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• Panda conservation such as US-China efforts helping other species thrive, scientists say
• EU Commission head Ursula von der Leyen unveils top team that may shape China policy
• How Chinese expertise helped to build US aerospace programmes
• China’s grip on rare earths undercuts US, Japan and Australia projects
• What are the risks for China as it draws closer to Russia with an eye on the US?
• Will China’s latest crypto crackdown stifle its gaming industry?
• Chinese scientists say low-cost diabetes drug holds promise for ageing body and brain
• China should reciprocate Britain’s willingness to mend ties: former UK trade secretary
• China, Thailand aiming to create ‘ecosystem using digital technologies’
• Australia to boost South China Sea presence by joining Philippines’ maritime defence patrols
• China delivery rider collapses, dies on bike after working 18-hour days, leaves family in hardship
• Apple’s iPhone 16 already selling at a discount in China, as AI delay cools demand
• Why China is sending southern officials north to its rusting economic front lines
• Chinese influencer Crazy Xiaoyangge prompts mooncake probe with ‘made in Hong Kong’ claim
• How China’s communists fell in love with privatisation | Finance & economics
• Singapore’s electronics exports soar amid China’s anti-tariff chips strategy
• Philippines blames China for starved, dehydrated sailors at Sabina Shoal
• China’s Fosun in talks to sell stake in Club Med to Singapore’s CapitaLand
• China’s retirement delay offers respite as Beijing ‘robs the rich to help the poor’
• US tariffs on China to lend a hand to Malaysia’s glove makers
• How to take Taiwan: China’s state TV shows what a PLA attack could look like
• Malaysian farmers cater to China’s sweet tooth by dialling down durian bitterness
• China-Philippine flights to get wings clipped amid low demand, geopolitics
• US charges employee of Chinese aerospace giant with hacking Nasa, US military
• Aukus risks being just ‘a label’ if it fails to curb China’s regional ‘adventurism’
• Why the US-China tech war has put bugs in the academic system back in Beijing’s sights

Panda conservation such as US-China efforts helping other species thrive, scientists say

https://www.scmp.com/news/china/science/article/3276656/panda-conservation-such-us-china-efforts-helping-other-species-thrive-scientists-say?utm_source=rss_feed

Decades of global conservation efforts for giant pandas have not only borne fruit for the iconic black-and-white bear but also helped their neighbours in the wild thrive.

As the National Zoo in Washington prepares to welcome two pandas later this year, scientists said a wider array of species was benefiting from America’s collaborations with China thanks to the expansion of protected areas and use of similarly effective techniques with other animals.

Bill McShea of the Smithsonian Conservation Biology Institute said panda reserves had reduced poaching, human impacts and deforestation, conserving both forests and pandas’ neighbours.

“They are benefiting because the pandas have very specific habitat requirements [that] bring a lot of other animals along for the ride,” the wildlife ecologist said.

As evidence of habitat recovery, McShea pointed to animals like takins, golden snub-nosed monkeys, migratory geese and cranes that are readily observable in China’s Giant Panda National Park, which is home to another 8,000 animal and plant species.

“The reserve staff could say, ‘look, these animals are here’,” he said. “It worked because of that initial seed around the giant pandas.”

McShea was among the first wave of foreign scientists travelling to China in the late 1990s to focus on protecting wild pandas.

He began by training mainland students to go beyond mere observations and instead collect field data through radio tracking, camera traps and habitat measurements.

Now, McShea as an adjunct professor at Peking University equips students with statistical analysis skills to understand how animals move across landscapes.

The training led to universities, government advisory committees and conservation organisations around the world being filled with skilled Chinese professionals passionate about animals, he said.

“A Westerner is never going to save the giant pandas. We do not have the connections, the power to make that happen. If giant pandas and any wildlife is going to be saved in China, it is going to be done by Chinese researchers, wildlife managers and bureaucrats.”

“They say, ‘give us the techniques, tell us what is the right way to do things and then we will do it and we will turn things around,” McShea added.

Ecologist Liu Jianguo of Michigan State University believed on-the-ground experience of those working in the area and technologies American scientists brought to China in the 1990s like satellite remote sensing, GPS and analysis tools were pivotal.

The collaborations “introduced advanced technologies into China’s conservation efforts”, Liu said. “Images from US satellites, for example, showed how forests and habitats changed over time on a large scale.”

Liu has transferred techniques originally applied in his nearly three-decade-old panda research projects with collaborators at the Chinese Academy of Sciences and Wolong Nature Reserve to track tigers in Nepal.

Managing the relationship between humans and animals was paramount, he said, noting that his research had expanded to cover birds in Michigan and threatened black bears in Texas.

“Taking the lessons learned from protecting pandas, we can apply the insights and methods to many other animals.”

As Liu sees it, animal conservation can only be achieved by simultaneously improving the livelihoods of locals around wildlife habitats and mitigating the impacts of climate change caused by human activities.

“Protecting animal habitats goes hand in hand with helping the local communities,” he explained. “If people have no other livelihood options, they must depend on firewood and local resources from forests, damaging natural habitats.”

He further said it was important to consider how humans interact with nature locally, nearby and faraway.

“For example, consumption activities far from the panda habitats could drive up carbon emissions and intensify climate change, which in turn affect panda habitats.”

When it comes to US-China panda collaborations, the focus now is on understanding and adapting to the threat of climate change, according to Melissa Songer, who leads international conservation projects at the Smithsonian Conservation Biology Institute.

“A lot of our work is focused on capacity building. But growing out of that … we began to build into monitoring, especially for wildlife, giant pandas, climate and vegetation in many of the protected areas,” Songer said.

Songer described a joint project testing how bamboo growth and survival would change in response to higher temperature through greenhouses set up in protected areas and later in other regions.

The project is being carried out alongside a former Smithsonian postdoctoral fellow who has since joined the Chinese Academy of Sciences.

Changes in bamboo “are going to be a really important key to figuring out impacts of climate change”, she said, in addition to modelling analysis.

Songer, a conservation biologist, said many scientists and animal keepers trained initially for the panda programme go on to work on other species.

Annual training has proved popular. More than 600 Chinese protected-area staff have taken part over the last 15 years, she said. Students from mainland universities intern in labs in the US for six to 12 months or work as postdoctoral fellows.

“We get the political will, the scientific will and the funding to be able to focus on pandas. But there is no reason why it could not happen for other species as well,” said Songer.

By the Smithsonian’s National Zoo and Conservation Biology Institute’s tally, its scientists have trained more than 1,500 Chinese wildlife professionals and students, with many of them leading panda conservation programmes on the mainland.

Not surprisingly, the improved situation of pandas has been hailed as an international conservation success. In 2016, the bears were upgraded from endangered to vulnerable.

The population of wild giant pandas surged from 1,100 in the 1980s to about 1,900, according to data released this year by China’s national forestry and grassland administration. In 2021, Giant Panda National Park was set up.

China started establishing panda nature reserves in the 1960s and launched a plan aiming to include panda habitats within protected areas in the 1990s. Such areas have almost doubled to nearly 2.6 million hectares compared with 2012.

Apart from local conservation efforts, the Chinese agency credited global scientific collaborations with helping advance research in panda breeding, disease prevention and control as well as reintroduction into the wild.

“Some 1,000 professionals have been trained through international projects on endangered wild animal protection including pandas,” said Zhang Yue, a wildlife conservation officer at the agency, in January. “Panda conservation also drives the overall level of global protection of animals and plants.”

Pandas, long adored for their appearance and mannerisms, were chosen as a flagship species to promote conservation efforts. And they are an umbrella species in that they provide refuge for animals sharing their habitat.

A team of Chinese scientists found that pandas were partially successful as a surrogate for protecting species living in the same ecosystem, according to a paper published in the peer-reviewed Journal of Environmental Management in February.

An analysis of five of six mountain ranges inhabited by pandas determined that the number of large and medium-sized herbivores increased significantly from 2001 to 2011, as did that of medium-sized carnivores.

However, the number of large carnivores including grey wolves, dholes and leopards declined significantly over the same decade.

“While our study highlights the overall success of the conservation strategy centred around the giant panda as a flagship umbrella species, it also highlights its ineffectiveness in protecting large carnivores,” the scientists wrote.

“This implied the inadequacy of the current panda-centric conservation strategy in preserving ecosystem functionality comprehensively.”

Jennifer McGowan of the University of Queensland said the broader ecological role of an animal which is both a flagship and an umbrella species meant a greater potential for conservation success.

“Oftentimes, the criticism from science is that by focusing so much on these iconic species, we are really missing out on the broader effort of habitat conservation and maintaining ecological integrity,” the research scientist said.

McGowan and her team in a paper published in the peer-reviewed journal Nature Communications in 2020 proposed an approach to resolve “the flagship species conundrum”: turning more animals into stars.

They took the example of Hengduan Shan Conifer Forest in southwestern China, home to pandas, and identified other potential flagship species from the region including takins, golden snub-nosed monkeys, snow leopards and the Chinese softshell turtle.

“Multiple flagships found in a single place provide flexible options for organisations to select species that best reflect their conservation strategies, donor preferences and local conservation interventions,” they wrote.

McGowan said expanding the definition of flagship beyond being cute and cuddly to a broader spectrum of characteristics – such as colourfulness in birds and an interesting appearance in reptiles – would mean additional mascots for conservation fundraising.

“What we are tasked with now is a bigger focus on biodiversity representation, sustaining a safe and healthy liveable planet for all of humanity,” she added.

“To do that, we have to focus on preserving intact ecosystems, regenerating and creating uplift on converted ecosystems and focusing on ecosystem services more.”

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EU Commission head Ursula von der Leyen unveils top team that may shape China policy

https://www.scmp.com/news/china/diplomacy/article/3278923/eu-commission-head-ursula-von-der-leyen-unveils-top-team-may-shape-china-policy?utm_source=rss_feed

Spain, France and Slovakia could play an important role in shaping the European Union’s approach to China, after Commission President Ursula von der Leyen proposed her leadership team for the next five years.

Maros Sefcovic from Slovakia has been nominated for the role of commissioner for trade and economic security and faces a confirmation hearing and vote at the European Parliament next month.

Sefcovic – a seasoned negotiator who helped steer the bloc through the torrid Brexit period – will report to outgoing French Foreign Minister Stephane Sejourne, who has been proposed for a broad portfolio as executive vice-president responsible for industrial strategy.

The competition file, meanwhile, will go to Spain’s current Ecology minister Teresa Ribera.

Trade and competition are the two areas in which EU members have handed decision-making powers over to Brussels. During her first term, von der Leyen used these powers to steer the bloc in a much more hawkish direction on China.

On the trade front, she oversaw a large number of investigations aimed at tackling the impact of Chinese subsidies on Europe’s economy, the highest-profile of which was an anti-subsidy probe into electric vehicles.

Last year she also announced a plan to de-risk relations with Beijing, in a speech that prioritised economic security.

Von der Leyen and the outgoing commissioner for competition Margrethe Vestager used a new foreign subsidies regulation to investigate a series of Chinese companies, prompting complaints from Beijing.

Letters from von der Leyen to her proposed leadership team suggest the trend will continue.

She urged Sefcovic to “manage trade and economic relations with China, in line with our policy of de-risking not decoupling” and said he should “address the spillover of non-market policies and practices, market distortions and overcapacities ... [and] use our autonomous instruments as necessary”.

She asked Ribera to “vigorously enforce the foreign subsidies regulation, including by proactively mapping the most problematic practices”.

The nominations are part of a lengthy procedure that divvies up the top jobs in the commission – the EU’s secretariat – among its 27 members.

It was already known that Kaja Kallas, the ex-Estonian prime minister, had been nominated to replace Josep Borrell as the bloc’s top diplomat.

However, von der Leyen’s letter to Kallas did not mention China at all. Borrell oversaw a “strategic dialogue” with the Chinese foreign minister each year, but this was not mentioned in the roles outlined for Kallas – a possible sign that von der Leyen sees a smaller role for the EU’s diplomatic wing in future China policy.

Other notable nominees included the former Lithuanian prime minister Andrius Kubilius - a member of the Beijing-critical Inter-Parliamentary Alliance on China - as the EU’s first defence commissioner.

Czech Trade Minister Jozef Sikela will oversee the bloc’s Global Gateway programme, an infrastructure drive pitched as a rival to Beijing’s Belt and Road Initiative.

The commission-building process became mired in various controversies. Some capitals declined to nominate both a male and female candidate in line with von der Leyen’s aims of having a gender-balanced commission.

It hit peak drama on Monday, when flamboyant former French tycoon Thierry Breton was jettisoned, to be replaced by Sejourne.

The former telecoms and IT executive, who fell out with von der Leyen during his five-year stint as the EU’s internal market boss, portrayed it as a political carve-up between von der Leyen and French President Emmanuel Macron.

For months, member states have been fighting it out for plum jobs, with 20 of them requesting something connected to the economy, von der Leyen said on Tuesday.

She urged her proposed commission to pull together to meet the EU’s goals of “prosperity, security, democracy”, adding that roles would be fluid and require collaboration.

However, some analysts said the portfolio titles were too vague with too much overlap between the roles. Alberto Alemanno, a professor of EU law at HEC Paris Business School, warned that “overlapping and blurred portfolios” were a recipe for “internal tensions”.

