Mistral点评

• China chip-packaging giant JCET takes over Shanghai plant of US flash memory maker SanDisk
• China, EU, must reason their way out of EV dispute, former Merkel adviser says
• The real victims when US politicians demonise China and attack Hong Kong
• India’s renewed push for permanent UN Security Council seat faces persistent China roadblock
• China’s National Day box office breaches a billion yuan on day 3, but holiday haul lags
• How China’s 2024 stimulus compares with past packages, and what’s next?
• Is China downplaying ‘restrained’ clash with Vietnamese fishermen near Paracel Islands?
• Economist urges China to sober up after stock rally as boom-bust risk rises
• China to bring Tanzania-Zambia railway back to full speed with US$1 billion boost
• EU expected to back tariffs on China-made EVs despite last-gasp German bid to kill them
• German foreign minister expected to make crucial visit to China in coming days
• China’s ‘golden week’ consumers unwilling to shell out as hairy crab prices tumble
• Burned-out South Korea and China youth embrace nutrient IV therapy to boost energy
• Discounted rents help mainland Chinese retailers snag prime spots in Hong Kong
• US$3 billion blunder: Walmart, Prosus, Tencent miss the China rally with premature exits
• China wants to be the voice of the Global South – but is the world ready for change?
• Philippines may face China-sized hurdle as it makes its case for UN security seat
• China’s goods prove hard to resist as US, EU maintain imports amid tariff bonanza

China chip-packaging giant JCET takes over Shanghai plant of US flash memory maker SanDisk

https://www.scmp.com/tech/big-tech/article/3280961/china-chip-packaging-giant-jcet-takes-over-shanghai-plant-us-flash-memory-maker-sandisk?utm_source=rss_feed

Chinese chip-packaging and testing giant Jiangsu Changjiang Electronics Tech (JCET) has completed its acquisition of an 80 per cent equity stake in the Shanghai plant of US flash memory maker SanDisk, the latest example of a transition in the global semiconductor value chain.

JCET Management, a subsidiary of JCET, obtained that stake through a joint venture with SanDisk Semiconductor (Shanghai), with US$272 million in registered capital, Shanghai-listed JCET said in a filing on September 25. The remaining 20 per cent equity is held by SanDisk China.

The deal – worth US$624 million, according to an announcement by JCET in March – was approved in August by the State Administration for Market Regulation, China’s antitrust body.

Milpitas, California-based SanDisk is a subsidiary of Western Digital, which said a year ago that it planned to spin off its flash memory business amid a supply glut, after merger talks with Japan’s Kioxia stalled. SanDisk’s plant in Shanghai is mainly responsible for developing and testing advanced flash memory storage products.

According to updated information from corporate data provider Tianyancha, JCET CEO Zheng Li has become the new legal representative of SanDisk Semiconductor (Shanghai), replacing Bock Kim Lee, a Western Digital executive who has been appointed as board director of the joint venture.

The entity has expanded its business scope to include semiconductor development, production and design, according to the update.

JCET, based in the eastern province of Jiangsu, is China’s leading chip-packaging firm, holding over a third of the market by revenue. The purchase of the SanDisk plant is expected to enlarge JCET’s share in the data storage industry, and deepen its partnership with Western Digital, a long-term client, the Chinese company said in March.

Separately, state-owned conglomerate China Resources Group recently paid US$1.6 billion to buy a 22.5 per cent stake in JCET. That stake previously belonged to a subsidiary of Semiconductor Manufacturing International Corporation, China’s top chip foundry, and the China Integrated Circuit Industry Investment Fund, a state initiative supporting the country’s semiconductor industry.

JCET’s second-quarter revenue rose 36.9 per cent from a year ago to 8.6 billion yuan (US$1.2 billion), while profit grew 25.5 per cent to 480 million yuan, according to its financial statements.

China, EU, must reason their way out of EV dispute, former Merkel adviser says

https://www.scmp.com/economy/global-economy/article/3280962/china-eu-must-reason-their-way-out-ev-dispute-former-merkel-adviser-says?utm_source=rss_feed

Shortly before new European Union tariffs on Chinese-made electric vehicles (EVs) are expected to enter into force, a former economic adviser to Angela Merkel urged both sides to reach a solution through settlement and avoid “punitive” measures.

With the EU’s 27 member states slated to hold a crucial vote on Friday over additional duties of up to 35.3 per cent on the country's EVs – a hefty increase which could remain in effect for five years – Lars-Hendrik Roller suggested officials from both sides of the dispute find a “mutual and beneficial” solution before the new taxes are imposed.

European policymakers have accused Beijing of creating overcapacity in the sector by supporting major EV makers with subsidies, subsequently distorting markets with cheaper models. China has rejected these claims, with its finance minister dismissing them as “groundless”.

Roller – director general for economic and financial policy at the German chancellor’s office from 2011 to 2022 – tends toward diplomacy in his own stance on the disagreement. “I think the answer to the overcapacity problem … is not trade war, but multilateral solutions where we cooperate and solve the problem,” he said in an interview on September 24.

“It’s always going to be the approach – let’s talk, let’s solve the problems, and let’s not escalate, because in the end we will all lose,” said Roller, also the founder and chair of Berlin Global Dialogue. “We have to make sure to not fall into the independence trap. We have to build common ground, where possible, so that everybody can benefit.”

Roller recalled from his time in government that overcapacity concerns related to China had been present for “a number of years”, with the G20 trying to work out a multilateral approach on steel. China had also made “some offers” in the past, he said.

“In the end it didn’t work, and we started imposing tariffs on each other for steel and aluminium, which I think is the second-best solution,” he said.

Trade tensions between China and the EU have risen since last year, when the bloc launched an investigation into the subsidies granted to certain manufacturers. A call-and-response pattern was soon established, with pressure from Beijing ramping up as the EU began to act.

Between June and September, China launched an anti-dumping investigation into EU pork, stepped up its audit of European brandy and launched its own anti-subsidy investigation into the region’s dairy sector. Some efforts at accommodation have also been made, with Beijing offering to set a minimum price on EVs exported to the EU in exchange for a tariff backtrack.

“I think it is important that we talk to each other,” Roller said. “Good dialogue is the foundation for solutions that can contribute to both Chinese and European interests. In the end, it is always about solving problems together.”

The former adviser to Merkel – whose tenure was characterised by a greater openness to engagement with China than many other Western heads of state – suggested joint ventures between Chinese and German companies could be one such solution, as some in Europe have observed the self-improvement German firms have undergone to stay competitive.

“We have done a lot of joint ventures in China, where actually German technology was very advanced, and now Chinese technology in some areas is at least as advanced, perhaps even more,” he said.

“So I think joint ventures in Europe with Chinese companies may make sense, where we cooperate rather than out-compete each other.”

Regarding the frequent calls for diplomatic and economic de-risking made by European Commission president Ursula von der Leyen, Roller said national security and dependency issues should be dealt with, but “nationalistic solutions” should be avoided.

“I think a balanced approach towards risk and not being too dependent on any country or any company which has monopoly power is a good thing,” he added.

The EU is not alone in its attempts to stem the flow of Chinese-made EVs. The United States announced it would impose tariffs of 100 per cent on the country’s vehicles in May, and its northern neighbour Canada followed suit in August with identical EV taxes taking effect October 1, and 25 per cent levies on China’s aluminium and steel beginning October 15.

Chinese commerce minister Wang Wentao will talk to his American counterpart Gina Raimondo about US restrictions on electric vehicles, state news agency Xinhua said. A date was not given for the discussion.

On the possible return of Donald Trump to the White House after November’s US presidential election, Roller urged European stakeholders to do their “homework” to “work on” the issues the region faces.

“[Trump] will impose tariffs, as he has already said. And this is not a good thing, for us, for anybody,” he said.

“I hope that we will [have] the European answer in terms of being strong economically. Many of the problems that we have in Europe are independent of who wins in the United States.”

The real victims when US politicians demonise China and attack Hong Kong

https://www.scmp.com/opinion/hong-kong-opinion/article/3280823/real-victims-when-us-politicians-demonise-china-and-attack-hong-kong?utm_source=rss_feed

Last month, the US House of Representatives introduced more than two dozen bills in what was designated “China Week”, to address issues related to China ranging from trade and economic espionage to biosecurity and farmland acquisition.

The bills were introduced in a single package vote and passed using a fast-track procedure requiring a majority of two-thirds of those present and voting. While all 25 bills were approved, their future is still being determined. Given the complexity of the issues involved, pressing problems at home and conflicts abroad, the Senate must consider them in the limited remaining legislative days.

But this has not reduced the political motivation to advance these bills and send a message of being tough on China, while deflecting the spotlight from some of the country’s more critical issues.

