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• China’s Mexico investment may dwarf official figures, with estimated US$13 billion in play
• Kazakhstan sees more ‘close coordination’ with China in platforms like UN, SCO
• 2024 US congressional races: what to expect and how China plays a role
• Chinese investment could soon pour back into Britain. It’s about time
• Chinese Premier Li Qiang pushes for stronger economic integration with Asean
• Huawei’s China smartphone sales in August beat Apple for first time in 46 months: report
• China moves to elevate and protect its private sector with new draft law
• Mainland Chinese buyers help fuel Hong Kong property sales after cooling measures scrapped
• We ‘all need to pay attention’ to China and Russia in Arctic, says top US commander
• China sets out ambitious timeline for comprehensive data-sharing system by 2030
• India to build 2 nuclear submarines, buy MQ-9B drones from US to counter China
• China warns Japan against ‘external forces’ in talks with Tokyo’s new top diplomat Takeshi Iwaya
• China to end Australian lobster ban by end of year, ‘huge relief’ for industry
• [Sport] Disabled orphans bear brunt of China's overseas adoption ban
• China property: Hangzhou scraps price caps, cuts down payments in bid to stabilise market
• China-Europe trade war ‘unavoidable’ on current trends, EU business leader says
• TikTok owner ByteDance launches US$170 earbuds in China in push into AI wearables
• Dubai’s DP World to use Hong Kong supply chain provider to connect China with the world
• Some Chinese developers are scraping discounts after sales rebound during ‘golden week’
• Praise for fuss-free ‘hanging’ China baby triplets on high-speed train with dad
• Chinese AI tool uncovers new viruses at the speed of a species per second: paper
• China unveils US$70 billion swap tool to enhance stock market liquidity
• US envoy to Japan pushes for Nato-like trade bloc to counter China’s economic coercion
• China expands project ‘white list’ to ease blues in property market
• How much is China’s massive trade-in programme driving consumption of everyday items?
• China stocks: small-cap ETFs send danger signals to bulls in world’s biggest market frenzy
• China, US locked in lose-lose tech battle whoever wins White House, experts say

China’s Mexico investment may dwarf official figures, with estimated US$13 billion in play

https://www.scmp.com/economy/global-economy/article/3281875/chinas-mexico-investment-may-dwarf-official-figures-estimated-us13-billion-play?utm_source=rss_feed

Chinese investment in Mexico – widely perceived as a handy detour around US-imposed tariffs – could be six times more than what is reflected in official data, a risk consultancy estimated in a report released on Thursday.

The Washington-based Rhodium Group has turned up more than 700 completed foreign direct investment transactions from China to the Latin American nation with a cumulative value US$13 billion. Both figures, if accurate, would overshadow official tallies of investment stock – the total accumulated level of direct investments.

Chinese investments mostly take the form of factories that produce motor vehicles, electronics and consumer goods. Many use Mexico’s land border with the US to transport products, bypassing tariffs former US president Donald Trump imposed on direct shipments from China as part of a wider trade war.

“Although it represents a relatively small portion of total foreign investment, Chinese FDI in Mexico is significantly higher than shown in official statistics,” the Rhodium Group said in its China Cross-Border Monitor report.

“While some Chinese firms are eyeing the local Mexican market, overall investment appetite will be shaped by market access to the US.”

Newly announced investments from China have averaged 13 major transactions per year since 2015, worth an average total of US$1 billion for each year through 2020, report authors said. Automotive investments were projected to represent three-quarters of the 2023 total, with parts manufacturers being a particularly substantive source of growth.

The researchers uncovered a total 42 transactions worth US$3.77 billion for last year, and over the first half of this year found 12 Chinese transactions in Mexico worth a combined US$1.43 billion.

Rhodium uses a “more comprehensive method” compared to government officials – including investments that pass through third countries – to track projects in Mexico, said the group’s senior research analyst Armand Meyer. Government tabulations, he added, are “not sufficient to capture foreign direct investment flows accurately”.

Trump, as quoted by American media outlets this week, said if he were elected next month to another term as US president, he would place tariffs of more than 100 per cent on vehicles made in Mexico and sold in the US.

Washington is already pursuing new measures to bar Chinese-made vehicles from the US market, the Rhodium Group said in a separate report this week. Chinese manufacturers would be “effectively shut out” by the new measures”, the group said, leading companies such as electric vehicle maker BYD to scrap or reduce their plans.

Chinese factory investments could also become an issue when the Latin American country sits down with its northern neighbours in January 2026 to review their free trade deal, the United States-Mexico-Canada Agreement, said Evan Ellis, a research professor of Latin American studies at the US Army War College’s Strategic Studies Institute.

The deal, which took effect in 2020, allows products of Mexican make to ship to the US without tariffs, provided they meet certain rules of origin.

In an exclusive interview with the Post in August, Mexican ambassador to China Jesus Seade said China-US tensions were “bad news”, with the US his country’s “first business partner” and China the second. Work was in progress, he said, to attract “Chinese partnership and Chinese investment”.

Meyer, the Rhodium researcher, clarified the report’s findings do not suggest officials are deliberately hiding investment data.

But China’s investment in Mexico may be “masked as investment from elsewhere”, said Naubahar Sharif, head of the public policy division at the Hong Kong University of Science and Technology.

To give one example, Sharif said, a Vietnamese or Indonesian company might invest in Mexico but use investments from China.

Mexico’s Secretariat of Economy reported Chinese investment stock of US$1.2 billion for last year, while China’s Ministry of Commerce placed the figure at US$1.7 billion.

Differences in calculation methods should explain Rhodium’s higher estimates, Ellis said.

“I can’t say who’s right and who’s wrong, but it doesn’t surprise me if there are significant questions and methodological differences regarding what is and what is not Chinese capital,” Ellis said.

Kazakhstan sees more ‘close coordination’ with China in platforms like UN, SCO

https://www.scmp.com/news/china/diplomacy/article/3281832/kazakhstan-sees-more-close-coordination-china-platforms-un-sco?utm_source=rss_feed

Astana will keep working closely with Beijing in multilateral frameworks and aims to take ties between Central Asia and China to “a new level” when it hosts a regional summit next year, a senior Kazakh diplomat says.

Alibek Kuantyrov, deputy foreign minister of Kazakhstan, said the country expects its “close coordination” with China to continue within platforms like the United Nations and the Shanghai Cooperation Organisation.

“Our shared commitment to regional peace, security and development is central to this partnership, and we believe it serves the long-term interests of both Kazakhstan and China,” he said in an interview on Monday.

Astana hosted the annual SCO summit in July, when Belarus was formally accepted as the 10th member of the security organisation following Iran’s inclusion last year.

The expansion of the SCO – founded by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan in 2001 – has again fuelled debate over whether the Eurasian security bloc can become a counterweight to Western alliances such as Nato.

Kuantyrov said the SCO and Nato had different areas of cooperation, noting that the Shanghai Cooperation Organisation was not a military alliance. “I think we should not compare Nato and SCO,” he added.

He said Kazakhstan would continue to play a proactive role in the SCO’s development with a focus on security and economic cooperation and cultural exchanges.

