the US for at least half of their revenue. The legislation still needs to pass the US Senate before Joe Biden could sign it into law.

“Uncertainty over the US election and future US policies toward China are keeping investors on the sidelines,” US asset-management firm Cambridge Associates said in a research note last month. “With these considerations in mind, investors should hold Chinese equities in line with their portfolio benchmark weight.”

For a rally in Chinese stocks to sustain, investors would need to see a rebound in domestic confidence and demand, particularly for the battered property and consumer sectors, it said.

Chinese stocks have taken a beating since Biden took office in January 2021. The CSI 300 Index and the Hang Seng Index both tumbled 42 per cent in that span, making them the worst performers among the world’s major benchmarks, according to Bloomberg data. The S&P 500 Index has risen 45 per cent in the span.

Shares in mainland companies fared better during Trump’s term from 2017 to 2021. The CSI 300 rose 65 per cent and the Hang Seng gauge gained 30 per cent, although both underperformed a 70 per cent advance in the S&P 500 in the period.

For now, the best strategy to ride out the uncertainty of the US election is to buy into the stocks that are able to deliver stable dividend payouts, according to UBS Group.

“Amid geopolitical uncertainties, we continue to favour a high-dividend yield strategy as a core portfolio, with beta options in the form of internet, property-related sectors, education and [semiconductor] equipment,” said James Wang, Hong Kong-based head of China strategy at the Swiss bank.

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China’s opportunity? Philippines’ Sabina Shoal withdrawal sparks backlash

https://www.scmp.com/week-asia/politics/article/3278652/chinas-opportunity-philippines-sabina-shoal-withdrawal-sparks-backlash?utm_source=rss_feed

The Philippines’ recent withdrawal of a coastguard vessel from a disputed South China Sea shoal opens the door for China to further assert its dominance and potentially accelerate its controversial reclamation operations, analysts say – warning that the ship needs to be quickly replaced.

Manila recalled the BRP Teresa Magbanua from Sabina Shoal over the weekend after a five-month deployment, citing bad weather, depleted supplies and the need to evacuate personnel requiring medical care.

The vessel returned to Puerto Princesa Port in Palawan on Sunday to a hero’s welcome, but not without incident: four of its 63 crew members required hospital treatment for dehydration.

Analysts say the sudden withdrawal could allow for the rotation and resupply of troops stationed on the BRP Sierra Madre, a WWII-era ship deliberately grounded by the Philippines at another disputed South China Sea feature: Second Thomas Shoal.

Sherwin Ona, a political-science professor at De La Salle University in Manila, expressed concern that China would exploit the situation.

“It’s crucial to sustain our presence,” he said. “The Chinese might continue their reclamation. There’s evidence of reclamation already with the discovery of crush corals.”

The Philippine coastguard currently has only two vessels capable of long-term deployment at Sabina Shoal – BRP Teresa Magbanua and BRP Melchora Aquino. The larger BRP Gabriela Silang, with its aluminium hull, would be less suited to the task, Ona said.

If China took control of the shoal “it would be difficult for us because the Chinese implement law enforcement” and view the presence of Filipinos as a violation of their laws, Ona said.

Echoing these concerns, Carl Thayer, an emeritus professor at the University of New South Wales, said that the Philippines should have ensured a replacement vessel was in place before withdrawing the Teresa Magbanua.

“China now holds the initiative,” he told This Week in Asia. “They will justify efforts to block a replacement by the Philippine Coast Guard as a defensive measure.”

Thayer added that the withdrawal would be used by China as a propaganda tool to bolster its claims of sovereignty in the region. With around 70 Chinese military, coastguard and militia vessels in the vicinity, he predicted that China would confront any replacement ship that the Philippines attempted to deploy.

“China’s objective is not to occupy Sabina Shoal but to prevent the Philippines from maintaining a permanent presence,” said Thayer, a specialist on Southeast Asia who has taught at the Australian Defence Force Academy.

The Teresa Magbanua’s deployment to Sabina Shoal – 146km from Palawan and around 1,200km from the nearest major Chinese land mass – symbolised Manila’s commitment to countering Chinese expansionism. Its mission was to deter China from pursuing island-building efforts in the disputed waters.

The ship’s withdrawal from the shoal would allow for necessary repairs and the crew to get some rest, National Maritime Council Chairman Lucas Bersamin said on Sunday in a statement.

“After she has been resupplied and repaired, and her crew recharged, she will be in tiptop shape to resume her mission,” he said.

The withdrawal has drawn sharp criticism, however. Defence analyst Jose Antonio Custodio lambasted the government’s failure to adequately support the Teresa Magbanua during its deployment, saying in a scathing Facebook post that there were no excuses for the dehydration and lack of supplies.

It was the “only ship” on forward deployment that had to be sustained by “the entire Philippine national security and defence system with all the resources it has at its disposal … and even that it couldn’t do properly,” he said.