The emphasis on a tough stance reflects broader concerns about national competitiveness. The narrative of a rising China amplifies fears of US economic decline and diminished global influence, leading to calls for protectionist policies that contradict the free trade principles essential for economic growth and international harmony.

The Committee of 100, a non-profit organisation representing prominent Chinese Americans for 35 years, expressed deep concern over “China Week”, fearing it may exacerbate racial profiling and hostility towards Chinese-Americans rather than focus on pressing issues at home.

They strongly condemned the passage of two bills in particular, one looking to revive the China Initiative, which fostered xenophobia and harmed the Asian-American and Pacific Islander (AAPI) community, and the other to add the secretary of agriculture to the Committee on Foreign Investment.

Both bills are seen as legitimising harmful narratives about immigrants and several leading civil rights organisations for Asian-Americans have voiced concerns.

Despite the narrative that portrays China as a formidable adversary, it is essential to recognise that China has consistently sought closer ties with the United States. China has aimed to address global challenges such as climate change and public health through trade partnerships, cultural exchanges and diplomatic discussions. These initiatives reflect a genuine desire for cooperation, underscoring the need for a more nuanced understanding of US-China relations in Washington.

With the presidential election just a month away, lawmakers from both parties have ratcheted up their rhetoric, presenting China’s rise as a direct threat to US economic and geopolitical interests.

Former president Donald Trump’s anti-immigrant statements and spreading of false rumours about Haitians living in Springfield are indicative of the broader patterns of xenophobia and misinformation contributing to a climate of fear and division within immigrant communities.

This messaging appeals to factions across an American public that is increasingly anxious about financial inequality, high crime rates, social division and misinformation, among other things, creating widespread feelings of vulnerability and distrust. Thus, portraying China as an adversary is a politically effective strategy to galvanise voter support.

The proposed Hong Kong Economic and Trade Office (HKETO) Certification Act illustrates how the US uses the city as a symbolic pawn in its broader strategy towards China.

The bill, passed in the House of Representatives, directly threatens Hong Kong’s economic interests. If enacted, it would require the US government to certify if HKETOs in Washington, New York and San Francisco can keep their privileges and immunities. If the offices no longer qualify, they must cease operations within 180 days.

For over 30 years, HKETOs have played a crucial role in promoting trade and investment, connecting American businesses with opportunities in Hong Kong, and supporting US companies looking to invest in the city.

In 2007, I had the privilege of joining a delegation visiting Washington led by Leung Chun-ying, then convenor of the non-official members of the Executive Council of Hong Kong. We engaged with American political leaders and think tanks. The steadfast support from the HKETOs significantly bolstered our efforts, leading to highly productive and impactful meetings.

However, the current pervasive trend of China-bashing means that many people are reluctant to engage in dialogue or meet Chinese counterparts due to concerns about potential repercussions.

Current politically motivated tactics undermine US interests and businesses operating in Hong Kong, strain diplomatic relations, create uncertainty and limit cultural exchanges.

More than ever, embracing a nuanced perspective that recognises the complexities of US-China relations is crucial. By fostering constructive dialogue and mutual understanding, we can move towards a future that prioritises cooperation over conflict, ultimately benefiting citizens and the global community.

As we navigate these challenges, we should remember that strong leadership does not lie in demonising perceived adversaries but in forging partnerships that address shared challenges, ensuring a more stable and prosperous world.

India’s renewed push for permanent UN Security Council seat faces persistent China roadblock

https://www.scmp.com/week-asia/politics/article/3280762/indias-renewed-push-permanent-un-security-council-seat-faces-persistent-china-roadblock?utm_source=rss_feed

India has renewed its long-standing bid for a permanent position in the United Nations Security Council (UNSC) as it seeks to represent the Global South, but resistance from China is expected to continue to present a significant hurdle.

For decades, India has been pushing for a seat at the table with the UNSC’s five permanent members, also known as the P5 – United Kingdom, China, France, Russia and the United States.

The council – which held its first session in 1946 – represents the victor nations of World War II and is responsible for maintaining international peace and security among the UN’s 193 member states.

China, the only Asian member of the council, has remained outwardly opposed to admitting India to the exclusive group.

In his address at the United Nations General Assembly last Saturday, India’s External Affairs Minister Subrahmanyam Jaishankar called for a “more representative” UN.

“Large parts of the world cannot be left behind when it comes to deciding the key issues of our times,” he said, reflecting Prime Minister Narendra Modi’s previous critique of the current council’s skewed representation.

In July last year, Modi said: “How can we talk of it as a primary organ of a global body, when entire continents of Africa and Latin America are ignored? How can it claim to speak for the world when its most populous country, and its largest democracy, is not a permanent member?”

Last week, British Prime Minister Keir Starmer and French President Emmanuel Macron publicly endorsed India’s bid to join the council. And during a visit by Modi to the US last month, US President Joe Biden said Washington recognised a need to reform global institutions to “reflect India’s important voice”.

Russia has also backed India’s effort, with Foreign Minister Sergey Lavrov saying in July that his country was in support of India getting a permanent seat on the council.

However, analysts caution that India’s chances of joining the UNSC remain slim due to its escalating tensions with China, stemming from a territorial dispute in the Himalayas and ongoing competition for regional influence.

“China is the only Asian power in the UNSC, so it definitely would not want a big competitor like India there,” said Dhananjay Tripathi, an associate professor in the Department of International Relations at South Asian University in New Delhi.

Beijing would like to maintain its position as the only Asian country with a permanent seat on the council, he added, noting it was unlikely that there would be any “fundamental changes” in its relations with India that would change this view.

The five permanent members of the council have veto power to single-handedly block any UN resolutions. China has previously used this blocking power in support of Pakistan over the Kashmir conflict with India.

Analysts say this presents a challenge for India, which aims to assert itself as a leading global power, maintain influence in the Asia-Pacific, and position itself as a champion of the Global South.

“India has wanted to play a certain role in world politics that at times can get curtailed because it’s not a part of the UNSC’s permanent membership,” Tripathi said. “On some issues, India feels that it has to be on the high table to defend its interest in world politics.”

For China, the issue also lies in its perception that India is growing closer to the West and, more specifically, the US, according to Srikanth Kondapalli, dean of the School of International Studies and a professor of China studies at Jawaharlal Nehru University in India.

“If India joins the Security Council with veto power, there may be concerns it may not side with China on certain issues,” he said. “As of now, the five countries don’t have to accommodate any other countries when it comes to a vote.”

Tripathi said more clarity was needed from the other permanent members on whether they supported India’s bid to join the UNSC with or without veto powers.

“If India joins without the veto power, it may not be able to play a vital, critical or relevant role in the UNSC,” he added.

Alongside India, the other members of the “Group of Four” countries – Germany, Japan and Brazil – have also sought permanent seats on the UN body.

While China has said it supports reforms to give developing nations “a greater say”, it has stopped short of providing specific proposals or naming countries.

Last year, China’s top diplomat Wang Yi said reform should “increase the representation and voice of developing countries, allowing more small and medium-sized countries to have more opportunities to participate in the decision-making of the council”.

Analysts suggest that another factor fuelling China’s resistance to India’s membership is that both countries see themselves as champions of the Global South, competing for greater influence in the region.

Kondapalli said while the “China factor is unlikely to go away”, India could strengthen its bid by further aligning itself with countries in the Global South.

“But China could be a spoiler in this by convincing some countries not to align with India,” he said. “It very much depends on India’s ability to convince these countries.”

Tripathi concurred, saying that greater support from Global South countries would also allow India to “put more pressure” on the current council members for more immediate reform.

“There is a closer eye on India now more than ever as a growing economic power … how India engages with its neighbours, whether it is playing a constructive role in the issues that are critical to the region will all be very important,” he said.

China’s National Day box office breaches a billion yuan on day 3, but holiday haul lags

https://www.scmp.com/economy/economic-indicators/article/3280971/chinas-national-day-box-office-breaches-billion-yuan-day-3-holiday-haul-lags?utm_source=rss_feed

China’s box office bookings for the ongoing National Day holiday period had surpassed 1 billion yuan (US$142 million) as of Thursday morning, according to box office tracker Dengta Data, but the industry remains under pressure compared with years past.

This year’s bookings crossed the 1 billion yuan mark on the third day of the seven-day “golden week” holiday, which started on Tuesday, compared with last year, when the milestone figure was reached on the second night.

While the box office saw a strong start to the season with 494 million yuan on Tuesday – a 15 per cent rise from last year – its pace soon slackened.

Chinese media outlets were predicting that the box office revenue during the holiday could climb to between 2 billion and 2.7 billion yuan this year. That would see revenue potentially fall short of last year’s 2.73 billion haul, which benefited from the holiday being a day longer, owing to the timing of the Mid-Autumn Festival.