Beijing is trying to forge closer ties with neighbouring Central Asia, including through the first China-Central Asia Summit held in May last year. President Xi Jinping rolled out the red carpet for the leaders of five former Soviet republics – Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan – at the gathering in the ancient Chinese capital of Xian.

A second summit will be hosted by Kazakhstan next year, and Kuantyrov said preparations were under way, with Astana pushing for a “meaningful and substantive” agenda.

“Kazakhstan views this summit as an opportunity to elevate relations between Central Asia and China to a new level of partnership,” he said.

The focus will be joint projects that benefit everyone in the region, including through the Belt and Road Initiative and the Middle Corridor transport route connecting China and Europe, according to Kuantyrov.

“We believe that the summit next year will not only strengthen ties between Central Asia and China but also enhance the region’s role in global trade and diplomacy,” he said.

Kazakhstan has also been a regular at meetings of the Brics bloc and will attend the next summit in Kazan, Russia later this month. Kazakhstan is not a Brics member but Beijing has backed Astana’s bid to join the group of emerging economies.

Kuantyrov said the relationship between Kazakhstan and China was “stronger than ever”.

“Our bilateral ties are founded on a high level of political mutual trust, good neighbourliness and shared interests,” he said.

China has overtaken Russia as Kazakhstan’s largest trading partner, with their imports and exports reaching US$41 billion last year.

Beijing’s growing footprint in Central Asia – which Russia sees as its backyard – has raised questions about whether it will lead to any pushback from Moscow.

Kuantyrov said the development in trade relations reflected “natural economic trends” such as China’s global economic rise and Kazakhstan’s strategic position as a transit hub between Europe and Asia.

He said Kazakhstan’s foreign policy, including its economic relationships, was guided by a principle of balanced and pragmatic diplomacy to maintain strong and mutually beneficial ties with all its key partners – including China and Russia – “without favouring one over the other”.

“Our trade with Russia remains robust, and both countries continue to enjoy strong historical, economic and cultural ties,” he said.

Two-way trade between China and Kazakhstan grew 15.6 per cent in the first eight months of 2024 from a year earlier to reach US$29 billion, according to Chinese customs data.

Astana has targeted annual two-way trade of US$100 billion by 2030.

Chinese investments in Kazakhstan totalled US$664.7 million in the first half of this year, after China became the fourth-largest investor in the Kazakh economy in 2023 with a gross inflow of US$1.7 billion, according to Kuantyrov.

He said Chinese officials had been invited to attend Kazakhstan’s annual global investment round table on November 1 in Astana to discuss “future investment trends within the context of the shifting geopolitical landscape”.

Kuantyrov sees significant potential for more investment cooperation between the two countries. “We are interested in deep processing of agricultural products and minerals, carbon chemistry, automated industry, electronics manufacturing, wood processing, light industry and also energy,” he said.

As strategic competition with China has intensified, the United States and European Union have also been looking to Central Asia.

Both Washington and Brussels have given their backing to the Middle Corridor – also known as the Trans-Caspian International Transport Route – which aims to connect Central Asia with Europe via a route across the Caspian Sea and through the Caucasus that bypasses Russia.

In a joint statement in July, China and Kazakhstan also agreed to strengthen cooperation on the project which could halve the time it takes for Chinese goods to reach European markets compared to sea routes.

While China is an important trading partner, Kuantyrov said Kazakhstan took a “diversified” approach to its international partnerships and was also strengthening ties with the EU, US and Middle East.

“Kazakhstan’s balanced foreign policy ensures that we do not become overly reliant on any single partner, whether economically or politically,” he said. “Our policy is not about choosing sides but about promoting cooperation, stability and development in a complex international environment.”

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2024 US congressional races: what to expect and how China plays a role

https://www.scmp.com/news/china/article/3281919/2024-us-congressional-races-what-expect-and-how-china-plays-role?utm_source=rss_feed

Along with exercising their choice for US president on November 5, American voters will cast their ballots for members of the US Senate and House of Representatives.

In recent years, the US Congress has taken an increasingly active role in shaping the country’s China policy. As a separate branch of government, Congress drafts laws, approves budgets and conducts oversight of the executive branch’s activities.

The political party in control of a congressional chamber sets its legislative and oversight agenda. Bills must clear both chambers before they can become law.

As happens every two years, all 435 House seats are up for grabs. At present, the Republicans hold a 220-212 edge over the Democrats, with three seats vacant.

Democrats need to flip four seats and reclaim two of the three vacant seats to reach the 218 seats required for control of the House, while Republicans hope to expand their narrow majority.

According to the Cook Political Report, which analyses US political races, the House has 192 solid or likely Democratic seats and 201 that are solid or likely going to the Republicans.

The Cook Political Report deploys four ratings in order of increasing competitiveness: solid, likely, lean and toss-up.

In the House, 26 seats are deemed toss-ups, meaning either party has a good chance of winning. Eleven seats have been identified as leaning Democratic, while five lean Republican.

Unlike their House counterparts, senators are elected for six-year terms. In the 100-seat Senate, 34, or about one-third, are up for grabs this cycle.

Republicans are breathing easier in that 38 of their seats are not up for election, while 28 Democratic seats are also off the ballot.

By most accounts, Republicans appear poised to take control of the Senate, which Democrats currently hold with a razor-thin majority of 51 seats.

The Cook Political Report identifies three toss-up races in the Senate – Michigan, Ohio and Wisconsin – along with three that lean Democratic and two that lean Republican.

Even if Democrats were to win all 18 of their safe, likely and leaning Senate seats and take the three toss-ups, they would only have 49 seats.

While China is not central to most campaigns and individual races are unlikely to change the trajectory of China policy, some lawmakers could have outsize impact on specific matters due to their position and backgrounds. Here are some races that could influence future policy or where China has played a notable campaign role.

The retirement of four-term Democratic senator Debbie Stabenow has set up a fight between House Democrat Elissa Slotkin and former Republican House intelligence committee chair Mike Rogers to succeed her. Both have built their reputations on national security and expressed concern over related risks posed by Gotion, a Chinese EV battery maker looking to set up a facility in the state.

Unlike Slotkin, Rogers, who has been out of political office since 2015, highlights tackling China as one of his four priorities on his campaign page. The former FBI agent has funded ads accusing Slotkin of concealing information about the Gotion plant.

Slotkin, a former Pentagon and CIA official, recently led an effort to push Mexico to address national-security concerns about Chinese electric vehicles there that may be shipped to the US, and sponsored legislation to sharpen scrutiny of Chinese real-estate purchases.

Three-term Democratic senator and banking committee chair Sherrod Brown is locked in a tight race with Republican businessman Bernie Moreno.

“Beat Communist China” is among Moreno’s 16 listed campaign priorities, along with restoring American manufacturing and energy independence.

Brown, meanwhile, does not list China as a campaign priority but has long pushed for combating China’s unfair trade practices. Running on a pro-labour track record, Brown has recently intensified pressure on the Biden administration to get tougher on trade, calling for stronger tariffs on Chinese goods and for barring mainland companies from accessing clean-energy tax credits.

Two-term Democratic incumbent Tammy Baldwin has dedicated a page of her campaign website to “winning the competition with China” and in a campaign ad highlighted her record of protecting American jobs from China. Baldwin has recently urged the Biden administration to investigate China’s trade practices in the shipbuilding industry.