How Chinese expertise helped to build US aerospace programmes

https://www.scmp.com/news/china/science/article/3278418/how-chinese-expertise-helped-build-us-aerospace-programmes?utm_source=rss_feed

With a multitude of aerospace achievements under its belt – including landing the first humans on the moon – the United States has carved a bold path through space.

But what many may not know is that several China-born experts were among the scientists, engineers and astronauts who helped rocket the US to the forefront of the global space race.

The ongoing importance of Chinese and other foreign talent in American STEM fields was highlighted last month in a report released by the US National Academies of Science, Engineering and Medicine.

“Students and scholars from abroad make an outsized contribution to advances in US science, innovation and invention, helping to keep the nation at the forefront of technological development,” said the report, which was commissioned by the US Department of Defence.

“The value proposition for international talent participation is clear and stark: the United States simply does not, and for the foreseeable future will not, develop sufficient domestic STEM talent at all levels of expertise to fully support the nation’s research and innovation system.”

The report on foreign talent programmes emphasised that, despite the importance of Chinese scientific expertise in the US, participation has not always been easy.

“The nation also has had difficulty cultivating research environments that are welcoming and inclusive for all and do not inadvertently discriminate against people on the basis of national origin or ethnicity during, and in the aftermath of, the US Department of Justice’s China Initiative,” the report said.

Despite the fluctuating political relationship between the two countries, China-born engineers have long been involved in US STEM fields – including aerospace.

Here the Post examines China-born engineers who have contributed to the development of US aerospace programmes – and whose success has allowed us to better understand the Earth and what lies beyond.

Qian Xuesen

The Jet Propulsion Laboratory is Nasa’s only federally funded lab, and has had a leading role in space exploration, with spacecraft designed by the lab having reached every planet in our solar system. And Shanghai-born aerospace engineer Qian Xuesen was there right at its beginning.

It started with the “Suicide Squad” – a research team that Qian joined in 1936 at the California Institute of Technology (Caltech) – which was given the moniker due to their enthusiasm for testing rocket engines.

Born in 1911, Qian was fresh from receiving his master’s degree from the Massachusetts Institute of Technology (MIT) when he joined the team led by aerospace engineer Theodore von Karman. While at Caltech, he also completed his PhD in aviation and maths.

The first time the group referred to themselves as the Jet Propulsion Laboratory (JPL) in a document came in 1943. The lab was under army jurisdiction during World War II; it was transferred to the newly formed space agency, Nasa, in 1958.

During his time at JPL, Qian designed an intercontinental space plane which inspired the design of the X-20 Dyna-Soar. This, in turn, was a precursor for the US Space Shuttle.

The lab is still managed by Caltech and over the years has helped build the Hubble Space Telescope, the James Webb Space Telescope and more.

Despite the contributions Qian made to the US space programme, he was never allowed to become a US citizen. His career in the country ended in the 1950s due to alleged communist ties. After spending five years under house arrest, he returned to China in 1955.

Upon his return, Qian became the father of the Chinese missile and space programme, whose work helped launch the country’s first satellite into space, and led to the development of the Long March space rockets.

Tien Chang-lin

As a pioneer in thermal science and engineering, Tien Chang-lin’s work not only contributed to the field of aerospace, but also to semiconducting, energy conservation and utilisation, thermal insulation, and nuclear reactors.

Born in Wuhan in 1935, Tien received his PhD in mechanical engineering from Princeton University in 1959.

Throughout the 1960s and 1970s, Tien investigated radiative heat transfer and the interaction of radiation with fibres, particulates and other nano materials. His work helped design thermal protection for the Space Shuttle, including thermal tiles.

His research also contributed to the design of boosters used to catapult satellites on the Saturn space rockets, the launch vehicles used for the Apollo 11 mission to the moon, according to a report commissioned by the Committee of 100, an organisation of Chinese-Americans.

In an interview for the University of California, Berkeley, Tien revealed that Nasa called him in 1980 when they were having trouble getting thermal tiles to stick to the surface of the Space Shuttle, a problem that he helped to solve.

Tien spent most of his career at UC Berkeley, where he served as chair of the mechanical engineering department, vice-chancellor for research and finally as university chancellor.

In 1976, he became one of the youngest members of the US National Academy of Engineering. The organisation later awarded him the NAE Founders Award in 2001, its highest honour, recognising lifelong contributions and accomplishments benefiting US citizens.

Helen Ling

When the Soviet Union took an early lead in the space race with the launch of Sputnik 1, the first artificial Earth-orbiting satellite, America was keen to catch up. So, Caltech’s JPL helped the US launch its own satellite just a year later.

This mission and the many that followed were made possible by computing teams at the laboratory known as “human computers” who performed crucial calculations.

Most were women, and some went on to become some of the first computer programmers at Nasa.

China-born Helen Ling was vital in this area, working first as a mathematician at the laboratory, and then as one of the supervisors for the computing group in the 1960s.

Born in 1928, Ling received a degree in mathematics from the University of Notre Dame before joining the laboratory.

Leading a team which performed trajectory calculations, Ling was well-known for only hiring women, and for creating a work environment that encouraged women to enter STEM positions at the laboratory.

One of the talented women Ling hired was Victoria (Vickie) Wang, a Guangzhou-born mathematician and engineer who joined the computing group in 1973.

Wang told Nasa that much of the computing group’s work “had to do with mission needs such as power, propellant, space trajectory and [the] number of instruments a spacecraft could carry”.

During Ling’s time at JPL, she developed software for the Infrared Astronomical Satellite, Magellan spacecraft, TOPEX/Poseidon mission to measure ocean topography and the Mars Observer mission.

Taylor Wang

In 1985, Taylor Wang made history when he blasted into space aboard the STS-51B Challenger mission – the first China-born person to do so.

One of a team of seven, Wang spent a week in space as a payload specialist, conducting various experiments that later helped with the creation of permanent orbiting research laboratories.

Born in Shanghai in 1940, the scientist joined JPL in 1972 after receiving his PhD in physics from the University of California, Los Angeles the previous year.

Wang became the principal investigator for several experimental projects at Nasa, and is credited with inventing an acoustic levitation and manipulation chamber for the Nasa Drop Dynamics experiments.

His work received attention at Nasa, and he was chosen to join the STS-51B flight – also known as the Spacelab 3 mission – which was the first operational flight for the Spacelab orbital laboratory designed by the European Space Agency.

Fourteen successful experiments were conducted during this mission, including investigating crystal growth, drop dynamics, cosmic rays, solar and planetary simulations, and observing laboratory animals.

After his career at Nasa, Wang became a professor of mechanical engineering and materials science and engineering at Vanderbilt University.

Ming Han Tang

Throughout his career, Chongqing-born aerospace engineer Ming Han Tang held prominent positions at Nasa and Lockheed Martin Skunk Works, which included leading programmes headed by the US Department of Defence.

Born in 1939, Tang began his decades-long career at Nasa at the Dryden Flight Research Centre in 1966, where he worked on projects like the high-altitude interceptor prototype YF-12.

He also worked on the development of the M2-F2 wingless aircraft, which became an early predecessor to the Space Shuttle.

After a brief period at Lockheed Martin in the 1980s, Tang returned to Nasa and became the assistant director of the National Aerospace Plane (NASP) programme, which sought to develop reusable hypersonic/transatmospheric vehicles.

From the late 1980s until the conclusion of the programme in the 1990s, Tang worked at the NASP Interagency Office at the Pentagon, first as principal deputy director, and then director.

From 1996 to 1999, Tang served as the chief engineer of the Nasa High-Speed Research programme, which aimed to produce economically viable supersonic aircraft.

Fuk Li

In 2005, Hong Kong-born physicist Fuk Li became manager of the Mars Exploration programme at JPL, which started with the aim of finding out whether Mars was a habitable planet for humans.

Li later also became the director of the Mars Exploration Directorate.

During Li’s time at the helm, the programme led a number of Mars missions, including launching the 2005 Mars Reconnaissance orbiter and the Mars 2020 mission which landed the Perseverance rover, shortly after which Li retired.

The programme has also landed other operational rovers on the red planet, including the Spirit and Curiosity rovers.

Born in 1953, Li received his PhD in physics from MIT in 1979, after which he joined the Nasa laboratory.

Before heading the Mars programme, he served as deputy director of Nasa’s Solar System Exploration directorate, manager of the New Millennium Programme, and manager of the Earth Science programme.

Li Zhijin

China-born data scientist Li Zhijin spent more than 20 years at Nasa developing processing tools for marine data gathered by ships, buoys and satellites.

Li’s data processing tools, used by Nasa, the US Navy and other government agencies, allowed for data from different monitoring devices to be converted into a common format for more efficient processing.

This allowed for high-resolution modelling of the ocean and how it interacts with the atmosphere, which can be used for in-depth climate studies and to improve weather forecasting.

The work he did has been used in ocean forecasting systems like the Japan Agency for Marine-Earth Science and Technology, and the US Naval Research Laboratory.

Li received his PhD in atmospheric dynamics from Lanzhou University in 1992, and later moved to the US to work at Nasa.

In 2022, Li returned to China to begin a professor role at the Fudan University department of atmospheric and oceanic sciences.

China’s grip on rare earths undercuts US, Japan and Australia projects

https://www.scmp.com/news/world/united-states-canada/article/3278904/chinas-grip-rare-earths-undercuts-us-japan-and-australia-projects?utm_source=rss_feed

A couple of hours outside Houston, in a remote field near a Dow Chemical Co. plant, America’s bid to undercut China’s grip on the global supply of rare earth minerals critical to high technology has yet to break ground.

Even when it does, China’s dominance of the market – it controls about 70 per cent of output and more than 90 per cent of refining – means that goal is likely to remain out of reach.

The Texas plant, to be built by Australia-based Lynas Rare Earths Ltd., represents a fraction of billions of dollars in subsidies and loans promised for the production and refining of the minerals in the US and its key allies. For the 149-acre (60 hectares) site, Lynas won more than US$300 million in Pentagon contracts. If all goes to plan, it will be operating a plant to process rare earths there in two years.

But while national security is a primary driver of the programmes in the US and elsewhere, a slump in prices since 2022 is undermining the business case for those projects. That’s raising questions about whether this and similar efforts can develop into a supply chain to rival Chinese firms protected by their government.

“These market conditions have now destroyed most of the hoped-for projects from just a couple [of] years back,” said James Litinsky, the CEO of MP Materials Corp., which owns the only rare earths mine in the US and is building a factory to manufacture magnets in Texas.

“Despite the efforts and investments of many governments, Chinese control over the vast majority of the supply chain remains,” Litinsky said on an earnings call last month.

The metals the US and allies are focused on aren’t actually “rare” but seldom exist in high enough concentrations to justify the often environmentally-hazardous mining. They include 17 chemically-related elements that have properties useful for making electronics in products from phones to fighter jets more efficient.

Underscoring its dominant role in the market, Beijing late last year announced tighter restrictions on technology related to rare earths, aiming to make it harder to develop the industry outside China.

Laura Taylor-Kale, the assistant secretary of defence for industrial base policy, promised earlier this year that the US will have a “sustainable mine-to-magnet supply chain capable of supporting all US defence requirements by 2027.” She said that once the Lynas project in Texas is operating, the company “will produce approximately 25 per cent of the world’s supply of rare earth element oxides.”

In recent years, the global price slump has been driven by increased supply from China and elsewhere, as well as the weakening Chinese economy, which has meant that domestic industry can’t absorb the higher output.

China’s Ministry of Natural Resources and its industry ministry didn’t respond to requests to explain their reason for raising mining quotas for rare earths in 2023 and 2024, which analysts say helped drive down prices.

“Most rare earths mines are struggling to break even under low prices, while early-stage projects face delays and funding shortfalls,” according to a September 3 report in Benchmark Source. Those factors are “potentially slowing the West’s push to reduce dependence on Chinese supply chains,” it added.

Some projects are already reporting setbacks.

Arafura Rare Earths Ltd. is one firm which looks to be struggling to ramp up as planned. It secured an A$840 million (US$560 million) Australian government loan this year, with the company raising more capital in July and saying that the project is ready to start construction.

It signed offtake agreements with two Korean auto firms in 2022 for production from its Nolans project north of Alice Springs, Australia, but hasn’t started building.

“We’ve got the debt, we’ve got the approvals, the offtakes are largely in place,” said CEO Darryl Cuzzubbo. “The one missing piece is the equity. We are pushing to get that by the end of the year – that would allow us to start construction first thing next year.”

Cuzzubbo said his goal is to get half the equity from “cornerstone investors, which is tracking very well,” adding that “once we’ve got that, we will then go to the rest of the market for the remaining 50 per cent.”

Iluka Resources Ltd. is another firm confronting multiplying hurdles as it invests in rare earths production in Australia. The company was the recipient of a A$1.25 billion loan in 2022 to develop Australia’s first integrated rare earths refinery, which it aimed to open in 2026. But this year it announced the project could cost as much as A$1.8 billion, well above initial estimates.

Earlier this year, the firm’s chief executive officer accused China of trying to manipulate prices and take control of the industry in Australia.

“China’s influence over the global rare earths market is pervasive,” CEO Tom O’Leary said in May. “It is this monopolistic production, combined with interference in pricing, that is resulting in market failure.”

