Mistral点评

• China’s newest nuclear submarine sank in dock, US officials confirm
• Biden administration blocks ‘second China shock’ with tariffs, US ambassador says
• Donald Trump’s planned China tariffs would hurt US economy and job growth: study
• Hong Kong museum to showcase Olympic medals from local, mainland Chinese athletes
• US calls for ‘regular’ missile launch notification process after China’s ICBM test
• Huawei ‘will take over everything’, head of China Computer Federation warns
• China preps for protracted trade fight with Canada tariff probe
• PayPal courts cross-border merchants in Shenzhen with expanded services in China
• China’s ICBM test a sign PLA Rocket Force stands ready despite corruption scandals
• Contender to lead Chinese University of Hong Kong vows to protect academic freedoms
• Philippines refutes China’s arms race claim, says Typhon missile system for self-defence
• China and Ukraine mull top-tier talks but Zelensky still cool on Beijing’s peace plan
• China announces new measures to arrest housing slump and boost growth
• Peter Mandelson on why UK’s U-turn on China was a big ‘mistake’, what Labour will do next
• Indian steelmakers seek higher tariffs as ‘predatory’ Chinese imports surge
• Why Germany’s economic issues run just as deep as China’s
• China’s spy agency accuses New Zealand of ‘harassment, intimidation’ of Chinese citizens
• Amid China-EU tensions, former Finnish prime minister warns of societal harm from tariffs
• Wheatgrass stood on by US rapper Kayne West at China concert sells for US$43 post-event
• Fiat and Jeep owner Stellantis’ CEO follows Chinese route to avoid EV tariff ‘trap’
• China weighs injecting US$142 billion of capital into top banks
• To Lam tells Biden Vietnam a ‘friend’ as Hanoi seeks to balance US-China ties
• China’s FAST radio telescope set for major upgrade to keep its place as world leader
• China vows to save private economy, stabilise real estate market in Politburo meeting
• Who is Ye Ke? China model captures media attention as new partner of Angelababy’s ex
• China’s push for job creation takes centre stage after policy barrage with 24-point plan
• Why China’s women are talking back like never before
• ‘Show of force’: US deploys laser-equipped warship to Japan with eye on China war threat
• China’s mortgage cut still insufficient to move the needle, boost spending for homeowners
• China’s EV makers pull out all the stops to beat Tesla in autonomous driving race
• Quad makes it clear to China it’s much more than ‘sea foam’
• Beijing uses ‘divide and conquer’ tactic with Asean as South China Sea tensions heat up
• Strengthening US shipbuilding to counter China becomes a focus of lawmakers

China’s newest nuclear submarine sank in dock, US officials confirm

https://www.theguardian.com/world/2024/sep/26/china-nuclear-submarine-sinks

China’s efforts to achieve maritime military parity with the US have suffered a serious blow after its newest state-of-the-art nuclear submarine sank in a dock, American officials have confirmed.

The incident happened last May or June at the Wuchang shipyard near Wuhan – the same city where the Covid-19 pandemic is believed to have originated – and came to light, thanks to satellite imagery, despite efforts by the country’s communist authorities to stage a cover-up.

A US defence official told Reuters that the Zhou-class vessel – first of a new kind of Chinese submarines and distinctive for its X-shaped stern that aids manoeuvrability – is believed to have been next to a pier when it sank.

It is not known if there were any casualties – or if the submarine had any nuclear fuel onboard at the time, although experts have deemed that likely, according to the Wall Street Journal, which initially broke the story. The submarine was eventually salvaged but it is believed that it will take many months before it can be put to sea.

American officials say they have no indication that Chinese authorities have checked the water or nearby environment for radiation.

There has been no acknowledgment of the incident from the People’s Liberation Army (PLA), the official name for the Chinese armed forces.

The Journal reported that the first indication that something unusual had occurred came in the summer when Thomas Shugart, a senior fellow at the Center for a New American Security and a former US submarine officer, noted irregular activity of floating cranes – which he had seen on satellite images – on social media.

Shugart suggested that there may have been an accident involving a submarine but did not know that it was nuclear-powered.

“Can you imagine a US nuclear submarine sinking in San Diego and the government hushes it up and doesn’t tell anybody about it? I mean, holy cow!” Shugart said.

The unnamed US defence official told Reuters that the incident and the wall of silence shrouding it raised serious questions about the Chinese military’s competence and accountability.

“In addition to the obvious questions about training standards and equipment quality, the incident raises deeper questions about the PLA’s internal accountability and oversight of China’s defence industry – which has long been plagued by corruption,” he said. “It’s not surprising that the PLA navy would try to conceal.”

The Chinese embassy in Washington has not commented.

As of 2022, China had six nuclear-powered ballistic missile submarines, six nuclear-powered attack submarines and 48 diesel-powered attack submarines, according to a Pentagon report on China’s military. That submarine force is expected to grow to 65 by 2025 and 80 by 2035, the US defence department has said.

The Pentagon report said the goal of developing the new submarines, along with surface ships and naval aircraft, is to counteract US moves to come to Taiwan’s aid in a conflict and establish “maritime superiority” in a string of islands stretching from the Japanese archipelago to the South China Sea.

“The sinking of a new nuclear sub that was produced at a new yard will slow China’s plans to grow its nuclear submarine fleet,” Brent Sadler, a senior research fellow at the Heritage Foundation thinktank, told the Journal. “This is significant.”

Biden administration blocks ‘second China shock’ with tariffs, US ambassador says

https://www.scmp.com/news/china/diplomacy/article/3280116/biden-administration-blocks-second-china-shock-tariffs-us-ambassador-says?utm_source=rss_feed

America’s top envoy to Beijing said the US will not tolerate a “second China shock” and expressed support for a “global pushback” to surging capacity in China’s electric vehicle (EV) industry and other sectors.

Speaking via video link from Beijing on Thursday, US ambassador to China Nicholas Burns called on European allies to jointly address China’s overcapacity issues and support to Russia’s war against Ukraine. He also warned of more sanctions if Beijing did not cease supplies of dual-use goods to Moscow.

“I think that all of us around the world, in every single country, learned from the pandemic, don’t be reliant on a single source for critical materials,” he said at the Transatlantic Forum on GeoEconomics, organised by the Atlantic Council in New York.

“We saw President [Joe] Biden put 100 per cent tariffs on sales of EVs, Chinese EVs, into the US market. We do this because what the Chinese are engaged in is patently unfair under international trade, and we are not going to, in any way, tolerate a second China shock in the United States.”

Burns was referring to a sharp rise in Chinese imports in the 2000s as the first shock, which he said led to a loss of more than one million US manufacturing jobs.

The Biden administration has ramped up measures to counter Beijing’s push for more capacity in the country’s EV industry by raising tariffs on Chinese new energy products such as electric vehicles and solar panels to stop them from undercutting local manufacturers.

Burns also said it was “remarkable” to see more nations from Europe and Global South coming on board.

“It’s a global pushback, and it’s a message of all the government here.”

The European Union is currently locked in an EV dispute with China as the bloc has been taking a similar “de-risking” approach to cut economic overdependence on China. It has imposed provisional tariffs of up to 37.6 per cent on Chinese EVs since July while negotiating with both China and other member states on whether to make this permanent in November.

Some Global South nations including Turkey have also started enacting measures meant to address a sharp increase Chinese EV imports. In July, South Africa introduced a 10 per cent tariff on all imported solar panels, cells, and modules, most of which come from China.

Burns made his comments following a series of meetings that Chinese foreign minister Wang Yi has held with Western diplomats on the sidelines of the United Nations General Assembly this week, where he stressed the US and the EU’s “protectionism”are harmful for the global economy.

He also urged the US to have a “rational” understanding of China.

“Some people in the United States have never been able to view and accept China’s development objectively,” he was quoted as saying in a Chinese foreign ministry readout on Thursday, after meeting with American businessmen and academics.

“The US needs to realise that China also has the right to development. China’s development is an opportunity rather than a challenge for the US and the world,” he added.

While Burns described relations with China as “vital” for the future of both the US and Europe, he also stressed the geopolitical “risks” that China has created.

These include Beijing’s relations with Russia, where the envoy said there was “no indication that China’s going to back away from its ‘no-limits’ partnership with Russia”.

China’s strengthening ties with Russia since that war broke out in 2022 have been closely scrutinised by the West, particularly alleged sales of “dual-use goods” to Russia and inputs for military hardware.

Both the US and the EU have sanctioned dozens of Chinese companies accused of trading with Moscow, and Burns warned that more sanctions could be coming.

“Unfortunately, we’ve not seen a change in Chinese behaviour, and so they should expect it will continue in this punitive effort to make our voice clear that we’re not going to stand by as China significantly helps Russia strengthen its armaments potential, but also its defence industrial base,” Burns said.

Burns urged European nations to continue to “call out” problems for China for “hitching themselves to Russia” and the “reckless relationship” between Russia and North Korea that is not in the interest of Beijing.

He said the US “is determined to maintain our leading position with our allies as a security force” in the Indo Pacific, adding that he realised that Europe’s strategic thinking about the region is “in a way that it hadn’t before”.

Speaking at the same forum, former German foreign minister Sigmar Gabriel, said the US and Europe should “diversify markets and lock arms in setting global standards” in the face of challenges from China and its partners.

“Dependencies on energy sources and critical materials from state actors like Russia, China, Iran and North Korea could severely undermine our economies and societies.”

Donald Trump’s planned China tariffs would hurt US economy and job growth: study

https://www.scmp.com/news/china/article/3280118/donald-trumps-planned-china-tariffs-would-hurt-us-economy-and-job-growth-study?utm_source=rss_feed

Republican presidential nominee Donald Trump’s vows to usher in a “manufacturing renaissance” in America have intensified as he seeks to differentiate himself from Democratic hopeful US Vice-President Kamala Harris ahead of US election day.

Standing before a ‘Made-in-USA’ banner at a campaign rally in Savannah, Georgia, on Tuesday, the former US president pledged to snatch “other countries’ jobs” and slap hefty tariffs on foreign-made goods to shield American industries.

Trump has also promised throughout his White House bid a crackdown on “illegal aliens” and expanding the president’s say in decisions made by the US Federal Reserve.

But a working paper released on Thursday by the Peterson Institute for International Economics warned of dire effects for the American economy, the world’s largest, if Trump’s plans were to materialise.

In particular, weaker economic growth, higher inflation and job losses would ensue, according to the Washington-based think tank, with some impact expected to be felt through 2040.

As president, Trump imposed tariffs on more than US$300 billion worth of mainland imports, saying the move would cut America’s trade deficit with China while boosting US job growth. If re-elected, he has threatened to implement a 10 per cent blanket tax on all foreign goods and tariffs of up to 60 per cent on Chinese goods.

PIIE’s study analysed two combined scenarios to illustrate the potential outcomes if Trump were to implement several of his promised policies simultaneously.

In a “low” scenario, 1.3 million undocumented immigrants would be deported, tariffs would be implemented but other countries would refrain from retaliating against Trump administration tariffs and the Fed’s independence would be compromised.

In a “high” scenario, the same tariff increases would take place, but this time the countries would retaliate, 8.3 million workers would be deported and the Fed would be politicised.

“Both of these scenarios cause a large inflationary impulse and significant declines in US employment, particularly in durable manufacturing and agriculture,” the report stated.

The scenarios “differ mainly by the magnitude of damage inflicted on households, firms and the overall economy”, it added.

PIIE’s projections were measured as deviations from US baselines between 2025 to 2040 of an average annual real GDP growth of 1.9 per cent, annual employment growth being 1.5 per cent and annual inflation standing at 1.9 per cent.

According to the findings, by the end of Trump’s four-year term in 2028, the US real GDP – the total value of goods produced in a year – would shed 2.8 per cent relative to the baseline in the low scenario, with a 9.7 per cent contraction in the high scenario.

Even though the GDP would recover “a bit thereafter”, PIIE found, it would be expected to remain lower than the baseline through 2040.

Similarly, US employment would range between 2.7 and 9 per cent below the baseline by 2028 and would hover between 0.4 and 3.4 per cent lower than the baseline by 2040.

For American consumers, inflation by 2026 would surge between 4.1 percentage points in the low scenario and 7.4 in the high scenario relative to the baseline.

“By 2028, US consumer prices generally are between 20 and 28 per cent higher,” the report said, again referring to the low and high scenarios.

The study found that if China opted to retaliate, US GDP would fall by more than 0.2 per cent below the baseline by 2026 and inflation would rise by 0.6 percentage points in 2025.

And if other governments retaliated “in kind” against 10 per cent tariffs, inflation would increase by 1.3 percentage points above the baseline in 2025.

As a result of such a trade war, PIIE said, all major US trading partners, including Canada, Germany, Japan and Mexico, would witness lower GDP relative to their baselines through 2040.

Last year, Mexico overtook China to become the biggest exporter of goods to the US. The US imported a total of US$427.2 billion from China last year, down nearly 20 per cent from the year before, according to the US Bureau of Economic Analysis.

China is now the third-largest export market for the US, behind Canada and Mexico.

“You can argue with some of the assumptions, but you’re not going to change the signs,” said PIIE’s Marcus Noland of the report.

Although some observers might regard the tariffs as only a “bargaining mechanism”, he added, “the history of the United States is, once you put a tariff in place, it’s very hard to pull it back”.

In addition, “countries may be afraid to retaliate against the United States”, Noland continued. “Perhaps that’s true. Then just look at the [scenarios] where there’s no retaliation. It’s still bad.”

On Wednesday, meanwhile, Harris delivered a nearly 40-minute economic policy speech in Pittsburgh, Pennsylvania.

Harris declared herself “a capitalist” – a response to Trump’s charge that she is a “communist”– and promised a “pragmatic” approach to the economy centred on the American middle class.

“I promise you I will be pragmatic in my approach,” she said, adding she would “seek practical solutions to problems and realistic assessments of what is working and what is not”.

On Thursday, Adam Posen, PIIE’s president, noted the think tank had not yet been able to analyse Harris’s economic plans. Nevertheless, he described her campaign and the Trump campaign as having “made very clear explicit differences”.

“The Harris campaign is still talking about tariffs on China, tariffs on various goods from Mexico, but as stated, it will not put on a set of general, across-the-board tariffs,” said Posen. “The Trump campaign has said it will, if elected.”

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Hong Kong museum to showcase Olympic medals from local, mainland Chinese athletes

https://www.scmp.com/news/hong-kong/politics/article/3280105/hong-kong-museum-showcase-olympic-medals-local-mainland-chinese-athletes?utm_source=rss_feed

A new patriotic exhibition at the Hong Kong Museum of History will include medals won by local and mainland Chinese Olympians, as part of efforts to showcase the country’s achievements and foster a sense of national identity among residents.

The venue in Tsim Sha Tsui, alongside the Hong Kong Science Museum, will host the “Glorious Voyage: Splendid Achievements of the People’s Republic of China in its 75 Years” exhibition series.

The event has been organised to mark the 75th anniversary of the establishment of the People’s Republic of China on October 1, which falls on Tuesday of next week.

Speaking at Thursday’s opening ceremony, Deputy Chief Secretary Warner Cheuk Wing-hing said the exhibition could help residents learn more about the country’s various avenues of development.

“The exhibition can promote patriotic spirit to the public, ” he said, adding that it could help to bolster patriotic education.

Secretary for Culture, Sports and Tourism Kevin Yeung Yun-hung earlier said that some museums would offer free admission as different government bureaus and departments rolled up their sleeves to prepare for the October 1 anniversary.

The exhibition includes 16 displays and brings together more than 170 images showcasing the nation’s development and achievements.

Ng Chi-wo, head of the Chinese Culture Promotion Office, a body under the Leisure and Cultural Services Department, said the exhibition featured medals won by Hong Kong and mainland athletes during the Olympic and Paralympic Games.

“We hope to showcase athletes’ spirit of training with perseverance,” he said.

The awards on display at the Hong Kong Museum of History include Chinese diver Guo Jingjing’s gold medal from the women’s three-metre springboard at the 2008 Beijing Games and Siobhan Haughey’s silver medal from the women’s 100m freestyle at the Tokyo 2020 Olympics.