Her opponent, Republican businessman Eric Hovde, touts standard party rhetoric on China, focusing on its role in the fentanyl epidemic and purchases of agricultural land.

Republican incumbent Ted Cruz, one of several lawmakers sanctioned by Beijing, faces a strong challenge from Democratic congressman Colin Allred.

As one of Congress’s most vocal China hawks, Cruz has sponsored numerous bills spanning everything from tackling Chinese land purchases near military sites to allowing Taiwan to display its flag at official US events.

For his part, Allred, a member of the House foreign affairs committee, has called for balancing views of China as the US’s “largest trading partner” and holding it “accountable for human-rights abuses and increasing aggression in the region”.

Democratic incumbent Bob Casey Jnr has been a central figure in pushing for stricter controls on outbound investment to China.

On the campaign trail, Casey has attacked his Republican challenger, Dave McCormick, for his time helping to run investor Ray Dalio’s hedge fund Bridgewater Associates, which had significant business in China. McCormick, however, has distanced himself from the firm and made “ending China’s free rein” a campaign priority.

McCormick also oversaw export controls under former president George W. Bush’s Commerce Department and is married to Donald Trump’s former deputy national security adviser, Dina Powell.

With the retirement of one-term independent incumbent Kyrsten Sinema, Democratic congressman Ruben Gallego and his Republican challenger, Kari Lake, are squaring off.

Since taking office in 2015 Gallego, a US Marine corps veteran and House armed services committee member, has led a delegation to Taiwan and made statements calling China an “adversary” and condemning “genocide” in the country. His legislative record on China is thin; earlier this year, Gallego introduced a bill to curb imports of vaping products from China.

Lake, a former TV anchor, has a thinner record on foreign policy, and has adopted typical Republican lines on China.

In Nevada, Democratic senator Jacky Rosen faces a strong challenge from retired US Army captain Sam Brown in a race that is rated as leaning Democratic. In Montana, Democratic senator Jon Tester is up against Republican businessman and former Navy Seal Tim Sheehy in a race that is rated as leaning Republican.

Michelle Steel, a Republican congresswoman from California and member of the House select committee on China, faces a stern test from Democrat Derek Tran, a trial lawyer and US Army veteran.

Steel, first elected to Congress in 2020, has sponsored legislation on increasing military aid to Taiwan and keeping Beijing out of the US military supply chain.

The 2022 midterms saw a politicisation of Asian-American identity, with Steel’s Taiwanese-American challenger portrayed as being favoured by Beijing.

Tran, whose family fled Vietnam and who has made anti-Communist Party comments on the campaign trail, is expected to be better able to fend off any ‘red-scare’ tactics.

Other toss-up races featuring lawmakers active in foreign policy involve Nebraska Republican and armed services committee member Don Bacon; New Jersey Republican and foreign affairs committee member Tom Kean Jnr; and Pennsylvania Democrat and foreign affairs committee member Susan Wild.

Wild serves on the Congressional-Executive Commission on China (CECC), a bicameral, bipartisan body tasked with tracking developments on the mainland in the rule of law and human rights.

Andy Kim, a Democratic congressman from New Jersey, is expected to win a US Senate seat in the state. As a member of the House select committee on China, Kim has called out “reckless” rhetoric relating to Beijing and pushed for considering the bilateral relationship through a more cooperative and long-term lens.

Meanwhile, Republican congressman Jim Banks is running for a vacated US Senate seat in Indiana, which is solidly Republican.

Banks, who also sits on the House select committee on China, has repeatedly pushed for ending China’s preferential trade status and curbing its political and cultural influence in the US. Earlier this year, Banks led a push for an investigation into 2024 US vice-presidential candidate Tim Walz’s China ties.

Republican senator Josh Hawley of Missouri, a strident China hawk since taking office in 2019, holds a safe seat. Hawley has introduced legislation to raise tariffs on Chinese imports and end China’s preferential trade status.

Another of Congress’s loudest and most consistent China critics, Rick Scott of Florida, finds himself in a race that is “likely” pointing to Republican victory.

Scott recently introduced legislation pushing for financial decoupling from China as well as advocated ending congressionally funded travel to China.

Democrat Tim Kaine of Virginia and Angus King of Maine, an independent who caucuses with the Democrats, are expected to win their respective races. Kaine and King sponsored a bipartisan bill that would create a bipartisan commission to develop a “whole-of-government” approach to tackling China.

Most of the 23 members of the House select committee on China are expected to return, including its Republican chair, John Moolenaar of Michigan, and top Democrat, Raja Krishnamoorthi of Illinois.

Should Republicans keep control of the chamber, House Speaker Mike Johnson of Louisiana has indicated that the select committee, which was founded last year, would be renewed.

Long-time congressman Chris Smith of New Jersey, the Republican chair of the Congressional-Executive Commission on China, is expected to win his race.

Democratic congressman Jim McGovern of Massachusetts, another stalwart human-rights hawk on the CECC, holds a safe Democratic seat.

McGovern, the top Democrat on the Rules Committee, was also a key voice against the advancement of the Biosecure Act, which aims to block five Chinese biotech companies from America’s pharmaceutical supply chain.

Asian-American House members like Ted Lieu and Judy Chu, both of California, have each advocated a more careful approach to efforts aimed at addressing China’s economic influence. Their seats are considered safe.

Patrick McHenry, a Republican congressman from North Carolina and chair of the powerful House financial services committee, is not seeking re-election.

McHenry, a relatively young lawmaker at 48, was crucial to blocking legislation aimed at curbing outbound US investment to China.

Cathy McMorris Rodgers, a Republican congresswoman from Washington state and chair of the House energy and commerce committee, is retiring.

McMorris Rodgers was instrumental to advancing legislation to compel ByteDance to divest short-video app TikTok, and has raised concerns about the national-security risks posed by mainland e-commerce platforms.

Ben Cardin of Maryland, a foreign-policy mainstay and chair of the Senate foreign relations committee who sponsored several pieces of legislation on China’s human-rights abuses, is retiring after four decades in Congress.

Other exiting House lawmakers include Ohio Republican Brad Wenstrup, sponsor of the Biosecure Act and leader of the House probe into Covid origins; Missouri Republican Blaine Luetkemeyer, a member of the House select committee on China; and Maryland Democrat Jennifer Wexton, a human-rights advocate who served on the CECC.

Chinese investment could soon pour back into Britain. It’s about time

https://www.scmp.com/opinion/china-opinion/article/3281360/chinese-investment-could-soon-pour-back-britain-its-about-time?utm_source=rss_feed

Although the brief “golden era” of Sino-British relations between 2015 and 2017 is over, an extended period of more sober and pragmatic commercial relations may be at hand. UK media reports point to senior Chinese and British finance ministry officials setting the stage for detailed economic talks in the near future.

Reports also suggest Britain’s new finance minister, Rachel Reeves, may travel to Beijing early next year to discuss trade and investment. The news follows China’s Vice-Premier He Lifeng’s phone call with Reeves last month. Both stated an interest in resuming economic and financial dialogue which has been on ice since 2019.

The new mood music emerged shortly after British Prime Minister Keir Starmer was elected in July. In his second month in office, Starmer spoke on the phone with Chinese President Xi Jinping.