It was a similar experience that started Japan on the road to reduce its dependence on China for rare earths more than a decade ago. The results show that these projects take longer and are more expensive than initially expected.

Tokyo invested in Lynas in 2011 with a US$250 million investment after Beijing temporarily cut off supplies over a territorial dispute. It took two years before trial production began and even longer to ramp up to forecast levels, according to company statements. The firm didn’t turn a profit until 2018.

It was support from Japan’s companies and the government that helped keep Lynas afloat, CEO Amanda Lacaze said in an interview. Japan backed Lynas by “putting some money in for capital and investment and development of our assets, but also then supporting us through a period of very, very low pricing,” she said.

Japan eventually cut its dependence on Chinese rare earth supplies to around 60 per cent from 80-90 per cent, former Economic Security Minister Takayuki Kobayashi said in an interview.

However, even more critical was patience, Lacaze said. That was underscored by a company announcement last month: An issue with waste water permits means that earthworks planned for the Texas facility this year are unlikely to happen, Lynas said in its latest earnings report.

“Patient capital in mining and also in an area where you’re doing something for the first time is really important,” Lacaze said in August. “If we truly want an industry, we do have to recognise that we’re playing a 30-year catch-up game.”

What are the risks for China as it draws closer to Russia with an eye on the US?

https://www.scmp.com/news/china/diplomacy/article/3278915/what-are-risks-china-it-draws-closer-russia-eye-us?utm_source=rss_feed

With the Ukraine war entering a critical stage, there are growing signs that China and the United States might be readying to take their gloves off on the largest armed conflict in Europe since World War II.

The US and its allies are weighing whether to allow Ukraine to use long-range Western missiles to strike targets deep inside Russia. This could be a potential game changer in the nearly 31-month war. According to Russian President Vladimir Putin, this would alter the nature and scope of the conflict.

Meanwhile, the pressure campaign launched by the US and Nato against China, especially their sanctions and allegations of its “very substantial” support for Putin’s war effort as a “decisive enabler”, seem to have pushed Beijing closer to Moscow.

China has markedly dialled up its diplomatic support for Russia, with President Xi Jinping expected to meet Putin next month at a summit of the Brics emerging economies in Kazan, in what would be the pair’s third meeting since May.

Beijing has also sent Premier Li Qiang and national legislative chairman Zhao Leji, its No 2 and No 3 officials, as well as Vice-President Han Zheng and top diplomat Wang Yi to meet Putin in Russia since July.

But the road to geostrategic and military alignment between China and Russia – mostly due to their shared distrust of the US and the converging world views of Xi and Putin – is not without its bumps.

Last week, the Chinese ambassador to Moscow, Zhang Hanhui, had to openly refute rumours circulating in Russia that “China will take over Siberia and the Far East”.

For years, despite Beijing’s repeated reassurances, Russians have been unnerved by Chinese internet users questioning the historical legitimacy of Russia’s ownership of its Far Eastern territories, with recurring claims that these were ceded by Beijing under “unequal” treaties in the mid-19th century.

In a TV interview earlier this month, Taiwanese leader William Lai Ching-te questioned Beijing’s claims of sovereignty over the island, saying it should first take back large tracts of territory ceded to Tsarist Russia, given Moscow’s weakened state because of the Ukraine war.

Without naming Lai, Zhang dismissed the suggestion as yet another version of the “China threat theory” presented with “ulterior motives”. “Anyone wishing to make a fuss over this issue and sow discord in Sino-Russian relations would have to be delusional,” he said.

Neither side had territorial claims on the other, he told Russian media in an interview published last week, citing agreements in 2004 and 2008 to finalise the 4,300km (2,670 mile) Sino-Russian border after 40 years of negotiations.

“This has completely eliminated the hidden dangers that could have jeopardised the healthy development of relations between the two countries,” he was quoted as saying in Chinese state media reports.

Russian Foreign Ministry spokeswoman Maria Zakharova in a September 3 briefing also asserted that both countries had settled their border, while lashing out at Lai as being one of “some fringe politicians obsessed with revanchism”.

However, observers said the official statements were unlikely to ease the simmering grievances and tensions over the annexed land, long a source of contention between the former Cold War rivals, which nearly went to war in 1969 over Damansky island, called Zhenbao Dao in China.

Even in recent years, despite the de facto Sino-Russian alliance, Russia’s commemoration activities celebrating the founding of Vladivostok, historically a Chinese city known as Haishenwai, and its previous occupation of the Beijing-controlled Zhenbao island have prompted nationalistic backlashes in China.

Beijing suffered another diplomatic blow last week after Ukrainian President Volodymyr Zelensky once again questioned China’s self-proclaimed neutrality in the war, dismissing a Chinese-Brazilian peace initiative as “destructive”.

“You either support the war, or you don’t support the war. If you don’t support it, then help us stop Russia,” he told Brazilian media outlet Metropoles last Wednesday.

As a parallel strategy to Zelensky’s 10-point initiative, China and Brazil put forward a six-point peace plan in May calling for an international peace conference recognised by both Russia and Ukraine and preventing the “escalation of hostilities” and “provocations”.

“The Chinese-Brazilian proposal is … destructive, it’s just a political statement,” Zelensky was quoted as saying.

Zelensky also sharply criticised China at this year’s Shangri-La Dialogue in Singapore in June, accusing Beijing of helping Moscow to undermine a Kyiv-initiated peace conference in Switzerland later that month and becoming “an instrument in the hands of Putin”.

Observers said Zelensky’s pointed criticism of China’s position in the war showed Kyiv had effectively lost hope in Beijing, further dampening the latter’s ambition to act as a peace broker in the conflict.

It has also highlighted Beijing’s deepening dilemma in its extremely delicate balancing act between Moscow – one of its biggest allies – and Ukraine and its Western supporters, where China’s own global standing and strategic interests are at stake.

As many analysts have cautioned, Beijing may need to tread carefully because its tilt towards Moscow, however useful it might seem in countering the US, may eventually become a liability – entrapping China in Russia’s proxy war against the US-led West.

Will China’s latest crypto crackdown stifle its gaming industry?

https://www.scmp.com/opinion/china-opinion/article/3278744/will-chinas-latest-crypto-crackdown-stifle-its-gaming-industry?utm_source=rss_feed

Last month, China’s top courts published a judicial review on cryptocurrencies, online game coins and tips given to live-streamers. Such transactions, including transfers and conversions, are now included in money laundering activities. Chinese officials pointed to criminal usage of virtual currencies and game coins to evade China’s capital controls and to enable cross-border transactions.

This increasing effort to curb illicit financial activities conducted via digital assets highlights the Chinese government’s staunch approach to cracking down on cryptocurrency. However, one unintended consequence of this action could be the impact on China’s vibrant video game industry, which brought in 303 billion yuan (US$42.7 billion) in revenue in 2023.

China’s video game industry has consistently experienced growth, owing to factors such as China’s massive market size, high internet usage and mobile penetration rates and its strong game production companies. China’s gaming population numbers some 670 million strong, consisting of nearly half of its population.

The market opportunities for video games in China are extremely large, with distinct market segments based on player preference, platform and other factors. One example can be seen just in the platforms leveraged by Chinese gamers, with many splitting their time between mobile, PC and console games, with a major preference for mobile games.

Popular titles such as , Fantasy Westward Journey and attract millions of users, with some contributing to billions of in-game revenue.

The Chinese gamer community’s influence has spread not only within China but also internationally. China has most number of esports players in the world after the US, and leads the globe in popularising the concept, as well as participation and viewership. One author has noted that esports is a “major cultural export” for China.

The Chinese government has attempted to directly regulate video game usage in the past. Most famously, the Chinese government sparked controversy in 2019 when it announced time restrictions for gamers based on time and age, editing this legislation in 2021 to completely ban minors from playing video games entirely between Mondays and Thursdays.

In late 2023, Chinese regulators announced rules aimed at reducing in-game spending and rewards incentivising video game play, with the result being the country’s domestic game developers losing US$80 billion in market value. Soon after, the government approved over 100 domestic games, a quiet acquiescence and nod to the significant impact that such policymaking can have on the gaming industry.

China’s vibrant gaming industry could be affected by the country’s recent judicial revisions on cryptocurrencies through in-game purchases. Games such as MetaCene, which utilises its own cryptocurrency tokens as in-game currency, could be affected by policies targeting digital assets.

Additionally, games with a monetisation component such as play-to-earn games and non-fungible token (NFT)-based games could be drastically affected by policy targeting digital assets. A court in Xiamen, Fujian province has argued that cryptocurrency is legally protected as property in China, despite recent government policies that crack down on activities related to virtual assets. This situation creates legal uncertainty around such mechanisms for in-game transactions.

One example of a popular game that could be directly affected by this ruling is , a platform developed by Animoca Brands, which is also the exclusive distributor of CryptoKitties in China. The Sandbox leverages NFT avatars for players to use, and could thus find itself under increased scrutiny by domestic regulators, particularly if the means of in-game transactions are categorised as “money laundering activities” by the Chinese government. This could have the secondary and tertiary effect of affecting corporate revenue streams and player ownership of in-game assets.

Globally, blockchain gaming plays a significant role in Web3, accounting for 28 per cent of total unique active wallets worldwide. Popular Chinese game development companies have already launched their own forays into blockchain, with initiatives such as Tencent’s WeBank blockchain, NetEase game NARAKA’s partnership with Cards Ahoy and miHoYo’s launch of its own metaverse called HoYoverse.

The ripple effects of China’s strict crackdown on cryptocurrencies could extend beyond the digital realm, potentially impacting the nation’s video game industry. As one of the world’s largest markets for video games, such effects could have significant implications for both video game developers and players.

The categorisation of virtual asset transactions as money laundering activities presents a confusing regulatory environment for game production companies and players. While China has introduced policies on video games over the years, the regulation of digital assets in relation to gaming is a relatively new notion, with the long-term implications of these changes yet to be seen.

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Chinese scientists say low-cost diabetes drug holds promise for ageing body and brain

https://www.scmp.com/news/china/science/article/3278693/chinese-scientists-say-low-cost-diabetes-drug-holds-promise-ageing-body-and-brain?utm_source=rss_feed

Chinese scientists say a highly accessible and low-cost drug used to treat and prevent diabetes could hold great promise in countering the effects of ageing.

In a 40-month study of adult male cynomolgus – or crab-eating – macaques, the researchers found that long-term administration of metformin could systematically delay organ ageing in primates, in particular delaying the effects of ageing on the brain by about six years, the equivalent of 18 years in humans.

The findings could “pave the way for advancing pharmaceutical strategies against human ageing”, according to the team from the Institute of Zoology and the Beijing Institute of Genomics of the Chinese Academy of Sciences (CAS).

The researchers – led by Liu Guanghui and Qu Jing from the zoology institute and Zhang Weiqi from the genomics institute – reported their findings in the peer-reviewed journal Cell on September 12.

They divided the 13 to 16-year-old monkeys – the equivalent of 40 to 50-year-old humans – into two groups.

The control group comprised 16 older monkeys and 18 young or middle-aged animals, while 12 older males were given 20mg/kg of metformin per day, the standard dose used to control diabetes in humans.

After the study, which lasted 1,200 days – the equivalent of about 13 years in humans – the CAS team analysed samples from 79 types of tissue and organs in 11 systems throughout the monkeys’ bodies.

They observed that long-term use of metformin was safe. Meanwhile, many of the animals’ tissues showed slowed biological ageing. And they found that the drug could reduce chronic inflammation, which is widely believed to be a key hallmark of ageing.

Liu and his colleagues paid particular attention to the protective effects of metformin on the brain. They found that monkeys given daily metformin showed slower age-related brain decline than the control group, and their cognitive function improved.

Metformin has been used for more than six decades to lower blood sugar levels in people with type 2 diabetes, and researchers around the world have been investigating its potential to treat conditions such as cancer, cardiovascular disease and ageing.

Although previous studies have suggested that metformin could delay biological ageing in animals such as threadworms, fruit flies and mice, the Chinese study is the first to thoroughly investigate the role of metformin in mitigating the ageing process in primates.

However, the study has some limitations. One is the relatively small sample size: only 12 monkeys were treated with the drug.

According to publicly available information, since the end of June, in collaboration with the biopharmaceutical company Merck – the developer and manufacturer of metformin – Liu and his colleagues have launched a clinical trial to assess the efficacy of oral metformin in delaying ageing in middle-aged and elderly men. The study will recruit 120 people and will be conducted at Xuanwu Hospital in Beijing.

China should reciprocate Britain’s willingness to mend ties: former UK trade secretary

https://www.scmp.com/news/china/diplomacy/article/3278786/china-should-reciprocate-britains-willingness-mend-ties-former-uk-trade-secretary?utm_source=rss_feed

Beijing should reciprocate the new British government’s willingness to re-engage with China to mend their frosty relations, an influential former British trade secretary said on Monday.

Speaking at the University of Hong Kong, Peter Mandelson also called on China to step up mediation efforts to help broker peace in Russia’s grinding war against Ukraine.

While the new government faced “colossal challenges” to retrieve Britain’s global clout, Mandelson said, he was “optimistic” about improved bilateral ties with Beijing under Keir Starmer, the country’s first Labour prime minister since 2010.