Other medals in the showcase include the gold won by windsurfer Lee Lai-shan during the 1996 Atlanta Olympics and runner So Wa-wai’s gold medal for the men’s 100m races at the 2000 Paralympic Games in Sydney.

The exhibition series comprises three main sections titled “Leapfrog Development”, “Scientific Breakthroughs” and the “Era of Intelligence”.

The exhibits cover topics such as the country’s sporting achievements, its breakthroughs in the artificial intelligence field, as well as national landmarks.

On the science front, visitors will be able to interact with robots that can play Chinese chess or a game of rock, paper, scissors.

Entry to the exhibition is free, with the event to run from Friday until early February of next year.

US calls for ‘regular’ missile launch notification process after China’s ICBM test

https://www.scmp.com/news/china/military/article/3280089/us-calls-regular-missile-launch-notification-process-after-chinas-icbm-test?utm_source=rss_feed

The United States and France have said they were given advance notification of China’s intercontinental ballistic missile test this week while other countries, including Japan, Australia and New Zealand, have asked for an explanation from China.

The US said the warning had helped to “avoid miscalculation” and was “step in the right direction”, but it wanted a more regular arrangement to give advance notice of future missile and space launches.

The People’s Liberation Army launch was China’s first known ICBM test in 44 years. On Thursday, China’s military released images of the missile but did not say what its trajectory had been or where it landed in the Pacific.

However, France has confirmed that it landed near French Polynesia’s exclusive economic zone.

French Polynesia President Moetai Brotherson told Agence France-Presse the missile “fell not far from … the Marquesas Islands” and that Beijing had notified the French authorities before the launch.

Pentagon deputy spokeswoman Sabrina Singh told a press briefing: “We did receive some advance notification of this ICBM test. And we believe that was a good thing. That was a step in the right direction and it does lead to preventing any misperception or miscalculation.”

Singh added the US had also pressed China for “a more regular bilateral notification arrangement when it comes to ballistic missile and space launches”.

“And this is something that we’ve proposed with the PRC [People’s Republic of China] and it represents a common sense, confidence-building measure. So we want to see these types of notifications,” she said.

China’s defence ministry said it had “informed the countries concerned in advance” while the ministry’s spokesman Zhang Xiaogang defended the test as “routine”.

“At present, there is a more stable momentum in the overall and defence relationship between China and the US,” he added.

“The two militaries maintain high-level strategic communication, policy communication, institutionalised dialogues and exchanges in specialised fields.

“These engagements could help enhance mutual understanding, avoid miscalculation, and manage and control risks.”

But the test, which involved a simulated warhead, also prompted concern from some countries in the Asia-Pacific region.

Japanese Foreign Minister Yoko Kamikawa told the Japan News: “We will promptly investigate and analyse the situation and continue vigilant monitoring.”

Japan’s chief cabinet secretary Yoshimasa Hayashi said the missile did not pass over Japan and that there were no reports of any damage, according to Kyodo News.

Australia also asked China for an explanation, telling Agence France-Presse: “Australia is concerned by any action that is destabilising and raises the risk of miscalculation in the region, and is consulting regional partners about this launch.”

New Zealand labelled the launch “an unwelcome and concerning development” and a significant worry for regional peace and stability.

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Huawei ‘will take over everything’, head of China Computer Federation warns

https://www.scmp.com/news/china/science/article/3280062/huawei-will-take-over-everything-head-china-computer-federation-warns?utm_source=rss_feed

Sun Ninghui, one of China’s leading computer scientists, has taken a rare swipe at Chinese technology giant Huawei, indicating an emerging rift between China’s academic community and its industry.

In a video clip posted on video-sharing service Bilibili on Sunday night, Sun criticised Huawei’s development model as too closed and monopolistic, saying the company’s control of the industrial chain would not help China to defeat the United States in their ongoing tech war.

“From chip manufacturing to software to large AI model to computing power network, it’s best for everyone else not to participate, and [Huawei] will take over everything,” he said, implying that Huawei dominated the technological chain in China.

“I think we are using this kind of Chinese-style closure and monopoly to fight Western-style monopoly and containment, which we certainly can’t win.”

It was not clear when or where Sun gave the speech.

Huawei did not respond immediately to a request for comment.

Sun is a researcher at the Chinese Academy of Sciences (CAS) and president of the China Computer Federation, the largest community of computer scientists in China.

He focuses on computer architecture and high-performance computing in his work at the High Performance Computer Research Centre at the Institute of Computing Technology at CAS. The research centre is behind the development of the country’s Shuguang series of supercomputers under the Chinese government’s 863 programme. He is also an academician at the Chinese Academy of Engineering.

In a lecture on AI and intelligent computing to China’s top legislative body in April, he suggested that China should reduce dependence on US technology by coming up with its own innovations and diversifying its supply chains.

Sun’s concerns were echoed by an industry computer expert who asked not to be named. The expert said he believed the overwhelming dominance of one tech company was not conducive to building a healthy innovation ecosystem, citing Samsung’s absolute dominance of the industry in South Korea, which he said had stifled the country’s technological progress.

The expert said he was aware Huawei tended to have more advantages and preferential treatment than other bidders in competing for many government orders.

But a founder of a Chinese venture capital firm that focuses on investments in hi-tech start-ups, who also spoke on condition of anonymity, said the problem was not as serious as Sun portrayed it.

The investor said China’s most urgent priority would be to innovate at the most acute choke points, a move requiring a few large companies with the ability to pool resources.

Once the breakthroughs were made, he said, it would not be too late to address issues such as resource monopolies and market share by the giants.

Others – including Xiang Ligang, a tech analyst and founder of Beijing-based telecoms information portal CCTime.com – suggest that Sun’s open criticism of Huawei is because of a conflict of interest.

In a video released on Monday on Douyin, the Chinese sister app of TikTok, Xiang said some scientists, represented by Sun, were “very depressed” and had “grievances against successful companies like Huawei” after the supercomputers they developed stopped taking part in world rankings. The video has since been deleted.

This was a “big blow” to scientists such as Sun, who had no way of proving the strength of their machines, said Xiang, who described these supercomputing systems as “incapable or weak” in terms of practical use and commercial value.

Xiang said that while concentrating the industry chain in one company was an inefficient strategy, Huawei might have to adopt it because it was being “choked” by others.

The US sanctions and China’s worsening relationship with the US in recent years have seen domestic supercomputing research institutions stop submitting data to the Top500 list, including information on supercomputing development and performance.

The South China Morning Post reported in June 2019 that even though China’s latest Shuguang supercomputers ran more than 50 per cent faster than the best US machines then, Chinese policymakers decided to withhold them from taking part in the latest supercomputing competition that year because China did not want to fan the flames of trade tensions.

Also in 2019, Huawei said it would invest an additional US$1.5 billion in incentives to expand its developer base from 1.3 million to 5 million to come up with the next generation of intelligent applications and solutions.

This month, some US industry analysts anticipate that Huawei will unveil a groundbreaking artificial intelligence semiconductor that could be capable of rivalling high-end chips that American tech giants such as Nvidia are prohibited from selling to China.

China preps for protracted trade fight with Canada tariff probe

https://www.scmp.com/economy/global-economy/article/3280067/china-preps-protracted-trade-fight-canada-tariff-probe?utm_source=rss_feed

Following a World Trade Organization complaint earlier this month, China has formally launched an investigation into what it has termed a “discriminatory” increase in tariffs from Canada against its electric vehicles (EVs), steel and aluminium.

In an official notice on Thursday, the Ministry of Commerce said it would be examining the North American country’s 100 per cent tariffs on Chinese EVs, its 25 per cent tariffs on steel and aluminium, and the exclusion of Chinese products from government incentives and subsidies.

“The process could involve written surveys, hearings and on-the-ground or delegated investigations,” the ministry said. “The investigation period is usually three months, and could be extended under special circumstances.”

While not specifying what actions could be taken after the investigation concludes, the ministry said Canada could request an intergovernmental negotiation within 30 days of its announcement.

This investigation is the first action of its kind to use “anti-discrimination”, as laid out by Chinese trade law, as its legal basis.

Under Article 7 of the country’s foreign trade law, countermeasures can be taken against “any country or region” as a response to “prohibitive, restrictive or other measures” applied on a “discriminatory basis”.

China has only begun such an investigation on Canada, though the US and European Union have also levelled accusations of overcapacity and unfair competition in the EV industry, putting their own tariffs in place earlier than the US’ northern neighbour. With the EU tariffs set to enter into force as soon as October, talks between the bloc and China are ongoing.

On August 26, Canada announced it would impose a 100 per cent import tariff on EVs manufactured in China. Unlike the vehicle tariffs, Canada’s new taxes on Chinese steel and aluminium have not been finalised. If Canada decides to impose the 25 per cent tariff, it would be announced on October 1 and enter into force two weeks later.

After lodging “stern” opposition to Canada’s decision, China revealed its planned response on September 6, divulging its investigation and filing a case at the WTO.

In an indication the dispute will continue to escalate, the Canadian Ministry of Finance started a 30-day public consultation period on September 10 over additional taxes on Chinese imports, including essential minerals, batteries, solar products and semiconductors.

PayPal courts cross-border merchants in Shenzhen with expanded services in China

https://www.scmp.com/tech/big-tech/article/3280090/paypal-courts-cross-border-merchants-shenzhen-expanded-services-china?utm_source=rss_feed

US digital payments platform PayPal is stepping up efforts to support Chinese cross-border merchants with the launch of new services in Shenzhen, tapping into booming exports from the country despite economic headwinds.

PayPal’s China business recorded double-digit growth in the past year, Hannah Qiu, senior vice-president and China CEO of PayPal, said at a company event in the country’s southern tech hub on Thursday.

“This is impressive growth considering the pressure and challenges facing the global and Chinese economy,” Qiu said.

The San Jose, California-based company launched PayPal Complete Payments for China on Thursday, with the aim of helping merchants sell abroad by allowing them to accept payments from global customers using credit cards and foreign digital wallets.

While PayPal has long supported cross-border payments, the new service is meant to broaden support for a variety of newer platforms such as Apple Pay and Google Pay while providing additional services such as risk management. PayPal Complete Payments is currently available in more than 30 markets, including the US and multiple European countries.

PayPal’s China expansion comes as it tries to find new growth opportunities in the country’s booming export market amid rising cross-border e-commerce, despite uncertainties in the global macroeconomic environment.

China’s exports grew at their fastest pace in 17 months in August, rising 8.7 per cent from a year earlier to US$308.65 billion in August, according to data released by China’s General Administration of Customs. The pace was faster than the 7 per cent seen in July. China’s total exports in the first eight months of 2024 reached US$2.31 trillion, up 4.5 per cent year on year.

However, Chinese exporters are facing new geopolitical uncertainties in some of their largest markets, especially the US and Europe. The EU has already levied provisional tariffs on China-made electric vehicles, while the US and Canada are making similar moves against imports from China.

Earlier this month, Washington announced new measures – aimed largely at Chinese e-commerce platforms like Temu and Shein – to reduce the range of low-value imports eligible for duty and tax exemptions.

“Till today, the US has been the biggest and most important market for our Chinese clients venturing abroad, but we are increasingly seeing more diverse choices as Chinese merchants are also looking at markets in the European Union, Middle East and Latin America,” Qiu said at the event.

“There has [been] and will always be headwinds and challenges,” she said, “but I firmly believe that Chinese merchants and the cross-border industry will continue to grow.”

China’s ICBM test a sign PLA Rocket Force stands ready despite corruption scandals

https://www.scmp.com/news/china/military/article/3280097/chinas-icbm-test-sign-pla-rocket-force-stands-ready-despite-corruption-scandals?utm_source=rss_feed

China’s intercontinental ballistic missile (ICBM) test shows its missile capabilities and the combat readiness of its rocket force despite a recent corruption scandal, according to analysts.

On Wednesday, China’s defence ministry said the People’s Liberation Army Rocket Force conducted a missile test with an ICBM carrying a dummy warhead, which flew over the Pacific Ocean – the first reported launch by Beijing in 44 years.

Beijing has not disclosed the trajectory and target of the missile, but based on navigational warnings and a Notice to Airmen, the ICBM was fired from the southern island province of Hainan and flew around 12,000km (7,456 miles) towards the southern Pacific Ocean, passing near the northern Philippines and Guam.

The missile fell near French Polynesia’s exclusive economic zone near the Marquesas Islands, according to Agence France-Presse, citing French Polynesian President Moetai Brotherson.

The missile launch comes a week before National Day on October 1, when the People’s Republic of China will celebrate its 75th anniversary.

An ICBM typically has a range greater than 5,500km and is designed to carry nuclear warheads. China has three types of ICBM in its nuclear stockpile: the DF-5, DF-31 and DF-41. All of them are capable of striking the US mainland.

Although the type of ICBM launched on Wednesday is unknown, analysts suggest that based on the photos of the missile launch released by the Chinese military on Thursday, the projectile was a variant of the DF-31, which has an operational range of up to 13,200km.

Defence ministry spokesman Senior Colonel Zhang Xiaogang said on Thursday that the launch was “routine” and was aimed at testing the equipment and the “level of training” of the troops.

The test came at a delicate time for the rocket force, the PLA division that oversees China’s missiles and nuclear arsenal. The division took a hard hit in the latest round of a military anti-corruption campaign that began in 2023. At least eight former or serving rocket force officials have been sacked in anti-corruption investigations.

Neither the force’s commander, Wang Houbin, nor its political commissar, Xu Xisheng, had any experience in the rocket or missile division before they took the helm in July of last year – an obvious sign of distrust in the rocket force’s previous leadership.

Observers say the test might have been aimed at restoring the rocket force’s credibility following the corruption scandals.

“[President Xi Jinping] and other Chinese leaders may be concerned, after reports of widespread corruption in the rocket force, that a full-range test was necessary to demonstrate the capability of China’s deterrent,” said Jeffrey Lewis, director of the East Asia non-proliferation programme at the James Martin Centre for Non-proliferation Studies at the Middlebury Institute of International Studies at Monterey.

“They may also harbour doubts themselves about the rocket force,” he said.

Timothy Heath, senior international defence researcher at the Rand Corporation, a US think tank, said the tests might be aimed at addressing concerns following reports that cast doubt on the division’s missiles.

“The PLA Rocket Force may have wanted to do the test to restore its credibility in the eyes of the leadership,” he said.

“The missile test was an important opportunity for the [rocket force] leadership to redeem itself after the scandals. No doubt the [rocket force] leadership did everything in their power to ensure the missile test succeeded.”

Shao Yongling, a mainland military commentator, also pointed to the need to prove the credibility of China’s nuclear deterrence.

“This time, we launched the missile from land towards the high seas, whereas in previous tests, the launches were from land to land. If the distance doesn’t meet the missile’s full operational range, we have to use a high-trajectory flight,” Shao told Zhongguo Junhao, a PLA-run social media account.

“However, this time, because the distance was greater, we were able to follow a normal trajectory. So we can say that this launch is the closest to the missile’s actual combat conditions.”

She added that it showed that China’s nuclear deterrence was “both reliable and credible” amid a “complex international environment”.

Beijing’s ICBM test came as Washington and its allies have strengthened their military coordination in the Indo-Pacific region.

According to an Associated Press report on Wednesday, citing two anonymous Philippine officials, American and Philippine security officials have agreed to keep a US mid-range missile system in the northern Philippines indefinitely.

In April, the US Army deployed its Typhon missile system in the northern Philippines as part of joint exercises with Philippine troops. The system can launch the Standard Missile-6 and the Tomahawk Land Attack Missile – both capable of striking mainland China.

Washington has also been promoting the expansion of Aukus, the defence technology-sharing initiative launched by the US, Britain and Australia. Other US allies are likely to join the pact’s “second pillar”, which focuses on cutting-edge technology such as hypersonic missiles.

In an undisclosed location in May, France carried out its first test firing of an updated nuclear-capable missile designed to be launched by a Rafale fighter jet.