During their call, the leaders talked about potential areas of cooperation such as the economy, trade and education. Both also emphasised nurturing consistent and stable political and economic ties. To launch this fresh policy approach, there would be a series of bilateral dialogues involving their various ministries, which are now swinging into motion.

Interestingly, Starmer’s election campaign prioritised new foreign policy initiatives including a “full audit” of UK-China relations. The mere fact of this use of business terminology might suggest a greater emphasis on economic objectives in preference to volatile geopolitical issues.

During his election campaign, Starmer had championed wealth creation driven by economic growth. Indeed, from the outset, China may well have been considered when the Labour government was setting ambitions to deal with the UK’s deepening economic disparities. The focus would likely be on the economic upgrading of regions outside the wealthy centres of London and surrounding southeast England.

No doubt, turning this complicated objective into reality will require attracting substantial levels of investment into England’s north and midlands. The Labour Party lost its traditional heartlands in an unprecedented swing to the ruling Conservatives in 2019, but which it regained this year. Starmer is well aware that retaining these pivotal regional constituencies would require successfully activating this policy – a feat easier said than done.

After his party won these regions in 2019, then prime minister Boris Johnson talked about “levelling up” between the north and the south. In the end, the agenda fizzled out.

Part of this was due to the Covid-19 pandemic, which hit Britain hard. Even so, longer-term policy errors also played a role, including Johnson’s and successive Conservative governments’ assaults on inward Chinese investment.

In 2020, Johnson’s government decided to remove Chinese telecoms company Huawei Technologies from Britain’s 5G mobile network. The Conservative government then introduced the National Security and Investment Act 2021.

Under Rishi Sunak, the UK forced the highly-publicised sale of a stake held by a Chinese state-owned company in a British nuclear plant project. Major deals involving Chinese investment were blocked, including the purchase of an advanced semiconductor facility in Wales and the licensing of state-of-the-art robot camera technology from Manchester.

In the year to April 2023 Chinese-linked companies accounted for eight of the 10 deals that were called in by UK government ministers for scrutiny. Partly as a result, Chinese inward investment plummeted.

But over a similar subsequent period, there seemed to be a major about-turn in government investigations of Chinese-funded deals. Not one of the 17 investments involving Chinese investors under investigation was blocked.

After Labour took office, a battery project run by a former Chinese diplomat was approved, with only minor conditions attached.

This more accommodating approach to inward Chinese investment, admittedly started by the Conservatives, may be a sign of more open treatment for Chinese investors under the Starmer administration.

Crucially, a further indicator of an accommodative stance towards Chinese investment may arise from the coming high-level financial dialogue. This dialogue could lay the groundwork for encouraging Chinese companies to invest in technology hubs and manufacturing centres across the north of England and other regions.

Data on China’s investment into the United Kingdom underscores its importance to the economy in both supporting Starmer’s ambitions for generating wealth and alleviating economic disparities.

Britain accounts for 28 per cent of total Chinese investment into Europe with cumulative flows into the UK, since 2000, standing at around £68 billion (US$89.4 billion). Among Chinese-owned companies in the UK, 970 enterprises count as the largest, recording a combined turnover of £116 billion (US$151.9 billion) in 2023 and employing around 60,000 workers.

These figures exclude the financial contributions of more than 30,000 other Chinese-owned businesses.

Notably, Starmer’s position on Chinese electric vehicles (EVs), which has so far not fallen in line with the European Union’s and the United States’ imposition of tariffs, may also support Chinese investment in this sector.

Chery, one of China’s largest car producers, is considering setting up facilities in the country. The north of England and the midlands, with their skilled automotive workforces, would clearly benefit most should this move forward.

The benefits of an improved economic rapprochement with China should also extend to trade. In 2023, China was the UK’s sixth largest export market. Some of the top exports included high value-added manufactured goods such as cars, pharmaceuticals and machinery.

In most cases, the industries producing these items are located in regions that Starmer’s government will be most focused on developing, whether from a national economic perspective or in the Labour Party’s own long-term political interests.

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Chinese Premier Li Qiang pushes for stronger economic integration with Asean

https://www.scmp.com/news/china/diplomacy/article/3281895/chinese-premier-li-qiang-pushes-stronger-economic-integration-asean?utm_source=rss_feed

Chinese Premier Li Qiang played up the potential of greater economic integration between Asean and Beijing at a regional summit on Thursday, prompting pushback from the Philippines.

Addressing leaders of the Association of Southeast Asian Nations (Asean) in the Laotian capital Vientiane on Thursday, Li said closer and more organic integration of the two markets would have a major scaling-up effect on the economy.

“The extra-large market is the greatest support we have to promote economic prosperity, and improving market connectivity is an important direction for our further cooperation,” Li said.

He also said China and Asean had completed talks to upgrade their free trade pact, saying it showed China’s “firm support for multilateralism and free trade”.

“Today, I am pleased to announce with the leaders of Asean that the negotiations on the China-Asean Free Trade Area to its 3.0 version have reached a substantial conclusion,” Li said.

“This is an important step in our joint efforts to lead the economic integration of [Southeast and East] Asia.”

The value of trade between China and Asean has grown by more than 15-fold in 20 years, amounting to US$911.7 billion last year, according to Chinese customs data.

China has also been the bloc’s biggest trading partner for more than a decade.

With the growing risk of a Western blockade, China is also looking to Southeast Asia as a potential major market for its new energy industry, particularly for electric vehicles.

“We must see that our market is upgrading comprehensively – whether it is industrial upgrading, digitalisation, green transformation or structural adjustment of imports and exports – so that new investment opportunities are created,” Li told the summit.

Despite the growth in trade, China’s relations with Asean are being tested by territorial disputes in the South China Sea, an issue that Li did not refer to in his address.

China claims nearly the entire waterway of the South China Sea, including areas also claimed by the Philippines, Brunei, Malaysia, and Vietnam.

Chinese vessels have been involved in a number of stand-offs and clashes in the contested waters, most recently on Tuesday with Philippine fishing boats near Scarborough Shoal.

Philippine President Ferdinand Marcos, Jnr said Asean and China could not pretend that all was well on the economic front when there were tensions on the political front, according to Agence France-Presse.

During the summit, Marcos said “you cannot separate economic cooperation from political security”.

Marcos also urged Asean members and China to speed up negotiations on an Asean-China code of conduct for the contested waters.

“In our view, there should be more urgency in the pace of the negotiations of the Asean-China code of conduct,” Marcos said, according to his office.

He said the overall situation in the South China Sea remained “tense and unchanged” and “parties must be earnestly open to seriously managing the differences and to reduce tensions”.

Manila is the most vocal rival claimant in countering Beijing’s growing ambition in the waters. There have been multiple confrontations, sometimes violent, between vessels of the two countries in disputed waters which has raised concerns of escalating into conflicts.

Singaporean Prime Minister Lawrence Wong also told the summit on Wednesday that “the South China Sea is a live and immediate issue, with real risks of an accident spiralling into conflict”.

US Secretary of State Antony Blinken arrived in Laos on Thursday and is likely to raise the issue in talks with Asean leaders on Friday.