By Thursday morning, historical war film The Volunteers: The Battle of Life and Death was in the lead with about 364 million yuan from 8.7 million tickets sold.

Directed by Chen Kaige, the film is the second instalment of a planned trilogy on the Korean war. The first part, To the War, placed third in the National Day box office standings last year.

Also by Thursday morning, sci-fi action film 749 Bureau had generated 270 million yuan, and crime drama Tiger Wolf Rabbit rounded out the top three with 157 million yuan. The figures include presales and advanced screenings.

Major films are typically released over extended holidays in China to capitalise on increased audience availability and spending.

The National Day golden week marks the country’s second-largest film season after the Spring Festival holiday.

China’s film industry is far from fully recovered from the pandemic, nearly two years after the country moved away from its stringent zero-Covid policy that restricted public gatherings and took a toll on the domestic box office.

Despite a strong showing during the Spring Festival holiday in February, China’s box office has struggled to gain momentum for most of the year.

The recent lacklustre summer season brought in only 11.6 billion yuan, according to ticketing platform Maoyan Entertainment.

This marked a sharp decline of more than 40 per cent from last summer’s 20.6 billion yuan and failed to reach the 17.6 billion yuan earned in the pre-pandemic summer of 2019.

Film critics and industry insiders attributed the weak performance to this summer’s underwhelming releases, sluggish consumption, and the rising popularity of short videos and micro dramas as entertainment alternatives.

A total of 10 new films hit Chinese theatres this holiday. Besides the top three, others include High Forces starring Andy Lau and Zhang Zifeng, and the family-friendly comedy Panda Plan with Jackie Chan.

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How China’s 2024 stimulus compares with past packages, and what’s next?

https://www.scmp.com/economy/policy/article/3280948/how-chinas-2024-stimulus-compares-past-packages-and-whats-next?utm_source=rss_feed

Chinese leaders surprised the world last week by announcing wide-ranging stimulus measures and issuing a rallying cry to Communist Party officials in a bid to lift a weary property sector, stoke consumption and revive capital markets – all hallmarks of China’s economically challenging 2024.

China has tried writ-large stimulus before. Here we take a look at what has been done in the past, and what to expect in the near future, according to two international investment banks.

The total size of China’s stimulus package this year, including plans announced last week, is estimated to be about 7.5 trillion yuan (US$1.07 trillion), or equivalent to 6 per cent of the country’s GDP in 2024, Deutsche Bank said in a research note on Thursday.

This could “potentially become the largest in history, in nominal terms”, if the government delivers on all of the announced measures, according to Deutsche Bank.

The 7.5-trillion-yuan estimate includes a combined 2.5 trillion yuan cut in mortgage-debt servicing and two new 800 billion yuan “facilities” for the stock market, according to announcements on September 24 by the People’s Bank of China.

The central bank also factored in an estimated 2 trillion yuan worth of bond issuance to help consumers and encourage local government spending, along with an additional 1 trillion yuan in capital for major state-owned banks, as the Politburo meeting on September 26 committed to more fiscal stimulus.

By total value, this year’s stimulus could be China’s largest in history, exceeding that of the policy package implemented during China’s stock market turmoil in 2015, and that of a Covid-19 economic rescue package hatched in 2020, according to the investment bank.

In percentage-of-GDP terms, the 2024 stimulus could rank as the third largest in history, putting it at par with the 2020 stimulus.

China’s stimulus rolled out in 2008 to counter the global financial crisis still ranks highest in GDP percentage terms, the German bank said.

And the 2015 package comes in second because of monetary easing aimed at stabilising the financial markets, it added.

China is poised to implement one of its largest stimulus packages in recent history to support its economy and financial markets, the bank said.

Moreover, the government also signalled that it would take further action if needed.

Such a whatever-it-takes policy tone should help reduce worries that the measures announced so far might not be sufficient to turn the economy around, the bank added.

The Politburo might meet again in October, if policymakers “plan to focus on the economic situation and policy again”, investment bank Goldman Sachs said in a September 27 research note.

The New York-based investment bank pointed to the potential for a National People’s Congress Standing Committee meeting later this month or in early November for the “potential approval” of extrabudgetary government bond quotas.

If new measures are aimed at accommodating external shocks, the Standing Committee meeting could wait until after the US presidential election on November 5, the American bank added.

The Politburo might hold another meeting on economic policies in early to mid-December, while the annual Central Economic Work Conference is likely to be held in mid- to late December, according to the note.

Is China downplaying ‘restrained’ clash with Vietnamese fishermen near Paracel Islands?

https://www.scmp.com/week-asia/politics/article/3280944/china-downplaying-restrained-clash-vietnamese-fishermen-near-paracel-islands?utm_source=rss_feed

Beijing’s playing down of a recent confrontation in the South China Sea in which Vietnam claimed its fishermen were violently beaten by personnel from Chinese ships reflects a consistent strategy to convince the Chinese people of the superpower’s reasonable behaviour in the disputed waterway.

Observers also say the latest incident could be the “tip of the iceberg”, and Hanoi could pivot from its low-key diplomatic approach to its maritime dispute with Beijing if similar incidents were to recur.

Their comments follow a reported attack on a Vietnamese fishing boat on Sunday, with Hanoi protesting to Beijing days after the incident. In response, Beijing’s foreign ministry said “no injuries were found” and that on-site operations to handle a case of illegal fishing were “professional and restrained”.

Abdul Rahman Yaacob, a research fellow with the Australia-based Lowy Institute’s Southeast Asia programme, said although video evidence indicated otherwise, China has consistently maintained that its coastguard or military personnel behaved properly to protect its sovereignty.

“This approach is primarily taken to target the domestic audience – to convince them that Chinese forces are acting in a reasonable manner,” Rahman said.

Vietnam’s foreign ministry said in a statement that Chinese law enforcers beat its fishermen and took away their equipment when their boat was operating near Hoang Sa, Vietnam’s name for the Paracel Islands.

The Paracel Islands, also known as the Xisha Islands in China, is a group of more than 30 islands in the South China Sea located between the coastlines of Vietnam and China. They are currently controlled by China but also claimed by Vietnam.

Vietnamese state media has earlier reported that Chinese personnel boarded a local fishing boat and beat the crew with iron bars, seriously injuring four of them. The alleged Chinese attackers also smashed fishing equipment and took away the Vietnamese crew’s catch.

In interviews with the fishing boat’s crew that were released by Vietnamese media, the fishermen described a “terrifying attack” by about 40 Chinese personnel on two Chinese vessels.

One fisherman said the attackers beat him and other crew members with metre-long steel bars, breaking his arms and legs.

The captain was quoted as saying that the attack was “the most brutal aggression” he had seen during his 15-year career in the waters off the Paracel archipelago.

Collin Koh, a senior fellow at the S. Rajaratnam School of International Studies in Singapore, said this was not the first time Chinese attacks on Vietnamese fishermen had taken place near the Paracels.

“From time to time over the recent decades, this has happened”.

“Chinese enforcement officers were criticised by the Vietnamese authorities for having applied excessive force against the fishermen, and the former would confiscate items, even whole vessels,” Koh said.

Adding that the latest incident might be the “tip of the iceberg”, Koh said there could also be similar cases recently that were unreported or “just hushed down”.

Vietnam has adopted a much lower profile since a major confrontation in the South China Sea in 2014 after China deployed an oil rig in a region in the disputed waterway, leading to a series of anti-China protests followed by unrest and riots across the Southeast Asian nation.

To resolve the 2014 incident, Vietnamese and Chinese authorities met over 30 times in a month, reflecting Hanoi’s approach of using diplomacy primarily to resolve any territorial dispute with China, Rahman said.

“For now, the Vietnamese may utilise diplomatic means to resolve the incident with China,” he said. If such confrontations were to continue and more Vietnamese fishermen were threatened and injured by Chinese authorities, Vietnam might reconsider its approach, he added.

“For example, it could send its coastguard or navy to protect Vietnamese fishermen,” he said.

Pointing out that Vietnam did not want to allow the territorial disputes in the South China Sea to affect its overall good relations with China, Rahman recounted a conversation he had with a Vietnamese official.

“The South China Sea disputes form only 1 per cent of Vietnam-China relations, the other 99 per cent is good, we should not allow that 1 per cent to affect the 99 per cent,” the official had said, according to Rahman.

Benjamin Blandin, a maritime security expert at the Yokosuka Council on Asia-Pacific Studies, said the Chinese response against the Vietnamese fishermen in the latest incident matched a recent increase in Beijing’s aggression against other claimants in the South China Sea.

For instance, China recently deployed its navy and maritime militia ships in Malaysia’s exclusive economic zone, while maintaining a “massive presence” of maritime militia vessels at Sabina Shoal, Iroquois Reef and Whitsun Reef in waters off the Philippines.