Earlier this month, Russia reportedly suffered a failure in a test of its Sarmat missile – an ICBM considered to be part of the modernisation of Moscow’s nuclear arsenal. Satellite imagery of the launch silo at the Plesetsk Cosmodrome in northern Russia revealed a crater about 60 metres (197 feet) across, suggesting extensive damage.

In February, British newspaper The Sun reported that Britain’s submarine-launched Trident 2 ballistic missile crashed near the Florida coast during a test, marking the second successive failure in Trident missile trials.

According to a Pentagon report on China’s military published in October of last year, the PLA Rocket Force has “doubled and continues to grow the number of launchers at most ICBM units”. It estimated there were around 350 Chinese ICBMs as of 2022.

Contender to lead Chinese University of Hong Kong vows to protect academic freedoms

https://www.scmp.com/news/hong-kong/education/article/3280101/contender-lead-chinese-university-hong-kong-vows-protect-academic-freedoms?utm_source=rss_feed

A top scientist named as the sole candidate to lead the Chinese University of Hong Kong (CUHK) has pledged to defend the varsity’s academic freedoms amid concerns from students and staff arising from the city’s national security legislation.

Molecular geneticist Professor Dennis Lo Yuk-ming also expressed a wish for the institution to focus more on the field of artificial intelligence (AI), as well as guide students hoping to launch start-ups.

Lo met with students, staff and alumni on Thursday to lay out his vision for the university if he secures the top job, a day before its governing council holds a special meeting to consider his appointment.

The academic was the only candidate recommended by the university’s search committee to become the new head of the institution.

Lo’s engagement sessions were held at CUHK’s Sha Tin campus and covered topics such as academic freedom, communication between management and staff, students and the government, as well as talent recruitment and retention.

Each session lasted about 1½ hours. More than 30 questions were asked at the one for students, while the event for staff appeared more lukewarm and ended 15 minutes earlier.

Lo, best known for his invention of non-invasive prenatal testing, which has been adopted globally, said he hoped to expand the university’s focus on AI and teach students more about intellectual property rights and entrepreneurial skills.

“If I become the president, students’ knowledge of how to protect intellectual property will need to be enhanced,” he said. “Alongside patent rights, we also hope to teach them some skills on how to open start-up companies.”

He also pointed to the success of some university academics and alumni as entrepreneurs, such as those behind the AI company SenseTime.

Lo, currently the associate dean of the university’s medical school, was repeatedly asked by students what he would do to protect academic freedom amid concerns that restrictions had tightened in recent years.

“Academic freedom is something holy to a university,” he said. “On the premise of complying with the law, we will definitely safeguard academic freedom. You can count on me to defend this.”

Lo also expressed confidence that ordinary academic research would not fall foul of the law.

“For normal academic discussion, I believe the chance of touching legal red lines is low,” he said.

US-based advocacy group Human Rights Watch published a report on Tuesday warning of a “severe decline in academic freedom and the rights to freedom of expression, association and peaceful assembly” at the city’s eight publicly funded universities since the national security law was enacted in 2020.

Last year, history scholar Rowena He Xiaoqing, whose research included the history of the 1989 Tiananmen crackdown, was sacked by CUHK after her visa extension request was denied by immigration authorities.

Earlier this month, veteran journalist Allan Au Ka-lun also took a break from his role as a consultant at the university’s journalism and communication school, after four of his articles published on a now-defunct online news service were ruled seditious by a court.

A student at Thursday’s session with Lo asked: “What measures would you take to protect students from external political pressure and intervention?”

The academic replied that he attached great importance to the university’s college system and academic freedom, but stopped short of elaborating.

He also declined to comment on individual cases when the students mentioned the incidents involving He and Au.

Lo also discussed his views on recruiting and retaining talent, calling for a more “proactive” and long-term approach when it came to keeping staff.

“When we nurture talent, perhaps we need to be more visionary, and plan the career development in the next five to 10 years for some people,” he said.

He also pledged to communicate more with students and staff, as well as with lawmakers and the government.

He pointed to Kenneth Chen Wei-on, a former Legislative Council secretary general, selection as a vice-president, with Lo saying he hoped to draw on Chen’s experience to “reset and redevelop relationships”.

Lo also noted that the development of CUHK Medical Centre, a private hospital in Sha Tin affiliated with the institution, would be one of his top priorities.

The hospital revealed in March that it had lost HK$734 million in the past financial year, about 30 per cent more than initially estimated, under a renegotiation plan for the HK$4 billion government loan.

Cynthia Chan, a fourth-year journalism and communication student, said that Lo gave general responses during his session with students.

“I have reservations about Lo’s views on developments for humanities and social science. I hope to observe him further,” she said.

Benson Chan, an IT service employee at the university who attended another session, said Lo was the ideal candidate for the top job.

“Lo was friendly and showed clear thinking,” he said. “I hope he can help CUHK achieve more … in terms of academic development.”

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Philippines refutes China’s arms race claim, says Typhon missile system for self-defence

https://www.scmp.com/week-asia/politics/article/3280091/philippines-refutes-chinas-arms-race-claim-says-typhon-missile-system-self-defence?utm_source=rss_feed

The Philippines has refuted China’s claims of an arms race between the two nations following reports that the Southeast Asian country will continue to host an advanced US missile system amid the territorial dispute between the two neighbours.

The comments by Philippine Defence Chief Gilberto Teodoro Jnr on the Typhon missile system were echoed by analysts, who say there is a huge imbalance in the defence capabilities of the two countries while the Philippines also lag behind its other neighbours in defence technology.

Speaking on the sidelines of the 5th Asian Defence and Security Exhibition in Pasay City on Wednesday, Teodoro criticised Beijing’s interference in Manila’s internal affairs over the Typhon’s deployment.

“That’s what China is saying but they are the ones that made the first move. For us, we are only defending our country. If they say that there is an arms race, they are the bigger country, they should be an example,” Teodoro told reporters.

“It seems to me that before other countries interfere [with] the creation of our credible defence posture, they should first stop their illegal activities, get out of the West Philippine Sea, take away their ballistic capabilities, destroy their nuclear arsenal before they interfere with us creating credible deterrence,” said Teodoro, who was referring to Manila’s name for a part of the South China Sea that included its exclusive economic zone.

China has expressed its concerns over the Typhon’s deployment in recent months and called for the system’s withdrawal from the Philippines.

On Wednesday, China’s embassy in Manila accused Washington of fuelling an arms race.

“The deployment is a move to turn back the wheel of history. It gravely threatens regional countries’ security, incites geopolitical confrontation, and has aroused high vigilance and concerns of countries in the region,” the embassy said, according to a Reuters report.

In July, Chinese Foreign Minister Wang Yi told Philippine Foreign Secretary Enrique Manalo at their meeting in Vientiane, Laos, that the Typhon’s presence in the Philippines could destabilise the region. Manalo assured Wang that Manila was not undertaking any process to affect regional peace.

Teodoro said China was using “reverse psychology” to deter the Philippines from building its defensive capabilities, but the country would persevere in modernising its military.

“Why don’t they lead by example? Don’t throw stones when you live in a glass house, and that goes for other countries that are worried about our defensive capability enhancement,” he said.

Chester Cabalza, president of the Manila-based International Development and Security Cooperation think tank, told This Week in Asia that the Philippines was aiming to achieve interoperability with its allies and partners with the Typhon and other systems.

“Manila is not engaged in an arms race since it is still catching up with its neighbours. Arms race can [only] be construed if the competitor has the same defence and technological edge as the other party,” Cabalza said.

The Typhon can strike targets over 2,500km away from the Philippines, placing critical areas like the South China Sea and the Taiwan Strait within the system’s reach.

In April, the US Army deployed the Typhon in Northern Luzon during a joint training exercise. The system remains stationed there to allow Philippine troops to familiarise themselves with its operations.

While Manila mentioned in July that the system could be withdrawn as early as September, media reports this week said the US has no immediate plans to remove it.

Sherwin Ona, a political-science professor at De La Salle University in Manila, agreed that the Philippines was not engaged in an arms race. “Our current modernisation programme is mainly to restore our lost military capabilities, especially for the navy and air force,” Ona told This Week in Asia.

“For the navy, we are just replacing our World War II-era ships, which we decommissioned three years ago while our air force can barely cover our air defence requirements. This is because of the Philippine military’s previous focus on internal security,” said Ona. As such, Teodoro’s comments underscored the urgent need for the country to accelerate its military modernisation programme, Ona added.

Sylwia Monika Gorska, a political analyst and a PhD holder in international relations at the University of Central Lancashire, said while the Philippines was not involved in an arms race, its increasing reliance on the US for its systems such as the Typhon could lead to further militarisation of disputed areas by China.

“While some might see this as essential for national security, others worry that it puts the country at greater risk of getting caught in a conflict between the US and China,” Gorska said.

Chris Gardiner, CEO of the Institute for Regional Security in Canberra, noted the Typhon and joint military exercises between Philippine and US troops have contributed to tensions between Manila and Beijing. Nonetheless, Manila’s deterrence strategies were “wise and timely”, he added.

“Further strengthening of its own military needs to occur and quickly, along with further operationalising of collective defence with its allies and friends,” Gardiner told This Week in Asia.

Speaking at a doorstop interview on the sidelines of the same event attended by Teodoro, Philippine military chief General Romeo Brawner Jnr said Manila would need more vessels to secure its territories against China.

“We need ships so that we have an effective presence in the West Philippine Sea because the name of the game is presence. Whoever is there in the West Philippine Sea, they control the area,” Brawner said.

On the Typhon, Brawner said the system should be a permanent asset of the Philippine military as it could boost the country’s defence capabilities.

“We need to strengthen our defence, and it is the Philippines’ interest to deter any intentions of any country which may seek to violate our sovereignty,” Brawner said.

China and Ukraine mull top-tier talks but Zelensky still cool on Beijing’s peace plan

https://www.scmp.com/news/china/diplomacy/article/3280098/china-and-ukraine-mull-top-tier-talks-zelensky-still-cool-beijings-peace-plan?utm_source=rss_feed

The foreign ministers of China and Ukraine discussed the possibility of “highest-level” talks between their two countries, just hours after Ukrainian President Volodymyr Zelensky again dismissed Beijing’s peace proposal.

On the sidelines of the United Nations General Assembly meeting in New York, Ukrainian Foreign Minister Andrii Sybiha said on Thursday that he and his Chinese counterpart Wang Yi discussed “the perspective of further contacts at the highest level”, indicating the potential for talks between Chinese President Xi Jinping and Zelensky.

While Xi has met Russian leader Vladimir Putin many times in the past two years, he has yet to speak to the Ukrainian president in person.

“[We] thanked China for supporting Ukraine’s sovereignty and territorial integrity. [We] focused on next steps to develop bilateral relations and trade [with China],” Sybiha said in a post on X.

According to the Chinese foreign ministry, Wang spelled out Beijing’s positions on the Ukraine war, saying it “advocates for a political solution through dialogue” and “is concerned about the humanitarian situation in Ukraine”.

“We are ready to maintain communication with all parties, including Ukraine, and to continue to do what China believes to be the right thing to achieve peace soon,” Wang said.

“China has always been concerned about the humanitarian situation in Ukraine, has provided four batches of humanitarian assistance to Ukraine, and is willing to provide new help in accordance with the needs of the Ukrainian side.”

The ministry said Sybiha, along with Andriy Yermak – the head of Zelensky’s office – vowed to strengthen Kyiv’s partnership with Beijing.

“Ukraine attaches great importance to China’s position on the Ukrainian crisis and its efforts for peace, and appreciates the fact that China has always advocated respect for the sovereignty and territorial integrity of Ukraine,” Sybiha was quoted as saying.

It was the first meeting between Sybiha and Wang since he became the new foreign minister earlier this month. His predecessor, Dmytro Kuleba, met Wang in Guangzhou in July, his first trip to China since the war, but did not meet Xi.

Sybiha visited Beijing in June as Ukraine’s first deputy foreign minister for talks with his counterpart Sun Weidong. That trip came days after Zelensky accused Beijing of “disrupting” a Ukraine peace summit in Switzerland.

Zelensky took aim at Beijing’s peace efforts again on Wednesday, telling the UN General Assembly that China’s proposal, which is also sponsored by Brazil, did not fully promise to restore Ukraine’s territory.

“Everyone must understand – you won’t boost your power at Ukraine’s expense,” he said.

“The world has already been through colonial wars and conspiracies of great powers at the expense of those who are smaller. Every country – including China, Brazil, European nations, African nations, Middle East – all understand why this must remain in the past.”

Brazil and China are scheduled to discuss the plan for Ukraine at a conference on Friday with representatives from nearly 20 Global South nations. Representatives from the United States and the European Union have not been invited.

The West has been wary of China’s offers to act as a peacemaker, with various countries accusing Beijing of supplying Moscow with dual-use goods that can be used for military purposes.

The US and the EU have imposed sanctions on dozens of Chinese companies accused of trading with Russia.

At a UN Security Council meeting on Ukraine on Tuesday, US Secretary of State Antony Blinken said China was a “top provider of machine tools, microelectronics and other items” that empower Russia’s defence base.

On the same day that he held talks with Sybiha, Wang also met his Russian counterpart Sergey Lavrov.

On October 3, China and Russia will mark the 75th anniversary of the start of diplomatic relations between Beijing and Moscow, which was then part of the Soviet Union.

Wang said China would “work with Russia to continuously enrich the content of China-Russia comprehensive strategic cooperation and seek more benefits for the people of the two countries”, according to the Chinese foreign ministry.

The Chinese ministry’s statement made little reference to the Ukraine war but a Russian statement on the meeting said the two ministers discussed Western sanctions, saying they were an “illegitimate” and “unacceptable” “circumvention of UN Security Council resolutions”.

Lavrov and Wang also expressed support for the international platforms led by Moscow and Beijing, including Brics, the Shanghai Cooperation Organisation, and other multilateral platforms such as Apec and the G20. Russia will host this year’s Brics summit in Kazan next month.

China announces new measures to arrest housing slump and boost growth

https://www.theguardian.com/world/2024/sep/26/china-new-measures-housing-slump-growth

Chinese leaders have vowed to arrest a slump in the housing market and boost growth after conceding that measures by the central bank to stimulate investment this week were likely to prove inadequate.

Promising to deploy “necessary spending” by the state to meet this year’s economic growth target of 5%, China’s politburo said it would increase benefits for the poorest and give local authorities the cash and power to intervene to prevent further falls in house price values.

Households with two or more children will be offered 800 yuan (£85) a month per child, excluding the first child, Reuters reported. Local authorities will have the backing of up to £213bn in extra borrowing by the state, allowing them to intervene in real estate markets, including buying empty properties.

China’s economic growth had been supported by a surge in residential housing developments and rising property values that underpinned consumer spending. An oversupply of homes in recent years has caused prices to tumble in many cities, pushing households into negative equity.

Some of the biggest property developers in the world’s second-largest economy have either gone bust or been weighed down by huge debts.

The planned intervention, which came after a monthly meeting of top Communist party officials, marks a reversal of previous piecemeal policies and an admission by China’s president, Xi Jinping, that the ailing economy needed a more coordinated programme of measures backed by a larger package of subsidies.

“New situations and problems” demanded a sense of “responsibility and urgency”, state media reported, citing the politburo meeting.

A wide range of economic data in recent months has fallen short of official forecasts, raising concerns that the growth target was at risk and that a reliance on a combination of rising domestic property values and exports was holding back growth. The 5% growth target is relatively modest by historical standards.

China’s central bank cut interest rates and eased local bank lending rules this week in its boldest intervention to boost the economy since the pandemic.

The People’s Bank of China cut interest rates on existing mortgages by 0.5 percentage points and supported new lending by reducing the level of reserves banks must set aside before making loans.

After the politburo announcement, Chinese property shares jumped by more than 8% and for companies registered in Hong Kong, their values jumped by 9%. The yuan and Chinese bond yields also rose.