Beijing has long accused Washington of being an “external force” meddling in the dispute and damaging regional stability.

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Huawei’s China smartphone sales in August beat Apple for first time in 46 months: report

https://www.scmp.com/tech/big-tech/article/3281858/huaweis-china-smartphone-sales-august-beat-apple-first-time-46-months-report?utm_source=rss_feed

Smartphone sales of Huawei Technologies on the mainland surpassed those of Apple in August – the first time in 46 months, according to a new report by research firm CINNO – as the US-sanctioned company continues to ride on the success of its 5G handset comeback last year.

That aligned with findings from government think tank China Academy of Information and Communications Technology, which reported a 12.7 per cent year-on-year decline in foreign smartphone shipments, including Apple’s iPhone, in the same month. Those shipments fell to 1.87 million units in August, from 2.14 million a year earlier, as domestic smartphone shipments rose 26.7 per cent to 24.05 million during the same period.

CINNO did not immediately respond to a request for comment on Thursday.

Competition between Huawei and Apple in the world’s biggest smartphone market has taken on new significance, as the Shenzhen-based telecommunications equipment giant has seen a revival of its handset business amid the US tech giant’s recent struggles on the mainland.

Strong demand for Huawei’s high-end handset models, such as the Mate and Pura series, as well as foldable smartphones like the recently launched Mate XT, helped lift the firm’s average selling price and wholesale revenue to record highs in the second quarter, according to TechInsights. It said China remains Huawei’s core market, accounting for 89 per cent of its global smartphone shipments.

China’s smartphone market has steadily gained momentum this year, with more consumers gravitating towards local brands. Huawei, which leads the market, had a 17.5 per cent share in the first half, when total domestic shipments exceeded 140 million units to grow 7.7 per cent from a year ago, according to data from research firm IDC.

Huawei’s Mate XT trifold 5G smartphone generated plenty of buzz last month, when it was released on the same day Apple’s iPhone 16 series hit store shelves in almost 60 countries.

Ahead of the new iPhone’s release, Apple fell out of the top-five smartphone vendor rankings in China during the second quarter. Apple’s market share on the mainland shrank to less than 14 per cent, according to IDC.

The Cupertino, California-based tech giant’s revenue in the Greater China region – comprising the mainland, Hong Kong and Taiwan – reached US$14.73 billion in the June quarter, down 6.5 per cent from the same period last year.

Apple’s iPhone assembly orders mostly remained unchanged from previous market estimates, according to Kuo Ming-chi, an Apple-focused analyst at TF International Securities.

“Suppliers had been asked to continue producing two [iPhone 16] Pro models during China’s National Day holiday, indicating that demand for the Pro models has generally met expectations so far,” Kuo wrote in an X post on Wednesday.

While Apple chief executive Tim Cook had expressed confidence over the firm’s long-term prospects in China, mainland consumers’ enthusiasm for the iPhone 16 has suffered because Apple Intelligence – the firm’s on-device artificial intelligence (AI) system – will not be available in the Chinese language until next year. Generative AI systems are also heavily regulated in the country.

“The next focus will be the impact on US market demand [or] shipments after Apple Intelligence becomes available in late October,” Kuo said. He maintains his previous production estimate for the iPhone 16 series at 88 million to 89 million units in the fourth quarter.

China moves to elevate and protect its private sector with new draft law

https://www.scmp.com/economy/policy/article/3281907/china-moves-elevate-and-protect-its-private-sector-new-draft-law?utm_source=rss_feed

Beijing on Thursday released the draft of a widely watched law concerning the promotion of the private sector – the latest step on the road to reviving business confidence that has been consistently hammered by policy uncertainties and a post-Covid economic slowdown.

The private-economy promotion legislation would mark a “systemic approach” to address the sector’s problems and challenges, while helping create a stable, fair, transparent and predictable business environment, the National Development and Reform Commission (NDRC) and the Ministry of Justice said in an online statement.

“The private economy is an important part of the socialist market economy and an important force for China’s modernisation,” said the draft, published on the NDRC’s website to solicit public opinions until November 8.

The 77-article draft has stipulated measures to promote fair market competition; enhance the investment and financing environment; encourage their involvement in scientific projects and technological innovation; and also safeguard their economic rights and interests.

“We must guide a social environment that respects work, innovation and entrepreneurs,” it said.

Particularly, the draft law tries to address the concerns of private entrepreneurs, including protections of private property and personal rights, as well as restrictions on criminal investigations.

It also stipulates the protection of private business assets by requiring law-enforcement agencies to clearly distinguish between economic disputes and economic crimes and to ensure acquittal or non-prosecution in cases that do not constitute a crime or which lack sufficient evidence.

Law-enforcement agencies would be instructed to differentiate between an enterprise’s assets and the operator’s personal property when conducting seizures at private firms, and then ensuring the proper safeguarding of any seized assets.

Usually, public views are considered when a draft law is reviewed by the Standing Committee of the National People’s Congress, China’s top legislature. However, the final approval by lawmakers would come during March’s “two sessions” – the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference.

The draft comes as private firms in the world’s second-largest economy are experiencing a prolonged downturn in business sentiment, largely due to ongoing weak consumer spending, and following China’s strict Covid-19 policies and regulatory crackdowns on private sectors such as the internet and off-campus education.

Private investment, an important gauge of confidence, fell 0.2 per cent from a year earlier in the first eight months of this year, National Bureau of Statistics data showed.

Also, the proportion of private investment among the national fixed-asset investment declined to 51 per cent at the end of August from 51.82 per cent a year earlier and 59.15 per cent in August 2019.

However, private firms play a crucial role in the Chinese economy, contributing to more than half of the national tax revenue and accounting for more than 80 per cent of urban jobs.

Tang Dajie, a senior researcher with the Beijing-based think tank China Enterprise Institute, said the bill does not extend beyond the policies rolled out in recent years.

“It lacks specific target requirements for administrative departments, such as mandating that government procurement allocate 30 per cent of contracts to small and medium-sized enterprises,” he said.

Also, the law mandates that private enterprises adhere to business ethics and integrity, a requirement that Tang said places undue moral constraints on those businesses.

The government should include the promotion of the private economy in the assessment indicators for local cadres and increase penalties for violent online speech against private enterprises, he added.

To provide a better financing environment, the government draft also encourages financial institutions to establish reasonable tolerance thresholds for non-performing loans and to implement a robust due-diligence-exemption mechanism.

Meanwhile, it supports qualified private enterprises in accessing direct financing equally through the issuance of stocks and bonds.

Additional reporting by Frank Chen

Mainland Chinese buyers help fuel Hong Kong property sales after cooling measures scrapped

https://www.scmp.com/business/article/3281885/mainland-chinese-buyers-help-fuel-hong-kong-property-sales-after-cooling-measures-scrapped?utm_source=rss_feed

Homebuyers from the mainland poured into the Hong Kong property market in the first eight months of 2024, setting records for transactions, after the city’s government scrapped all of its cooling measures earlier this year.

Buyers from the mainland accounted for 7,575 primary and secondary property transactions in the first eight months of the year, an increase of 70 per cent from a year earlier, while the value of those deals rose 43 per cent to HK$84.89 billion (US$10.9 billion), Centaline Property Agency said on Wednesday. Both transactions and total deal value hit fresh record highs.