“I am optimistic because the incoming government has decided that it wants to engage with China after many years of a very poor, deteriorating relationship,” said Mandelson, also a former European trade commissioner.

“And the incoming Labour government wants to change that course and I hope that China will reciprocate in that re-engagement.”

Beijing last year reportedly asked Mandelson – still an influential figure in British politics and believed to be close to Starmer – to help persuade foreign investors to return to China, despite its slowing economy and deteriorating business environment.

His comments came after Starmer, during his first conversation with Chinese President Xi Jinping by phone last month, expressed hope of broadening cooperation and being able to have “open, frank and honest discussions to address and understand areas of disagreement when necessary”.

Unlike his Conservative predecessor Rishi Sunak, who called China a growing “systemic challenge” to Britain’s values and interests, Starmer told Xi that developing a closer relationship was in the long-term interests of both countries. Starmer has yet to roll out his China policy.

Mandelson, who is honorary president of the Great Britain-China Centre and chairman of strategic advisory firm Global Counsel, said both sides should first “stop throwing mud” at each other and increase dialogue and exchanges, especially between their governments and among their people.

“[We need] to have people talk to each other, more discussions between the two governments and their representatives to understand each other’s perspectives and how they see the world and what they think the global agenda needs to be for us, among others,” said Mandelson.

Echoing British Foreign Secretary David Lammy’s remarks about “a full audit” of ties with China shortly before the Labour Party’s election victory in July, Mandelson also pointed to “an examination and audit” of bilateral ties “with our eyes wide open”.

Li Yongsheng, deputy commissioner for China’s foreign ministry’s office in Hong Kong, attended the HUK seminar and praised Mandelson’s call for dialogue and engagement.

Both sides also needed to do more self-reflection and be more sympathetic towards each other, Li added.

But Mandelson dismissed criticism and concerns that the Labour government would go soft on China, pointing to “very serious headwinds” confronting Beijing and Washington and global democracies as a whole.

He was especially sceptical of China’s economic and trade policy, which he said resembled the economic nationalism championed by former US president Donald Trump.

Mandelson said he could highlight “the advent of a pretty strong, populist-driven economic nationalism that embraced the US after Trump’s election to the White House. But then equally, I could point to the economic nationalism, which I would say characterises President Xi’s approach to policymaking as well”.

He added that it was “not realistic” for China to expect the rest of the world to digest its overcapacity in seeking to expand its economy while exporting its subsidised surplus products to other countries.

The former British cabinet member noted that trade tended now more than ever to follow geopolitical fault lines and was a new reality that countries had to accept.

Meanwhile, Mandelson questioned China’s geostrategic alignment with Russia in the midst of the Kremlin’s invasion of Ukraine, saying the decision had further strained Beijing’s ties with London and Brussels.

“If Beijing needs alignment with Russia in order to map out its future, the international system, and to make friends in the world and conduct itself in a practical way with the liberal democracies in the West, then I think it’s got itself in a very, very tight corner,” he said.

“I don’t think that aligning yourself with [Russian President Vladimir] Putin is a very effective passport to anything or anywhere.”

Last week during an official visit to Washington, Starmer and US President Joe Biden voiced “deep concern” about “China’s support for Russia’s defence industrial base”, according to the White House.

Within a week of his election, Starmer at a North Atlantic Treaty Organisation summit in Washington signed a joint Nato communique that labelled China a “decisive enabler” of Russia’s war efforts.

As for China, Mandelson believed it was one of the better-positioned countries to help broker peace in Ukraine because of its “influence and position” in relation to both Kyiv and Moscow.

“I would say this: use your good offices to influence Russia to go out of this colonial war in Ukraine and reach a settlement that leaves Ukraine sovereignty and its territorial integrity intact,” he said.

On Hong Kong, Mandelson was upbeat about ties with the city under the new Labour government, claiming both sides would benefit from commercial diplomacy.

“There’s an enormous amount we can do further with liberalised trade between Britain and Hong Kong. I would base that more on intensive commercial diplomacy rather than the negotiation of a free-trade agreement,” he said when asked about the prospect of an FTA between Britain and Hong Kong.

While describing the task of navigating the escalating Sino-American rivalry as challenging, Mandelson suggested the city should be proud of its exceptionalism.

“Hong Kong is blessed with a legal judicial system which is the envy of many others in the world and sustaining that is absolutely vital for Hong Kong to succeed in the future,” he said.

“If I were to give any off-the-cuff piece of advice to Hong Kong, it would be to recognise how exceptional a place it is and to take pride in its exceptionalism and to be confident about it.

“I hope nothing will change in the next 15 years or have any negative impact on its socioeconomic life or its rule of law,” Mandelson added.

China, Thailand aiming to create ‘ecosystem using digital technologies’

https://www.scmp.com/economy/global-economy/article/3278879/china-thailand-aiming-create-ecosystem-using-digital-technologies?utm_source=rss_feed

A group of four southern provinces and cities in China are working with authorities in Thailand to develop smart cities, with Chinese technology playing a vital role in the Asean region, although data flow remains a challenge in the development of the digital economy, according to a top Thai official.

The Digital Economy Promotion Agency of Thailand, which reports to the Ministry of Digital Economy and Society, is collaborating with Shenzhen and Hangzhou, as well as the Guangxi Zhuang autonomous region and Yunnan province.

They are aiming to create an “ecosystem using digital technologies”, said Supakorn Siddhichai, executive vice-president of the Digital Economy Promotion Agency.

“In the Belt and Road Initiative, we work in terms of improving our infrastructure, both hard and soft, like railways, bridges and roads, connecting to Laos, to Cambodia, and also to south Malaysia and Singapore eventually,” he told the Post on the sidelines of the Belt and Road Summit in Hong Kong last week.

“[For] soft digital infrastructure, [we] work in terms of submarine cables and also building laser centres in the region to help support the digital transformation of businesses.”

The agency is, according to Supakorn, collaborating with Chinese tech giants, including Huawei Technologies, Alibaba and Tencent. Alibaba is the owner of the South China Morning Post.

China has been keen on collaborating with other countries under its Belt and Road Initiative to boost technological development, with a focus on 5G wireless communications, smart city construction and cross border e-commerce.

And as preparation for the Smart City Expo World Congress in Hangzhou, which starts next week, the Digital Economy Promotion Agency visited Zhejiang Dahua Technology – a producer of video surveillance and smart city solutions – in the city earlier this month to exchange insights on urban innovations.

In 2017, the Shenzhen government signed a memorandum of understanding with the Ministry of Digital Economy and Society that aimed to support a range of developments, including digital parks, smart cities and national broadband infrastructure for the Southeast Asian country.

But when it comes to the difficulty of developing the digital economy, Supakorn said that he “must admit” that data remains a challenge because it “can go undetected”.

“And so you don’t know the data you’re sending is going to the right and intended place that you wanted it to go,” he added.

In March, the Cyberspace Administration of China issued a set of 14 rules that required critical information infrastructure operators to go through a security review by relevant departments when sending personal information or important data overseas.

Data flow is seen as key to developing smooth cross-border trade, and in June 2020, Singapore, Chile and New Zealand signed the Digital Economy Partnership Agreement (DEPA), which aims to facilitate digital trade and create a framework for the digital economy.

South Korea became the fourth member in May, with China requesting to join the agreement in November 2021.

Minister of Commerce Wang Wentao said in May that Beijing was making active efforts to facilitate the accession to the trade pact, according to the state-backed Xinhua News Agency.

“Thailand is not a member state of the agreement … or eventually it will be, we are evaluating [the situation],” Supakorn added.

Supakorn believes that cooperation between China and Thailand on enhancing the digital economy “involves a lot of digital infrastructure and how you want to send data across”, which can help facilitate cross-border trade highlighted by DEPA.

Australia to boost South China Sea presence by joining Philippines’ maritime defence patrols

https://www.scmp.com/week-asia/politics/article/3278894/australia-boost-south-china-sea-presence-joining-philippines-maritime-defence-patrols?utm_source=rss_feed

Australia will strengthen its presence in the South China Sea through joint maritime defence activities with the Philippines, a move analysts have said reflects Canberra’s strategic interest in securing vital trade routes even at the risk of inviting economic backlash from Beijing.

Australian Ambassador to the Philippines HK Yu recently told reporters that her country would be increasing its maritime cooperative activities (MCA) with Manila.

“In terms of MCAs, you can expect to see more into the future. This is what we do when you have [a] very close defence cooperation relationship,” Yu said at a media reception at her residence over the weekend, as quoted by the Philippine News Agency.

Yu described the MCAs as a demonstration of the “collective commitment to strengthen regional and international cooperation in support of a free and open Indo-Pacific” between Manila and its partners.

Colonel Xerxes Trinidad, chief of the Armed Forces of the Philippines’ Public Affairs Office, told This Week in Asia that Manila planned to hold regular MCAs to normalise the situation in the South China Sea and was working on the schedule of the next joint maritime patrols.

Previous examples of Australian participation in MCAs took place in April and August, when the country was involved in joint sails with the naval forces of the Philippines, United States, Canada and Japan in the West Philippine Sea, Manila’s term for the portion of the South China Sea that falls within its exclusive economic zone.

In November, Australia also conducted its first joint patrol with the Philippines in the disputed waterway.

Yu said the South China Sea situation was a regional issue that nations like Australia had a stake in.

“You will notice that even many countries that are outside the region are passionate about this issue – it’s because the South China Sea is a very important international waterway for the whole world,” she said.

The South China Sea is a critical global trade route, with about a third of the world’s maritime trade – valued at more than US$3 trillion – passing through its waters annually.

“Imagine if international law does not guide how the South China Sea can be used, and does not protect the right of countries to do freedom of navigation and overfly, you know, you’re running into some problems. So, this is not an issue just between the Philippines and China,” Yu added.

The ambassador’s comments come amid escalating tensions between Manila and Beijing over their competing territorial claims in the South China Sea, which has led to regular maritime clashes between the two sides.

Analysts said Yu’s promise of increased cooperation was likely to earn Australia China’s ire, with the potential for economic consequences for Canberra.

“The two countries are set to have the Australia-China Strategic Economic Dialogue later this month. I can definitely see Beijing bringing up Canberra’s stance on the South China Sea during the consultations,” Vincent Kyle Parada, a former defence analyst for the Philippine Navy and a graduate student at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore, told This Week in Asia.

“The South China disputes are not the end-all and be-all of Australia-China relations – but it is becoming a very crucial part of it. Right now, I think the first priority bilaterally is to stabilise trade relations. They’ve been embroiled in a trade war since 2018 or so, and that’s definitely been damaging economically, considering their sizeable share in each other’s markets.”

In 2020, China imposed a range of trade restrictions on Australian exports, including barley, beef, wine, coal and cotton, in what many consider to be retaliation for Canberra’s call for an independent inquiry into the origins of Covid-19.

Joshua Espeña, a resident fellow and vice-president of the International Development and Security Cooperation think tank, said while China was likely to be upset with Canberra, it would not immediately resort to sanctions, “given how Beijing is still risk-averse and knowing that the extent of operations and logistics will be limited”.

The Philippines, China, Malaysia, Brunei and Vietnam have competing claims in the South China Sea. A tribunal in The Hague ruled in 2016 that Beijing’s claims over the South China Sea through its so-called nine-dash-line had no legal basis and recognised Manila’s sovereign rights in the waterway. China has refused to accept the ruling.

Abdul Rahman Yaacob, a research fellow with the Australia-based Lowy Institute’s Southeast Asia programme, told This Week in Asia that Australia considered Southeast Asia critical to its security, as outlined in the 2023 Defence Strategic Review and the 2020 Defence Strategic Update.

According to Yaacob, the maritime domain, especially in Southeast Asia, plays a significant role in Australia’s economic prosperity, given that 99 per cent of commodities enter or leave the country by sea.

“Australia’s energy supply, such as jet fuel, is mostly imported from overseas suppliers and is transported by sea. Therefore, Australia will naturally be concerned about any instability or activities that could impede the freedom of navigation in the South China Sea or West Philippine Sea,” Yaacob said.

Yu’s statements were a diplomatic signal to China that Canberra was keenly interested in stability and freedom of navigation in the South China Sea, Yaacob said, but added that China was likely to “consider other factors” before imposing any economic sanctions on Australia.

Chris Gardiner, CEO of the Institute for Regional Security in Canberra, said Australia’s support for the Philippines aligned with its National Defence Strategy, which emphasised collective security and deterrence.

“Australia’s support honours the Philippines exemplary use of peaceful arbitration to resolve an international dispute and is in response to threats of force against it by China to revise first not just Philippine territorial boundaries but second, potentially those of others affected by China’s claims,” he said.

Canberra, according to Gardiner, hopes collective defence of the Philippines will not just uphold the existing rule of international law but also deter China’s use of force as a tool for statecraft across the Indo-Pacific.

Japan and Australia recently signed security deals and agreed to jointly help the Philippine coastguard in the South China Sea.

At a Quad meeting in Tokyo two months ago, Australia, India, Japan and the US pledged to bolster maritime security in the region, saying they were seriously concerned about the situation in the East and South China Seas.