“China has always let Vietnamese fishermen operate near the Paracels, usually without much incidents over the years,” Blandin said. Nonetheless, Hanoi’s ongoing reclamation in the South China Sea was seen as “unacceptable” to the Chinese as the action “changes the status quo”, he added.

“China needed to do something to keep face and decided to resort to a simple, cheap, but efficient way to remind Vietnam it still has the capacity to create problems for Vietnam any time it wants,” Blandin said.

A Chinese think tank said in May that Vietnam had reclaimed more land in the South China Sea in the past three years than in the previous four decades, warning that Hanoi’s activities could “complicate and expand” disputes in the waters.

In its report “Construction on Islands and Reefs Occupied by Vietnam, the Philippines and Malaysia in the Nansha Islands”, the Beijing-based Grandview Institution said that until 2019, Hanoi carried out only modest reclamation efforts on the 29 disputed islands and reefs it controlled in the Spratly Islands in the South China Sea.

But it has embarked on major dredging and landfill work on several islands and reefs since then by adding 3 sq km of new land to the original 0.7 sq km of land, far exceeding the construction scale over the previous 40 years, the report said.

Economist urges China to sober up after stock rally as boom-bust risk rises

https://www.scmp.com/economy/china-economy/article/3280921/economist-urges-china-sober-after-stock-rally-boom-bust-risk-rises?utm_source=rss_feed

Having experienced a rare, week-long stock rally after Beijing fired its policy bazooka to boost the economy, a more sober assessment is required as the possibility of a stock crash looms large, an economist has warned.

“Given the current market momentum and our tracking of sentiment on China’s social media, the risk of repeating the epic boom and bust in 2015 could rise rapidly in coming weeks,” said Lu Ting, chief China economist at Japanese investment bank Nomura, on Thursday.

“While investors might still be OK to indulge in the boom for now … we wish Beijing could be more sober.”

Last week, China’s central bank announced a raft of economic stimulus measures, including cutting bank’s reserve requirement ratio and policy interest rate, reducing the mortgage rate for existing housing, as well as introducing policy tools funded with 800 billion yuan (US$113.7 billion) to support the stock markets.

The moves lifted the onshore and offshore markets over the coming days, although the Hong Kong stock market slipped on Thursday.

And while the stock market valuations and leveraging are still far from slipping into a crisis, China’s economy remains in an emergency mode, mainly due to the ongoing property slump, Lu added.

“Beijing will surely roll out a raft of fiscal measures and other supportive policies, but the eventual scale and content of the fiscal package might be quite improvised and uncertain due to the brewing stock bubble and still-controversial debates on what Beijing should focus on,” he said.

Under the worst scenario, a stock market mania would be followed by a crash – similar to 2015 - and Beijing might resort to money printing to contain such a decline, he added.

But it might take on too many stock shares and reduce liquidity, and capital flight could be rampant, causing depreciation of the yuan and restricting the central bank’s capacity to buy up more stocks, he said.

Under the favorable situation, Chinese officials could closely watch the brewing bubbles and take timely measures to calm the frenzied stock markets, while also taking on difficult tasks, including cleaning up the property sector and restructuring the fiscal system, Lu added.

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China to bring Tanzania-Zambia railway back to full speed with US$1 billion boost

https://www.scmp.com/news/china/diplomacy/article/3280038/china-bring-tanzania-zambia-railway-back-full-speed-us1-billion-boost?utm_source=rss_feed

For Beijing, the Tanzania-Zambia railway is “a symbol of China-Africa friendship” – a must-visit stop on any diplomatic tour and China’s largest ever African foreign aid project.

But five decades after it was first built, Tazara, as it is known, has fallen into disrepair, underutilised with only 10 locomotives being used instead of its capacity of 50, and in financial despair.

Now Beijing is stepping in, pledging US$1 billion or more to refurbish the ageing railway.

The decision to help save Tazara, however, is being seen as a direct response to the US announcement of its own African railway infrastructure project, as it bankrolls the refurbishment of the Lobito Corridor between Angola and Zambia through the Democratic Republic of the Congo (DRC).

Observers also say China is keen to get Tazara back to full speed to help transport its mining exports from Zambia and the DRC, as the race for critical minerals used in the production of electric vehicle batteries heats up between China, the European Union and the US.

Tazara has long held a special place for China. Built in the early 1970s, 160 workers lost their lives during its construction, including 69 Chinese nationals. Even now, visiting Chinese diplomats lay flowers at memorials to those who died.

But the 50-year-old railway line needs a serious cash injection.

The deal under discussion would see state-owned China Civil Engineering Construction Corporation (CCECC), a subsidiary of China Railway Construction Corporation (CRCC), rehabilitate the railway. CCECC is negotiating a concession to operate the railway for 30 years to both make the railway profitable and to recoup its investment, before Tazara would be transferred over to the Tanzanian and Zambian governments.

It is a plan that was announced on the sidelines of the Forum on China-Africa Cooperation (FOCAC) summit held in Beijing in early September. Chinese President Xi Jinping, Zambian President Hakainde Hichilema and Tanzanian President Samia Suluhu Hassan witnessed the signing of a deal with CRCC that signalled the commencement of the revitalisation of Tazara, a 1,860km (1,156-mile) line from Zambia’s copperbelt town of Kapiri-Mposhi to the Tanzanian port of Dar es Salaam.

“Upgrading this strategic railway line will create jobs and enhance trade and connectivity in our region,” Hichilema said at the time.

The revitalisation plan will see upgrades of tracks and purchases of new locomotives to increase capacity and help shift more heavy cargo from roads to rail, according to Zambian Transport and Logistics Minister Frank Tayali.

“It is poised to catalyse the much-needed revitalisation of our infrastructure and rolling stock, positioning Tazara to achieve its full potential,” the Tazara Railway Authority said.

“We anticipate that the rehabilitation of both infrastructure and rolling stock will take approximately two years.”

Meanwhile, the railway authority’s head of public relations, Conrad Simuchile, said negotiations over the concession were “still ongoing” with CCECC, Tazara’s original construction company.

“We aim to finalise the concession agreement by the end of the year,” Simuchile said.

The concession will cover a period of up to 30 years, and in that time, Tazara Railway Authority said it was expected that its operational capacity would increase “from the current combined average of 500,000 metric tonnes for all operators to approximately 2 million metric tonnes”.

The upgrade of Tazara comes as the EU and America have announced their own infrastructure investment in the region.

Eyeing critical minerals from resource-rich Zambia and the DRC – where Chinese companies have vast interests – the Lobito Corridor project will see the Western superpowers fund the building of a railway line from the Zambian copperbelt region, through the DRC, to join up with an existing line which runs to the Atlantic port city of Lobito in Angola.

It is the first big infrastructure project that the US has undertaken in Africa in decades. And it might not stop there. Washington recently announced that it might also extend the railway to Tanzania all the way to the Indian Ocean, effectively running the railway right across the African continent.

A major Chinese investment in Tazara has been on and off the negotiating table for more than a decade, according to Tim Zajontz, a research fellow in the Centre for International and Comparative Politics at South Africa’s Stellenbosch University, who has done studies about the railway. He noted that talk of China’s help with the railway’s upgrade long predated America’s new-found interest in Africa’s transport corridors.

Nonetheless, Zajontz said geopolitical considerations had certainly played a role in China’s cost-benefit analysis to take over the railway, which would require significant investment to make a profit.

“It is evident that both China and the West have an interest in exerting a degree of control over transport corridors that provide access to Zambia’s and Congo’s critical minerals,” said Zajontz, who is also a lecturer in global political economy at the University of Freiburg and wrote the book, The Political Economy of China’s Infrastructure Development in Africa.

The timing, too, of announcing the revamp of Tazara at the FOCAC summit, he said, was strategic.

“Announcing such symbolic and large-scale endeavours at the summit is not least intended to counter certain speculations that China may cut back its engagement on the African continent,” Zajontz said.

Critical minerals are at the heart of the Tazara upgrade, according to Lauren Johnston, a China-Africa specialist and an associate professor at the University of Sydney’s China Studies Centre. She said the railway connected to deeply important renewable minerals in the DRC, which produces more than 60 per cent of global cobalt supplies, and Zambia, a major copper producer.

“If this leg remains aged, it may undermine China’s role in Africa’s contemporary railway modernisation and construction agenda. It’s a case of refitting the original,” Johnston said.

“The railway had become rundown and was not fit for the intended new era of railways in the region, let alone China’s modern railway brand.”

She also noted Tazara’s political history.

“The railroad was built to circumvent Western control of South Africa and Zimbabwe,” she said. “It was a symbol of resistance.”

China funded and built Tazara under the leadership of chairman Mao Zedong at a time when the young People’s Republic was itself facing financial difficulties.