Following the withdrawal of all measures aimed at cooling the local real estate market, mainland buyers have accounted for more than 20 per cent of all transactions for six months in a row. In August, mainland buyers accounted for 22.8 per cent of all deals. In August, 745 of the 3,271 property transactions were registered to mainland buyers, up from 723 in July.

In late February, the government withdrew the Buyer’s Stamp Duty that targeted non-permanent residents and a New Residential Stamp Duty for second-time purchasers. Homeowners were also given a reprieve from paying a Special Stamp Duty if they sold within two years.

“It is expected that more capital from the mainland will be attracted to Hong Kong, especially seeking treasures in the property market,” said Louis Chan Wing-kit, CEO of Centaline Property Agency.

Chan said the market is benefiting from lower interest rates and Beijing’s measures to support the overall economy. He added that commercial banks have lately had a more proactive outlook on mortgage lending. Centaline said a large number of professionals and other buyers from the mainland have been lured to the city with discounted prices from developers.

Districts with new developments are particularly popular with mainland buyers. In August, Kai Tak topped the list, accounting for 132 sales to mainland buyers, or 42 per cent of all such registrations. Tuen Mun ranked second with 55 deals and Sai Ying Pun recorded 19 transactions.

Homebuyers snapped up flats at the Pavilia Forest, developed jointly by New World Development and Far East Consortium, in Kai Tak. Among the 286 transactions in August, 38.5 per cent involved mainland buyers, according to Centaline.

The Uppland at Gold Coast Bay in Tuen Mun, developed by Early Light International Holdings, sold 336 units in August. Centaline said 54 of those transactions were registered to mainland buyers.

“Mainland buyers could drive market sentiment, as some of them are bulk buyers while the majority of buyers in the market are local end users,” said Martin Wong, senior director and head of research at Knight Frank Greater China. “Before interest rates return to a lower level to unleash local purchasing power, the market is reliant on these bulk buyers to drive market sentiment.”

We ‘all need to pay attention’ to China and Russia in Arctic, says top US commander

https://www.scmp.com/news/china/military/article/3281828/we-all-need-pay-attention-china-and-russia-arctic-says-top-us-commander?utm_source=rss_feed

Russia and China’s increasing joint activities in the Arctic are a growing concern to the United States, according to the chairman of the US Joint Chiefs of Staff, General Charles Brown.

“It’s something we all need to be paying attention to and to understand what they’re doing together, and is it for some type of positive benefit to the collective whole, or is that something they’re doing to challenge other nations and other interests?” Brown told the Arctic Chiefs of Defence Conference in Iceland on Wednesday.

“The US remains focused on deterring any malign activities including Russia’s modernisation of capabilities that pose risks to the allied territories and interests, China’s growing influence in the region and the increasing cooperation between the two countries.”

Brown, who chaired this year’s forum, also met his counterparts from Sweden and Norway during the visit, according to the Pentagon.

The US has long recognised the region’s strategic importance, especially to homeland defence during the Cold War, and updated its Arctic strategy in July.

Competition in the Arctic has grown in recent years, as global warming has opened up once-frozen sea lines, offering access to energy and mineral deposits in the sea but also increasing the prospect of maritime disputes.

Last Tuesday, China’s National Day, saw the Chinese coastguard making its first foray into the Arctic during an exercise with their Russian counterparts.

It was the northernmost location where Chinese coastguard vessels had been observed by the US.

According to the China Coast Guard, the operation “significantly expanded the range of offshore operations, thoroughly tested vessels’ ability to carry out missions in unfamiliar waters and provided strong support for actively participating in international and regional maritime governance”.

President Xi Jinping and his Russian counterpart Vladimir Putin announced in 2017 that the two countries would team up to create a “Polar Silk Road”, an alternative shipping route through the Arctic Ocean linking China to Europe.

The plan was designed to reduce dependence on vulnerable maritime chokepoints such as the Strait of Malacca and the Suez Canal.

Since China issued a white paper on the Arctic in 2018, the country has described itself as a “near-Arctic state”, a claim that the US rejected on the grounds it was a meaningless categorisation.

Last month, the Chinese and Russian navies conducted joint drills in the Sea of Japan and the Sea of Okhotsk – two of the major shipping routes on the way from the Chinese coast to the Arctic. The two militaries also staged joint maritime and air patrols over the north Pacific and near the coast of Alaska.

China sets out ambitious timeline for comprehensive data-sharing system by 2030

https://www.scmp.com/news/china/politics/article/3281808/china-sets-out-ambitious-timeline-comprehensive-data-sharing-system-2030?utm_source=rss_feed

China will build a comprehensive system to manage its public data as a “strategic resource” by 2030, according to an ambitious timeline jointly released on Wednesday by the Communist Party’s Central Committee and the State Council.

According to state broadcaster CCTV, the intention is to build up some basic rules for the system by next year, while also improving the supply and quality of data sources so that information sharing and usage will be efficient and compliant in six years’ time.

The plan, dated September 21, also sets a 2025 target for more key industries and regions to be incorporating public data into their operations, as well as for the development of companies that rely on the information as a core production factor.

“Public data generated by party and government agencies at all levels … in the course of performing their duties or providing public services is an important foundational strategic resource for the country,” it said.

According to the document, coordinated government data-sharing will be encouraged by improving data catalogues and ensuring unified management, as well as facilitating both proactive and on-demand sharing, while also clarifying responsibilities.

Data-sharing platforms will be improved to enable sharing across different levels of government – as well as regions, departments and businesses – for a more efficient and improved experience for the public and business sector, it said.

The document also outlines how China intends to balance the competing priorities of opening up its public data and safeguarding national security – a prevailing theme for Beijing in recent years.

The plan is to “promote the orderly opening of public data” with clearly defined rights and responsibilities, as well as the permitted scope of data sharing, enshrined in law to protect national data security, personal information, and trade secrets.

The first priority will be to focus on data that has a clear and direct impact on people’s daily lives that is also in high demand from the public, the document says.

The plan stipulates that the party will lead all data-related work, and directs officials to build strong teams in the field by including data skills in training programmes.

The document also identifies the need to get involved in international exchanges as global rules on public data management are developed.

Beijing has previously flagged its ambition to develop a toolkit for managing public data and last year set up a National Data Administration to improve management at all levels of local government and advance the building of a data infrastructure system.

In December 2022, the State Council issued a document that urged party and government entities at all levels to improve data management and promote interconnectivity.

The document called on the public sector to break down “data silos” while also protecting personal privacy and public safety when using the information.

The latest plan also comes at a challenging time for China’s local governments, with some authorities tempted to sell their data in the face of a slumping economy, which could pose a risk to national security.

Earlier this year, some state media reported cases of local governments considering the move because of rising debts and a declining property market.

India to build 2 nuclear submarines, buy MQ-9B drones from US to counter China

https://www.scmp.com/news/asia/south-asia/article/3281842/india-build-2-nuclear-submarines-buy-mq-9b-drones-us-counter-china?utm_source=rss_feed

India will build two nuclear-powered submarines and buy 31 US-made long-range drones at an estimated cost of 350 billion rupees (US$4.2 billion), senior officials familiar with the matter said, helping to counter China’s military dominance in the region.