China delivery rider collapses, dies on bike after working 18-hour days, leaves family in hardship

https://www.scmp.com/news/people-culture/trending-china/article/3278707/china-delivery-rider-collapses-dies-bike-after-working-18-hour-days-leaves-family-hardship?utm_source=rss_feed

The tragic death of a 55-year-old Chinese delivery man, who passed away during a nap on his bike after enduring gruelling 18-hour workdays, has reignited crucial discussions about the welfare and legal rights of delivery drivers across the mainland.

The incident, which unfolded in Hangzhou, Zhejiang province in eastern China, was brought to the public’s attention through a widely circulated online video on September 6.

The footage captured the food delivery worker, surnamed Yuan, who tragically succumbed in his sleep while resting on his electric bike after a taxing day of fulfilling multiple orders.

A witness revealed that Yuan had been at his post from about 9pm on September 5 until he was discovered at 1am the following morning by another delivery driver.

An insider, known as Yang Yang, shared with Zonglan News that Yuan had earned a reputation for his relentless work ethic, which earned him the nickname “Order King”.

Yang noted that Yuan typically earned between 500 and 600 yuan (US$70 and US$85) a day, with earnings exceeding 700 yuan on rainy days.

“He would sometimes work until 3am, then rise at 6am to start again. When he felt fatigued, he would take a brief nap on his bike, ready to return to work as soon as an order came in,” Yang stated.

Another of Yuan’s colleagues, who goes by the pseudonym Zhao Hua, told Dingduan News that a month before his death, Yuan had suffered a leg fracture in a traffic accident while delivering an order.

He rested for about 10 days before returning to work, and then two weeks later the tragedy happened.

Zhao said Yuan relocated from Hubei province in central China to Hangzhou to earn a living but also to support his 16-year-old son who is studying there. Yuan also has an older son who is married with children.

On September 9, in response to the tragedy, the Xianlin Sub-district Office in Yuhang district released an official statement confirming that Yuan had “collapsed and died despite emergency treatment”.

“The food delivery platform, the insurance company, and the family have reached an agreement. Follow-up arrangements are being carried out in an orderly manner,” the announcement stated.

The incident has sparked public outrage online.

“Another ‘Order King’ has fallen. Is there really no way to avoid these tragedies?” one person said.

“He was in his 50s, the sole breadwinner of his family, working day and night. May he rest in peace. I hope in his next life, he will not have to race against time like this,” another commented.

The number of food delivery workers in China surpassed 10 million last year, with Meituan and Ele.me, the two biggest platforms, employing 7.45 million and 4 million active riders, respectively.

Sun Ping, a researcher at the Institute of Journalism and Communication, Chinese Academy of Social Sciences, found that from 2018 to 2021 there was a significant increase in working hours for full-time riders.

In 2018, about 36.5 per cent of riders worked more than 10 hours daily; by 2021, the number had risen to 62.6 per cent.

This surge in the labour force and working hours, together with fierce competition, has heightened public concern for their legal rights.

In another case in Hangzhou on August 12, a delivery man had his electric bike keys confiscated by a security guard for cutting through a residential green belt to save time.

Desperate to avoid delays, the rider knelt and begged for his keys, prompting a gathering of fellow riders who protested and demanded an apology.

Apple’s iPhone 16 already selling at a discount in China, as AI delay cools demand

https://www.scmp.com/tech/big-tech/article/3278855/apples-iphone-16-already-selling-discount-china-ai-delay-cools-demand?utm_source=rss_feed

Online retailers in China have slashed the prices of Apple’s new iPhone 16 series ahead of its official release, as consumers in the world’s largest smartphone market hold out for the release of the US company’s first on-device artificial intelligence (AI) software.

PDD Holdings’ Pinduoduo, one of the country’s most popular e-commerce platforms, has started selling the iPhone 16 Plus with 512 gigabytes of storage for 8,999 yuan (US$1,268), a 10 per cent discount from the official price of 9,999 yuan. The 128GB iPhone 16 is being sold at an even steeper 11 per cent discount.

Both Pinduoduo and Alibaba Group Holding's’ Taobao marketplace have slapped a 4 per cent discount on the 256GB version of the high-end iPhone 16 Pro Max, lowering the price by 400 yuan to 9,599 yuan. Alibaba’s Tmall shopping platform also offers buyers the option to pay for a new Apple handset in 24 instalments without interest charges.

Alibaba owns the South China Morning Post.

The discounts suggest soft demand for Apple’s latest flagship handsets in China, a major market for the world’s most valuable company and one of the world’s most competitive. The iPhone 16 ships this Friday without AI features, considered the main selling point of the new series.

While Apple said it will launch its AI system in US English next month and in localised English in several markets in December, other languages, including Chinese, will not be available until next year. The company has also given no indication of how it plans to offer Apple Intelligence in China, where the government has tight oversight over generative AI services accessible by the public.

Initial response to the new iPhone on Chinese social media appeared to be tepid.

Across the globe, pre-order sales in the first weekend for the iPhone 16 series were down nearly 13 per cent from last year’s iPhone 15 series, partly because Apple Intelligence is missing at launch, according to Kuo Ming-chi, analyst at TF International Securities.

“Additionally, intense competition in the Chinese market continues to impact iPhone demand,” he said.

Last week, Huawei Technologies unveiled in its home market the Mate XT, a double-hinge foldable smartphone, just hours after Apple introduced the iPhone 16. Huawei made a surprise comeback to the 5G smartphone market last year with a device equipped with an advanced, locally-made processor, in defiance of US sanctions.

Apple risks losing further market share to Huawei and other domestic brands in the premium segment in China, consultancy Counterpoint Research said last month.

The Cupertino, California-based company recently fell out of the top five ranking of smartphone vendors in China by quarterly shipments, the first time that domestic vendors dominated all the top five positions, according to research firm Canalys.

But Apple so far appears unfazed by the competition from Huawei.

The US tech giant has lowered the trade-in value, or the amount of money a consumer receives for trading in their older device for a new one, by up to 16 per cent in China, according to a Jefferies research note last week.

“Apple may now conclude Huawei’s tech capabilities are constrained by advanced chip access, and for those who wanted to switch from iPhone to Huawei have already done so,” Jefferies analysts wrote.

Why China is sending southern officials north to its rusting economic front lines

https://www.scmp.com/news/china/politics/article/3278881/why-china-sending-southern-officials-north-its-rusting-economic-front-lines?utm_source=rss_feed

China is trying to bring new economic life to its northeastern rust belt by parachuting in cadres from the upper ranks of the central government and more prosperous parts of the country.

Since the start of the year, at least a dozen senior officials from central government ministries and the powerhouse provinces of Jiangsu, Zhejiang and Guangdong have taken up top jobs in Liaoning, Jilin, Heilongjiang, and Inner Mongolia, according to a tally by the South China Morning Post.

Most of these officials have been tasked with developing industry and information technology, trade, science and education and business – heeding Chinese President Xi Jinping’s call last year to revitalise the rust belt region through exchanges.

These northern provinces were important engines of economic growth during the planned economy era as hubs for large state-owned enterprises in industries such as steel, cars, shipbuilding and military equipment.

However, the region has been left behind in the global shift towards hi-tech industries and services.

Beijing has made it a priority to convert its once-powerful cluster of SOEs by shifting centres of heavy industry to advanced manufacturing. This aims to supercharge the weak local economy while making progress towards technological autonomy, accomplishing two major goals at once.

One of the most recent appointments to propel that shift is that of Li Wenbiao.

Li spent more than 2½ decades in the affluent eastern province of Jiangsu until September 3 when he was made Communist Party secretary of the city of Tieling in Liaoning.

Joining Li in Liaoning is fellow Jiangsu cadre Jiang Bing, who was the mayor of Gaochun district in Nanjing, before becoming the acting mayor of Dandong, on China’s border with North Korea.

Also in Liaoning, Han Shangfu, a former director of a free-trade zone in Jiangsu, was made the deputy mayor of Panjin, while Yin Jun, former mayor of the city of Xinghua, was appointed deputy mayor of Benxi in Liaoning.

Further north in Jilin province, at least three Zhejiang cadres have taken on new senior roles.

Zhu Huan, former deputy mayor of Ningbo, is now in charge of Meihekou; Ruan Ganghui, former deputy mayor of Jinhua, is now Baicheng’s executive deputy mayor; and Xiong Weiwei, former deputy director of Zhejiang’s economics and information technology department, is now a standing committee member of Siping’s party committee.

Two Guangdong cadres arrived in Heilongjiang this year. In July, former Zhuhai district mayor Han Yun was transferred to Daqing, China’s oil capital, to serve as deputy mayor. A month earlier, Guo Yuehua, former chief of Guangdong’s provincial economic planning agency, was sent to Heilongjiang to serve as deputy director of the provincial industry and information technology department.

In addition, three senior ministerial cadres from Beijing have been transferred to regional roles in recent months, with all of them landing in corresponding provincial departments. In June, the head of planning for the national grain reserve, Liu Xiangyi, took up the directorship of the corresponding bureau in Jilin.

Duan Guangping made a similar transition the next month, moving from the housing ministry in Beijing to head of the Liaoning Housing and Urban-Rural Development Department. That same month, Wang Di left his job as director of innovation at the agriculture ministry to become Heilongjiang’s deputy director of agriculture.

Inner Mongolia also acquired the services of former Beijing executive deputy district mayor Yu Jisun, who was appointed as government head of Hinggan League in August.

The hope is that these officials will be able to apply their knowledge of more advanced systems and regions to help the economies of the northern regions reach the next level of development.

Xie Maosong, a senior researcher at the National Institute of Strategic Studies at Tsinghua University, said the slew of transfers was meant to create a “catfish effect” in the northern provinces, an idea that involves a strong competitor with fresh ideas coming in to motivate others to improve.

But there are doubts about whether these officials will be able to cut enough red tape and foster the pro-business climate needed to spur that activity.

“In the past, we have seen some cadres who have very good track records in their home province, but performed poorly in the north,” Xie said.

“Some were even assimilated into the local culture, failing to bring about changes in these provinces’ overly bureaucratic atmosphere and put in place a pro-business mentality.”

Xie said that in addition to sending southern cadres to the north, Beijing was also dispatching northern cadres to southern provinces in the hopes they would pick up good policies and initiatives to implement on their return.

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Chinese influencer Crazy Xiaoyangge prompts mooncake probe with ‘made in Hong Kong’ claim

https://www.scmp.com/business/china-business/article/3278906/chinese-influencer-crazy-xiaoyangge-prompts-mooncake-probe-made-hong-kong-claim?utm_source=rss_feed

As people gather to celebrate the Mid-Autumn Festival on Tuesday, top-earning Chinese influencer Crazy Xiaoyangge finds himself facing an investigation into allegations that his company sold mooncakes it falsely claimed were from Hong Kong.

Three Sheep Group, a company founded by the influencer, whose real name is Zhang Qingyang, is being investigated for allegedly “misleading consumers” via a live-streaming promotion, according to a statement issued by a local regulator in Hefei, capital of eastern Anhui province, where the company is based.

The case will be handled in accordance with the law based on the investigation results, the statement said.

“Any illegal business activities found in the live-streaming sales will be penalised according to the law,” the regulator added.

Zhang, whose moniker Crazy Xiaoyangge means “crazy little brother Yang” in Chinese, is among the highest-paid online personalities in China. He earned 3.21 billion yuan (US$450 million) in 2023, according to a list prepared by the Guangdong E-commerce Summit Forum.

On Monday, Zhang touted what he referred to as “Hong Kong Meisun Mooncakes” via a live stream on Douyin, the ByteDance-owned platform that is the Chinese version of TikTok.

Zhang claimed that the mooncakes were a “high-end brand” in Hong Kong. However, the maker, Guangzhou Meisun Food Company, is not registered in Hong Kong, and the product has never been sold in the city.

“The regulator should give Crazy Xiaoyangge a severe penalty,” a user nicknamed Luochao Biz Talks said in a post on Xiaohongshu, an Instagram-like Chinese social platform also known as Little Red Book or simply Red. “I think regulators can fine such live-streaming e-commerce companies that sell fake products”, the same as it would do for large e-commerce sites, the user added.

The mooncakes are no longer found on Zhang’s online store. Three Sheep did not respond to a request for comment.

The controversy comes weeks after Three Sheep established a subsidiary in Hong Kong.

The Hong Kong company was registered on July 16, according to the Companies Registry. It rented a 5,570 sq ft office in the United Asia Finance Centre in Wan Chai at a monthly rent of HK$183,000 (US$23,474), the Post reported earlier.

Founded by Zhang in 2021, Three Sheep is a service platform for online creators in mainland China, a type of company sometimes known as a multichannel network. Its businesses cover brand operations, live broadcasting, talent incubation, investment, supply chain services and celebrity brokerage, according to its official website.

Zhang creates comedic short videos and is a well-known anchor for e-commerce live-streams. In November 2022, he became the first influencer to get 100 million followers on Douyin. In 2023, he disclosed that his company pays out 50 million yuan in wages each month.

How China’s communists fell in love with privatisation | Finance & economics

https://www.economist.com/finance-and-economics/2024/09/15/how-chinas-communists-fell-in-love-with-privatisation

On a recent visit to his hometown of Laixi, in eastern China, Guo Ping received a shock: the local government had sold off a number of state-owned assets, including two reservoirs. The small city’s finances, as well as those in the neighbouring port of Qingdao, were under strain, forcing officials to come up with new sources of revenue. This meant hawking even large bits of regional infrastructure. The sales seemed to be part of what Mr Guo, who asked to use a pseudonym, views as a gradual economic deterioration.