Custodio noted that, despite attempts by China to blockade the vessel, resupply via helicopters would have been possible. He blamed the Philippine national security establishment’s “mindset” for the failures.

“It cannot get into its thick skull that one must believe that the areas under threat are ours and it’s not just a task to do because that’s just a job for the day,” said Custodio, a fellow at the Consortium of Indo-Pacific Researchers.

“That’s why we end up with half-hearted, badly run deployments and operations because many of those on top look at it from the perspective of symbolic actions to fulfil a requirement.”

In addition to the Philippines and China, Malaysia, Brunei and Vietnam also have competing claims in the South China Sea. Although a UN arbitration court ruled in favour of the Philippines in 2016, recognising the lack of legal basis for China’s claims, Beijing has refused to accept the ruling.

Chester Cabalza, president of the Manila-based International Development and Security Cooperation think tank, expressed hope that the Teresa Magbanua’s withdrawal would not lead to another stand-off like the one in 2012 at Scarborough Shoal.

“Hopefully China decreases its swarming … around the largest reef and stops crashing [into] Philippine vessels,” he said, surmising that there must have been “a negotiation with Beijing”.

“Otherwise, they [the Philippine coastguard] would stay and remain guarding the disputed reef closest to mainland Palawan.”

In 2012, China seized Scarborough Shoal, a traditional fishing ground within the Philippines’ exclusive economic zone, after a prolonged naval stand-off.

Some fear a repeat of this outcome at other disputed shoals, but Cabalza advised against such an action.

“This should be the kind of approach that should be sustained without any blemish of bias and doubt between the two direct claimant states in Sabina Shoal,” he said.

As the Philippines grapples with its maritime strategy, observers say the urgent need for a robust and sustained presence in the South China Sea has never been clearer.

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Cheap Chinese goods bring joy to Southeast Asia’s shoppers. What’s the trade-off?

https://www.scmp.com/week-asia/economics/article/3278458/cheap-chinese-goods-bring-joy-southeast-asias-shoppers-whats-trade?utm_source=rss_feed

Small southeast Asian manufacturers feel increasingly besieged by the avalanche of cheap Chinese imports that’s threatening their business models, but the region’s consumers are revelling in the affordability of toys, cosmetics and jeans – often just a few clicks away on platforms like Shopee or Temu.

The deluge of low-cost goods is putting the heat on the governments of Indonesia, Thailand and Malaysia to protect local manufacturers by implementing or raising sales taxes on e-commerce platforms.

Yet for many Southeast Asian consumers, this influx of affordable products provides a welcome relief amid stubbornly high living cost – allowing them to stretch their budgets beyond essentials like energy and rent.

For Malaysian mother Cindy Hong, online shopping has been a game-changer. She has found budget-friendly Christmas gifts and toys for her daughter’s birthday on Shopee, often choosing items shipped directly from China.

“It is just so much cheaper than the branded toys in the shops, and more importantly, my daughter is perfectly happy with what she gets,” said Hong, 45, a human resources executive.

The consumer e-commerce market is booming in Malaysia, with revenue projected to reach US$7.88 billion this year – a 14 per cent increase from the previous year, according to data gathering and visualisation platform Statista. Electronics lead the charge, expected to generate US$2.06 billion, closely followed by fashion at US$2.04 billion. The beauty and personal care sector is set to contribute US$880 million, while furniture sales are projected at US$820 million.

This robust e-commerce landscape is driven by demand from consumers across all income levels, particularly younger millennials aged 35 and under, according to a 2023 study from the University of Malaya published in the International Journal of China Studies. The study found that Malaysian consumers generally view cross-border e-commerce with China favourably, provided the products are useful and accessible through secure platforms.

However, determining what consumers will find useful can be a challenge for traders. Major platforms like Shopee and Lazada host tens of thousands of vendors, offering everything from pens and jewellery to niche items like discontinued smartwatch straps.

For traders like Will*, cheaper Chinese imports allow for a diverse inventory that boosts sales potential.

“We need to have a good variety of products in stock and Chinese suppliers now offer decent quality at lower prices. It keeps our costs manageable with better margins,” he said. “People want to be fashionable without emptying their wallets. You can save a lot, shopping online.”

In Indonesia, the government has taken notice of the threat posed to its domestic manufacturers of shoes, clothing and ceramics by China’s efficient supply chains, which often leverage technology over manual labour.

In July, Trade Minister Zulkifli Hasan announced plans to introduce tariffs of up to 200 per cent on a range of products, including textiles, clothing, footwear, ceramics and electronics, in a bid to protect local industries from the “flood” of Chinese-made goods.

China remains Indonesia’s largest trading partner, benefiting from low duties under regional trade agreements. Last year, trade between the two nations surpassed US$127 billion, with China exporting more than US$950 million in footwear, US$690 million in ceramics, and more than US$2 billion in textiles and clothing, according to online economic indicator database Trading Economics.

While the push to defend local industries has resonated with the owners of small and medium-sized enterprises, which employ hundreds of thousands of Indonesians, consumers like 28-year-old Fitri Aprilia have more immediate concerns.