The politburo said the government should “promote the stabilisation of the real estate market” by expanding a list of approved housing projects that could receive further financing and revitalise idle land, according to official news agency reports.

Officials “will respond to people’s concerns, adjust home purchase restriction policies, lower existing mortgage rates and improve land, fiscal, tax and financial policies as soon as possible to push forward the new model of property development”, it said.

Bruce Pang, the chief China economist at Jones Lang LaSalle, said the politburo’s endorsement of a further stimulus “represents a strategic shift in macro policy, from piecemeal policies to a highly orchestrated package in the right direction”.

He added: “A pickup in government spending will probably be sufficient to drive a turnaround in business confidence, market sentiment and economic activities, helping China to catch up with potential trend growth.”

Xi is understood to have faced criticism from economic advisers, including from Zhu Hengpeng, a member of a government-funded thinktank, who has reportedly disappeared.

Peter Mandelson on why UK’s U-turn on China was a big ‘mistake’, what Labour will do next

https://www.scmp.com/news/china/diplomacy/article/3280012/peter-mandelson-why-uks-u-turn-china-was-big-mistake-and-what-labour-will-do-next?utm_source=rss_feed

Britain’s biggest mistake with China over the past decade was its sharp shift from courtship to aversion, according to a British Labour Party veteran, who stressed that Britain could not afford to boycott Beijing.

Peter Mandelson, a close adviser to Prime Minister Keir Starmer and an influential figure in the Labour Party during the Tony Blair era, told the Post that the new Labour government would do things differently – seeking to stabilise relations and offer consistency in Britain’s relationship with China.

“It does not mean normalising the relationship as this isn’t possible given how much we compete with China and sometimes challenge China … But we need a relationship that enables us to cooperate with China when desirable and necessary,” he said.

“And it’s that clarity and that continuity that we are pursuing in any re-engagement with China following the audit of the relationship.”

Led by successive Conservative governments for more than a decade, Britain’s ties with China declined as it grew to view China as a security challenge.

Mandelson, the former trade secretary, said past Conservative leaders handled relations with China “very unimpressively” and ex-prime minister David Cameron’s courtship of China was naive.

“It was neither golden nor was it long-lasting,” he said, referring to Cameron’s proclamation of a so-called golden era of ties with China when he was leader in 2015.

“Boris Johnson took a more instrumental approach which ignored human rights. Liz Truss was violently anti-China. And then her successor, Rishi Sunak, thought Britain could simply boycott China,” he said.

“[Britain’s] biggest mistake is that it swung violently from one side to another. Violent courtship then violent antipathy. That’s just not sensible or realistic.”

In July, following the Labour Party’s landslide election victory, Starmer’s government called for a “full audit” of the country’s relations with China.

In the first call between Chinese President Xi Jinping and a British prime minister since 2022, Starmer and Xi last month agreed on the need for a “stable and consistent” China-Britain relationship.

Mandelson said that even as trade was increasingly shaped along geopolitical lines, Britain – with its natural disposition towards free trade – “can’t boycott the biggest and fastest-growing economy in the world”.

In its engagement with China, Britain needed to consistently express its views on human rights while pursuing its economic interests. “One shouldn’t overwhelm the other,” he said, adding that the tension between these two priorities could be managed.

Mandelson, who is now president of strategic advisory firm Global Counsel, also urged China to exercise its role and responsibilities in the international system, including contributing to the resolution of conflicts such as the war in Ukraine.

Russia’s infringement of Ukrainian territorial integrity and sovereignty, he said, was not only “extremely serious” for the eastern European nation but it also represented a “direct and continuing threat to Europe as a whole”.

“China which has always stood for territorial integrity and sovereignty … seems to be making an exception when it comes to Ukraine. This is hypocritical and hangs like a dark cloud over China’s relationship with the European Union,” he said.

Since the war broke out in February 2022, Beijing has been unwilling to openly condemn Russia’s actions, and instead has sought to deepen ties with Moscow.

Mandelson described Beijing’s decision to prioritise its relationship with Moscow as “astonishing”, given the economic stakes between China and Europe.

“This is very short-sighted and I cannot believe that Beijing is of one mind on pursuing this course, because it’s contrary to China’s medium and long-term interests,” he said.

According to Mandelson, there is no question in European capitals that China is sustaining Russia’s war effort by supporting the Russian economy and its ability to continue its aggression against Ukraine – even as Beijing maintains that it is not providing military help.

“This causes the gravest concern to policymakers in Europe. We feel that China is not only contradicting its own principles … but is placing itself in opposition to what is an existential interest of Europe’s,” he said, adding that European countries would want to see Beijing reconsidering its position.

Asked how big of an issue the Ukraine war was in China’s relationship with Europe, Mandelson said: “Very big. It’s much bigger than China seems to realise.”

Indian steelmakers seek higher tariffs as ‘predatory’ Chinese imports surge

https://www.scmp.com/news/asia/south-asia/article/3280047/indian-steelmakers-seek-higher-tariffs-predatory-chinese-imports-surge?utm_source=rss_feed

India’s steelmakers have called on the government to double tariffs on steel imports to curb a surge in cheaper steel shipments from China, according to a letter from an industry association seen by Reuters.

The world’s second-biggest crude steel producer became a net importer of the alloy in the fiscal year through March and the trend has continued into the current year.

Finished steel imports from China hit a seven-year high over April-August while overall finished steel imports hit a six-year high of 3.7 million metric tonnes.

In a letter dated September 2, the Indian Steel Association (ISA) called on Minister of Finance Nirmala Sitharaman to double the customs duty on steel imports to 15 per cent.

ISA represents major steel producers such as JSW Steel, Tata Steel, ArcelorMittal Nippon Steel India and state-run Steel Authority of India.

“Industry is concerned about the surge in imports of steel into India at predatory prices and the threat posed by China’s downturn,” ISA said in the letter.

The trend of cheaper steel imports is likely to continue, ISA said. “There is an imminent threat of further surge in imports in the coming months,” ISA said.

As surplus Chinese steel makes its way into global markets, Japanese and European steel makers have sought import curbs. In the US, a 25 per cent tariff on Chinese steel takes effect on Friday.

Steel minister H.D. Kumaraswamy this month said Indian steel makers were “suffering” because of cheaper imports.

In its letter, ISA also urged Sitharaman to impose an extra 25 per cent import tax on steel.

ISA has also sought the removal of the “lesser duty rule” under which the import duty should be fixed at a level only to avoid injury to Indian producers rather than fixing the import tax at a higher rate.

The Ministry of Finance and ISA did not respond to Reuters emails seeking comment.

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Why Germany’s economic issues run just as deep as China’s

https://www.scmp.com/opinion/world-opinion/article/3279996/why-germanys-economic-issues-run-just-deep-chinas?utm_source=rss_feed

Once again, Chinese policymakers have given investors reasons for hope. On September 24, the People’s Bank of China (PBOC) announced a raft of monetary easing measures to help counter a cyclical and structural downturn that has intensified in recent months. As Chinese stimulus packages go, this was one of the boldest since the eruption of the Covid-19 pandemic.

As is often the case with China, the immediate reaction in financial markets was positive, with volatile stock markets and commodity prices benefiting the most. Yet no sooner did the PBOC unveil the measures than analysts criticised the plan – which also provided support for the equity market and the property sector – for not doing enough to boost domestic demand.

Nomura, which has struck a more optimistic tone on China in recent months after having been relentlessly bearish, said, “we do not believe these monetary and financial policies alone are enough to arrest the worsening economic slowdown. We believe fiscal stimulus should take the front seat...”. However, Nomura cautioned that a poorly designed fiscal stimulus programme, even a large one, could have a negligible impact on growth.

Doubts over the efficacy of the policy response are part of broader concerns that Beijing is unable and unwilling to address the underlying causes of the downturn. Worries about China’s economic model, especially concerns about whether new growth drivers can offset the huge drag from property and related industries, are fanning fears about “Japanification” – a vicious feedback loop of weak demand, deflationary pressures and mounting debts.

Yet China is not the only large economy engulfed in pessimism because of deep-seated problems and the inadequacy of the policy response. Germany is in many ways in a worse position, having barely grown in the past five years. Its central bank warned last week that Europe’s largest economy might have slid back into recession, having been the only major economy to contract in 2023.

China and Germany face similar challenges. Both are on the sharp end of geopolitical fragmentation and deglobalisation. They also face severe demographic pressures and are suffering the consequences of policy mistakes. Furthermore, despite contending with weak household consumption, both governments are more concerned about fiscal profligacy and moral hazard than about growth.

However, while China’s problems are mostly home-grown, Germany’s have been exacerbated by the transformation of China from a gold mine for German manufacturing firms to a fierce rival in the industries Germany once dominated. No other country in Europe is more dependent on China, with German exports to China as a share of the country’s economic output more than double the figure for the European Union as a whole.

The combination of the sharp slowdown in China’s economy and the competitive threat posed to German carmakers by China’s own fast-growing brands, as consumers switch to electric vehicles, has hit Germany hard. The “China shock” has come when high interest rates, higher gas prices stemming from Russia’s invasion of Ukraine and German consumers’ reluctance to spend have amplified the impact of structural weaknesses and rigidities.

While China’s economy is paying the price for overinvestment in property, Germany is dealing with the consequences of underinvestment in public infrastructure and digitisation. A rapidly ageing society, acute skills shortages, a botched transition to net zero emissions and excessive red tape have contributed to a growing sense among economists that Germany is in a slow-burning crisis.

This perception stems in part from the stronger performance of southern Europe’s economies since 2017. This is a feat few would have predicted during the 2011-12 euro-zone debt crisis, when Germany was imposing onerous conditions on financial aid to southern European countries as the price to keep the bloc intact.

Another factor fuelling concerns about Germany is the surge in popularity of the far-right Alternative for Germany party and, more worryingly, the collapse in support for the three parties in Chancellor Olaf Scholz’s coalition government. This makes it less likely that Germany will grasp the nettle of much-needed structural reform.

Despite the huge political and economic challenges facing Germany, the country’s obsession with fiscal prudence endures, exemplified by a constitutionally enshrined debt brake that imposes rigid curbs on budget deficits. Persistent stagnation in the euro-zone’s largest member is bad enough. That Germany is unwilling to do what it takes to revive and reform its economy poses an even bigger threat to the euro zone, which itself is stagnating.

As is the case in China, there are policies that would make a big difference. While Beijing should prioritise measures to boost consumption and secure the delivery of unfinished homes, Berlin should back former European Central Bank governor Mario Draghi’s plan to boost the flagging competitiveness of the EU.

On September 9, Draghi called for “a new industrial strategy for Europe”, including increasing investments by €800 billion (US$891.3 billion) a year and “new common funding and common assets”, designed to raise productivity to stop the EU falling behind the United States and China.

Not surprisingly, German Finance Minister Christian Lindner was quick to denounce Draghi’s call for joint issuance of debt as a plea that “Germany should pay for others”. The reality, however, is that many of Draghi’s recommendations – notably his call for massive investments in innovation, decarbonisation and digitisation – amount to “a blueprint for a rescue plan of the German economy”, according to GlobalData TS Lombard.

Unfortunately, this will not stop Germany opposing the plan. Political and ideological resistance to big increases in public spending runs deep. China and Germany both need to urgently restore confidence in their economies. This entails huge investments and unpalatable choices and trade-offs. Desperate times call for desperate measures.

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China’s spy agency accuses New Zealand of ‘harassment, intimidation’ of Chinese citizens

https://www.scmp.com/news/china/diplomacy/article/3280050/chinas-spy-agency-accuses-new-zealand-harassment-intimidation-chinese-citizens?utm_source=rss_feed

China’s top counter-espionage agency has accused New Zealand of “harassment and intimidation” in its investigations of Chinese nationals after Wellington released an annual security threat report that labelled China as a “complex intelligence concern”.

The Ministry of State Security (MSS) condemned New Zealand for what it said were unfounded claims of a “Chinese intelligence threat”, adding that such actions harmed bilateral relations. The MSS said the allegations reflected New Zealand’s “ideological bias” and “cold war mentality”, which undermined cooperation between the two countries.

“The harassment and intimidation faced by Chinese citizens in New Zealand is deeply malicious and unacceptable,” the MSS said on its WeChat account on Thursday.

The criticism followed a formal diplomatic complaint from Beijing to the New Zealand Ministry of Foreign Affairs and Trade earlier this month.

In a statement on September 19, the Chinese embassy said that it received reports of Chinese nationals being “harassed” and “intimidated” by security officials in New Zealand after the New Zealand Security Intelligence Service (NZSIS) released an annual threat report on September 4 that branded China as a “complex intelligence concern”, highlighting the threats of “foreign interference”.

The report said China manipulated viewpoints within New Zealand’s Chinese communities through deceptive front organisations and promoted narratives through a Chinese-language news outlet believed to operate under Beijing’s influence.

The Chinese embassy in New Zealand called the claims “baseless”, insisting that China consistently avoided interfering in the internal affairs of other countries and that relations between the two countries had prospered due to strong economic ties – marked by recent trips to New Zealand by Foreign Minister Wang Yi and Premier Li Qiang.

The embassy said the NZSIS report “unfairly disparages” the Chinese community and students, “aiming to provoke conflicts, create panic and sow division”.

On Thursday, the MSS dismissed the report as part of a broader pattern of rumours being spread about China. The ministry countered that New Zealand – a member of the Five Eyes alliance – was spying and stealing intelligence.

New Zealand had promoted false narratives about “Chinese cyberattacks” while cooperating with the Five Eyes, “the largest intelligence organisation in the world”, the MSS said in its post, citing leaked documents by Edward Snowden revealing New Zealand’s collaboration with the US National Security Agency to hack a data link between the Chinese consulate and its passport office in Auckland.

The MSS urged New Zealand to follow ethical standards instead of “straying down the wrong path”, and to create a fair environment for Chinese nationals.

“Whether driven by delusion, ulterior motives, or incited by external forces, creating contradictions and divergences between China and New Zealand and promoting the agendas of others will not resolve any of one’s own issues. Instead, it will harm one’s own interests and bilateral relations,” the MSS said.

Historically, New Zealand has maintained an accommodating stance toward China, its biggest trading partner.

However, since the conservative coalition government of Prime Minister Christopher Luxon took office late last year, New Zealand has tilted to strengthening ties with US-led allies over concerns about China’s growing influence in the Pacific.

Wellington is considering joining Pillar 2 of the Aukus three-way security pact of Australia, the United States and the UK, and creating a new partnership with Nato.

New Zealand’s warnings were part of a broader trend reflecting concerns about China’s “assertive” actions, the MSS said in its post on Thursday.

In March, New Zealand accused a Chinese state-sponsored group of orchestrating a 2021 cyberattack that compromised sensitive government systems. China rejected the allegation, saying the critics were proxies for Washington.

In its first security report last year, New Zealand highlighted foreign interference threats from countries including China, Iran and Russia.

Amid China-EU tensions, former Finnish prime minister warns of societal harm from tariffs

https://www.scmp.com/economy/global-economy/article/3280068/amid-china-eu-tensions-former-finnish-prime-minister-warns-societal-harm-tariffs?utm_source=rss_feed

Beijing should take action to address the European Union’s concerns over China’s overseas projects, products and technology, as open discussions are vital to managing differences and tensions, former Finnish prime minister Mari Kiviniemi said on Wednesday.

“I’m very worried about these tensions – and geopolitical tensions,” Kiviniemi told the Post on the sidelines of the annual conference of the Asian Infrastructure Investment Bank (AIIB) in Samarkand, Uzbekistan. “Because, from my background, I know so well how much protectionism and tariffs harm the world economy, and by that, it harms all of society.”

Kiviniemi served as the prime minister of Finland from 2010-11 and was deputy secretary general of the Organisation for Economic Cooperation and Development from 2014-18. She is now chair of the board at the University of Vaasa in Finland.

Her comments came as economic relations between Beijing and Brussels have soured this year.

Particularly, the European Union’s decision to impose additional import tariffs – ranging from 17.4 to 37.6 per cent – on major Chinese-made electric vehicle producers fuelled fears of a trade war and was met with countermeasures from Beijing.