Singapore’s electronics exports soar amid China’s anti-tariff chips strategy

https://www.scmp.com/news/asia/southeast-asia/article/3278829/singapores-electronics-exports-soar-amid-chinas-anti-tariff-chips-strategy?utm_source=rss_feed

Singapore’s electronics shipments gained the most since 2010, fuelled by overseas sales of integrated circuits and disk media products, as the global tech boom is proving a boon to the city state.

Electronics exports rose 35.1 per cent in August from a year earlier, following a revised increase of 16.8 per cent the previous month, according to data released by Enterprise Singapore on Tuesday. That was the fastest growth since June 2010.

The robust performance of electronics is providing the momentum for Singapore to meet, if not surpass, its gross domestic product forecast of growing at the upper half of its 1 to 3 per cent projected band.

The city state is home to some of the largest chip manufacturing plants in Southeast Asia.

Singapore and the broader Southeast Asia region are benefiting as companies diversify their tech supply chains beyond mainland China and Taiwan to reduce risks related to tensions between Beijing and Washington.

“There is market talk that China is front-loading chips in anticipation of potential trade tariffs from the US that are targeted at China,” Selena Ling, chief economist at Oversea-Chinese Banking Corp Lt, wrote in a note.

“Many uncertainties remain due to the US-China confrontation.”

Global tech companies have announced billions of dollars of fresh investments in the region this year, encouraged by demand for new services such as generative artificial intelligence.

Still, trade-reliant Singapore has reason to be cautious.

The island’s non-oil domestic exports were up 10.7 per cent, below the 15 per cent median forecast in a recent survey. Month-on-month, overseas sales declined by 4.7 per cent, reversing the 12.2 per cent expansion in July.

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Philippines blames China for starved, dehydrated sailors at Sabina Shoal

https://www.scmp.com/week-asia/politics/article/3278858/philippines-blames-china-starving-dehydrated-sailors-sabina-shoal?utm_source=rss_feed

The Philippines has revealed that the decision to withdraw the BRP Teresa Magbanua from Sabina Shoal arose from acute hunger and dehydration faced by the vessel’s crew – a situation exacerbated by aggressive manoeuvres from the Chinese coastguard that blocked Manila’s crucial resupply mission.

After five months at sea, exhausted sailors were seen leaving the vessel on stretchers upon its arrival at a port in Palawan on Sunday. Philippine coastguard spokesman Jay Tarriela reported that several crew members suffered from extreme fatigue and gastroenteritis after being forced to drink rainwater and subsist on porridge for three weeks as supplies dwindled last month.

While the previous resupply operation had gone smoothly, another attempt on August 26 was met with a swarm of Chinese coastguard and navy vessels, forcing Manila to abort the mission. Although essential supplies were later airdropped, they were insufficient to alleviate the crew’s suffering.

Tarriela explained that the ship’s prolonged stay at the shoal – meant to deter Beijing’s island-building activities – had rendered its desalinating equipment inoperative. Consequently, the crew had to rely on rainwater for over a month, as they lacked replacement filters to convert seawater into drinking water. When rain was scarce, they resorted to using water produced from the ship’s air conditioning units for drinking and cooking, Tarriela shared during a news conference on Monday.

Despite the withdrawal, Tarriela insisted that it did not mean Manila was giving up its claims over the area. “We have not lost anything. We can still patrol and maintain our presence in Escoda Shoal,” he said, using the Filipino name for the reef. “We are going to sustain our presence in these waters” by sending another ship to the shoal, he added but he declined to provide specifics on the protection of the mission’s integrity, as reported by The Manila Bulletin.

Following the vessel’s pull-out, China’s coastguard said on Sunday that it possessed “indisputable sovereignty” over Sabina Shoal, which it referred to as Xianbin Jiao.

Meanwhile, Philippine Defence Chief Gilbert Teodoro Jnr stated that the United States could intervene if China attempted to remove the BRP Sierra Madre from Second Thomas Shoal, another flashpoint in the ongoing tensions between Beijing and Manila. The dilapidated ship, which serves as a military outpost, has been intentionally grounded since 1999 to assert Philippine territorial claims.

“If China were to take the Sierra Madre, that is a clear act of war on a Philippine vessel,” Teodoro said, adding that the country “naturally expects” Washington to react.

China has demanded that Manila remove the vessel, labelling its presence a violation of Beijing’s sovereignty. The US has reiterated its commitment to assist the Philippines under their Mutual Defence Treaty, with Teodoro noting that discussions were ongoing about scenarios that would trigger the pact.

Teodoro also acknowledged there were no signs of Chinese vessels leaving Philippine waters. “I really don’t know the end state. All I know is that we cannot let them get away with what they’re doing,” he said.

Beijing claims sovereignty over nearly the entire South China Sea – an area where the Philippines and several other nations have competing claims – and has rejected a 2016 international ruling that favoured Manila and asserted China’s claims lacked legal basis.

China’s Fosun in talks to sell stake in Club Med to Singapore’s CapitaLand

https://www.scmp.com/business/china-business/article/3278864/chinas-fosun-talks-sell-stake-club-med-singapores-capitaland?utm_source=rss_feed

Singapore’s CapitaLand Investment is in advanced talks to buy a minority stake in luxury resort chain Club Med from its Chinese owner Fosun International, according to people with knowledge of the matter.

The real estate investment firm, part of Temasek Holdings-owned conglomerate CapitaLand Group, is seeking to acquire from 20 to 30 per cent of the hotelier for several hundred million euros, the people said, asking not to be identified because the information is private. The Singaporean firm has emerged as the likeliest buyer for the stake after outbidding other rivals including private equity firms, the people said.

Talks are still ongoing, and no final decisions have been made, the people said.

Shares of CapitaLand Investment rose as much as 2.8 per cent to the highest intraday level since February 2. Fosun Tourism’s stock jumped as much as 9.3 per cent, the steepest gain in more than two months. Fosun International rose 1.3 per cent before paring gains.

Fosun has stepped up efforts to cut its debt burden, including asset disposal and reduced borrowing. Progress on that front has helped it become one of the few Chinese conglomerates to witness a recovery in global investor confidence in recent years.

Backed by billionaire Guo Guangchang, Fosun owns Club Med through its listed leisure arm Fosun Tourism Group. Club Med is known for its all-inclusive resorts offering a range of leisure activities from fine dining and massages to yoga, scuba diving and baby gym classes. It operates more than 60 resorts globally in destinations including the French Alps and the Maldives, according to its website.

CapitaLand Investment, which was listed in late-2021 as part of a major restructuring at CapitaLand Group, has been facing market pressure over its sizeable investments in China, which is experiencing a major property downturn. CapitaLand Group is owned by Singapore state investor Temasek, which also holds a majority stake in the investment arm.

A representative for CapitaLand Investment and Fosun Tourism declined to comment, while Fosun International did not immediately respond to requests seeking comment.

China’s retirement delay offers respite as Beijing ‘robs the rich to help the poor’

https://www.scmp.com/economy/policy/article/3278845/chinas-retirement-delay-offers-respite-beijing-robs-rich-help-poor?utm_source=rss_feed

In China’s three northeastern rust-belt provinces of Liaoning, Jilin and Heilongjiang, where ageing rates have been among the nation’s highest, pension fund shortfalls present a long-term vulnerability.

Facing an economic slowdown steeper than the national average and financial difficulties, the numerous retirees in the region of 99 million people bordering North Korea, Russia and Mongolia would not have been able to eke out a living without help from the better-off coastal provinces.

Last year, the three provinces received a combined 180 billion yuan (US$25.4 billion) in central government transfer payments to fill the void in their pension funds, according to the Ministry of Finance, with the figure representing more than half of their total tax revenues of 342.9 billion yuan.

Across China, just half of all provincial administrative regions recorded pension fund surpluses that could be turned over to the central government last year, with only four – Guangdong, Beijing, Jiangsu and Anhui – able to hand in at least 10 billion yuan each.

Guangdong, China’s largest provincial economy with only 15 per cent of its 120 million population aged 60 or above, handed in 115.8 billion yuan alone last year.

But analysts have long questioned whether provinces like Guangdong can continue to support rust-belt regions if they start to grow old themselves.

And for regions already grappling with steep population ageing and pension fund deficits, raising retirement ages is viewed as the only option.

On Friday, China’s top legislature endorsed a plan to gradually raise retirement ages by up to five years by 2040, starting from January.

And starting from 2030, employees will also have to make more contributions to the social security system to receive pensions.

“The postponement was carefully designed and timed to ease the funding pressure facing governments, and the relief can be instant for many regions,” said Ai Jingyi, a postdoctoral researcher of labour economics at Fudan University in Shanghai.

In China, 21.1 per cent of the population were aged 60 or above last year, but that figure could rise to 32.7 per cent by 2035, according to the Economist Intelligence Unit (EIU).

But the changes to the retirement ages could narrow the national pension budget shortfall by 20 per cent in the next decade, according to the EIU, at a time China is facing shrinking government revenues.

In the first half of the year, total government revenues dropped by 2.8 per cent year on year to 11.59 trillion yuan, according to the Ministry of Finance as feeble domestic demand and low business confidence has hit state finances. Meanwhile, local governments are under great pressure from falling land sales and mounting debts.

With more people set to retire than join the workforce, the Chinese Academy of Social Sciences repeated a warning last year that the public pension system would be depleted by 2035.

The Nanjing and Shanghai-based Huatai Securities also said in a report last week that the balance of China’s social security fund had declined after peaking in 2019, standing at around 700 billion yuan (US$98.7 billion) in 2022, or 5.8 per cent of gross domestic product, up from slightly over 600 billion yuan in 2021.

“If fiscal subsidies are not taken into account, and assuming the current retirement age is not changed, the revenue and expenditure gap will widen further,” the report said.

“Delaying retirement can promote the financial sustainability of pension funds, provided that there are other reforms going in tandem, like more government investment and better pension management.”

Zhao Yaohui, a professor with Peking University’s National School of Development, told a forum in June that even the central government would have “rather limited potential” to foot the bill of increasing pension payments to more retirees and medical care expenditures.

“If there is a deficit [in pension funds], the government will have to make up for it, but if this continues, the country’s finances will collapse,” she said.

“There are lessons around the world: many countries like Italy and Greece have to borrow money as pension funds drain public finances and this triggers fiscal and economic crises.”

For rich regions like Guangdong, the delays to the retirement ages could soothe discontent as their pension surpluses are transferred by Beijing to support the lives of many retirees in other regions, according to a Peking University public administration professor who declined to be named as they are not allowed to speak to the media.

“Beijing is robbing the rich and helping the poor with such pension fund surplus transfer, but it is not sustainable,” said the professor.

And for less affluent provinces, the delay to the retirement ages could buy some time to reform their pension systems, while they could also become less dependent on transfer payments from other regions, according to the professor.

“There must be no more dithering. Also, the central government, as well as central state-owned enterprises, should shoulder more responsibilities in growing the size of China’s pension funds by injecting more capital,” the professor added.

However, analysts also warned that delaying retirement alone was not enough to fill the funding gap, with a mix of supportive policies required to reform retirement and pension systems.

“In the long run, all the policy changes should be a strategy to make better use of China’s human capital,” Fudan University’s Ai said.

Meanwhile, the changes to the retirement ages have raised concerns that job opening at state-owned enterprises (SOEs) might be affected as employees will remain on the payroll for longer, reducing job mobility and vacancies.

SOEs, especially those owned by the central authorities, have traditionally been a magnet and key driver for job creation for fresh graduates and other job-hunters eyeing job security and better pension and social security coverage.

An all-time high of more than 60 per cent of fresh graduates in China, whose ranks rose to 11.79 million this year, said they would pick SOEs as their preferred employers, according to a survey published in August by Shanghai-based human resources service firm China International Intellectech Group.

Some leading conglomerates, including oil and gas firm Sinopec and the China Railway Construction Group, have in previous years heeded Beijing’s call to boost hiring, each signing up 17,000 new employees in 2023, according to the State-owned Assets Supervision and Administration Commission.

But it remains to be seen if the changes to retirement ages would impact new job opportunities, analysts said.

“The relationship between the old and young workers within an SOE can be complementary,” said Fudan University’s Ai.

“There is little direct competition between old and young workers for jobs as their expertise and skill structure are quite different.

“Young graduates face far greater competition from their peers than the impact from extending retirement ages.”

Li Xuenan, a finance professor with the Cheung Kong Graduate School of Business in Beijing, also questioned whether young people would be willing to take jobs vacated by retirees.

“Letting the elderly go early will free up some jobs, but it is not an effective way to help the young land jobs, especially at SOEs,” Li said.

“The jobs left open by the elderly may not necessarily be the jobs that young people are willing to do. Young people may be more suitable for jobs that require new skills or innovation.”

US tariffs on China to lend a hand to Malaysia’s glove makers

https://www.scmp.com/news/asia/southeast-asia/article/3278877/us-tariffs-china-lend-hand-malaysias-glove-makers?utm_source=rss_feed

Malaysia glove maker shares including Top Glove Corp. surged after the US was expected to finalise tariffs on Chinese goods this month.