“My child is always growing out of his clothes and shoes,” she said, referring to her 9-month-old baby. “So I need to keep buying new things all the time.”

She doesn’t pay much attention to where the products come from, she told This Week in Asia.

“I’m just looking for things with good reviews that are also not so expensive,” she said. “Online shopping like on Shopee or Tokopedia has made my life easy.”

In response to concerns about competition in Indonesia, platforms like Shopee have launched initiatives to support small domestic businesses, such as “Shopee Pilih Lokal” (Shopee Choose Local), which highlights micro, small, and medium-sized enterprises and local brands. During the first half of this year, the initiative attracted more than 29 million visitors, according to Shopee’s marketing growth team.

Marketing professional Ivana Setiawan, 26, told This Week in Asia that she often seeks out local artisans, especially for durable items like batik clothing or local snacks like banana chips.

“But sometimes, when I’m buying quick things online and I’m on a budget, like plain shirts or cheap sandals … then I’m just picking based on price,” she admitted.

*Surname withheld at interviewee’s request

As Chinese AI and GPU demand heats up, a Hong Kong data centre turns to liquid cooling

https://www.scmp.com/tech/tech-trends/article/3278538/chinese-ai-and-gpu-demand-heats-hong-kong-data-centre-turns-liquid-cooling?utm_source=rss_feed

Global Switch, a data centre operator controlled by China’s state-backed Jiangsu Sha Steel Group, said demand from mainland artificial intelligence firms in Hong Kong is driving a need for new direct-to-chip cooling solutions it has started providing in the city.

“We’ve seen a huge increase in demand for higher and higher density racks,” said Ben Ryder, solutions engineering director at Global Switch. “In the last two years, we’ve seen requirements for 20 kilowatts [per rack] initially, 40 to 50, and now beyond that, up to 100 kilowatts, as we can support liquid cooling.”

Global Switch on Monday announced the availability of direct-to-chip liquid cooling in its 30-megawatt facility in Tseung Kwan O after last week inviting potential customers in to see what it called the first showcase of this solution in Hong Kong. Direct-to-chip cooling, which involves placing a cold plate with cool liquid running through it in direct contact with integrated circuits, is in increasing demand in data centres as power requirements for AI applications shoot up.

The company said it has seen an increasing number of inquiries related to deploying China-made graphics processing units (GPUs), the type of chips driving the AI boom. GPUs have become highly politicised as the US moved to block certain powerful chips from Nvidia from being exported to China. This has increased demand in China for AI chips from companies like Huawei Technologies and Shanghai-based unicorn Biren Technology.

Global Switch said it does not have visibility into the tech that customers use in their servers, but power and cooling demands provide some insights.

“In Hong Kong it’s very clear that the main new demand comes from mainland China customers,” said Eric Liu, the Hong Kong managing director for Global Switch. “I think compared with a couple of years before, they are more open to new markets, and they are bringing out from mainland China their own technology to Hong Kong.”

In rolling out its new cooling solutions – which includes rear-door heat exchangers that combine liquid and air cooling – Global Switch has partnered with Supermicro, xFusion and Liquidstack. In its presentation ahead of a tour of the facility on September 10, Supermicro touted the capabilities of its servers running Nvidia’s H100 and H200, two of the AI chips that Washington has banned from export to China.

Matthew Dent, Global Switch’s chief commercial officer, said the company does not police server hardware in its facilities. No local laws prevent companies from purchasing Nvidia chips, and a black market for the products has sprung up where they sell well above retail price.

“As a data centre operator, we’re agnostic,” Dent said. “We’re not in the business of servers and chips. We’re in the business of creating a resilient environment for our customers’ equipment.”

Founded in the UK in 1998, Global Switch has grown to 13 data centres across eight markets, concentrated in major metropolitan areas.

The company works with major tech companies, including Alibaba Group Holding, the owner of the South China Morning Post. Alibaba Cloud lists the Tseung Kwan O facility as one of its six Hong Kong access points.

Global Switch’s China ties have invited scrutiny in recent years. Australian federal government agencies started terminating agreements with the company in 2017 after a Chinese consortium led by Jiangsu Sha Steel Group bought a 49 per cent stake. Through later investments, Jiangsu Sha Steel became the controlling shareholder in 2019.

Global Switch has previously sought a buyer for the company, according to media reports, but no deals have yet to go through. It has separately been shopping around its Australian facility and has been weighing offers this year, according to reports.

Regarding a potential sale, the company said it has a “duty to look at all options that will enable Global Switch to continue its growth plans”, but that shareholders remain “highly supportive of our management team”.

The company also said it would not “comment on speculation” regarding its Australia facility, and it downplayed the potential risks of the current geopolitical environment. When asked about the Huawei power distribution cabinets throughout the facility, Ryder said the company uses interchangeable hardware from multiple vendors.

Power distribution cabinets, which distribute power from generators to electrical equipment, are less likely to be politicised because they are a “dumb piece of equipment” without any “intelligence or control”, Dent said.