At the time, landlocked Zambia was desperate for this railway link after its neighbour, the white-controlled Southern Rhodesia (now Zimbabwe), opposed to the transfer of power to the black majority next door, and cut its only outlet to the sea – the road and rail through Rhodesia to the seaports in southern Africa.

China stepped in after the US and Russia refused to fund a new line, saying it would not make economic sense.

Around 50,000 Chinese workers built the railroad between 1970 and 1975 at a cost of US$500 million via an interest-free loan to be repaid over 30 years.

EU expected to back tariffs on China-made EVs despite last-gasp German bid to kill them

https://www.scmp.com/news/china/diplomacy/article/3280867/eu-expected-back-tariffs-china-made-evs-despite-last-gasp-german-bid-kill-them?utm_source=rss_feed

European Union member states are expected to confirm the imposition of punitive tariffs on Chinese-made electric vehicles in a vote on Friday.

Frantic efforts by the governments of China and Germany to stop the tariffs are expected to fall short, meaning duties of up to 35 per cent will be slapped on imports of the cars from Saturday.

Blocking the tariffs requires 15 member states, accounting for 65 per cent of the bloc’s total population, to vote against them during the confidential procedure.

Capitals received notification of the timing from the European Commission last Friday, along with the final details of the level of duties.

Germany’s ambassador to the EU Michael Clauss said on Tuesday that the bloc’s most powerful member has yet to make up its mind how to vote, but he expects most capitals to abstain on Friday, meaning the “tariffs, in all likelihood, will be confirmed”.

An abstention will not count as a vote against in the EU’s Byzantine procedures. It also offers individual member states some cover from Chinese retaliation, showing that “you don’t want to go against the proposal, but it sends a signal that you aren’t the ones pushing for it”, Clauss told a three-day event in Brussels hosted by Politico.

Populous members such as France, Italy and Poland are expected to vote in favour of the duties, almost guaranteeing their passage.

“I do support the European Commission on that,” French President Emmanuel Macron said on Wednesday in Berlin when asked about the EV probe.

Nonetheless, Beijing has embarked on a vocal campaign to sway EU members and it has launched a series of retaliatory trade probes. It also dangled investment carrots in front of governments such as Spain, which has moved from backing the tariffs to hinting at opposing them.

The scale of Germany’s secret mission to undermine the commission’s findings, however, is only beginning to become clear.

Leading up to the vote, the office of Chancellor Olaf Scholz has been calling other European leaders, fearing the country’s powerful car industry – already facing duties on electric cars made in China – will be in line for reprisals from Beijing.

Scholz said on Wednesday that “we have to protect our economy from unfair trade practices”, but said the focus should be on areas that are “actually damaging our economy, such as steel”.

“Our reaction as the EU must not lead to us damaging ourselves. That is why the negotiations with China on electric vehicles must continue,” he said.

The German industry continues to lobby fiercely against the tariffs, which the commission said were required after a lengthy investigation concluded there were subsidies at “every stage of the supply chain” in China.

“Additional tariffs harm globally active companies in this country and could provoke a trade dispute from which no one gains … the German government should therefore take a clear position,” BMW chief executive Oliver Zipse has said in a statement.

In an explosive newsletter published on Tuesday, Noah Barkin – a Berlin-based specialist in EU-China relations – said Scholz had threatened to withdraw support for Ursula von der Leyen – a German nominee – having a second term as commission president.

“This was complemented by calls from the CEOs of German carmakers to senior European government officials, including at least one conversation with a prime minister, to warn that a vote for the duties would put plants in their countries at risk,” Barkin wrote.

“The government of Czechia, home to Volkswagen’s Skoda, came under acute pressure from German carmakers, I was told. In a third and final stage over the past weeks, Scholz has reverted to pressuring von der Leyen herself. One EU official described the chancellor as going ‘ballistic’ in his attempt to kill the case,” he continued.

Scholz’s chief economic adviser Joerg Kukies warned this week the tariffs “were not a good idea”.

“We are very integrated into global supply chains so a priori we do not think that tariffs are a good idea,” said Kukies, adding that German firms “are still exporting very heavily to China”.

A senior commission source said that its department of trade was “walking on eggshells” as it tries to show Germany it is open to reaching a negotiated settlement while not showing weakness to “relentless” negotiators from Beijing.

Even after Friday’s vote, EV talks will continue, with China pushing Brussels to accept a commitment from its car companies to sell their vehicles at a minimum price.

Insiders believe it will be tricky to cut a deal. Price undertakings are notoriously complex to arrange, and World Trade Organization rules stipulate that they must be set without government involvement.

“Things like voluntary export restrictions or price undertakings are extremely difficult for cars. They’re even very difficult for bicycles,” former WTO director general Pascal Lamy told the same Politico event on Wednesday.

Should the tariffs pass as expected, it will be a fillip for von der Leyen’s tough-talking China agenda as she embarks on a second term.

“The commission will be strengthened at the start of its new mandate, gaining momentum to continue addressing market distortions, critical dependencies, and emerging security challenges across various industries. It will also send a clear signal to Beijing that Brussels must be taken seriously,” said Janka Oertel, director of the Asia programme at the European Council on Foreign Relations.

If it fails, on the other hand, it will “reinforce the notion that there are always enough weak links in the European chain, giving Beijing the upper hand – especially over Berlin”, Oertel said.

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German foreign minister expected to make crucial visit to China in coming days

https://www.scmp.com/news/china/diplomacy/article/3280906/german-foreign-minister-expected-make-crucial-visit-china-coming-days?utm_source=rss_feed

German Foreign Minister Annalena Baerbock is set to visit China in the coming days at a time critical in both the Ukraine war and conflicts in the Middle East, according to people familiar with the matter.

Two sources familiar with discussion about Baerbock’s plan to visit said the trip had been “largely confirmed”. They both declined to be named due to the sensitivity of the matter.

“It is going to happen in the coming days within this month,” said one source, declining to give an exact date.

Also confirming the trip, a second source said there would be “plenty to discuss” during the visit, as both sides needed such an opportunity to exchange views on “various issues”, but declined to give further details.

The trip to Beijing by Germany’s top diplomat would come six months after German chancellor Olaf Scholz’s widely watched trip to China.

The timing of Baerbock’s visit is critical for the Ukraine war as Kyiv seeks to convince Washington of its victory plan and pleads for rapid support before the US presidential elections in November and a possible change of government.

The United States and its Nato allies are voicing increasing unease over China’s support for Russia’s war in Ukraine, which China denies.

On Friday, the US Secretary of State Antony Blinken underscored the US’ “continued concern” with China’s support for Russia’s defence industrial base and war of aggression against Ukraine. He made clear the need for China to “address Russia’s threat to transatlantic security” during his meeting with China’s top diplomat Wang Yi in New York on Friday, according to the State Department readout.

Wang met Baerbock last week on the sidelines of the 79th session of the United Nations General Assembly where the two sides also exchanged views on the conflicts in Ukraine and the Middle East, according to China Daily, a state media outlet, although it did not give further details.

Baerbock’s visit also coincides with escalating tension between Israel and Iran, as Tehran filed more than 180 missiles at Israel on Tuesday and Israeli Prime Minister Benjamin Netanyahu pledged to retaliate.

Ties between Iran and China have warmed in recent years in the face of growing US-China competition and, in the past year, Beijing has increasingly taken the side of the Islamic world as Israel waged war against Hamas.

Baerbock’s scheduled visit to Beijing would come at a critical juncture. The EU member states are expected to decide on Friday whether to make current preliminary tariffs on Chinese EVs permanent. Germany and China are actively working to convince EU members to oppose electric vehicle tariffs.

During their last meeting, Wang expressed hope that Germany and the EU would stick to open cooperation and continue to hold dialogue and consultations with China, according to the Chinese foreign ministry’s readout.

Baerbock was quoted in the Chinese readout as saying China was Germany’s most important trade partner, and that there were a wide range of sectors for bilateral cooperation that would yield mutually beneficial outcomes.

China’s ‘golden week’ consumers unwilling to shell out as hairy crab prices tumble

https://www.scmp.com/economy/china-economy/article/3280797/chinas-golden-week-consumers-unwilling-shell-out-hairy-crab-prices-tumble?utm_source=rss_feed

Prices of one of the most popular gifts handed out during China’s ongoing “golden week” National Day holiday have fallen under continued weak consumer spending.

Hairy crabs are enjoyed for their exceptional flavour and quality, and have long been seen as an ideal gift for companies and wealthy individuals to present to important clients and officials.

But falling prices have raised concerns, since the seven-day holiday, which started on Tuesday, is often seen as an important time of the year to gauge China’s domestic demand, including retail and box office sales, tourism and catering.