Top Glove jumped as much as 32 per cent, the most ever, while Hartalega Holdings Bhd rallied by the 30 per cent limit. The gains come a day after Thailand peers spiked, as analysts point out that Southeast Asian producers will be the main beneficiaries. Malaysia’s market was closed for a holiday on Monday.

Tariffs on billions of dollars in Chinese goods, including medical products, are being finalised by President Joe Biden’s administration following a proposal to raise levies in May, an official said late last week. The new tariffs are higher and will be implemented more quickly than expected, according to Citigroup Inc.

US tariffs on Chinese medical gloves will rise to 50 per cent in 2025 and 100 per cent in 2026, Citi analysts wrote in a report. That’s up from a 25 per cent hike proposed in May, which was to take effect in 2026.

The tariffs are “poised to revitalise investors’ sentiment on the Malaysian glove sector,” Jack Goh, an analyst at UOB Kay Hian Pte., wrote in a report. “With the sector’s post-pandemic recovery eclipsing earnings amid demand moderation, domestic glove makers should progressively reclaim market share from China.”

The impending levy provides yet another fillip for Southeast Asian equities, which are already bolstered by growing bets the region will be a beneficiary from a Federal Reserve interest-rate pivot. Four of the five best-performing Asian stock benchmarks this month are from the region, with inflows in September poised for the highest level since April 2022.

Tuesday’s rally revives a popular trade from 2020 when glove makers became market darlings as governments globally rushed to procure surgical and latex gloves to slow the spread of Covid-19. At one point, more than US$1 of every US$10 invested in the Malaysian stock market was a bet on gloves.

Brokers are already taking note, with at least five sell-side analysts upgrading Top Glove this week, according to data compiled by Bloomberg. There were also several upgrades for Hartalega. Shares of Kossan Rubber Industries Bhd climbed as much as 26 per cent, while Supermax Corp. jumped 27 per cent.

“This tariff move removes the underutilisation of glove makers with a very high margin,” said Danny Wong, chief executive officer of Areca Capital Sdn. “Profits are coming back.”

How to take Taiwan: China’s state TV shows what a PLA attack could look like

https://www.scmp.com/news/china/military/article/3278827/how-take-taiwan-chinas-state-tv-shows-what-pla-attack-could-look?utm_source=rss_feed

A documentary broadcast on Chinese state television has revealed what an amphibious landing assault on Taiwan might look like, just as the People’s Liberation Army steps up its training for such a manoeuvre.

The latest episode of documentary series Quenching on Monday night included footage of exercises by PLA ground forces, navy and rocket brigade, as well as a full account of how a landing would be achieved.

Among the featured operations were a large-scale helicopter air assault by the Ground Force’s aviation unit, an aircraft carrier strike group’s anti-access electronic countermeasures, and a long-range rocket fire covering drill.

The 20-minute programme opened with a soldier expressing a nostalgic longing for a unified country and lamenting that the island of Taiwan and the mainland remain separated.

The programme then gave details of how reconnaissance and strike drones would be used to help the helicopters deliver landing troops to the island. Beijing regards Taiwan as part of its territory, to be brought under mainland control by force, if necessary.

The documentary showed the PLA dispatching high altitude surveillance drones at the start of the simulated operation while helicopters flew near sea level to get frogmen as close as possible to the shore of the targeted landing areas.

In the filmed exercise, the helicopters and landing troops meet resistance from enemy forces who attempt to hold them off with man-portable air defence missiles (MANPADS).

“As man-portable air defence weapons are widely used in battlefields, helicopters face significant threats [from being hit],” a PLA officer tells the viewers. “We must find new ways to win in real battles.”

Taiwan has bought 250 FIM-92 Stinger MANPADS missiles from the US, and earlier this month announced plans to procure 1,985 more.

Like most countries, the US does not recognise Taiwan as an independent state. However, Washington is opposed to any attempt to change the status quo by force and is the island’s largest arms supplier.

In the filmed exercise, the PLA can be seen deploying infrared decoys and engaging in avoidance manoeuvres, as well as firing missiles in a bid to take out the enemy’s air defences.

The helicopter air assault operation was conducted in an airfield with specially designed landing positions. However, in the footage shown on CCTV, images of buildings were blurred to hide the location.

The programme’s naval segment highlighted the sentinel role of China’s most advanced destroyer – the 12,000-tonne Type 055 – as an aircraft carrier group orchestrated an electronic warfare exercise.

The Yanan – identifiable from its hull number 106 – is a multifunctional guided-missile destroyer with air defence, anti-missile, anti-submarine and electronic warfare capabilities.

In the documentary, the Yanan detects electromagnetic interference signals and sends its ship-borne J-15 jet fighters to investigate. The J-15s identify two enemy electronic warfare aircraft and successfully expel them.

The programme did not specify when the training exercises occurred, but it was reported in July that the Yanan accompanied the Shandong aircraft carrier – along with two other warships – on an exercise in the Western Pacific Ocean, east of Taiwan.

Japan’s military photographed the Yanan during the July operation, as well as fighter planes and helicopters taking off and landing from the Shandong. At the same time, the US was leading the world’s biggest maritime military drill – the Rim of the Pacific (RIMPAC) exercise – near Hawaii.

The waters east of Taiwan form a key area for the PLA’s anti-access and area denial (A2/AD) tactics against possible intervention from the US and its allies in the event of a landing attack on the island.

The documentary showed a Ground Force brigade using “Long Fire”, the PLA’s most advanced PCL-191 long-range multiple launch rocket system (MLRS) capable of firing 370mm rockets 350km (217 miles) and 750mm ballistic missiles 500km (311 miles).

With the Taiwan Strait only 280km (174 miles) at its widest point, the rocket system would be able to strike the Taiwanese west coast from positions in Fujian, the coastal mainland province that faces the island.

The Taiwanese military is expected to receive its first batch of 11 M142 High-Mobility Artillery Rocket Systems and associated ammunition this year. The US-made MLRS, with a firing range of up to 300km, has played a significant role in the war in Ukraine.

The rocket brigade’s drill took place at night and involved enemy forces launching missiles and rockets against PLA bombers and warships – a likely scenario for the PLA’s amphibious landing forces in an island attack.

According to the documentary, as soon as the “long fire” brigade received orders to provide cover for the bombers and warships, it mobilised rapidly, launching its truck-mounted rockets into the night.

“When we are aiming at the enemy, they will be aiming at us. Winning is a matter of seconds,” a rocket operator said in the programme. “We won’t allow them any chance to strike back.”

Malaysian farmers cater to China’s sweet tooth by dialling down durian bitterness

https://www.scmp.com/news/asia/southeast-asia/article/3278806/malaysian-farmers-cater-chinas-sweet-tooth-dialling-down-durian-bitterness?utm_source=rss_feed

In Malaysia, the Musang King – a premium variety of durian famed for its rich, complex flavour – is facing a culinary crossroads.

Some farmers are experimenting with its taste, sweetening the fruit to appeal to the Chinese market, sparking a heated debate among durian purists who cherish the variety’s traditional flavour profile.

The Musang King is celebrated for its creamy, golden flesh with a distinctive balance of sweetness and bitterness, but industry insiders say certain growers have been trying to adjust its flavour.

Modifying the taste of durians is scientifically feasible yet complex, according to Dr Zulhazmi Sayuti from the Malaysian Agricultural Research and Development Institute’s Horticulture Research Centre.

While genetic modifications could potentially reduce bitterness, pinpointing the specific genes involved poses a significant challenge. “The feasibility has been shown in other crops; however, identifying the exact genes and ensuring other fruit traits are not compromised presents a challenge,” he said.

Farmers may be able to alter the fruit’s taste profile by controlling the genes responsible for glycosides, such as saponins, which contribute to the inherent bitterness of durians.

However, the horticultural specialist stressed the importance of regulatory and ethical considerations, emphasising that any genetic modifications must undergo rigorous testing.

“Malaysia maintains a strict genetically modified organism policy, ensuring safety while fostering scientific and biotechnological advancements,” he said.

Musang King durians are categorised based on the age of the trees in Malaysia. This distinction matters, as trees over the age of 20 typically produce fruit with a more pronounced bitterness.

Experimenting with flavour adjustments has raised concerns within the industry.

Anna Teo, general secretary of the Durian Manufacturer Association, lamented that many Musang King durians on the market today exhibit signs of “diluted colour and aroma”.

While flavour modifications are possible through techniques like fermentation and bruising, she said the focus should remain on maintaining the fruit’s quality rather than merely sweetening it.

Lawrence Ting Siew Haw, president of the Federation of Malaysian Fruit Farmers Association, noted that farmers enhance their durians using organic fertilisers.

“Since fruit cannot be factory-produced, farmers rely on organic methods to improve the durian flavours,” he said.

The unique taste of Malaysian durians, characterised by a balance of sweetness and slight bitterness, sets them apart from the sweeter varieties found in Thailand, Ting said – a distinction shaped by the country’s climate and soil. While Malaysians prefer this flavour profile, foreign consumers often have different tastes.

Lee Pit Kheong, president of the Pahang Agriculture and Ecotourism Association, said that first-time tasters from China frequently find the Musang King bitter, sometimes mistaking it for spoilage.

Stephen Chow, a seasoned durian orchard owner, emphasised that exporters tailor their selections to meet international sweetness preferences.

“Farmers know which trees are under 10 years old and which are the 20-year-old mature trees. If the market preference in different countries leans towards sweeter durians, then the durians with higher sweetness will be exported there,” he said.

“Changing the taste of durian depends on whether enough organic fertiliser is used.”

Chow said some of the current market demands for durian exports to China include the flesh being plump, and that the fruits should have five sides of flesh. But he reported no specific requests to reduce bitterness.

The Federal Agricultural Marketing Authority (Fama), which comes under the Agriculture and Food Security Ministry, has been facilitating Musang King’s market expansion ever since Malaysia began exporting frozen durian to China in 2011.

Malaysia received approval to export whole frozen durians in 2018, and starting last month, its fresh whole durians are being sold in China.

Fama director general Abdul Rashid Bahri said the Musang King has always been aimed at the upscale market segment. This has led more farmers to grow the variety because of its profitability, he said.

This article was first published by

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China-Philippine flights to get wings clipped amid low demand, geopolitics

https://www.scmp.com/economy/global-economy/article/3278736/china-philippine-flights-get-wings-clipped-amid-low-demand-geopolitics?utm_source=rss_feed

Weak demand linked to choke points in the Chinese economy has prompted airlines to plan cuts in their China-Philippine flights for the final three months of the year, according to analysts.

And they say geopolitical friction between the two Asian countries is also playing a role in deterring travel that would help airlines prosper.

AirAsia Philippines, China Southern Airlines and Qingdao Airlines have all indicated intentions to halt some of their flights in the fourth quarter, according to the industry data platform OAG Aviation.

Philippine-based Cebu Pacific’s president, Alexander Lao, said separately last month that his airline would not restore Beijing flights because air travel had fallen short of pre-pandemic demand, the media outlet Philstar Global reported. The airline had a Manila-Beijing route in 2019.

And OAG data indicates that AirAsia Philippines, an affiliate of Malaysia-based budget carrier AirAsia, will discontinue its 13 weekly Manila-Shenzhen flights from October, as well as the Beijing connection.

China’s economic growth is slowing due to a property market crisis, hesitant consumption and, as of August, a softening of industrial activity.

Travel outside mainland China last year reached just 60 per cent of its 2019 levels, with more than two-thirds of those trips to nearby Hong Kong, Macau or Taiwan, according to the Economist Intelligence Unit.

Andy Xie, an independent economist in Shanghai, said: “With the airline business there’s a cost issue – there’s a preference for domestic tourism in China. The cost of flying is quite high.”

The anticipated flight cutbacks also come as China and the Philippines struggle through a maritime sovereignty dispute. The dispute has chilled two-way travel, said OAG Asia head Mayur Patel.

And Xie noted that perceptions of personal safety risks abroad, including in the Philippines, further deter Chinese travellers. “It doesn’t make any sense now to do tourism in the Philippines,” he said.

Guangzhou-headquartered China Southern will stop its two weekly Manila-Nanning flights from October, Patel said, while China-based Qingdao Airlines will cut its 10 flights from Chengdu to Tagbilaran, a city on the Philippine tourism-intensive island of Bohol. The Bohol flights were added just this quarter.

Philippine media outlet GMA News Online quoted AirAsia Philippines CEO Ricardo Isla as saying that China’s 30 per cent share of its traffic in 2019 had fallen to just 2 per cent this year.

AirAsia from Malaysia still operates a long list of routes between China and other countries in the region.

“AirAsia as a group continues to add flights to China and has been one of the strongest foreign airline groups in China in terms of their post-pandemic recovery and size of operations,” said Brendan Sobie, founder of the Singapore-based consulting firm Sobie Aviation.

“But it makes no sense for AirAsia to serve China from the Philippines at this point, given the current China-Philippines environment.”

AirAsia, China Southern and Cebu Pacific did not immediately answer inquiries for this report.

But Xiamen Airlines, a Chinese carrier with a Xiamen-Manila route, said in a reply to the Post on Monday that it had “no way to forecast the long-term allocation or movement of flights”.