Submarine cables have already become politicised, as Facebook discovered in 2021 when it nixed a plan to connect the US and Hong Kong with a new line. While Global Switch touts its Tseung Kwan O facility as being close to “major submarine cable landing stations”, Dent said the company just goes wherever there is client demand.

“The politics of submarine codes is not something we involve ourselves in,” he said.

China’s GJ-11 stealth drone sightings hint at future role as fighter jet ‘wingmen’

https://www.scmp.com/news/china/military/article/3278606/chinas-gj-11-stealth-drone-sightings-hint-future-role-fighter-jet-wingmen?utm_source=rss_feed

China’s new stealth combat drones are likely to be paired with fighter jets, playing the role of “loyal wingman” and acting as a “force multiplier” for the country’s airborne operations, according to military analysts.

Citing satellite imagery from Planet Labs, defence news site The War Zone reported last week that a pair of GJ-11 Sharp Sword unmanned combat aerial vehicles (UCAV) had become more active in recent months at western China’s Malan Air Base, known to be a major hub for drone testing.

The sightings come amid speculation over the future of a US initiative to develop the next generation of fighter jets and air combat systems, prompting comparisons between the military rivals’ drone programmes.

“The US military has no such drones in active development, at least that we know about, and public interest in designs of this kind has completely disappeared within America’s armed forces,” The War Zone reported.

“This is all despite extensive work the US military funded on stealthy flying wing UCAVs in the past, and their absence has become particularly pronounced when it comes to US Air Force future planning.”

The GJ-11, manufactured by Hongdu Aviation Industry Group, is designed for precision strike and aerial reconnaissance missions. It features a stealthy design with a tailless flying wing and two internal weapons bays.

Images of a prototype of GJ-11 first circulated online in 2013 when the first test flight was conducted. The drone later appeared in a military parade in October 2019, sporting an overhauled rear design.

Georgios Salapasidis, head of platforms and on-board sensors at global military intelligence company Janes, said the GJ-11 was a “necessary step” for China in its effort to “secure expeditionary capabilities in contested areas” where its adversaries operated sophisticated air defence systems.

“The GJ-11, among other systems, may provide the ability to gather information on enemy units, suppress their operation by guiding fire from other platforms, or carry weapons and execute a strike independently,” Salapasidis said.

The GJ-11’s recent appearance in satellite images and Chinese media suggests that the aircraft will probably be teamed up with manned weapons for the air force and navy.

Satellite images from June showed two GJ-11 mock-ups at a testing site near China’s latest Type 076 amphibious assault ship, which is under construction in Shanghai.

In October 2022, Chinese state broadcaster CCTV aired a computer-generated graphic of a new twin-seat J-20 fighter jet commanding stealth attack drones resembling the GJ-11, to illustrate how the aircraft could be used together in what is known as manned-unmanned teaming (MUM-T).

James Char, a research fellow with the S. Rajaratnam School of International Studies at the Nanyang Technological University in Singapore, said the concept was similar to the US military’s “loyal wingman” project, which combines AI-enabled combat drones with next-generation manned fighters.

First outlined by the United States in its Next Generation Air Dominance (NGAD) initiative, MUM-T has become a crucial tool for future airborne operations as China and the US look to revamp their fighter jet programmes.

While China has continued to upgrade its J-20 jets, it has also worked to develop next-generation fighter jets with drones at the side.

In June, China conducted a test flight of a new fighter jet featuring dual-inlet turbojet engines and a blended wing body, in which segments of the wings could detach to form two autonomous drones propelled by electric ducted fans.

Salapasidis said China and other nations were exploring the feasibility and possible returns of the “loyal wingman” concept in a bid for superior combat firepower and effectiveness. He added that the technology could become a “force multiplier” once it matured.

“The expectation is that multiple autonomously operating [unmanned aircraft systems], in concert with a limited number of manned aircraft, will constitute a mass of sensors and weapons that will secure the tactical advantage, while unmanned and manned platforms combined will present a prohibitively large number of targets for the enemy to neutralise,” Salapasidis said.

He added that unmanned aircraft systems would be “attritable”, meaning they would be expected to return to their launching platform, but if destroyed, their “relatively low cost and replaceability will not result in a significant loss of overall capability”.

Timothy Heath, a senior international defence researcher at the Rand Corporation, an American think tank, said manned-unmanned collaboration was a “trend” in aerial warfare, and China was probably exploring ways to carry out these operations in line with the US military.

“Drones are poised to play a key role in future warfare due to their lower cost and versatility. China could use drones and drone carriers to provide better reconnaissance support for long-distance operations along the Indian Ocean, for example,” Heath said.

“The teaming of manned and unmanned aircraft also allows both China and the US to operate advanced fighters at lower cost and in a more flexible manner.”

With the increasing emphasis on drones in modern warfare, the US recently signalled a possible shift towards unmanned platforms in its NGAD programme.