Beijing has expressed concerns over the de-risking strategy of the EU, which is China’s second-largest export destination, and has been wary of more orchestrated actions against it after the United States and Canada announced punitive duties.

China’s commerce minister, Wang Wentao, held talks with European Commission executive vice-president and trade commissioner Valdis Dombrovskis last week.

No concrete deals were announced, but both vowed “maximum effort to work towards a mutually agreeable solution”, according to the EU readout.

After Beijing turned last month to the World Trade Organization for arbitration over the EU’s tariff decision, Brussels on Monday launched a challenge at the Geneva-based multilateral trade system to Beijing’s investigation into EU dairy products.

The former Finnish prime minister acknowledged that the situation was “not a good one”, while adding that the concerns from the EU and the US should be taken seriously.

“There’s always this question: what is behind this Chinese company?” she added. “Openness and transparency are kind of the best remedy for fears there are in terms of security.”

Finland is a founding member of the AIIB and is also part of China’s Belt and Road Initiative – an initiative by the central government to link economies into a China-centred trading network.

In the first eight months of this year, the value of bilateral trade between Finland and China fell by 2.9 per cent from a year earlier, to US$5.58 billion, Chinese customs data showed.

Many Finnish projects, including a 100km (62-mile) tunnel between the Finnish capital of Helsinki and Estonia’s Tallinn, were previously delayed because of the reported involvement of Chinese funds and know-how.

However, the Post reported earlier this year that Finnish developers were pushing ahead with the tunnel plan, and would still want Chinese companies to build it.

Kiviniemi said open discussions remained important to finding answers to security concerns.

“[Beijing officials] need to address transparency. I think transparency is really the key – and open discussions,” she said.

The value of trade between China and the EU fell during the first eight months of this year by 1 per cent, year on year, to US$523.1 billion.

Wheatgrass stood on by US rapper Kayne West at China concert sells for US$43 post-event

https://www.scmp.com/news/people-culture/trending-china/article/3280042/wheatgrass-stood-us-rapper-kayne-west-china-concert-sells-us43-post-event?utm_source=rss_feed

Bundles of wheatgrass US rapper Kanye West stood on during his concert in China have gone on sale online for 300 yuan (US$43) each.

West, who is also a music producer with 24 Grammy Awards to his name, is extremely popular in China where fans affectionately call him “Uncle Kan”.

His relationships, with ex-wife Kim Kardashian and current spouse Bianca Censori, as well as their bold fashion choices, regularly trend on mainland social media.

Years ago, he collaborated with Adidas to design the Yeezy training shoes, sparking a fashion craze and making them highly sought after in China.

In early September, West’s concert in Haikou in the southern island province of Hainan was announced on Instagram and took the internet by storm.

Within just three minutes, 30,000 tickets were sold out, leaving 225,000 people on a waiting list.

It was Kanye’s first performance in China in 16 years.

The celebrity’s deep connection with China dates back to 1987 when, at the age of 10, he moved to Nanjing in the eastern province of Jiangsu with his mother, Donda West, a university professor participating in an exchange programme.

There, West went to primary school, where he learned martial arts, how to use chopsticks, and even once break-danced for his classmates, earning him a lamb skewer in return.

In 2021, during the Covid-19 pandemic, West advocated for China during an interview with The Wall Street Journal.

“ I love China. It’s not China’s fault that disease. It’s not the Chinese people’s fault. They’re God’s people also. I love China. It changed my life. It changed my perspective, it gave me such a wide perspective,” he said.

When news of his upcoming concert in China broke, a fan jokingly said: “This excellent young student from Nanjing returns to his motherland after studying in the US.”

Another person said: “I can’t go to the concert, but I support the legendary Nanjing elementary school student Kanye West.”

On September 15, West performed at Haikou Wuyuanhe Stadium in a wheat-filled arena before a huge crowd.

The event was such a hit that local tourism officials announced an additional show on September 28, the tickets for which quickly sold out.

Shortly after the concert, listings for “wheat stepped on by Kanye” appeared on Xianyu, a major second-hand platform in China owned by Alibaba, which also owns the South China Morning Post, with prices ranging from 49 to 300 yuan (US$7 to US$43).

One seller advertised: “This straw was pulled from Kanye’s path as he walked from the entrance to the top of the wheat hill. I can provide photos and videos as proof.”

Another said: “Kanye-stepped-on wheat, only one bundle left. One bundle for 300 yuan, or available by stalk. The second show is coming soon, bring this with you and you’ll be the coolest guy there.”

On September 20, a member of staff from the concert venue told Zhengzai News that the wheat used at the event was actually plastic and had been spray-painted to appear real.

The listings shocked many and triggered a heated discussion on mainland social media.

One person said: “Oh my god, Kanye’s not stepping on wheat, he’s stepping on cash!”

“I can even imagine people waiting outside the restroom for Kanye, selling used tissue paper as collectibles,” quipped another.

A third person added: “How much alcohol do they have to drink to get dizzy enough to buy this wheat?”

Fiat and Jeep owner Stellantis’ CEO follows Chinese route to avoid EV tariff ‘trap’

https://www.scmp.com/business/china-evs/article/3280037/fiat-and-jeep-owner-stellantis-ceo-follows-chinese-route-avoid-ev-tariff-trap?utm_source=rss_feed

Carmaker Stellantis wants to adopt the low-cost mindset of Chinese electric vehicle (EV) makers, despite the European and United States tariffs that chief executive Carlos Tavares lambasts as anticompetitive.

But the world’s No 4 automaker must navigate trade barriers on both sides of the Atlantic if it wants to succeed.

Tavares calls tariffs a “trap”, arguing that these will hurt legacy automakers by shielding them from the reality that Chinese rivals make EVs for about a third less.

The best way to compete is instead to “try to be Chinese ourselves”, Tavares said at a Reuters Events conference in Munich in May.

That belief led Stellantis to purchase a 21 per cent stake in Chinese EV maker Leapmotor last October, creating a joint venture giving Stellantis access to Leapmotor technology and exclusive rights to produce its EVs outside China.

The challenges faced by Stellantis in the European Union and the US are no different than those confronting all automakers, as they seek to compete with the Chinese globally. However, Stellantis and a handful of others have taken it a step further, establishing partnerships with Chinese automakers to stay competitive.

Stellantis is making Leapmotor EVs at its Tychy plant in Poland alongside models from better-known brands Fiat, Jeep and Alfa Romeo.

Tavares has said Stellantis could make Leapmotor EVs in North America.

But applying the same strategy in Europe and the US is difficult because the regions have sharply different approaches to Chinese EVs and the underlying technology.

Chinese EVs are already on sale in Europe; and factories to make more are being built – with subsidies from individual countries competing for plants.

European automakers are embracing Chinese technology. Volkswagen has already bought a stake in China’s Xpeng to jointly develop cheaper EVs for the mainland market.

Many auto experts see this as a blueprint for future partnerships.

“We believe many of our competitors will turn to Chinese companies … to use their platform globally,” Ford Motor Co chief executive Jim Farley said in July, adding the US automaker will develop its own core EV technology instead.

Such partnerships are far more challenging in the US. The Biden administration has slapped a 100 per cent tariff on Chinese-made EVs, championed US production through the US$430 billion Inflation Reduction Act and targeted Chinese car components.

The US government now proposes barring Chinese software and hardware from vehicles on American roads, which could be its most powerful weapon yet to block Chinese EVs.

Stellantis could theoretically produce Leapmotor EVs at US plants, but with non-Chinese parts and US wages any savings could be minimal.

The real problem for Stellantis would be political.

For instance, US Republican Senator Marco Rubio and others have fiercely criticised a planned Ford battery plant in Michigan using technology licensed from Chinese company CATL .

Stellantis’ contrasting US and European options highlight differences in trade strategies on both sides of the Atlantic.

Protectionist moves have divided automakers and executives, with some – like Tavares – rejecting the need for tariffs, especially German automakers reliant on China for profits.

BMW chief executive Oliver Zipse argues that as China dominates EV raw materials and components, a trade war would hurt Europe.

“There is no Green Deal in Europe without resources from China,” Zipse said in May.

But some US automakers favour tariffs.

Ford’s Farley said tariffs level the playing field, giving US automakers a short window to match Chinese rivals’ ability to make cheaper EVs.

Industry observers say regardless of tariffs, China’s EV industry will become a global powerhouse.

US executives said two European Commission reports released this year – detailing Chinese government assistance, including direct EV purchase subsidies, cheap corporate loans, cheap electricity, and cheap or even free land – prove protection is needed.

Chinese companies dominate raw materials from rare earths to graphite, undercutting Western rivals on price.

In June, the US government reinstated a 25 per cent tariff on Chinese artificial and natural graphite.

“As long as the market stays unbalanced … tariffs should stay in place,” said Chris Burns, chief executive of battery materials company Novonix, which has received US$203 million in US grants and tax credits to scale up synthetic graphite anode production at a Tennessee plant.

Detroit’s automakers also need better EV models to compete, said Tim Piechowski, portfolio manager at ACR Alpine Capital Research, a General Motors investor.

“This (tariffs) does give them time,” Piechowski said.

The EU has proposed tariffs of up to 35.3 per cent, but cannot shut out Chinese automakers because the 27-country bloc has a common set of rules for members and outsiders to play by.

“The aim is to remain open to competition from China, but on fair terms,” a European Commission representative said.

Former Nissan chief operating officer Andy Palmer – currently chairman of Slovak battery maker InoBat, part-owned by China’s Gotion High-Tech – said the EU must rely on a “combination of carrot and stick to bring the Chinese in, so at least they’re making locally”.

Still, Stellantis’ Tavares said tariffs hurt exports because protected automakers are under no pressure to lower prices.

“When you get used to protection, it’s very difficult to get rid of,” Tavares told Reuters in May.

Stellantis is instead leaning on cheaper models like its upcoming Citroen e-C3, which will start at 20,000 euros (US$21,342), and its Leapmotor EVs to compete.

A number of automakers have backpedaled on electrification targets, but Stellantis said its targets of 100 per cent EV sales in Europe and 50 per cent in the US by 2030 remain in place.

Moshiel Biton, chief executive of Israeli battery materials company Addionics, which plans a US$400 million US factory for cathode materials, said legacy automakers must develop better EVs to compete instead of simply embracing Chinese technology.

“If they just try to do copy and paste, they can’t compete with the Chinese on cost,” Biton said. “Innovation is mandatory or they face a dead end.”

China weighs injecting US$142 billion of capital into top banks

https://www.scmp.com/business/china-business/article/3280008/china-weighs-injecting-us142-billion-capital-top-banks?utm_source=rss_feed

China is considering injecting up to 1 trillion yuan (US$142 billion) of capital into its biggest state banks to increase their capacity to support the struggling economy, according to people familiar with the matter.

China’s six largest state-owned lenders – the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, and Postal Savings Bank of China – could each receive an injection of 100 billion yuan, a source familiar with the matter told the Post.

The funding would mainly come from the issuance of new special sovereign bonds, the people said, asking not to be identified discussing a private matter. The details have yet to be finalised and are subject to change, the people said. Such a move would be the first time since the global financial crisis that Beijing has injected capital into its big banks.

China is rushing to replenish its banks – even though the top six have capital levels that far exceed requirements – after unveiling broad reductions to mortgage rates and slashing key policy rates in an effort to revive the economy. Enlisted to support the economy over the past years, lenders like ICBC and Bank of China are now battling record low margins, sinking profits and rising bad debt.

Li Yunze, the nation’s top banking regulator, said earlier this week that authorities would act to increase core tier 1 capital at its six major commercial banks, without elaborating. The National Financial Regulatory Administration did not respond to a request for comment.

China’s mega banks have been under increasing pressure from regulators to shore up the struggling economy by offering cheaper loans to risky borrowers – from real estate developers and homeowners to cash-strapped local government financing vehicles. Most recently, some of the lenders heeded government calls to pay their first ever interim dividends to support the stock market, even as profit growth and margins are sliding.

Funding now is favourable for the government. In May, China kicked off another planned issuance of 1 trillion yuan in ultra-long special sovereign bonds; it would like to wrap up the sales in mid-November. The latest auction saw a 30-year bond sold at an average yield of 2.19 per cent, a record low based on Bloomberg data from past issuances of the tenor that dates back to 2007.

Combined profits at China’s commercial lenders rose just 0.4 per cent in the first half, the slowest pace since 2020. Meanwhile, the sector’s net interest margins have continued to shrink, hitting a record low of 1.54 per cent at the end of June, well below the 1.8 per cent threshold that is seen as necessary to maintain reasonable profitability.

Higher dividend distribution also threatens to erode capital buffers at the systemically important banks, which face additional capital requirements under the so-called total loss-absorbing capacity mechanism imposed globally.

The six largest banks have primarily relied on retained profits to increase capital buffers.

Their average core tier 1 capital adequacy ratio fell slightly to 11.77 per cent at the end of June, but remains above the 8.5 per cent level required for China’s systemically important banks.

It would not be the first time Beijing has stepped in to support its banks, most of which are still majority-owned by the state.

China first bailed out its big four banks in the late 1990s when their collective non-performing loan ratio surged to about 40 per cent. At the time, policymakers sold special bonds to raise capital and set up state-run bad banks to buy 1.4 trillion yuan of soured loans at face value. The effort was largely a success.

The government also injected US$60 billion worth of foreign reserves in the early 2000s to recapitalise ICBC, Bank of China and China Construction Bank, which were buckling under non-performing loans after decades of government-directed lending to unprofitable state-owned companies. In 2008, AgBank received about US$19 billion in a bailout, capping a decade-long overhaul of the banking industry.

To Lam tells Biden Vietnam a ‘friend’ as Hanoi seeks to balance US-China ties

https://www.scmp.com/news/asia/southeast-asia/article/3280010/lam-tells-biden-vietnam-friend-hanoi-seeks-balance-us-china-ties?utm_source=rss_feed

US President Joe Biden met Vietnam’s President To Lam for talks on Wednesday, aiming to deepen relations with the Southeast Asian country and manufacturing hub and counter its ties with China and Russia.

Biden and Lam, the ruling Communist Party chief making his first visit to the US as president, met on the sidelines of the United Nations General Assembly in New York. A senior US official said they discussed how to accelerate a strategic partnership agreed last year.

On meeting Biden on Wednesday, Lam hailed what he called Biden’s historic contribution to elevating bilateral relations.

Biden said that since beginning a new era in relations last year, the two countries had made significant investments in semiconductors and supply chains and launched unprecedented cooperation on cybersecurity.

He also said they stood united in commitments to freedom of navigation and the rule of law – a reference to regional maritime disputes with China.

The Vietnam News Agency reported Lam told Biden that Vietnam was on the brink of a new era of development, and that it was a friend and reliable partner.

“Vietnam will continue to firmly implement its foreign policy of independence, self-reliance, multilateralism and diversification,” Lam told Biden, the state media agency reported.

Lam met this week in New York with representatives of US companies, including Meta, which pledged to expand investments in the Communist-ruled country with a population of 100 million.

Lam asked business leaders to back Hanoi’s bid to have Washington remove it from the list of non-market economies and lift other trade restrictions and for the US and Vietnam to cooperate on semiconductor supply chains.

SpaceX is proposing to invest US$15 billion in Vietnam tied to its Starlink satellite service in the near future, the Southeast Asian country’s government said, citing a meeting between the company’s senior vice-president Tim Hughes and Lam.

Lam said the Vietnam government is reviewing the proposal, according to a statement on the website of the country’s National Assembly. No further details were provided.

According to the Vietnamese statement, Lam told Elon Musk’s Starlink, a subsidiary of SpaceX that uses thousands of satellites to provide web access, the nation will coordinate with domestic partners to complete investment procedures.

Biden visited Hanoi a year ago and secured deals on semiconductors and minerals and an upgrade in diplomatic ties, despite US concerns about human rights issues.