India’s Cabinet Committee on Security, headed by Prime Minister Narendra Modi, took the decisions on Wednesday, the people said, asking not be identified because of the sensitive nature of the matter.

The two nuclear-powered boats carrying conventional weapons will be built in local shipyards for the first time. Nuclear-powered vessels are vastly superior to their diesel-electric counterparts: they’re faster, can stay submerged almost indefinitely, and are bigger, allowing them to carry more weapons, equipment and supplies.

Australia is teaming up with the UK and US to build similar boats through a tripartite security partnership called Aukus. Until now, only a few nations – the US, UK, France, China and Russia – have had the technology to deploy and operate nuclear-powered submarines.

The acquisition of these sophisticated platforms will add to India’s ability to monitor and police the vast waters of the Indian Ocean region. The South Asian country is a member of the Quadrilateral Security Dialogue or Quad – a grouping of democracies comprising the US, Australia and Japan – aimed an containing China’s dominance in the region.

India’s Ministry of Defence did not respond to a request for comment.

Separately, India also cleared the purchase of 31 long-range drones made by US defence giant General Atomics. The MQ-9B drone can fly for about 48 hours and carry a payload of about 1,700kg (3,700 pounds). That would add to the Indian navy’s ability to monitor Chinese warships in the southern Indian Ocean, and equip the army to engage targets along the disputed India-Pakistan border in the Himalayas.

India Today earlier reported on the submarine and drone deals.

China warns Japan against ‘external forces’ in talks with Tokyo’s new top diplomat Takeshi Iwaya

https://www.scmp.com/news/china/diplomacy/article/3281836/china-warns-japan-against-external-forces-talks-tokyos-new-top-diplomat-takeshi-iwaya?utm_source=rss_feed

China’s top diplomat warned his new Japanese counterpart against interference from “external forces” in the region amid rising concern in Tokyo about Beijing’s military activities in the region.

In their first phone call on Wednesday, Wang Yi and newly appointed Japanese Foreign Minister Takeshi Iwaya reaffirmed intentions to build constructive and stable bilateral ties, and strengthen strategic and mutually beneficial relations.

Wang hailed “positive signals” from Japan to “foster stable bilateral relations” and said he looked forward to “a new atmosphere within Japan’s new cabinet and new developments in Sino-Japanese relations”, according to the Chinese foreign ministry.

Wang also told Iwaya that maintaining overall peace and stability in the region was a “hard-earned achievement and should be cherished amid a turbulent global environment”, the ministry said.

“The two sides should prevent external forces from provoking disturbances and stirring up regional confrontation,” he added, an apparent reference to Japan’s key ally the United States.

In his 45-minute conversation with Wang, Iwaya expressed “grave concerns” over intensifying Chinese military activities around Japan, including the first confirmed intrusion by Chinese military aircraft into Japanese airspace near islands in the southwestern prefecture of Nagasaki in late August.

Iwaya urged China to provide a thorough explanation of the activity, according to a statement from Japan’s foreign ministry.

He also said Tokyo was “closely monitoring the situation around Taiwan” and stressed the critical importance of peace and stability in the Taiwan Strait for the international community, including Japan.

Wang expressed hope that “Japan would honour its political commitments on the Taiwan question and uphold the one-China principle”.

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

Despite sharing strong economic ties, Tokyo and Beijing have found themselves increasingly at odds on the diplomatic front. Bilateral ties between the two countries have been strained by contentious issues such as wartime grievances and territorial disputes, and Japan’s concerns over China’s escalating military activities.

China is increasingly wary of Japan’s deepening diplomatic and military alliance with the US, including its participation in several US-led regional security partnerships that aim to counter China, as well as its cooperation to help impose export limits on semiconductors.

Relations have been further strained over Tokyo’s discharge of treated nuclear waste water into the sea, and more recently, the stabbing death of a Japanese boy in Shenzhen last month.

Iwaya also urged Beijing to provide a detailed explanation of the case and bolster security measures to protect Japanese nationals, amid growing safety worries among Japanese citizens living in China, according to Japan’s foreign ministry.

Both sides would continue to communicate on the matter, the Japanese statement added.

Days after the attack, Beijing agreed to gradually lift its ban on Japanese fishery products that was implemented a year ago following the Fukushima water discharge. Iwaya called for the early restoration of the imports by China, according to the Japanese ministry.

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China to end Australian lobster ban by end of year, ‘huge relief’ for industry

https://www.scmp.com/economy/global-economy/article/3281864/china-end-australian-lobster-ban-end-year-huge-relief-industry?utm_source=rss_feed

Australian businesses welcomed the removal of China’s trade impediments on its live lobsters, which are set to be dropped after more than three years following a meeting between Chinese Premier Li Qiang and Prime Minister Anthony Albanese on Thursday.

The unofficial import ban will be lifted by the end of the year, and a timeline regarding the resumption of full lobster trade was also agreed by Albanese on the sidelines of the Asean summit in Laos.

China had been a vital market for Australian lobster exporters before 2020, buying 95 per cent of Australia’s A$750 million (US$504 million) worth of lobsters in 2019.

But the Australian seafood was unofficially blocked by Chinese authorities after the previous Morrison administration asked for an investigation into the origins of the coronavirus with other world leaders.

According to the Australia China Business Council, lifting the restrictions is expected to “restore a crucial trade flow, providing much-needed relief to producers and restore confidence in Australia’s broader trade relationship with China”.

“We were delighted when we heard the announcement by the Australian prime minister ... and congratulate the Australian government on reaching this outcome,” said David Olsson, president of Australia China Business Council.

“It is a huge relief for our members and the broader seafood industry.”

Albanese said the removal of the ban “will be in time for Chinese New Year and this will be welcomed by the people engaged in the live lobster industry in places like Geraldton, and South Australia and Tasmania, and so many parts of particularly regional Australia”.

According to Li, the bilateral relationship is pointing to a positive development, with China set to further strengthen the mutual understanding and move forward to develop a fruitful strategic partnership.

“China will take more steps to deepen reforms and provide an internationalised business environment to foreign companies,” he added.

“[We] welcome more Australian companies investing in China, and [we] hope that Australia can give a fair, safe and non-discriminatory environment to Chinese companies.”

Albanese added that the Australian government had continued to “stabilise the relationship without compromising on any of Australia’s national interests”.

His administration had also restored trade with Australia’s largest export market “with our patient, calibrated and deliberate approach”, he added.

China had lifted its tariffs of up to 218.4 per cent on Australian wine in March before also removing bans on imports from five major Australian beef processing facilities in May amid warming ties between the countries.

[Sport] Disabled orphans bear brunt of China's overseas adoption ban

https://www.bbc.com/news/articles/cly39yvde0go

Aimee Welch

Aimee Welch

Meghan Briggs

China property: Hangzhou scraps price caps, cuts down payments in bid to stabilise market

https://www.scmp.com/business/china-business/article/3281817/china-property-hangzhou-scraps-price-caps-cuts-down-payments-bid-stabilise-market?utm_source=rss_feed

Hangzhou, the capital of eastern Zhejiang province, has scrapped price caps for new housing projects, indicating bolder steps are being rolled out by big mainland Chinese cities to stabilise the market.