The NGAD initiative aims to create the next generation of American air combat systems, and development of a crewed fighter jet was to be the centrepiece of the programme.

However, US Air Force Secretary Frank Kendall said in July that his service had decided to “pause” its efforts to field a new stealth fighter under NGAD, citing budgetary constraints.

He said that while the US Air Force was still prioritising development of a crewed NGAD aircraft, there was “a chance it might be uncrewed”. He said the air force would revise the design to lower the cost and better integrate its drone wingmen, which would be developed under a separate initiative, the Collaborative Combat Aircraft (CCA) programme.

Speaking at a conference hosted by Defence News on September 6, US Air Force vice chief of staff Jim Slife said that the technology had advanced much faster than anticipated, and his service aimed to better integrate drone wingman technology with the NGAD initiative

Salapasidis said that in the future, drones would “complement” manned aircraft fleets, expanding from their current role in intelligence gathering and land strikes.

“Several nations are pursuing, or are expected to pursue, this type of technology, including the US,” he said, citing the CCA programme.

“The fielding of these systems by the top defence spenders may provide tactical and strategic advantages significant enough to drive requirements at the global level,” he added.

“However, the pace at which these technologies will be fielded will be defined by the resources available to end users and the type and magnitude of geopolitical threats that each country has to counter.”

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Quad plans joint patrols in Indo-Pacific to counter illegal fishing where China’s influence growing

https://www.scmp.com/news/world/united-states-canada/article/3278621/quad-plans-joint-patrols-indo-pacific-counter-illegal-fishing-where-chinas-influence-growing?utm_source=rss_feed

Japan, the United States, Australia and India plan to launch joint patrols to monitor vessels in the Indo-Pacific, diplomatic sources said on Sunday, in the latest effort by the Quad group to counter illegal fishing in waters where China’s influence is growing.

The plan involving the four countries’ coastguards is expected to be included in a joint statement to be issued at a Quad summit on Saturday in the United States, along with projects to improve regional telecommunications and collaborate on steps to tackle cancer, according to the sources.

The gathering in Delaware, US President Joe Biden’s home state, is likely to be the last Quad summit for Biden and Japanese Prime Minister Fumio Kishida, both outgoing leaders. Australian Prime Minister Anthony Albanese and Indian Prime Minister Narendra Modi are also set to join.

The Biden administration has been pushing to elevate and institutionalise the Quad, widely seen as a counter to Beijing’s increasing military and economic influence in the Indo-Pacific region. The meeting’s agreements are intended to help solidify the group’s expanding cooperation across successive governments.

The envisaged first ship observer mission could take place next year, with members of the Japan Coast Guard and its Australian and Indian peers boarding a US Coast Guard vessel, according to the sources.

The mission would be aimed at improving interoperability to maintain maritime order based on the rule of law and will continue on a rotational basis, they said.

In recent years, some Southeast Asian nations such as the Philippines and Indonesia have protested to Beijing over Chinese fishing activities in disputed waters of the South China Sea. Japan has similarly expressed concern over what it considers illegal activities by Chinese vessels in its surrounding waters.

Among other areas of cooperation expected to be announced at the upcoming Quad summit is in the deployment in the Pacific of new communications infrastructure, known as Open Radio Access Network, designed to avoid reliance on specific companies’ technology to help mitigate supply chain risks.

The focus on the Open RAN issue reflects the Quad members’ wariness over China’s massive investments in Pacific island nations.

On the medical front, the four-way group plans to launch efforts to address cervical cancer, building on their experience of working together during the coronavirus pandemic. They are also likely to pledge cooperation to support farmers in the region through artificial intelligence and other technology.

At the planned gathering, the leaders are also expected to discuss an idea to hold the first-ever Quad meeting of commerce and industry ministers, the sources said.

The Quad originated in 2004 in response to the Indian Ocean earthquake and tsunami. Efforts to revitalise the grouping have been seen in recent years, with increasing focus on advancing a vision of a “free and open” Indo-Pacific.

After holding the first gathering of Quad foreign ministers in September 2019 in the United States, the White House hosted the first-ever in-person Quad leaders’ summit in September 2021.

A joint statement released after the previous Quad summit in Japan in May 2023 said the four nations support their Indo-Pacific partners in “combating a wide range of illicit maritime activities, including illegal, unreported and unregulated fishing”.

China frees American pastor David Lin who US claims was wrongly jailed

https://www.scmp.com/news/china/diplomacy/article/3278635/china-frees-american-pastor-david-lin-who-us-claims-was-wrongly-jailed?utm_source=rss_feed

China has released American citizen David Lin, a pastor who has been held in the country for almost two decades, the US State Department confirmed on Sunday.

A spokesperson for the State Department said the US welcomed Lin’s release from prison.

“He has returned to the United States and now gets to see his family for the first time in nearly 20 years,” the spokesperson said.