US charges employee of Chinese aerospace giant with hacking Nasa, US military

https://www.scmp.com/news/world/united-states-canada/article/3278795/us-charges-employee-chinese-aerospace-giant-hacking-nasa-us-military?utm_source=rss_feed

An employee of one of China’s most powerful state-owned defence contractors tried to hack Nasa, the US military and other targets, according to an indictment announced on Monday by the US Attorney in Atlanta, Georgia.

Song Wu, a Chinese national, attempted to obtain computer software and source code from the space agency, the Air Force, Army and Navy and the Federal Aviation Administration, according to a statement from the office of Ryan Buchanan, US Attorney for the Northern District of Georgia.

Song allegedly tried to hack individuals working at major research universities in Georgia and five other states as well as private-sector aerospace companies, according to the statement.

The United States is charging him with 14 counts of wire fraud and 14 counts of aggravated identity theft.

The statement identified Song as a 39-year-old who worked as an engineer for Aviation Industry Corporation of China, but did not indicate where he is based or if he has been arrested.

AVIC, a conglomerate that makes drones, stealth jets, fighter helicopters for the People’s Liberation Army, has been the subject of sanctions from the US government for its ties to the Chinese military. The group also produces commercial aircraft and owns stakes in companies in the US including Cirrus Aircraft Ltd, which went public earlier this year.

In April, the Justice Department announced the indictments of two Chinese nationals for allegedly conspiring to illegally export technology, including semiconductor-manufacturing equipment.

Aukus risks being just ‘a label’ if it fails to curb China’s regional ‘adventurism’

https://www.scmp.com/week-asia/politics/article/3278706/aukus-risks-being-just-label-if-it-fails-curb-chinas-regional-adventurism?utm_source=rss_feed

The three defence partners of Aukus must soon deliver on their goals to address what analysts say are common security concerns over China’s “adventurism in the region”, warning that the bloc risks being “nothing more than a label” if it fails to show its capabilities to deter Beijing.

Analysts say cooperation between Australia, the UK and the US in advanced technologies could soon bear fruit, including the pairing of crewed submarines with autonomous underwater vehicles and the use of quantum computing technologies.

The urgency to produce results would benefit researchers, start-ups as well as other enterprises involved in the defence pact, they add.

Nishank Motwani, a senior defence and security analyst at the Australian Strategic Policy Institute, said Aukus must focus on delivering on these goals promptly to show how the three allies could work together to address their collective security challenge over China.

Pointing out that the central purpose of Aukus was to deter Beijing from engaging in armed conflict, Motwani said credible deterrence was needed to “complicate China’s decision-making calculus to use force by making the risk of failure too high”.

“Given the stakes, it is imperative for Aukus to contribute to deterrence,” he said, adding that the grouping would otherwise “risk being nothing more than a label”.

Established in September 2021, Aukus comprises two pillars to push back against China’s growing power in the Asia-Pacific region.

The first pillar is aimed at providing nuclear-powered attack submarines to Australia and ensuring the rotational basing of such submarines from the UK and the US in Australia.

Pillar 2 focuses on sharing sensitive military expertise on cutting-edge innovations, ranging from quantum computing and artificial intelligence to hypersonic weapons.

The Australian media reported last Monday that the US was pushing for Aukus to launch leading military technology projects before Joe Biden’s presidency ends.

According to The Sydney Morning Herald, US National Security Adviser Jake Sullivan said in an interview at the White House that he wanted to see “two or three signature projects launched and under way by the time the administration finishes” on January 20.

As the development of the new nuclear-powered submarines was expected to take a decade, it was important for Aukus to gain wider political support and enhance its deterrence capabilities by advancing other projects, said Bruce Jones, a senior fellow in the Strobe Talbott Center on Security, Strategy and Technology at the Brookings Institution based in Washington.

Aukus is moving more quickly in three areas – having the support of US nuclear-powered attack submarines deployed at the Australian Navy base HMAS Stirling outside Perth in Western Australia, deploying Australian sailors on board US Virginia-class submarines and introducing advanced technology projects under the bloc’s Pillar 2.

These ongoing developments were important in communicating to China that the undersea capabilities of Aukus “still provide a powerful deterrent to potential Chinese adventurism in the region”, Jones said.

Of the five to six areas of potential cooperation in advanced technologies, Jones said one of two areas with good potential to be realised soon was the pairing of crewed submarines with autonomous underwater vehicles to strengthen the sensing and capabilities of such submarines.

“[The other area is] the use of quantum computing technologies to improve both the quality and security of remote positioning and guidance technologies,” he said.

Other areas of cooperation included satellite technology and the development of the world’s first fault-tolerant quantum computer with wide applications in advanced cryptography and communications, Motwani said.

Fault tolerance refers to the ability of an operating system to continue running despite malfunctions while quantum computing involves using physics in calculations to solve highly complex problems very quickly.

However, Motwani also pointed to the “persistent challenge” of navigating the regulatory environment and attracting private companies to collaborate across the three countries.

Aukus partners needed to come up with incentives to attract private sector innovation, smoothen the regulatory environment and enable workforce mobility to build their respective defence industrial bases, Motwani added.

Sophie Mayo, a foreign policy and defence researcher at the University of Sydney’s United States Studies Centre, said Sullivan’s remarks were good news for start-ups, enterprises and the broader research community involved under Pillar 2.

These entities were “under pressure” to justify their investments in advanced capabilities, she said, adding that Aukus was also working to protect critical supply chains by improving its cybersecurity.

Noting that Pillar 2 was created to boost the advanced capabilities of its partner nations, Mayo said partners had, for instance, enabled information sharing between their P-8 Maritime Patrol Aircraft sonobuoys. Such buoys are used in anti-submarine warfare or underwater acoustic research.

“Ultimately, ensuring Aukus Pillar 2 reaches its full potential is about bolstering deterrence to the greatest extent possible in the Indo-Pacific and beyond,” Mayo said.

In April, China’s foreign ministry said the advancement of Aukus “will inevitably escalate the risk of nuclear proliferation, exacerbate the arms race in the Asia-Pacific, and undermine regional peace and stability”.

Calling on Australia, the UK and the US to abandon the “Cold War mentality”, the ministry said the trio should “stop cobbling together exclusionary blocs, and cease stirring trouble and camp confrontation in the Asia-Pacific region”.

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Why the US-China tech war has put bugs in the academic system back in Beijing’s sights

https://www.scmp.com/news/china/politics/article/3278195/why-us-china-tech-war-has-put-bugs-academic-system-back-beijings-sights?utm_source=rss_feed

It was just four months ago, on May 17, when Sun Beicheng made headlines around the world as he led a team that successfully transplanted a genetically modified pig liver into a patient with liver cancer.

By July, Sun was making headlines again, but this time he was one of six researchers named and shamed in a rare move by the Ministry of Science and Technology (MOST) for misconduct in state-funded research programmes.

According to MOST, Sun, the former vice-president of Nanjing Drum Tower Hospital in the eastern province of Jiangsu, had contacted reviewers to lobby them to approve an application he had made for state funds in 2021.

Sun’s is just one case out of many, as Beijing turns “a new page” in academic integrity and intensifies crackdowns on misconduct by researchers, according to observers – all part of China’s push to beat the United States in their tech rivalry.

Sun’s resume is an impressive one. As well as leading the breakthrough in xenotransplantation with the pig liver surgery, he was named a Yangtze River Scholar Professor by the Ministry of Education, and was recognised as a Distinguished Young Scholar by the National Science Fund in 2012.

Despite his achievements, MOST has now banned him from taking part in state-funded research projects for seven years, after finding him in violation of a 2020 regulation that prohibits “inviting” or “asking for a favour” from panel members as they decide whether a research project deserves state funds. Sun’s application has also been denied.

The other five researchers named by MOST, including leaders of some key national labs and research programmes, were given bans of up to five years for either helping Sun to approach the reviewers or for failing to report his behaviour to the regulator.

MOST also reported four cases of plagiarism in content, methodology or “innovative ideas” presented in their research proposals while applying for state funds. These researchers were also named, banned from applying for state funds for three years and added to a growing integrity blacklist as MOST vows to take a “zero tolerance” approach to academic misconduct.

“There is a distinct ‘choking the chicken to scare the monkey’ feel to [MOST’s] announcement,” said Sourabh Gupta, a senior policy specialist with the Institute for China-America Studies in Washington.

“Just as China’s macro-development model is moving away from high-speed growth to higher-quality growth, so also, there is a burgeoning policy focus on transitioning from quantity to quality in research output. MOST’s announcement falls within this thinking.

“It’s an undisguised reminder that a new page in academic standards and research integrity has been turned – and that all would be better off staying within the lines rather than cutting corners to cheat the system for self-regarding gain.”

While academic misconduct has been a chronic and prevalent problem in China, this focus on projects seeking state funds suggests Beijing is doubling down in its pursuit for genuine breakthroughs in key technologies. And amid the sweeping anti-corruption drive in China’s military as well as the economic slowdown, the funds that are available for research projects need to be spent strategically.

It is no coincidence that the denunciation of the researchers came just one day after the ruling Communist Party concluded its third plenum, a key conclave setting the major economic policies for the next five to 10 years.

At the meeting, the top leadership decided to intensify efforts for breakthroughs in key technologies as “external suppression and containment are continuously escalating”. They also decided to improve the funding system to support basic research and “severely crack down on academic misconduct”.

The outcome of the third plenum reflects “a sense of urgency” from the top leadership to make real innovations, according to Zeng Liaoyuan, an associate professor at the University of Electronic Science and Technology of China.

Despite a decade of splashing cash, with massive amounts of state funding put towards Beijing’s tech ambitions, he said China was still being stifled by America’s export and investment curbs of chips and chip-making equipment.

Since 2014, Beijing has pumped nearly 690 billion yuan (US$97 billion) into the chip industry.

The China Integrated Circuit Industry Investment Fund – or “Big Fund” – has succeeded in getting some national champions off the ground, but it has also become a hotbed of corruption.

Meanwhile, China is still incapable of mass-producing advanced chips – such as 5nm and 3nm varieties crucial for artificial intelligence (AI) models and top-of-the-line smartphones.

“It shows a large amount of funds did not reach the right recipients,” Zeng said. “Approaching and lobbying appraisers often implies that the applicants do not qualify for state funds.”

State funds are lifelines for universities and research institutes. Access this money is widely regarded as a key measure of research strength, an institute’s reputation and a potential deciding factor for the career of university heads.

“So in many cases, lobbying reviewers is not an individual conduct. It’s a systemic problem, which could implicate employers of the researchers,” Zeng said.

The central government pledged to boost investment in science and technology by 10 per cent this year, amounting to 370.8 billion yuan (US$51.5 billion) of spending, according to the finance ministry. It marks a big jump from last year’s 2 per cent rise. However, researchers are still feeling the pinch amid the economic slowdown.

In the first half of this year, China’s fiscal revenue fell by 2.8 per cent from a year earlier, and its spending on science and technology was 1.4 per cent lower than the first six months of last year, according to the Ministry of Finance.

It has had to resort to ultra-long-term special treasury bonds, for terms of 20, 30 and 50 years, to finance key national programmes with a focus on science and technology projects. A combined 1 trillion yuan (US$140 billion) of such bonds are planned for 2024.

Meanwhile, it has become increasingly difficult this year to obtain funds from one major source – the military – according to several Chinese researchers who spoke under the condition of anonymity due to the sensitivity of the matter.

The People’s Liberation Army Rocket Force, which oversees China’s arsenal of nuclear and ballistic missiles, has been at the centre of an anti-corruption campaign targeting the military, with a number of senior officials under investigation since last year, including former defence minister Li Shangfu.

Li, who previously oversaw military procurement, was accused of accepting “large sums of money” to seek benefits for others and was accused of bribing others. He was abruptly dismissed in October after just seven months in the post.

In a ripple effect, this year the military has tightened grips over procurement. Last month alone, the PLA Rocket Force said Xian Jiaotong University and Xian Technological University, in Shaanxi province, and Southwest Jiaotong University in Chengdu, Sichuan, had been banned from taking part in its procurement process for three years. It alleged that the universities had colluded with competing bidders or those inviting bids to determine the winner of the bidding process.

As a result of the military’s moves, more programmes are now competing for state funds. Around 380,000 research programmes applied for 14 kinds of state funds this year, up 26 per cent from last year. Nearly 50,000 programmes were successful – just 13 per cent of the total – according to data provided by the National Natural Science Foundation of China.

Michael Frank, CEO and founder of business intelligence platform Seldon Strategies and former senior fellow in the Wadhwani Centre for AI and Advanced Technologies at the Centre for Strategic and International Studies (CSIS) said: “The systemic issues that contribute to academic misconduct in China are not necessarily unique. The pressure to publish, competition for limited funding and weak institutional oversight are challenges around the world.

“But what really sets China apart from other countries is the central role of the state in academia.

“Government funding and policy directors heavily influence research priorities and academic career advancement. That helps to explain why the government has to act decisively to stamp out misconduct. It has positioned itself as the lone arbiter of academic integrity.”

Measures such as increasing external checks, involving more independent institutions, introducing conflict-of-interest rules, and the spotlight of free media would be helpful to address the problem, he added.