Hairy crabs, which are also known as mitten crabs, are palm-sized crustaceans named after their furry claws, which look like fuzzy mittens. Some of the most famous come from Yangcheng Lake in the eastern province of Jiangsu.

And although the supply of hairy crabs has dropped by about 10 per cent this year compared to a year earlier due to high temperatures and typhoons, dealers expect the retail price of the expensive Yangcheng Lake hairy crabs to remain the same or to even fall.

“We have had to reduce the price of gift certificates this year,” said Liang Qing, a hairy crab dealer focusing on the affluent Pearl River Delta market.

“Many customers told us that their business – either domestic or export – is bad and the budget for gift giving has been reduced by half or more.”

Liang added that although the prices shown on the gift certificates was the same as last year, the actual selling price had been discounted by at least 50 per cent.

On leading online-to-offline grocery platform Freshippo, the presale price of a gift certificate for eight fine hairy crabs from the Yangcheng Lake area had been discounted from 2,688 yuan (US$382) to 1,488 yuan

Across other e-commerce platforms, the price of hairy crabs from other regions had dropped to about 10 yuan (US$1.4) per crab.

And the declining prices have also pushed merchants to adjust their strategies to adapt to market demand.

Hairy crabs are being sold via various live commerce platforms, and prices are expected to fall further in late October due to increased supplies.

According to the government-back news website Cnnb, hairy crabs are being sold at wholesale markets for about 60 yuan to 100 yuan per kilogram in Zhejiang, down by about 20 per cent from mid-September.

In addition to hairy crabs, high-end fruit varieties, such as prunes and Shine Muscat grapes, have also seen a significant drop in prices by up to half, according to a CCTV report on Saturday.

In stark contrast, in 2009, state media reported that a Jiangsu businessman had sold 12 pairs of hairy crabs, costing about 99,990 yuan per pair.

The crabs were decorated in gold, while the set also included a box of eight traditional crab-cracking tools made of silver.

The falling prices during this year’s golden week holiday highlight the challenges faced by Beijing as it seeks to shore up consumer confidence.

Consumption contributed 60.5 per cent of gross domestic product growth in the first half of the year.

But China’s retail sales rose by just 3.4 per cent year on year in the first eight months of the year, and by 2.1 per cent in August.

Beijing has rolled out a large-scale trade-in scheme to upgrade its stock of industrial equipment and to drive spending on consumer goods.

But while stimulus measures may drive markets to surge, a recovery in consumption confidence will require time.

Last week, Shanghai also unveiled a 500-million-yuan (US$71.1 million) consumption voucher plan, just a day after Beijing’s raft of interest rate cuts and policy changes were announced as part of efforts to revive China’s struggling economy.

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Burned-out South Korea and China youth embrace nutrient IV therapy to boost energy

https://www.scmp.com/news/people-culture/trending-china/article/3279770/burned-out-south-korea-and-china-youth-embrace-nutrient-iv-therapy-boost-energy?utm_source=rss_feed

Office workers in South Korea and China have taken to intravenous (IV) drips to combat fatigue and restore their energy for work.

Known as intravenous nutrient therapy (IVNT), these drips typically consist of a blend of liquid vitamins and saline, infused directly into the body.

Originally utilised for cancer treatment, joint health, and growth therapies, IVNT has expanded into aesthetic medicine, as noted in a June report from Medical Aesthetics News, a South Korean beauty industry portal.

At the Tox & Fill beauty clinic in Seoul, the cost of nutrient drips ranges from 25,000 to 60,000 won (US$18 to US$45) per session, which lasts approximately 40 minutes. The clinic recommends a weekly infusion.

Sejin Plastic Surgery, another clinic in Seoul, indicates on its website that the Cinderella, garlic, and placenta drips are the most popular blends among its clientele in South Korea.

The Cinderella drip is rich in antioxidants such as alpha-lipoic acid and Vitamin C, with claims that it reduces oxidative stress and slows the ageing process.

The garlic drip, derived from Vitamin B1, leaves a garlicky taste and is said to alleviate fatigue, particularly for those suffering from insomnia.

As for the placenta drip, it contains various components from the placenta, including amino acids, aimed at helping middle-aged women restore skin elasticity.

South Korean experts believe this trend began between 2016 and 2017, coinciding with the investigation of former South Korean president Park Geun-hye for corruption.

In 2016, the National Assembly disclosed that Park’s administration had made 31 purchases of IVNT drips, including the Cinderella, garlic, and placenta treatments, totaling 20 million won (US$15,000) from March 2013 to August 2016.

The media’s focus on IVNT treatments sparked interest, leading to a surge in popularity among exhausted workers seeking a quick energy boost.

“We prefer solutions that yield rapid results. Many office workers under intense pressure rely on nutrient drips,” Kim Jong-wan, a South Korean in his 30s, shared with Southern Weekly.

A survey conducted by South Korea’s Asian Daily found that over half of young people feel mentally and physically drained from the pressures of pursuing success.

Shen Hui, a Chinese student at Ewha Womans University in Seoul, expressed feeling increased competition with her peers. When writing papers, she opts for a garlic drip and has noticed significant benefits.

“The drips are painless. The doctor recommended the garlic drip for people like me who stay up late because it helps alleviate fatigue,” she noted.

Shasha, a 24-year-old student from Yunnan, southwestern China, currently studying in South Korea, mentioned her intent to try the Cinderella drip.

She told the Post: “My South Korean roommate has been receiving Cinderella drips for six months. Her skin looks smoother, and she’s more energetic, but I believe her fitness routine and diet also contribute.”

“Intravenous nutrient infusions bypass the body’s filter system, raising the risk of serious reactions like phlebitis,” said Deng Guifang, a nutritionist at Huazhong University of Science and Technology Xiehe Shenzhen Hospital told the Post.

She advises focusing on gut-based nutrition and following a balanced diet for better overall health.

A 2021 study by South Korea’s National Evidence-based Healthcare Collaborating Agency urged caution regarding IV drips. The study found insufficient evidence supporting their effectiveness and highlighted potential risks of severe side effects, including anaphylactic shock.

Ki Moon-sang, director of Enbi Medical Aesthetics Clinic in South Korea, emphasised that nutrient IV drips should be considered for prevention and supplementation rather than as treatments, advising against over-reliance or misplaced trust.

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Discounted rents help mainland Chinese retailers snag prime spots in Hong Kong

https://www.scmp.com/business/article/3280841/discounted-rents-help-chinese-retailers-snag-prime-spots-hong-kong?utm_source=rss_feed

Hong Kong’s slumping retail market is forcing landlords to extend deeper discounts to tenants, providing opportunities for brands to snap up prime spaces and expand their footprints in the city.

In particular, brands based in mainland China are finding space in high-street shops for a fraction of what they would have paid a few years ago.

“We expect that near-term leasing demand on the high street will be driven by popular mainland retail operators and [food and beverage] chains,” said Cushman & Wakefield in a recent report about the city’s retail market.

In the first seven months of the year, new leases by mainland Chinese brands surged 215 per cent from a year ago, according to JLL.

For example, Shanghai-based baby and kids’ apparel retailer Balabala is set to open its 11th and 12th Hong Kong shops in November, one in the Hopewell Mall Extension in Wan Chai and the other in Telford Plaza in Kowloon Bay.

Both outlets will occupy more than 1,000 sq ft, according to Eric Lee, the company’s general manager for Hong Kong and Singapore. Balabala is owned by Chinese fashion firm Zhejiang Semir Garment.

The company is getting a discount of about 20 per cent compared with 2018 when it opened its first Hong Kong shop, Lee said, though this varies by area.

“We can see opportunities after the Covid pandemic,” he said. “We can see foreign visitors coming to Hong Kong. Meanwhile, local customers usually buy new clothes for their kids whenever they are about to travel overseas.”

The brand chooses locations that are “convenient for local customers” and frequented by office workers, Lee said. Its biggest outlet is in Harbour City in Tsim Sha Tsui, which Lee said is a “landmark” popular with tourists.

“This is a good place for us to build our image in Hong Kong,” he added.

The company gets a slight premium for its products in Hong Kong, compared with mainland China, Lee said. Hong Kong is also advantageous in that having outlets in the city has helped Balabala gain recognition and reputation with landlords overseas as it expands abroad, he said.

“Hong Kong is an international hub, so it’s easier to convince landlords and consumers to accept our brand,” he said. “Every time we talk to them, they always ask us if we have a shop in Hong Kong.”

Balabala has more than 4,000 outlets across China. In Southeast Asia, it will add a second shop in Singapore and venture into Malaysia with three stores this year. It also has six shops in Vietnam.

Meanwhile, Bossini.X, a sporty causal wear brand, and Clarks, the UK-based footwear retailer, have leased new shops on Park Lane Shopper’s Boulevard in Tsim Sha Tsui, according to information from agents.