Lin is one of several Americans whom the US has deemed unjustly detained in China. His release, coming weeks after US National Security Adviser Jake Sullivan met with Chinese Foreign Minister Wang Yi in Beijing, marks notable progress in a persistent source of bilateral tension.

Lin’s daughter, Alice Lin, told Politico that Sullivan raised her father’s case in Beijing.

“I dream of him meeting my husband and my 8-year-old son for the first time,” the younger Lin wrote in a letter published by the Wall Street Journal in April.

“I wish for my mother, a caretaker by nature and trade, to care for the one she loves most instead of living as a widow. I yearn to hug him again myself.”

Lin, who entered China in 2006, was given a life sentence in 2009 on a charge of contract fraud after trying to open a Christian training centre in Beijing, according to his daughter. He was due for release in 2029.

According to human rights group Dui Hua Foundation, contract fraud is a charge “frequently used against house church leaders who raise funds to support their work”. The organisation estimates that there are over 200 Americans “under coercive measures” in China.

Lin’s release comes just days ahead of a scheduled hearing by the Congressional-Executive Commission on China focused on detained US citizens in China. That hearing is expected to feature testimony from family members of three Americans held in China: Dawn Michelle Hunt, Kai Li and Nelson Wells.

The State Department maintains a “level 3” travel advisory for mainland China, cautioning travellers to “reconsider travel” due to “the arbitrary enforcement of local laws, including in relation to exit bans, and the risk of wrongful detentions”.

The Chinese embassy in Washington did not immediately respond to a request for comment.

Economist Jin Keyu on why the trade war is still a ‘gift for China’

https://www.scmp.com/economy/china-economy/article/3278425/economist-jin-keyu-why-trade-war-still-gift-china?utm_source=rss_feed

Jin Keyu is a Harvard-trained economist currently serving as an associate professor at the London School of Economics. In The New China Playbook: Beyond Socialism and Capitalism, Jin argues China’s system remains well-positioned to resolve the problems weighing down its economy, and that calls for the country to adopt a model more attuned to the West miss several qualities that have been essential to its success.

In this latest interview in the Open Questions series, Jin discusses these misunderstandings in more detail and lays out her thoughts on how the world can continue to cooperate even in an era of heightened geopolitical tensions. This interview first appeared in . For other interviews in the Open Questions series, click .

I think the West misunderstands Chinese aspirations, the Chinese developmental model and the Chinese people. I think there’s an under-emphasis on cultural differences and, to a certain extent, differences in people’s preferences and values. If we only take one lens to look at the entire world, then - more often than not - we will get it wrong.

I think part of my job, or the job of many others with similar multicultural backgrounds, is to reduce these misgivings by showing the other side of China from the inside, a way of life that may not be apparent from the headlines of Western media.

It’s a matter of how to communicate. It’s a matter of showing up more and being there to engage with the world, and to give room to a newer generation of voices which understand both the Eastern and Western mentalities.

There are many in my generation and the newer generation who have the ability to bridge this gap, and in our small ways we should all contribute, because I think misunderstandings are causing more serious dangers.

There is a sense that China and the United States often talk past each other, rather than with each other. This comes from the different perspectives, and perhaps the lack of willingness to see the other perspective. I think there are important things to recognise, positive aspects of the Chinese economy and the nation that the US often fails to see. And I think China also ought to be more aware of some of the consequences of its actions in the global arena.

I have a chapter called “the mayor economy” about local governments and their enormous impact on the Chinese economy, starting from the reform period all the way to today’s national endeavour to advance technology. A large part of that job has been done by the local governments. So a failure to understand the mayor economy risks not understanding how the China model works at all.

If you look at the successes of the electric vehicle (EV) or solar panel sectors in terms of China’s ability to produce, manufacture and innovate these products – starting really from zero – you can see that these industrial policies were rolled out at the local government level. And it was very clear that those governments who had more policies were more successful in the production and innovation of these emerging technologies.

The incentive for local governments to aid private entrepreneurs comes from a very unique feature of the Chinese political economy, which is that mayors are promoted in large part due to their ability to advance the local economy. The only way to advance the local economy in terms of GDP growth, employment and productivity is to help the most productive companies in the locality, and those often happen to be private enterprises.

So rather than aid connected but poorly performing firms, they’d rather aid the best firms, because they are basically an equity stakeholder of their entire local economy. When the companies do well, there are more jobs, they have more fiscal capacity, they reach their GDP growth targets and the real estate they own is also worth more. So that private and public partnership, not an explicit one, is very much at the core of the Chinese development model.

And you have to ask why that is the case in China. I do believe that this model is only really suitable for a certain stage of development. Once the market is mature, the role of the state should dramatically reduce. But in the beginning, the local governments were influential and quintessential to helping accelerate local development.

It is a double-edged sword. It has its positives in expediting development. But it also has a lot of downsides that we have to be very clear-minded about. This includes the ramping up of local government debt to unsustainable levels, as we are seeing now. There is too much production and perhaps too little consumption, and there has also been a lot of waste and inefficiency when there has been too much spending. We also don’t need more than 100 EV companies. Of course, when the market starts to play a greater role, it will reduce the number of companies down to a handful.