US Representative Michelle Steel, a California Republican who represents a large population of Vietnamese-Americans, wrote to Biden before the meeting asking him to directly address human rights abuses in Vietnam under Lam’s leadership.

Asked if Vietnam’s NME status was discussed, the senior US official told reporters: “They talked about economic cooperation broadly and plans to redouble cooperation with Vietnam.”

Asked if they discussed China, the official said: “The leaders acknowledged the fact that Vietnam lives in a complicated neighbourhood.”

He said there was a recognition that Hanoi “has to be very cautious and strategic to its approach to the region” and that the United States is a strategic partner.

Alexander Vuving, a Vietnam expert at the Hawaii-based Inouye Asia-Pacific Centre for Security Studies, said the meeting was important to helping Lam consolidate power after being confirmed as Vietnam’s top leader in August.

He said it signalled Vietnam’s balanced position between the great powers, given Lam’s recent visit to China and meetings with Russian President Vladimir Putin as well as the importance of the Hanoi relationship in US’ Asia policy.

Lam spoke at the UN General Assembly on Tuesday and his travels include a stop in Cuba, Vietnam’s long-term Communist partner.

Ahead of his trip, Vietnamese authorities released some prominent activists from prison before the end of their jail terms, sources said.

They included Tran Huynh Duy Thuc, who was sentenced to 16 years in prison in January 2010 on charges of subversion, and environment activist Hoang Thi Minh Hong, who was sentenced to three years in prison on charges of tax fraud in September last year, but other dissidents remain in detention.

Sources said the US has been urging Vietnam to avoid Chinese companies in its plans to build 10 new undersea cables by 2030.

Vietnam has long argued it should be freed of the NME label given recent economic reforms and that retaining the moniker is bad for increasingly close two-way ties that Washington sees as a counterbalance to China.

However, Murray Hiebert, a senior associate of the Southeast Asia Programme at Washington’s Centre for Strategic and International Studies, said it was not Biden’s prerogative to offer concessions on that, given Commerce Department criteria.

Opponents, including politically influential US labour lobbies, argue Vietnam’s policy commitments have not been matched by concrete actions and it is increasingly being used as a manufacturing hub by Chinese firms to circumvent US curbs on imports from China.

China’s FAST radio telescope set for major upgrade to keep its place as world leader

https://www.scmp.com/news/china/science/article/3279995/chinas-fast-radio-telescope-set-major-upgrade-keep-its-place-world-leader?utm_source=rss_feed

China has launched the second phase of construction for its FAST radio telescope, as it aims to boost its observational power and maintain its global leadership in radio astronomy.

As part of the upgrade, two dozen fully steerable radio telescopes – each 40 metres (131 feet) across – will be constructed around the Five-hundred-metre Aperture Spherical Telescope (FAST), according to state broadcaster CCTV.

FAST is the world’s largest and most sensitive single-dish radio telescope, located in the southwestern province of Guizhou.

The new telescopes will be tuned to work in unison with FAST, forming an array that will be equivalent to that of a 10km (6.2-mile) diameter telescope, and will boost FAST’s resolution more than 30 times, CCTV reported on Wednesday.

This, in turn, will allow scientists to better understand phenomena such as gravitational waves, fast radio bursts and black hole events.

“There’s fierce international competition in radio astronomy, with multiple major projects like the Square Kilometre Array in the southern hemisphere and the Next Generation Very Large Array in the United States already under way,” senior astronomer Chang Jin told Xinhua news agency.

That competition saw Chinese scientists challenged with developing a long-term strategy to maintain FAST’s competitive edge in the low to mid-frequency range, added Chang, who also serves as vice-president of the Chinese Academy of Sciences in Beijing.

Although FAST is the most sensitive telescope of its kind, currently its resolution falls significantly short of top-tier telescope arrays, according to Jiang Peng, director of the FAST Operation and Development Centre.

For example, when observing a fast radio burst – a brief but intense flash of radio waves from a mysterious cosmic origin – “sensitivity determines whether you can detect it, while resolution defines how clearly you can see details, such as the precise location of the burst”, Jiang told CCTV.

To enhance FAST’s performance and increase its resolution, Jiang and his team proposed a low-cost, rapidly deployable telescope array scheme, leveraging the 5km-radius radio silent zone around FAST.

However, Jiang noted, the team will face two critical technical challenges: developing high-performance, room-temperature receivers and advancing data processing technology for synthetic aperture telescopes.

The FAST upgrade plan was unveiled on Wednesday during a symposium in Pingtang, Guizhou, where over 100 researchers gathered to celebrate the telescope’s eighth anniversary and discuss its future.

Nestled in a natural depression in Pingtang’s karst landscape, FAST was completed and began operations on September 25, 2016. It has since become a leading tool for exploring the radio sky, particularly after the collapse of the 305-metre Arecibo telescope in Puerto Rico in late 2020.

In the past eight years, FAST has discovered over 900 new pulsars – extremely dense, magnetised and fast-rotating neutron stars that emit beams of radio waves. That is triple the number of pulsars found by other telescopes combined during the same period, according to CCTV.

FAST’s other major discoveries include the first detection of a black hole “heartbeat” in the radio wave band and the identification of a pulsar binary system with the shortest known orbital period.

More than a dozen papers based on FAST observations have been published in academic journals such as Nature and Science. FAST observes the sky for around 5,300 hours annually, with at least 10 per cent of that time available to international astronomers.

China vows to save private economy, stabilise real estate market in Politburo meeting

https://www.scmp.com/economy/article/3280018/china-vows-save-private-economy-stabilise-real-estate-market-politburo-meeting?utm_source=rss_feed

China has vowed to save the private economy, stablise its property sector from further slumping and ensure necessary fiscal expenditures, according to the readout from a Politburo meeting on Thursday.

“It is necessary to help enterprises tide over difficulties,” said the readout.

The top decision-making meeting, which was chaired by President Xi Jinping, came after financial authorities rolled out a raft of stimulus measures on Tuesday.

“It is necessary to look at the current economic situation comprehensively, objectively and calmly,” the readout said.

“Face up to difficulties, strengthen confidence, and effectively enhance the sense of responsibility and urgency to do a good job in economic work.”

Holding a Politburo meeting to discuss economic affairs in September is a rare move for the authorities.

As part of the raft of interest-rate and policy changes unveiled on Tuesday, China’s central bank announced cuts of half a percentage point to the outstanding mortgage rate and the reserve requirement ratio – the amount of cash that commercial banks must hold as reserves.

More to follow...

Who is Ye Ke? China model captures media attention as new partner of Angelababy’s ex

https://www.scmp.com/news/people-culture/china-personalities/article/3279767/who-ye-ke-china-model-captures-media-attention-new-partner-angelababys-ex?utm_source=rss_feed

Ever since celebrated actor Huang Xiaoming revealed that his new girlfriend was Ye Ke there has been much speculation on social media about who the woman is and how she managed to hook the performer.

Entertainment industry businessman Huang, 46, who is among the best paid actors in the country, divorced actress and model Angelababy in 2022.

The former couple’s son, a seven-year-old nicknamed Little Sponge, is in the custody of his mother.

In mid-September rumours surfaced that Huang was dating Ye, a Shenzhen entrepreneur.

The actor confirmed the speculation on Weibo where he has 60 million followers, according to the news outlet NetEase.

“Sorry to occupy public resources. Please don’t do any more guessing. Yes, we are together,” said Huang, inserting the Weibo account of Ye in his post.

Soon afterwards, Ye relayed this post adding a red heart along with it.

The couple’s announcement soon became the most searched news item in China.

Internet users also dug out details about the new woman of “Lord Huang” as the actor is affectionately known by his followers

Ye is 15 years younger than Huang and was born and raised in Shenzhen, Guangdong province, southern China. Her parents are real estate entrepreneurs.

After graduating from Shenzhen University with a major in broadcasting, Ye’s first job was as a presenter at a local radio station. Five years later, she quit to establish a biological technology company.

This venture expanded into cosmetics, restaurants, and e-commerce.

Several years previously Ye had created a high-end women’s golf garment brand.

She is also a member of the council at Shenzhen Women’s Chamber of Commerce.

With half a million followers on Douyin, Ye occasionally conducts live-streaming events to sell beauty products.

She divorced four years ago and her son and daughter from her first marriage are in the custody of her ex-husband, who runs a mining company.

It is not clear how Huang and Ye got to know each other.

One internet user claimed that he saw Huang accompany Ye to a prenatal checkup at a private clinic, sparking unconfirmed rumours that she was pregnant.

China’s push for job creation takes centre stage after policy barrage with 24-point plan

https://www.scmp.com/economy/policy/article/3280020/chinas-push-job-creation-takes-centre-stage-after-policy-barrage-24-point-plan?utm_source=rss_feed

China’s juggernaut continued on Wednesday as the State Council vowed to prioritise job creation and prevent the risk of large-scale unemployment as “a bottom line” with a 24-point set of guidelines.

The country’s cabinet placed employment as a top priority for economic and social development, pledging coordinated endeavours among fiscal, monetary, industrial, price and employment polices as it stepped up efforts to reverse weakening economic momentum and meet its full-year growth target.

The guidelines offered a comprehensive package of measures, ranging from job creation by different sectors to better income distribution, as well as increased protection for gig workers.

State-owned enterprises were also urged to fulfil their social responsibilities by leading efforts to absorb the workforce.

Additionally, they pledged priority support, including land allocation, for market players that create more jobs.

“We will strengthen macro-guidance on wage and income distribution within enterprises,” the document said, pledging to also promote reasonable increases in salaries.

The guidelines came after Beijing rolled out a raft of stimulus measures on Tuesday.

As part of the raft of interest rate and policy changes unveiled on Tuesday, China’s central bank announced half a percentage point cuts to the outstanding mortgage rate and the reserve requirement ratio – the amount of cash that commercial banks must hold as reserves.

A 0.2 of a percentage point cut to the benchmark policy rate was also confirmed by central bank governor Pan Gongsheng amid efforts to spur lagging consumption, which is seen as a drag to China’s hopes of achieving its annual “around 5 per cent” gross domestic product growth target.

“With only one quarter left to reach its annual growth target, Beijing is seizing this final window of opportunity by intensively introducing policies to stimulate domestic demand in a short period,” said Peng Peng, executive chairman of the Guangdong Society of Reform, a Guangzhou-based think tank.

“Beijing has already softened its stance on the full-year growth target, and with limited time remaining, achieving the 5 per cent growth goal appears quite challenging.”

Employment has been high on the list of priorities for policymakers this year, particularly after President Xi Jinping in May ordered officials to put it and job creation “at the forefront of their mind”.

Last week, China confirmed its revised jobless rate for the 16-24 age group, excluding students, had risen to up from 17.1 per cent in July, after a record 11.79 million college graduates entered the job market last month.

China had also earlier confirmed its overall urban unemployment up from 5.2 per cent a month earlier.

In the first seven months of the year, China said it had achieved 68.8 per cent of its annual job creation target after creating 8.26 million new jobs.

“[The policies announced on Tuesday] reflect the country’s intent to stabilise the economy,” Yue Su, principal economist for China at the Economist Intelligence Unit, said on Thursday, pointing to a weak job market and declining income and employment expectations.

“The pressure to maintain employment remains key to boosting domestic demand. Employment growth depends on the recovery of industries, and given the constraints of limited monetary and fiscal easing, loosening industry regulations could be another path to revitalise the economy.”

Under the 24-point guidelines announced on Wednesday, Beijing also said it would expand enrolment in science, technology, agriculture and medicine education programmes, while also adjusting major degrees based on market and industrial demand.

It would also implement a warning system akin to football’s red and yellow cards for fields with poor employment outcomes.

The document mentioned it would actively address the impact of the rapid development of artificial intelligence and other emerging technologies.

“It also aligns with Beijing’s strategy to leverage high technology for economic growth, as China plans to establish more tech majors in fields facing choke points from the West,” Peng added.

Beijing would also offer social insurance subsidies to individuals facing employment difficulties, including college graduates who have not secured stable jobs but have engaged in flexible employment within two years of their graduation.

In recent years, following Beijing’s crackdowns on several industries, including the internet sector, and the implementation of strict pandemic policies, the market has developed grim expectations.

And amid widespread pessimism, many companies have voluntarily reduced hiring, laid off employees or slashed wages, while the property market downturn has further eroded residents’ wealth.

The multifaceted chain of events has created a domino effect that poses a risk of a prolonged deflationary spiral in the world’s second-largest economy.

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Why China’s women are talking back like never before

https://www.scmp.com/opinion/china-opinion/article/3279833/why-chinas-women-are-talking-back-never?utm_source=rss_feed

One night, Caicai suddenly had her period. It was late and all the shops near her home had closed, so she had to order sanitary pads through a courier service. When the courier, a man, called her from a shop, he sounded embarrassed as he whispered, “Hello beautiful, did you want … that thing?” Caicai whispered back, “Yes, I want that thing.”

They went on to discuss the different brands and functions of sanitary products in the same hush-hush manner, as if they were buying narcotics on the black market.

After the courier made the purchase on her behalf, he called again, reporting a mini crisis: the shop had run out of black plastic bags for him to discreetly carry the feminine hygiene products in.

Comedian Caicai recently performed this skit during an online stand-up comedy show in China, as the studio audience roared with laughter. After her set went viral, she drew praise from hundreds of women, who said they resonated with her experience. Chinese women are fed up with period shaming, with having to call it another name, hide sanitary pads from men, or feel bad if menstrual blood stains their clothes.

“Menstruation is not our fault, nor should it make anyone feel ashamed,” read one Weibo comment on Caicai’s performance. “It’s one of the most normal physiological phenomena of human beings. Why should we be as silent as thieves about menstruation, and use code words for menstruation and sanitary towels? Girls have to silently endure menstrual pain every month and bear the extra expenses of menstruation, including sanitary towels and painkillers. If we are really striving for equality, please seriously consider menstruation.”

Caicai isn’t the only one speaking up about life in a patriarchal society. In recent weeks, on shows such as a new spin-off from the Rock & Roast web series, female comedians have riffed on subjects close to women’s hearts, in a sign that Chinese women are becoming more conscious of these issues. Besides menstruation, the topics tackled include China’s preference for sons, dating, and being too bossy for a woman. Some of the sets are quite sharp, skewering sex discrimination.

Sister duo Yan Yi and Yan Yue recently joked about a key difference between how Chinese parents name sons and daughters. They noted that male names, like Zhang Fei, Liu Bei and Cao Cao, tend to involve active verbs (fei, bei and cao mean “fly”, “prepare” and “exercise” respectively), whereas female names focus on passive qualities such as yi (“pleasantness”) and yue (“happiness”). The one exception they could think of is Zhaodi, a girl’s name which literally means “beckon a younger brother”.

The Chinese comedy scene wasn’t like this a few years ago. When Rock & Roast first premiered online in 2017, even though it featured many female comics, the topics were more general, including how to deal with anxiety, whether to stay on in first-tier cities like Beijing and Shanghai, and how to be your real self.

In 2021, comedian Yang Li faced a heavy backlash over her biting jokes about men. After she famously cracked, “Why are men so mediocre but still so confident?”, online attacks came hard and fast. She was called “ugly” and a “female hooligan”. An advertisement featuring her was pulled, and a shopping live stream she appeared in was flooded with negative comments.

But other women have not stopped speaking out, because public opinion battles are won by repeatedly pushing back. On social media, it’s quite common to see women commenting on social issues that relate to their rights, such as a rule requiring a cooling-off period before a divorce, domestic violence, and the impact of motherhood on career development.

In the past couple of years, Japanese feminist writer Chizuko Ueno has become something of a rock star in China, or at least among the country’s feminist underground. Her most popular book, Misogyny, has tens of thousands of reviews on Douban, with people saying they suddenly understood themselves better after reading it.

These days, we not only have more female comedians airing their views on female topics, but also female writers and directors stepping forward.

This month, the film Like a Rolling Stone dominated discussions on social media. It is based on the true story of Su Min, a retiree who went on a solo road trip to get away from an abusive husband and find freedom. The film was directed by Yin Lichuan, who is also a writer, a poet and a mother.