Clarks leased spaces of 653 sq ft and 671 sq ft on the ground and first floors of the shopping centre on Nathan Road until February, according to information from Midland IC&I. On the same retail strip, which was once a magnet for mainland tourists, Bossini.X leased spaces of 2,866 sq ft and 3,090 sq ft on the ground and first floors for HK$200,000 a month (US$25,728).

Clarks is owned by Chinese company Feifan Lingyue, and Bossini.X is a brand of Hong Kong-based Bossini International Holdings. In turn, both companies are majority-owned by Viva China Holdings, which was established in 2009 by the popular Olympic gymnast turned entrepreneur Li Ning – founder of China’s largest sportswear brand.

Other retailers have been able to secure prime spots in Hong Kong at rents lower than a decade ago.

For example, Spanish fast-fashion brand Mango signed a three-year lease for 14,000 sq ft over two levels at the Asia Standard Tower on Queen’s Road in Central for a monthly rent of HK$1.25 million starting this month. That is 55 per cent below the peak rent of HK$2.8 million British rival Topshop paid for the same space in 2012.

Swiss luxury watchmaker Omega, meanwhile, snapped up a 795 sq ft location adjacent to its current boutique on Russell Street in Causeway Bay for HK$400,000 per month, a discount of more than 70 per cent from a peak in 2018.

From January to September, InvestHK, the agency responsible for attracting foreign investment, has assisted 37 companies with launches or expansions in the city, about a third higher than the number of companies it assisted in the same period last year.

The top source of consumer-product companies was China, followed by Italy, France and India. About 30 per cent of the assisted companies are in fashion, while a fifth of them are in jewellery and watches.

Retail sales in the city continued to contract in July, falling 11.8 per cent to HK$29.1 billion from a year earlier, according to the Census and Statistics Department.

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US$3 billion blunder: Walmart, Prosus, Tencent miss the China rally with premature exits

https://www.scmp.com/business/markets/article/3280839/us3-billion-blunder-walmart-prosus-tencent-miss-china-rally-premature-exits?utm_source=rss_feed

Beijing’s big-bang stimulus may have restored more than US$3 trillion of value to Chinese stocks, but not everyone has been lucky enough to reap that windfall, especially those who timed their exit before the rally took hold.

Retail giant Walmart sold 144.5 million of JD.com’s US-listed shares at US$24.95 each last month, missing out on potential gains of US$2.8 billion had it held on to its stake for another three weeks.

Global investment firm Prosus, which dumped 14.5 million shares of Trip.com at US$51.40 each in a block trade last week, would have been better off by US$225 million. Baidu, too, lost out on additional gains of US$123 million from the sale of 10.5 million shares in the travel agency last week.

Tencent Holdings might also be regretting not holding onto its stake in Futu a little longer. The internet giant sold its stake last week before a 34 per cent surge in the online broker’s share price, leaving potential gains of US$85 million on the table.

These badly timed exits have led to missed opportunities of more than US$3.3 billion, underscoring how Beijing’s massive stimulus package caught China bears off guard. A 27 per cent rally in the CSI 300 Index, which tracks the performance of the 300 largest stocks on the Shanghai and Shenzhen bourses, has put the squeeze on short-sellers, costing them US$6.9 billion in mark-to-market losses, according to an estimate by S3 Partners.

In total, more than US$3 trillion in market value has been restored in Chinese stocks since Beijing unveiled its biggest stimulus bazooka to stop a rot in the property and stock markets. That has also helped China reclaim the biggest share of weight in the MSCI Emerging Markets Index at 27.8 per cent, according to Bloomberg estimates, up from 24.4 per cent in August.

“China’s stimulus is fast and furious. The scope and timing of this package caught many investors off guard,” Mark Mobius, the legendary emerging markets fund manager, wrote in a blog post this week.

“The sheer scope of the measures has provided a surge of confidence in the markets, and many investors – who had been waiting for a reason to jump back in – have seized the opportunity” driven by fear of missing out and cheap valuations, he added.

It remains to be seen whether the current rally could turn into a sustained recovery in Chinese stocks, with the MSCI China Index still 45 per cent lower than the 2021 peak. Lingering concerns about the nation’s economic growth, regulatory uncertainties and geopolitical tensions could still pose risks to investor confidence.

However, bad news could be good news for Chinese stocks going forward, according to BCA research.

“In the near term, further evidence of weak economic performance could spur further equity gains, as they would prompt the expectation for additional policy support,” BCA analysts said in a note earlier this week.

China wants to be the voice of the Global South – but is the world ready for change?

https://www.scmp.com/news/china/diplomacy/article/3280720/china-wants-be-voice-global-south-world-ready-change?utm_source=rss_feed

There was a message in China’s focus on developing countries at the annual UN General Assembly leaders’ meeting last week.

According to observers, China is eyeing greater support from the developing world as it faces increasing isolation from the West, while also seeking to position itself as an important player in the global order.

China made clear its support for developing nations in a position paper released for the 79th session of the General Assembly, a gathering of top officials from around the world that wrapped up in New York on Monday.

The position paper called on the international community to address challenges faced by emerging economies and stressed the need to give developing nations a greater voice and representation, including through changes to the United Nations, which Beijing has long urged.

“China advocates an equal and orderly multipolar world and a universally beneficial and inclusive economic globalisation. It believes in equality between countries big or small, and opposes hegemonism and power politics,” the paper said.

“China holds that countries, regardless of size and strength, should be enabled to take part in decision-making, enjoy their rights and play their roles as equals in the process toward multipolarity.”

The five-point paper also described China as a member of the “Global South”, saying that it “always stands with all countries of the South through thick and thin”.

Chinese Foreign Minister Wang Yi doubled down on Beijing’s positions in his address at the UN general debate on Saturday, saying countries needed to share development opportunities and push for inclusive globalisation.

“All countries, regardless of their size and strength, are equal members of the international community. International affairs should be handled through consultation by all countries,” Wang said, while also calling for the interests of developing nations to be protected.

Amitendu Palit, senior research fellow at the National University of Singapore’s Institute of South Asian Studies, said China’s stance at the UN General Assembly – and its pronounced support for developing countries – were in line with Beijing’s attempts to “break the power hierarchy that dominates multilateral bodies”.

China has in recent years sought to portray itself as a champion and leader of the developing world, challenging the Western-led order. It has also joined a chorus of global voices calling for change in institutions like the UN to give a greater say to developing nations.

“In this regard, it needs to work with the developing countries,” Palit said, though he suggested that reform of UN institutions would be “difficult”.

“China needs to propose an effective alternative for achieving its objectives that will have the support of developing countries.”

According to Courtney Fung, a non-resident fellow with Asia Society Australia, China has three objectives at the UN General Assembly: “to ensure developing countries accept China as a peer; to recast Beijing’s positions on human rights, development and security as standard fare and not deviant; and [to show] China’s policy approaches are more effective than those of the United States”.

Some developing countries, she said, may hold similar positions to China and would allow Beijing to point to its own like-minded cohort.

But Beijing’s rhetoric towards the developing world would be weighed against its actual policy efforts, including its respect for the interests of smaller states.

As an example, Fung cited China’s repeated reference to “legitimate security concerns” in the context of the Ukraine war. She said this could be “interpreted as a comment towards ‘might makes right’, which is problematic for states that need rules to protect their sovereignty”.

Stefanie Kam, an assistant professor at Nanyang Technological University’s Institute of Defence and Strategic Studies, also said China’s support for developing nations could be seen in the context of its efforts to be an “important player in the global order”.

In doing so, Beijing needs to reassure the world of its peaceful rise, advocate for the Global South, and support developing countries in its dual identity as a rising power and a global “peer competitor” to the US, according to Kam.

“Along with China’s global rise and its increasing global footprint, China also recognises the need to proactively address a range of challenges beyond its borders, as evident in its contributions to UN peacekeeping missions, to reflect its role as a responsible global power,” she said.

“Beijing has been actively courting the developing world by advocating for and championing the interests of developing economies. This sits well with Beijing’s desire to provide a more favourable alternative to the US-led liberal order.”

Kam suggested that China’s support for developing economies would likely be followed with “economic inducements” – including through frameworks like the Belt and Road Initiative and other diplomatic engagements – especially as Beijing faces increasing isolation from the West.

These could allow China to “co-opt countries and cultivate strategic allies in the developing world through comprehensive partnerships and mechanisms to advance its overall foreign policy objectives”, she said.

Wang Yiwei, a professor of international relations at Renmin University of China, said that while many developing countries had shown support for China on issues involving human rights and Taiwan, that was not the reason behind Beijing’s support for the developing world.

He stressed that China, as the world’s largest developing country and one of five permanent members of the UN Security Council, had the responsibility to call for reforms and shape the international order into one that was “fair and reasonable”.