We have to recognise that for all the benefits, there were significant costs. But it’s very difficult to estimate the full benefits and the full costs to see whether this model was worth it.

But as so many developing countries pursued liberal markets without the same kind of success China saw, I think the overall benefits still outweigh the costs.

Some have said recently the “middle-income trap” is not a real economic phenomenon, because based on the latest numbers the fastest-growing economies are those that are currently middle-income. So it’s not clear they really represent a trap.

But let’s just say that transitioning from middle-income to rich is often very difficult or slow. And my view is that getting to US$30,000 per-capita gross domestic product is much harder than getting to the first $10,000, because the old playbook was about catching up.

Now it’s about long-term sustained growth based on consumption and technology rather than exports or investments. And that means that the China development model needs to change. This involves reforming the financial system so that the private sector can have more ready access to finance, so that innovation and entrepreneurship can really thrive. And it also means reforming the hukou system of household registration to allow for greater mobility of people and give them better social protection. The key is to turn the model from scale-based to wealth-based, to raise personal income and consumption rather than just capacity.

It’s very clear that for countries that were able to reach developed economy status or income levels, the capacity to innovate is the most important element that sustains long-term economic growth.

So in that sense, I do believe that China can succeed, because China’s innovative capacity is really world-leading despite still being a developing country.

I think the more important issue is how to reduce the geographical disparity within China, where you still have almost a billion people who are lagging because they are undereducated and underemployed. The rural-urban divide is really enormous. So pulling up the people in the poor areas so they can converge with the richer areas is the most significant source of growth going forward. And when that happens, China can reach US$20,000 to US$30,000 in per-capita GDP, as many of its cities already have.

I want to quibble with the concept of overcapacity, because countries export when they produce more than they can consume, and they often export products that are aligned with their comparative advantage. If the US exports soybeans, it doesn’t mean that the US has an overcapacity in soybeans.

At the same time, by 2040, we are going to need 45 million EVs in use to be on track for the green transition. We need trillions of dollars of financing, especially in developing countries. So I don’t really see an overcapacity issue, both in products and in finance. In fact, there is a big deficit. The cost of solar power has been reduced dramatically, maybe by 95 per cent, in the last 15 years or so. That has a lot to do with significant investment that has been led by China, production as well as innovation.

Now that China has also started to invest a lot in European economies to jump start the EV ecosystem, whether in Poland or Hungary or Spain, it’s important to recognise that the green industry is a global supply chain. Certain aspects of it might be led by China, but it is truly a global supply chain, and countries really need to have a more collaborative framework in this industry, rather than a protectionist view.

As the subsidies have been withdrawn in these sectors, it is up to market mechanisms to weed out the weakest links among Chinese companies, and hopefully the market will be more competitive.

But it is a thorny issue, in the sense that the West and other developing countries have been significantly behind the curve when it comes to climate mitigation. I believe that governments and companies need to do more. If we’re looking at the cost and quality, Chinese renewable technologies are very competitive, and this is the only way that developing countries can actually adopt them and be on track.

I see [the complaints] as a sign for further negotiation. I don’t see it from a purely protectionist angle. I think that the Europeans and the Chinese have a lot to negotiate over, to create more common ground and increase the flow of goods and services.

We’ve seen in the data that the US and China’s direct trade has fallen, but much of that is simply going through third countries like Vietnam and Mexico. Chinese investment in these countries has also increased significantly, and US imports from these countries have risen. This just means that trade is taking a longer route, and this will increase the costs.

But ultimately the US and China are still deeply interlinked – indirectly – because trade is a network. If there’s a shock from one country, it will quickly spread to the other country through just one link. So it’s important to emphasise that there’s no deglobalisation happening. It’s a reorganisation. There’s no way that the global trading system can escape the world’s biggest and second-largest economies simply because they are the biggest source of demand and supply in the world.

There’s something to be said about China’s development model inspiring certain actions, including more state involvement on the part of both the US and the European Union, as well as Japan and South Korea. There is currently a global race of industrial policies in all major advanced economies to grab market share in strategic emerging sectors.

But it’s also important to recognise, as the latest studies have shown, that the ones that have used industrial policies most heavily are the rich countries, including Europe and of course Japan and South Korea in the past. So this is not something that China has invented, or developing countries embrace more than industrialised countries. It’s actually the other way around.

I don’t see this necessarily as protectionist, because there is still a big gap in terms of private investment in these renewable and green technologies, as well as a gap in innovation in these sectors. We can’t simply narrowly define industrial policies as subsidies, and need to include softer policies including infrastructure, EV charging stations and a friendly business environment. In developing countries, it’s about coordination with the financial system. All of these things aid a sector’s growth, and that should be seen as a good thing.

I see this as different from tariff wars, export controls or technology restrictions that are directly aimed at holding down another country’s development. I see policies that aim to strengthen oneself as being acceptable, especially when it comes to the global green agenda.