In an interview, she said she had drawn inspiration from her own pain as a mother. “Motherhood is my biggest predicament, it will completely overwhelm you for at least a period of time, it will replace your individual identity and this is really painful.”

Even though these feminist works are few and far between, and female writer-directors remain outnumbered by men, there is value in being seen by society and making people more comfortable with certain ideas. In the words of comedian Qiqi, “My seniors fought for the right to eat at the table, and I will fight for the right to eat my fill at the table.”

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‘Show of force’: US deploys laser-equipped warship to Japan with eye on China war threat

https://www.scmp.com/week-asia/politics/article/3279916/show-force-us-deploys-laser-equipped-warship-japan-eye-2027-china-threat?utm_source=rss_feed

A US warship equipped with the advanced Helios laser weapon is being forward-deployed to Japan’s Yokosuka naval base, south of Tokyo, as a “show of force” to potential rivals in the increasingly tense Indo-Pacific region, analysts say.

The Arleigh Burke-class guided-missile destroyer USS Preble departed the US Navy base in San Diego on Sunday and is scheduled to carry out tests of its Helios system – a high-energy laser with integrated optical-dazzler and surveillance – during its crossing of the Pacific, according to the navy in a statement.

“The forward presence of the Preble supports the United States’ commitment to the defence of Japan, enhances the national security of the United States and improves its ability to protect strategic interests,” the statement added. “Preble will directly support the Defence Strategic Guidance to posture the most capable units forward in the Indo-Pacific region.”

The deployment coincides with the release of Navigation Plan 2024, the US Navy’s outlook on the challenges ahead. Issued by Admiral Lisa Franchetti, the chief of naval operations, the report states for the first time that the navy must be ready for the “possibility of war with the People’s Republic of China by 2027”.

The 30-page report identifies China as the greatest threat to US interests.

“The PRC presents a complex multi-domain and multi-axis threat. The PLA Navy, Rocket Force, Aerospace Force, Air Force and Cyberspace Force are coalescing into an integrated warfighting ecosystem specifically designed to defeat ours, backed by a massive industrial base,” it said.

“The PRC’s defence industrial base is on a wartime footing, including the world’s largest shipbuilding capacity,” it added.

The USS Preble is only one of 73 destroyers in its class to have been retrofitted with Helios, a weapon developed by Lockheed Martin and designed to intercept aerial threats, such as drones, missiles and even small boats. Commissioned in 2002, USS Preble was fitted with the laser weapon in 2021.

“It is obvious that the US is placing strong priority on the Indo-Pacific region and making sure that it has the best assets in the right areas for the contingencies it might face,” said Ryo Hinata-Yamaguchi, associate professor in Tokyo International University’s Institute for International Strategy.

“Put simply, the US wants its best weapons systems right on the front line.”

The second, parallel reason for the deployment of the USS Preble and other state-of-the-art warships in the region – the nuclear-powered attack submarine USS Vermont on Monday docked in the South Korean port of Busan for replenishment – is to underline Washington’s commitment to the security of the region.

“The US is now facing a powerful adversary in the region and this show of force is designed to send the message to Beijing that while China is strong, the US is stronger,” Hinata-Yamaguchi told This Week in Asia.

Helios is based on a 60kW high-energy laser that can be fired at a target at the speed of light and is designed to melt or overheat the target, causing it to malfunction or explode. The concept behind laser technology is not new, analysts agree, although it has taken decades of research to go from the drawing board to being mounted on warships.

Among the many advantages of laser-based weapons are the speed at which they are able to engage a target and their precision. They can also be fired as long as power is available, making them cheaper alternatives to conventional missiles or artillery rounds in destroying a target, a critical consideration as warfare increasingly embraces the use of drones swarms in attacks.

The manufacturer is understood to be working on a more powerful 120kW version of the weapon, which should be capable of destroying anti-ship cruise missiles.

The Nikkei newspaper reported that while the USS Preble is fitted with Helios, it remains in the at-sea testing phase, with more tests to be conducted as the ship crosses the Pacific and after it is based in Japan.

“The system has obviously been extensively tested already but it is important that the navy continues to conduct tests to determine how it works in less-than optimal conditions, such as in areas of high humidity, to make sure that it remains effective,” Hinata-Yamaguchi said.

The US Navy has 12 warships forward-deployed to Yokosuka, the largest US naval installation outside the US and the home port of the 7th Fleet. The Nimitz-class aircraft carrier USS George Washington is scheduled to be based at Yokosuka from mid-November.

China’s mortgage cut still insufficient to move the needle, boost spending for homeowners

https://www.scmp.com/economy/policy/article/3279945/chinas-mortgage-cut-still-insufficient-move-needle-boost-spending-homeowners?utm_source=rss_feed

China’s mortgage rate cut for existing properties will hardly make any impact for Ivy Cai, as the Shanghai-based homeowner is facing the burden of a 15,000 yuan (US$2,131) monthly repayment.

She is expected to save a few hundred yuan per month once the rate cut, announced on Tuesday as part of a bumper round of measures to support the world’s second-largest economy, is implemented.

But the 43-year-old said that much money “can hardly do anything in Shanghai”, one of the most expensive cities in the world, where a standard lunch can easily cost 100 yuan (US$14.2).

“With no significant increase in income, I can only deprioritise other expenses,” Cai said.

“Many costs that used to seem necessary now feel optional, leading to tough choices.”

Cai is among the large group of homeowners that policymakers had hoped to appease by reducing the outstanding mortgage rate by half a percentage point, amid efforts to spur lagging consumption, but that hope might just be empty.

“I’m glad I still have my job,” added Cai, who has seen the pharmaceutical company she works for lay off staff.

Cai’s investments are also depreciating, forcing her to start to save money amid widespread pessimism about income growth and slowing economic expansion.

The policy changes announced by People’s Bank of China governor Pan Gongsheng on Tuesday also included cutting the benchmark policy rate by 0.2 of a percentage point and the reserve requirement ratio – the amount of cash that commercial banks must hold as reserves – by half of a percentage point.

New tools were also introduced to boost capital markets as policymakers announced a coordinated package of stimulus measures.

However, “it doesn’t make any difference”, said Wu Zi, a homeowner in his 30s.

“If I can avoid spending, I will,” Guangzhou-based Wu said, adding that he only repays a few thousand yuan off his mortgage per month.

Wu said that earning money had become increasingly difficult, while purchasing power had dipped with growing expenditures.

“For me, increased spending hinges solely on more income,” he added.

The reduction in existing mortgage interest rates is expected to benefit 50 million households, or about 150 million people, reducing household interest expenses by an average of roughly 150 billion yuan (US21 billion) per year, according to Pan.

“This will in turn help promote consumption and investment, reduce early mortgage loan repayments,” Pan told a joint press conference on Tuesday alongside minister of the National Administration of Financial Regulation Li Yunze and China Securities Regulatory Commission chairman Wu Qing.

The rate reduction would narrow the gap between new and existing mortgages, which has been a key motivation for homebuyers to repay home loans in advance over the past couple of years.

Real property agents said that the announced change to the mortgage rate had prompted many clients to make inquiries.

But for Cai, and her friends, “there is talk, but not a lot, due to little effect”.

Beijing has been firing on all cylinders to spur domestic consumption to keep growth on track, especially after August’s key economic data indicated growing difficulties for China to attain its ambitious “around 5 per cent” growth goal for this year.

Retail sales in China rose by 2.1 per cent year on year last month, lower than the 3.4 per cent year on year increase in the first eight months of the year, according to the National Bureau of Statistics.

Early mortgage repayments due to high interest rates are also being blamed for the tepid consumption growth.

The PBOC’s financial stability report published in July revealed that monthly early mortgage repayments averaged 387 billion yuan between September and December 2023, representing an annual early repayment total of 4.6 trillion yuan (US$654 billion).

Pan also said that when the central bank designed monetary policy tools and mulled adjustments, one key consideration was to promote a moderate recovery in prices.

China’s consumer price index in August edged up marginally by 0.6 per cent, extending over a year of economic and consumption weakness amid deflation concerns.

The reading remained below the around 3 per cent growth target for the year.

To boost consumption, China had launched a large-scale car and household appliance trade-in programme in March, but analysts have long called for more meaningful measures to better boost consumption.

“What we observe on the ground is that sentiment is not picking up meaningfully despite a lot of the things that the government is doing,” Sandy Lim, director of corporate ratings at S&P Global Ratings, told a conference on Tuesday in Hong Kong.

In addition to a continuation of last year’s sluggish sentiment on the property front, the downgrading of consumption has been particularly notable this year, she added.

“If it becomes a habit, it’ll be pretty difficult to reverse,” Lim added.

Additional reporting by Sylvia Ma

China’s EV makers pull out all the stops to beat Tesla in autonomous driving race

https://www.scmp.com/business/china-evs/article/3279957/chinas-ev-makers-pull-out-all-stops-beat-tesla-autonomous-driving-race?utm_source=rss_feed

A battle for supremacy in autonomous driving is escalating in mainland China, as major electric vehicle (EV) makers speed up development of cars with advanced driver assistance systems (ADAS) to lure buyers.

Their effort to build intelligent cars in the world’s largest automotive market represents a threat to Tesla’s position as a global leader in self-driving, analysts said.

“Preliminary autonomous driving systems have emerged as a new battlefront for electric car builders in China because they help propel sales and increase brand awareness,” said Phate Zhang, founder of Shanghai-based electric-car data provider CnEVPost. “The leading players are unanimous that it is necessary to equip their cars with the best hardware and software to compete in the fast-growing market.”

Consultancy Counterpoint Research estimated in a report early this year that about 1 million EVs in China will meet the Level 3 (L3) autonomous driving standard in 2026, and the mainland carmakers will continue to play an important role globally in designing and building self-driving cars.

A typical L3 car has environment detection capability and can make informed decisions, such as accelerating past a slow-moving vehicle, according to standards for autonomous driving set by US-based SAE International. But the drivers are still required to intervene under certain circumstances.

Top mainland EV makers, such as BYD and Li Auto, have all launched new models fitted with ADAS software with L3 capability. However, Beijing has yet to approve the use of L3 and higher autonomous-driving systems on the mainland, with drivers required to keep their hands on the steering wheel at all times.

“Based on my experience, more Chinese customers are looking at autonomous driving technology before making their car purchase decisions,” said Wang Xiaohan, a sales manager with Beijing-based Li Auto, Tesla’s nearest rival on the mainland. Chinese EV makers with superior ADAS can attract more buyers, he added.

Sales of pure electric and hybrid cars in China are the highest in the world, accounting for 65 per cent of the global total in the first half of this year, according to the China Passenger Car Association.

China’s EV industry and supply-chain are now considered global leaders in terms of sales and technology, according to David Xu Daquan, the China president of Bosch, the world’s largest automotive supplier.

But they have yet to prove their proprietary autonomous driving technologies are superior to Tesla’s Full Self-Driving (FSD) software, according to some industry observers.

“Autonomous driving is an area where Chinese EV assemblers and technology providers are still playing catch-up with Tesla,” said Gao Shen, an independent analyst in Shanghai.

The massive efforts made by Chinese players to improve their technologies will be seen when Tesla debuts the FSD on the mainland next year, he added.

Tesla’s software has not yet been approved for use in China, but is expected to enter testing in the first quarter of 2025. In the United States, Tesla charges US$8,000 to install FSD, on top of a US$99 monthly subscription.

Tesla is doubling down on efforts to promote the FSD globally and plans to collect and process data in China to support its mainland operations.

Grace Tao, Tesla’s vice-president of external relations in China, wrote in an article in the official People’s Daily newspaper in April, that autonomous driving would be a key growth driver for the country’s EV sector. She said that the technology will spawn new business models such as robotaxis, a vision that Musk has embraced.

Most ADAS software from Chinese carmakers are available to buyers for free.

In July, Guangzhou-based Xpeng, another Tesla rival in China, announced it had expanded the use of its self-driving system across the mainland in a bid to attract more buyers. The move made Xpeng the first to offer a semi-autonomous driving system nationwide.

Last month, Jiyue, a premium EV maker backed by Chinese search-engine giant Baidu, began taking orders for its second model, Jiyue 07, that features a high level of autonomy.

Supported by Apollo 2.0, a self-driving software developed by Baidu, the sedan has a range of 660km on a single charge, beating Tesla Model 3’s driving range of 606km.

Last October, when Jiyue began delivering the Jiyue 01 SUV, it said the Apollo system could handle most driving situations independently, matching the L4 standard.

Up to 15 per cent of all new EVs on the mainland will have L3 at least by 2026, according to Li Zhenyu, Baidu’s vice-president and head of Apollo intelligent driving business division.

Quad makes it clear to China it’s much more than ‘sea foam’

https://www.scmp.com/opinion/world-opinion/article/3279746/quad-makes-it-clear-china-its-much-more-sea-foam?utm_source=rss_feed

The latest Quad summit took place last Saturday in Wilmington, Delaware – the hometown of US President Joe Biden. The leaders of the United States, Australia, India and Japan gathered for a sixth time since 2021 and capped their meeting with a detailed, expansive statement of more than 5,000 words.

The agreements reached ranged from matters related to the Indo-Pacific and maritime domain awareness, to joint port development, cybersecurity and improving interoperability among coastguards. Extending pandemic public health cooperation and seeking a cure for cervical cancer were also included in the summit.

The subtext was to reiterate a point made in every such meeting of the grouping: the Quad is not an “Asian Nato” and its activities are not aimed at any specific nation.

China remains the invisible elephant in the room, often alluded to but not explicitly mentioned by name. It is instructive that the only references to “China” in the lengthy joint statement were by way of the East and South China Seas.

However, the most substantive takeaway from the summit came from an unintended moment. In an audio feed not meant for public consumption, Biden was overheard telling the other leaders that President Xi Jinping was “looking to buy himself some diplomatic space, in my view, to aggressively pursue China’s interest”. He added that China “continues to behave aggressively, testing us all across the region” on several fronts, “including on economic and technology issues”.

Beijing denounced the summit, with Foreign Ministry spokesman Lin Jian accusing the Quad of being “a tool the US uses to contain China and perpetuate US hegemony”. Lin noted: “Though the US claims that it does not target China, the first topic of the summit is about China and China was made an issue throughout the event. The US is lying through its teeth.”

Linkages between China and the Quad extend as far back as December 2004, when a major tsunami ravaged parts of the Indian Ocean region. India was a first responder in providing humanitarian aid and disaster relief to affected nations, and the US, Japan and Australia soon joined the international aid effort. The seeds of Quad were sown.

The nature of the tsunami response and swift cooperation among the four maritime democracies did not go unnoticed by China. When the US and India sought in 2007 to expand their bilateral naval exercises to strategic talks that also included Australia and Japan, Beijing made vehement protestations and issued démarches – an official diplomatic communication demanding to know the views of the recipient – to each participant. Months after the first Quad meeting, Australia pulled out of the grouping.

Yet the idea of the Quad persisted, remaining dormant until it was revived in 2017. After being elevated to the foreign minister level in 2019, the first virtual Quad summit took place in March 2021 during the Biden administration. The Quad’s importance to Biden is visible in Wilmington being the sixth meeting during Biden’s presidency.

Despite the disruption of the Covid-19 pandemic, the Trump administration began a rewiring of US policy towards China, making the start of US resistance to Beijing’s predatory trade policies and creeping assertiveness in the South China Sea. Biden helped flesh out this policy, and US Defence Secretary Lloyd Austin went on to describe China as a “pacing challenge”.

Biden has used the Quad forum to bolster US leverage against China and deal with the Beijing challenge in a larger multilateral framework, and it is evident this strategy has been reasonably effective.

The US president said in Wilmington that, “We’re democracies who know how to get things done. That’s why, within the first days of my presidency, I reached out to each of your nations to propose we elevate the Quad, make it more consequential. Four years later, our four countries are more strategically aligned than ever before.”