“[Developing countries] are not sufficiently represented, they don’t have enough say. Who will speak for them or speak from their perspective?”

Philippines may face China-sized hurdle as it makes its case for UN security seat

https://www.scmp.com/week-asia/politics/article/3280786/philippines-may-face-china-sized-hurdle-it-makes-its-case-un-security-seat?utm_source=rss_feed

The Philippines is campaigning for a non-permanent seat on the UN Security Council (UNSC), a bid analysts say could bolster its diplomatic leverage to address maritime tensions in the South China Sea. However, they warn Beijing’s veto power might hinder these efforts.

Making his country’s case before the United Nations General Assembly in New York, Department of Foreign Affairs Secretary Enrique Manalo said on Sunday that the Philippines “has emphasised that the rule of law and the integrity of the multilateral system must prevail amid the current global challenges”.

He also noted that President Ferdinand Marcos, Jnr, affirmed that “multilateralism remains the single viable platform for collective action against transcendent global challenges.”

In September, Manalo announced the Philippines’ intention to seek support for a non-permanent seat on the council for the 2027-2028 term.

“The Philippines is making positive headway in its campaign for the UNSC, secure in our proven track record of being a dependable partner, pathfinder and peacemaker in world affairs, with eight decades of multilateral diplomacy experience as a founding member of the UN and having previously sat in the UNSC four times,” Manalo said.

Without explicitly naming China, Manalo alluded to rising tensions in the South China Sea.

“Despite irresponsible and dangerous actions against our legitimate activities within our own waters and exclusive economic zone (EEZ), the Philippines remains committed to diplomacy and other peaceful means,” the Philippines’ top diplomat said, adding that the country will abide by the UN Charter and Manila declaration on the peaceful resolution of disputes.

He also rejected narratives portraying the South China Sea as a stage for a “proxy war” between China and the United States.

“We do not accept narratives depicting the South China Sea as a theatre of major power rivalry because they all ignore what is an essential truth: all states in this region have a right to determine their own destiny and secure their own future,” he said.

Non-permanent members of the UN Security Council are elected by the General Assembly for two-year terms, with five seats up for election each year. To win a seat, a candidate country must secure a two-thirds majority of votes from member states. The vote for the 2027-2028 term will be held in mid-2026.

Observers said securing a seat on the Security Council could give Manila a platform “to advocate for its interests.”

Matteo Piasentini, an analyst with the Italian think tank Geopolitica, said Manila’s bid was consistent with its foreign policy goal of internationalising its maritime disputes with Beijing, “highlighting Manila’s role as a responsible member of the international order, observant of international law, norms, and principles.”

“Additionally, being a member of the Security Council provides a platform for informal consultations and dialogue, which may serve as a useful avenue for the Philippines in pursuing its strategy,” Piasentini said.

Still, observers cautioned that raising issues about tensions in the West Philippine Sea – Manila’s term for the portions of the South China Sea within its exclusive economic zone – may have limited impact due to China’s status as a permanent member of the UNSC.

Piasentini said if the Philippines secures a seat on the council, China is unlikely to respond strongly as both countries already engage in various multilateral forums. However, he acknowledged that Beijing could use its veto power to block any resolutions Manila might propose concerning disputes in the South China Sea.

“[The Philippines] has to be realistic too, given the structure of the UN Security Council, with five members, including China, enjoying veto powers,” Nathaniel Candelaria, assistant professor at the University of the Philippines’ political science department, told This Week in Asia.

He added that Manila may face other hurdles, given geopolitical disputes in the South China Sea.

China claims most of the South China Sea, based on its “10-dash line,” which overlaps significantly with the Philippines’ EEZ. An international tribunal ruled in favour of the Philippines in 2016, rejecting China’s claims as inconsistent with international law. Beijing rejected the ruling and continues to assert control, leading to frequent maritime confrontations.

Candelaria said Manila’s hopes for winning a seat may “depend on how it packages its candidacy as a non-permanent member”.

In his speech before the General Assembly, Manalo highlighted the Philippines’ contributions across various UN initiatives, saying the country “offers constructive solutions across the spectrum of the work of the United Nations.”

“The Philippines is a trusted partner, innovative pathfinder, and committed peacemaker. We bring experience, depth, and steadfastness in working with the international community to address common global challenges,” he added.

While a seat on the UNSC could elevate the Philippines’ global influence, observers remain sceptical of the body’s capacity to deter Beijing’s actions in the South China Sea.

“Unfortunately, as we’ve seen many times in the history of the body, great powers that possess veto prerogatives aren’t easily deterred by the Council’s operations. For example, it didn’t stop Russia’s invasion of Ukraine, and recently, in 2024, the US vetoed a resolution that aimed at granting Palestine statehood,” Piasentini said.

Candelaria said that China’s permanent membership also prevents the council from deterring its activities in the disputed waterway.

“Even so, the Philippines can still use the UNSC as a platform to raise these issues. Even if the UNSC will not be able to act on it,” he added.

Meanwhile, Piasentini said that Beijing may likely use its veto powers to strike down any resolution that Manila may try to pass regarding the South China Sea, but added that “this may very well be what the Philippines aims for – to show which of the two is acting responsibly for the sake of international peace and stability.”

China’s goods prove hard to resist as US, EU maintain imports amid tariff bonanza

https://www.scmp.com/economy/global-economy/article/3280830/chinas-goods-prove-hard-resist-us-eu-maintain-imports-amid-tariff-bonanza?utm_source=rss_feed

While China has reduced its reliance on goods from the United States and European Union, a German think tank said, use of the country’s products has increased “significantly” in the West over the past 20 years – even as trade restrictions against the East Asian powerhouse have steadily ramped up.

Though the EU and US need for imports from China can be seen most clearly in machinery and electronic equipment, some degree of dependence exists across a range of industries, the non-profit think tank Mercator Institute for China Studies (Merics) said in an analysis released on Wednesday.

Textiles and furniture were deemed areas of “significant reliance” by authors of the report, which crunched numbers from as far back as 2000.

These findings come in the wake of increased US tariffs on Chinese-made electric vehicles (EVs), EV batteries, solar cells and steel levied this year – the latest development in a six-year trade dispute which began after former US president Donald Trump imposed import duties on US$550 billion worth of Chinese goods.

Over the past year, the EU has stepped up anti-subsidy probes and raised tariffs on Chinese imports, mostly covering goods related to the lucrative EV industry.

The US relied “heavily” on imports from China in 532 of about 5,000 categories in 2022, the think tank said, nearly four times the figure recorded in 2000. The EU’s count for the same year was 421, about three times more than in 2004.

China, however, has relied less on Europe and the US over the past 24 years, the institute said. Specifically, it cut the number of products for which it relies on the US from 116 to 57 and, in the EU, from 235 to 120.

Chinese dependence on shipments from the EU and US has waned steadily since 2004 – a year when the EU and US together accounted for more than half the total, per the institute’s Trade Dependency Database.

The world’s second-largest economy leans more heavily now on commodities such as iron ore and soybeans from other parts of the world, the think tank said.

China’s reduced need for “technology-intensive” inputs from advanced economies has fostered an “asymmetry of dependencies”, the institute’s senior economist François Chimits said in the report.

“The risk of relying on imports of goods from only one foreign partner has [been] vaulted onto the political agenda,” Merics authors said.

But the institute said the US tariffs were “most likely sub-efficient”, advising the EU to evaluate the risks of its dependency on goods from China.

China was the 27-member bloc’s biggest source of imports in 2023, and the second-biggest for the US after Mexico.

In a separate report released this week, a US-based tech analyst cast doubts on the efficacy of decoupling efforts in the US-China supply chain.

Past shipments of US chipmaking equipment to China have already aided in the production of older types of semiconductors, said Richard Barnett, chief marketing officer at the business intelligence platform Supplyframe. Those chips, while not speedy enough to power cutting-edge computing systems, are often used for less demanding applications.

But the modern automotive space – including EVs, Barnett said – “do not typically have drop-in replacements, meaning they are not interchangeable or easily replaceable.”

US officials have barred transfers of advanced tech to China over the past half decade, particularly in semiconductors, and muffled the activities of Chinese tech firms in the US on national security grounds.

China’s chip output grew a steep 40 per cent year on year to 98.1 billion integrated circuits in the first quarter this year, a sign the country is stepping up production of lower-end “mature” chips while the US tries to curb its advances in newer ones.

Data showing limited impact of sanctions on China trade isn’t surprising, said Jayant Menon, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore. Chains for automotive, electronics and electrical machinery may mask other “embedded” chains such as those for their components, he said.

“China is embedded in all supply chains in all key industries,” Menon said. “You can try to remove it superficially, but each of those components has its own supply chain – and China is part of them.”