[Industrial policies in China] encompass a wide range of friendly government policies, which is more important in China than it is in the US or Europe because China’s environment is less developed and mature in governance, financial system, rule of law, ease of doing business, and so on. So there’s an important element of the state that’s still relevant, because the overall macro or business climate is still not comparable to the West.

First, the US spent roughly US$5 trillion on a stimulus package to deal with the pandemic. Now we’re seeing greater fiscal deficits and inflation, but the US staved off a serious economic recession.

In China, households did not have an equivalent support package, so I think it will take longer for China to fully recover from the pandemic. At the same time, the real estate transition happened very quickly. Add this to the fact that China is in a stage of transition from low-end to higher-value-added manufacturing, and more growth coming from consumption and productivity improvements from technology.

When we think about investing in hi-tech or renewables, the fruits of these investments will be seen down the line. And of course, this is not enough to offset the slowdown in the real estate sector, because it contributed so much to GDP and employment growth over the last two decades.

This is why we need to give China a bit more patience. But it’s also very clear that three of the fastest-growing economies today and in the foreseeable future are still in Asia, and they still include China.

If we look at the data, investment contribution to growth in China has significantly declined for a number of years. This tells us that China is saying goodbye to the old growth model, which led to many criticisms about GDP growth being based only on investment growth. This is no longer the case, but we need to give it a bit more time to recover.

I think it can, for the simple reason that there’s still enough fiscal space for government investment to increase to contribute to GDP growth. They can invest trillions of yuan, whether in new infrastructure, turning real estate capacity into affordable housing, or urban village reconstruction.

Of course, it would be fantastic if personal consumption rose steadily in terms of its contribution to GDP. But I think in this instance, the Chinese people would need to feel that the income growth is steadier and their jobs are more secure before that happens.

I’m very positive towards the new generation, because they think about values and they are also proud of China and what China has achieved. They connect very well with Gen Z people around the world, because they face common challenges, whether it’s climate change or the rising debt left to them by the older generations, and they share a greater awareness of social inequity.

The young generation in China like to solve problems they encounter in their daily lives and have become very entrepreneurial. They enjoy leisure as well as working hard – not just working hard. And they’re very different from the generation of Foxconn workers that opted for three shifts a night to earn a few extra dollars. What this means is that they want to use innovation rather than just brute labour to create value in their life.

Economic pressures and rising youth unemployment are global phenomena. Until recently, youth globally were much more pessimistic about the future than the youth in China. I think young people still see opportunity in China - the big market, fast learning, fierce competition - but they’ve also had a very burdensome childhood with too much study and too many practice exams. So maybe some are a bit burnt out once they reach the beginnings of their professional careers.

I think what would help is to give them more opportunity to experience on-the-job training or internships so they can find their passions, and to work in areas which they like. So I think in that sense, many of them will also create their own jobs and employment if they are allowed that space to explore.

But also, because of their parents’ relative prosperity, many of them will choose not necessarily to lie flat, but to wait a little longer before they find a fulfilling job. And they can afford it, because they don’t need to seek immediate employment.

First of all, the Trump trade war did not have a great negative impact on China. In fact, most of the tariffs were paid by Americans, as many studies have shown. I think what has been accelerated – not just in terms of tariff wars, but also the technological restrictions from the US – is a national mobilisation around climbing up the value chain and pursuing more technological advancement. That certainly has been led by external pressure.

It is not at all clear whether Joe Biden’s export controls or Trump’s threats to further hold back Chinese technology will actually work.

Historically, blockades and export restrictions have led to an acceleration of the target country’s technological progress. We only need to look at Napoleonic France, Germany during the two world wars and Japan to see that these restrictions actually backfired.

And I think the same is happening to China. Never have we seen so much national unity, whether it’s the big tech firms or the government, all trying to tackle the choking technological barriers. We have seen significant progress.

Even in the semiconductor industry, the profits of Chinese companies have risen substantially, primarily because a lot of the demand has shifted back to them. Many of these players, AI companies or EV companies, require a lot of high-quality semiconductors. They don’t feel comfortable relying on Nvidia or Qualcomm, because one day they might be subject to sanctions. So they are all seeking domestic alternatives, and this has boosted domestic companies’ profits and research and development efforts.

My view is that if you want to stall a competitor’s industry, you make them import your stuff. That’s the best way to stall progress.

As we’ve seen in the data, one good thing about the one-child policy was that it raised the status of women. The number of women leaders, especially those in the younger generation, has increased dramatically. Maybe because they have been better educated, maybe because there’s more fairness in the family as they are the only child.

So I think women in China should grasp that opportunity of enormous social change to make more of an impact. In finance and politics, which are male-dominated professions, there are even more opportunities for women, because I think the world has come to a recognition that gender equality issues are very important. So it’s fantastic to be a woman in some of these sectors.

I think intellectuals have to be intellectually honest, become experts and have the courage to speak out. They can have the strongest voice of all.