China was initially dismissive of the Quad, with Foreign Minister Wang Yi asserting in 2018 that it was nothing more than “sea foam on the Pacific and Indian oceans”. Since then, however, Beijing has become more wary of the grouping and its ability to check China’s advances.

Within the Quad, Australia and Japan are formal treaty allies of the US. This became more robust in recent years with the three-nation Aukus agreement between the US, Britain and Australia which enables Canberra to acquire nuclear-powered submarines. Japan is a major regional ally of the US and has its own anxieties about Chinese territorial aggressiveness.

India is the odd one out in the Quad. It is not a military ally of the US and is unlikely to become one given its long history of non-alignment and New Delhi’s preference to retain its strategic autonomy.

However, if Beijing pursues its territorial assertiveness against Delhi, as it did in 2020 in the Galwan Valley, that could push India towards becoming a more substantial military partner of the US. The Quad could help facilitate this process. Such a shift would have direct implications for China.

India will play a critical role in determining the military tenor of the Indo-Pacific even after Biden hands the baton to his successor in January 2025, with the Quad forming part of his legacy. The last line in the Quad joint statement is instructive: “The Quad is here to stay.”

China is clearly aware of the reality that the Quad is far from sea foam that will quickly dissipate. Instead, there is a deep and abiding undercurrent that will significantly animate the Indo-Pacific in years to come.

Beijing uses ‘divide and conquer’ tactic with Asean as South China Sea tensions heat up

https://www.scmp.com/news/china/diplomacy/article/3277495/beijing-uses-divide-and-conquer-tactic-asean-south-china-sea-tensions-heat?utm_source=rss_feed

Southeast Asia is playing an ever-growing part in China’s investment and diplomatic decisions, particularly as Beijing’s rivalry with Washington heats up. In the first of a four-part series on China’s ties with Asean, Shi Jiangtao looks at the wider implications of the increasingly adversarial relationship between Beijing and Manila.

Escalating hostilities between Beijing and Manila in the South China Sea has brought the region closer to an undesired conflict, putting Southeast Asia’s growing China conundrum on the spot.

China and the Philippines have exchanged fiery criticism of each other’s “provocative behaviours”, with coastguard vessels from both sides colliding six times since March near two uninhabited flashpoint shoals in the disputed waters.

Despite fears of armed confrontation and a potential larger conflict involving the US, Beijing has doubled down on its high-handed tactics against the Philippines, while ratcheting up efforts to leverage its political, military and economic clout to pull other Southeast Asian countries away from Manila.

According to observers, Beijing is deliberately upping the ante, trying to thwart a united front against China on its doorstep, while escalating pressure in the hope of forcing the Philippines to back down from its robust resistance to China’s expansive maritime claims.

In recent months, as Manila has continued tilting decisively towards Washington, Beijing has launched a charm offensive to woo its Southeast Asian neighbours, with a flurry of high-level diplomatic exchanges and defence engagements, such as joint drills.

Chinese Premier Li Qiang visited Malaysia in June, while Indonesian president-elect Prabowo Subianto and Vietnam’s newly elected Communist Party chief To Lam visited Beijing on their respective maiden overseas trips in April and August.

Also since April, foreign ministers from seven out of the 10 Asean countries, namely Laos, Vietnam, Brunei, Cambodia, Malaysia, Thailand and Indonesia, have been invited to visit China.

Chinese Foreign Minister Wang Yi, who is President Xi Jinping’s top foreign policy aide, has also made trips to Indonesia, Cambodia, Thailand, Laos and Myanmar this year.

According to Lucio Blanco Pitlo III, research fellow at the Asia-Pacific Pathways to Progress Foundation, a Manila-based think tank, Beijing is using its diplomatic clout over Southeast Asian countries to “isolate the Philippines”.

“China will leverage its economic and political influence to diminish regional support for Manila and portray the latter as the provocateur. Beijing may argue that all other claimants are finding ways to manage the long-running row, although not without difficulty, and Manila’s megaphone diplomacy is the outlier,” he said.

Based on the so-called nine-dash line, Beijing claims sovereignty over almost the entire South China Sea, one of the world’s most important and resource-rich waterways. Its claims overlap those of the Philippines, Vietnam, Malaysia, Taiwan and Brunei.

Meanwhile, the Philippines – a US treaty ally – has become increasingly assertive on the maritime dispute under the leadership of President Ferdinand Marcos Jnr. Philippine Defence Secretary Gilberto Teodoro called it “an existential issue” and last year launched a “transparency initiative” to publicise China’s alleged bad behaviour.

“China may also blame the Philippines for heightened power tensions by inviting its rivals who are non-claimants to patrol or sail in the Philippine exclusive economic zone and install missiles and rockets on Philippine soil to put Chinese reefs and mainland targets within range,” Pitlo said.

Highlighting the region’s rising importance to Beijing in the midst of the maritime tensions and its rivalry with the US, China took part in a record 14 joint military exercises in Southeast Asia last year – more than any other part of the world.

Following the first-ever joint coastguard drills between the Philippines and Vietnam last month, China conducted a joint air force drill with Thailand, another US treaty ally. It also held a maritime exercise with Singapore at the start of September.

Last month, China and Indonesia agreed at their first “2+2” joint foreign and defence dialogue in Jakarta to resume bilateral military exercises, which had been suspended since 2015 over disputes around the Natuna Islands.

Like Thailand and Singapore, Indonesia, which is not a claimant in the South China Sea, also conducts joint drills with the US on a regular basis, including hosting a 10-day Washington-led, multi-nation drill that ended on September 5.

According to a study by the Lowy Institute, an Australian think tank, mainland states in Southeast Asia, such as Cambodia, Laos, Myanmar and Vietnam, have favoured military drills with China over the US, while Thailand and the Association of Southeast Asian Nations’ (Asean) five maritime states hold more exercises with Washington.

Ni Lexiong, a Shanghai-based military analyst, said defence cooperation and military drills played an “important and indispensable” role in China’s Asean strategy, as Southeast Asia had figured prominently in the unfolding Cold War-style US-China confrontation.

“The boiling tensions in the South China Sea have made the Philippines the detonator of potential armed conflict between China and the US, a situation other Asean countries have been trying hard to avoid,” he said.

According to Ni, Asean nations seek to maximise their gains by playing both sides. While they do not want to pick a side in the Russia-Ukraine conflict, the China-US rivalry, or Nato’s expanding interests in the Indo-Pacific, it is likely that they see the US and other external actors as a countervailing force to China.

“It is of vital importance for Beijing to make sure that even if it cannot be turned into an ally, Asean would at least remain neutral without taking Washington’s side,” he said. “A divided Asean is of course in China’s interests.”

Andrew Taffer, a research fellow with the Centre for the Study of Chinese Military Affairs at the US National Defence University’s Institute for National Strategic Studies, said that as Beijing’s ties with Manila rapidly deteriorated, it was in China’s interest to ensure relations with its other rivals were healthy.

“On balance, if the objective of a ‘divide and rule’ strategy is to ensure that the rival claimants, and Asean more broadly, don’t form a united front to collectively resist China, we would have to say that China has been successful in this regard,” he said.

According to Carl Thayer, emeritus professor at the University of New South Wales in Australia, over the years, Asean has rarely been able to unify against China’s growing assertiveness in the South China Sea – let alone take collective action.

Amid Asean’s long-stalled negotiations with China over a code of conduct for the South China Sea – which have been ongoing since 2002 – the group has repeatedly made concessions to Beijing. Thayer said this “opened the door for China to ‘divide and conquer’”.

“China hopes the ‘nervous Nellies’ in Asean will put pressure on the Philippines to stand down in order to reduce tensions and the prospect of US intervention,” Thayer said. “Asean members are unlikely to reach consensus to take a firm stand against China or join the US in an anti-China coalition.”

Thayer said he believed China viewed Manila’s efforts to revitalise the Philippines-US alliance as “a major challenge if not threat to China’s regional security ambitions”.

“China’s actions against the Philippines are not only intended to coerce the Philippines, but to send a message to other regional states that accommodation with China is better than confrontation,” he said.

A senior researcher from the government-linked Chinese Academy of Social Sciences (CASS), who spoke on condition of anonymity, noted two points Beijing had vigorously imposed when it csme to Asean’s stance on the South China Sea.

“They may raise concerns but China should not be named directly. The 2016 arbitral ruling is also a taboo subject that no Asean countries talk about publicly except the Philippines,” said the scholar, referring an international arbitral tribunal ruling that rejected China’s claim in the South China Sea.

However, Gregory Poling, a senior fellow and director of the Southeast Asia programme at the Centre for Strategic and International Studies in Washington, said China’s approach to cause division among Southeast Asian nations had its limitations.

“The strategy has mixed success. Cambodia and Laos consistently do China’s bidding in the Asean context, while Beijing is often able to keep disinterested governments like Thailand, Brunei and Malaysia from speaking up,” he said. “But there is little evidence that China has been able to measurably change opinions in Indonesia, Vietnam or Singapore, where the Philippines continue to get quiet support from officials and experts.”

He noted China had grown “much more reactive” over the last three years as it had suddenly found Southeast Asian claimants willing to push back on its use of non-kinetic force and threats to develop oil and gas fields, resupply and expand outposts, and patrol disputed areas.

“Rather than change tack, Beijing has mainly doubled down on these ineffective tactics, particularly towards the Philippines, which have not only failed to dissuade Manila but have created exactly the counter-China coalition of regional and extra-regional states that Beijing wished to avoid,” he said.

“Unfortunately, I see little hope of Beijing changing course in the near term, which means tensions and the risk of escalation will stay high even as China undermines its wider regional and global goals of leadership.”

China is “deliberately upping the ante”, according to Tan See Seng, a research adviser at Singapore’s S. Rajaratnam School of International Studies.

“But whether China is prepared for a shooting war with the US over the South China Sea is anyone’s guess,” he said. “In my view, China’s present calculation is likely based on what happened at Scarborough Shoal in 2012.”

During the 2012 Scarborough Shoal stand-off, according to Tan, despite China reneging on a US-brokered deal it had with the Philippines, the Obama administration decided it had no interest in fighting China “over a bunch of rocks”.

“If so, then China could presumably be banking on the hope that the US – and the Philippines by extension, given its utter dependence on the US – will once again, sooner or later, fold under Chinese pressure,” he said.

However, Taffer said China had been preparing for a conflict in areas along its maritime periphery, including the South and East China seas and the Taiwan Strait.

“But of course it does not want to engage in an armed conflict with the Philippines, which would involve the United States. So, on the one hand, China is preparing for these conflicts – that’s what militaries and aspiring great powers do – but, on the other hand, China is not desirous of such a conflict,” he said.

He cautioned that Beijing would have to continue to be careful as the South China Sea disputes had the potential to drive its rival claimants into Washington’s arms.

“That is why China has been so careful not to cross red lines that would trigger US defence commitments to the Philippines,” he said. “The US factor is really central to China’s calculus in the South China Sea.”

Strengthening US shipbuilding to counter China becomes a focus of lawmakers

https://www.scmp.com/news/china/article/3279977/strengthening-us-shipbuilding-counter-china-becomes-focus-lawmakers?utm_source=rss_feed

Two members of the US Congress said on Wednesday that they would introduce bipartisan legislation to revitalise the US shipbuilding industry amid rising concerns around America’s maritime capacity, national security and economic competitiveness with China.

Representative Mike Waltz, a Republican from Florida, and Senator Mark Kelly, a Democrat from Arizona, announced the upcoming Ships for America Act during an event at the Centre for Strategic and International Studies, a Washington-based think tank.

The bill is one of several China-related priorities discussed by lawmakers on Wednesday, just before Congress goes into recess until after the November 5 elections. Other proposals included removing a “de minimis” threshold for imported Chinese goods and strengthening enforcement against Uygur forced labour.

Kelly and Waltz said the bill would be introduced after lawmakers return to Washington. For it to become law, Congress would need to pass it in both chambers this year, as all pending legislation expires in January and would need reintroduction by the new Congress.

Kelly said the decline in US maritime capabilities was one of the main motivations for the bill. He said that at the end of World War II, the US had “10,000 ocean-going merchant vessels in US trade flying a US flag, with US crew members”.

“Today, that number has fallen even further. It’s down to about 80 ships operating in international commerce flying the US flag.”

Waltz pointed to China’s dominant position in global shipbuilding. In 2023, he said, China received over 1,500 orders for new ships, while the US got five. The lawmakers also estimated that China now produces 50 per cent of global shipping, while the US accounts for only 0.2 per cent.

“We talk a lot about China’s ability to turn off things that they now produce, and we no longer do, like pharmaceuticals or rare earth minerals or the fact that most of our chips are produced now in Taiwan, under threat by China,” Waltz said.

“But they literally could turn off our entire economy by essentially choking off that shipping fleet.”

The proposed legislation aims to address this disparity through a multi-pronged approach. Kelly outlined its main components, including regulatory reform and financial support for the industry, like tax credits; building up shipbuilding capacity; and rebuilding the maritime workforce.

Kelly also called for a coordinated government approach, asking for a joint effort between the Departments of Defence, Commerce and Treasury.

Waltz and Kelly said they were optimistic that the legislation would be widely supported, and referred to the extensive consultations with industry stakeholders, shipping companies and labour unions during the drafting of the bill.

At a separate event on Wednesday, Representative John Moolenaar, a Republican from Michigan and chair of the US House Select Committee on the Chinese Communist Party, said Chinese companies posed significant national security risks to the US shipbuilding industry.

The US has tried to cut its dependence on Chinese goods that could pose national security threats to its strategic sectors. In May, US President Joe Biden’s administration announced a 25 per cent tariff on Chinese steel and aluminium imports, including cranes. It has also turned to allies like Japan and South Korea to help build its own shipbuilding industry.

Moolenaar pointed out that the House select committee recently discovered that Shanghai Zhenhua Heavy Industries (ZPMC) – the world’s largest manufacturer of port machineries, which produced 80 per cent of ship-to-shore cranes in operation at US ports – has surveillance capability.

An investigation by the committee, formed in January 2023 after Republicans took control of the House in midterm elections, found in September that ZPMC installed unauthorised cellular modems in its cranes that could be potentially accessed by Chinese government entities. ZPMC denied the allegations.

Calling ZPMC a “loaded gun,” Moolenaar said the company “could disrupt US maritime equipment technology at the request of the Chinese government, including during the conflict over Taiwan”.

“We would like to see this manufacturing here in the United States, that should be the first priority,” he said. “However, we also need to partner with our allies and recognise that we can’t do this alone. And it’s going to require leadership to build those alliances.”

Representative Raja Krishnamoorthi of Illinois, the ranking Democrat on the committee, said on Wednesday that Taiwan was “on the front lines of being targeted” and that the US shared “a lot of intelligence” with the island “in terms of what we know about their own vulnerability”.

ZPMC-made cranes are used in Taiwan’s Kaohsiung port, which has prompted concerns since the island’s largest harbour could become a strategic supply base in the event of war.

The two leaders of the House Select Committee on China also stressed the blurred lines between government and private business in China.

“Even Chinese companies that claim to be private may be called upon by the [Communist Party of China] to advance its interest at the expense of ours, at any time for any reason,” said Moolenaar, who expressed support for legislative restrictions on outbound US investment to China in emerging sectors, similar to executive action taken by Biden last year.

Moolenaar said he also backed elimination of the “de minimis” threshold for China, a trade provision that allows companies to ship packages worth under US$800 to the US without paying duties.

Krishnamoorthi, meanwhile, advocated for the continued use of what he called “strategic tariffing”, in line with the Biden administration’s targeted tariffs on Chinese products like electric vehicles and batteries.

He also called for new tools to tackle the practice of transshipment – when companies attempt to bypass tariffs by shipping their products to an intermediary country – as well as stronger enforcement of the Uygur Forced Labour Prevention Act, which requires importers to prove that products made in Xinjiang were not done with forced labour.

The House Select Committee on China would need to be reauthorised to continue beyond January. House Speaker Mike Johnson has indicated that Republicans would renew the body if they retain control of the chamber. All House seats, which have two-year terms, are up for election in November.