The local government, home to Chinese tech leaders Alibaba Group Holding and carmaker Geely Auto, removed price restrictions for homes built on newly acquired land in the city, according to a notice from Hangzhou’s housing bureau late on Wednesday.

The city also lowered the down payment requirement to 15 per cent from 20 per cent for first-time homebuyers, and to 15 per cent from 30 per cent for second homes, according to the notice.

“It is expected that housing prices in Hangzhou will [stop] dropping further,” said Yan Yuejin, vice-president of Shanghai-based E-House China Real Estate Research Institute.

“Following the new policies, as well as a rebound in housing transactions during the ‘golden week’ [holiday], we expect a frenzy among builders to snap up land in Hangzhou.”

Price restrictions, which were imposed nationwide in 2016 to contain runaway home prices in the red-hot market, hampered a recovery in the world’s second-largest economy following the slowdown since 2021.

Under the rules, developers were required to report planned selling prices to local governments, while the governments offered so-called “guide prices” that limited the price range. The measures left little room for developers to adjust prices of new homes based on market performance, curbing demand from buyers who instead resorted to acquiring reasonably priced second-hand homes.

China’s troubled during the weeklong national holiday, as buying interest picked up after Beijing recently rolled out measures to stimulate consumption, investment and property sales.

Authorities reduced mortgage rates and down payments for second homes, while major Chinese cities including Beijing, Shanghai, Shenzhen, and Guangzhou have relaxed home-purchase restrictions.

“Local governments are set to offer bolder measures to prop up housing demand, as well as promote the healthy development of the property market, echoing the central government’s calls for stabilising the market,” Yan said, citing top officials’ pledge to roll out more measures to “stop housing prices from sinking further” at a meeting on Tuesday.

Meanwhile, Chengdu, the capital of southwestern Sichuan province, is seeking public suggestions on a proposal to introduce measures that enable homebuyers to have their hukou, or official residency, in the city, according to a local government directive published on Wednesday.

Once the measures are introduced, eligible family members of the primary homebuyer will also be able to apply to change their hukou, according to the proposal.

While Chengdu’s population stood at 21 million at the end-2023, only 16 million people held a hukou, according to official data.

During the national day holiday, 1,561 new homes were sold in the city, 81 per cent more than the same period last year.

The average daily transactions over the period – 223 flats per day – was also five times higher than usual, according to data compiled by Chengdu’s property agents’ association.

China-Europe trade war ‘unavoidable’ on current trends, EU business leader says

https://www.scmp.com/news/china/diplomacy/article/3281754/china-europe-trade-war-unavoidable-current-trends-says-eu-business-leader?utm_source=rss_feed

An EU-China trade war is “unavoidable” on current trends, according to Europe’s top business leader in the country, who said that Beijing’s own policies mean it could not be considered the “victim”.

“A full-blown trade war looks more and more likely if nothing changes,” said Jens Eskelund, the chairman of the European Union Chamber of Commerce in China, in an interview in Brussels on Wednesday.

Obviously, I think on current direction of travel [a trade war] is unavoidable, where you continue to see for several years now, a decline in Chinese imports and an increase, an accelerating increase in volume terms, of Chinese exports.”

The Danish executive was speaking a day after China slapped swingeing tariffs on EU brandy imports – a move that came shortly after the bloc greenlit punitive duties on Chinese-made electric vehicles.

While Beijing has accused Brussels of “naked protectionism”, Eskelund urged it to look at the big picture and take Europe’s concerns over Chinese government policies seriously.

“There are many, many [trade] cases [against China], but this one [the EV probe] stands out because it has been so very important in China that it was felt that an example needed to be made out of that. In the wider commercial picture, I think actually, this is very, very important: China is not a victim,” he said.

He also said: “I do think that the EV case, for several months, has been a distraction in regards to looking at the broader things going on in trade, where you see this massive increase in [Chinese] exports, propelled by deflation, and as a consequence of that, the externalisation of low domestic demand in China.”

Over the first seven months of the year, Chinese exports to the bloc have soared to an “all-time high” in volume terms, he said, while imports from the EU have crashed.

“Since 2017 the Chinese economy has grown by 40 per cent but in that period European exports to China declined by 30 per cent – I think this is what we should be talking about,” he said, referring to the volume of goods traded rather than the value.

Value term figures have been massaged by long-term deflation in the Chinese economy, Eskelund said.

Chinese government data shows producer prices – the cost of goods at the factory gate – falling for 23 consecutive months, leaving companies with little choice but to ship their goods overseas. This has led to a surge in imports of hi-tech goods to Europe, which is relatively open to Chinese products by Western standards.

“This is not just European snowflakes complaining, we hear also from Chinese companies a pretty similar estimation of the situation,” he said, pointing to a glut in production in sectors ranging from EVs, batteries and solar panels to wind turbines, steel and legacy chips.

“At the core of these issues that we see now is deflation. I understand that the Chinese government does not much like the term ‘over-capacity’. So let’s talk about the deflation, because it’s a hard fact.”

Government efforts to galvanise consumption in the world’s biggest consumer market have so far underwhelmed.

Chinese stocks fell on Wednesday after an expected stimulus announcement did not materialise, leaving investors lukewarm on its growth prospects.

In Europe, the dynamics are being closely watched as weak consumption in China has been blamed for the surge in imports which is fuelling the dispute.

European Commission President Ursula von der Leyen has vowed to stem the flow of such goods during her second term in office.

The anti-subsidy probe into Chinese EVs is at the centre of this push. Additional duties of up to 35.3 per cent will be imposed by October 31, while Beijing has moved to impose tariffs of up to 39 per cent on EU brandy imports.

While analysts shy away from the term “trade war” at present, further escalation would push the dispute close to that territory.

Beijing is currently investigating dumping practices among EU dairy and pork producers, and is considering a tariff hike on “imported large-engine petrol-powered vehicles”, the commerce ministry said on Tuesday.

Technical talks on reaching a deal on EVs are ongoing, with the European Commission already rejecting several offers from Chinese business chambers to set a minimum price on their imports. One offer, first reported by Reuters, for a price floor of €30,000 (US$33,000) was swiftly rejected by the commission.

There is still a “big gap” between what Chinese negotiators are willing to offer and what the commission would be willing to accept, an industry source said. Such a deal would “not be impossible” to structure, but nor is it seen as likely.

A solution “would have to ensure the same effect as the tariffs” while being “monitorable and enforceable” and compliant with global trading rules, EU trade chief Valdis Dombrovskis said on Tuesday.

China’s enormous trade growth is resulting in a “beggar thy neighbour” dynamic, by eating into its partners’ share of trade, said Eskelund, who has spent his career in the shipping industry.

Citing statistics showing China’s share of the container shipping trade growing from 32 per cent last year to 36 per cent next year, he said it is becoming an increasingly “zero sum” dynamic.

“If China wins in Europe, it means that someone in Europe is losing,” said Eskelund. “There is a need for China and Europe to make sure that the value creation through globalisation is distributed in a more equitable manner.”

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TikTok owner ByteDance launches US$170 earbuds in China in push into AI wearables

https://www.scmp.com/tech/article/3281819/tiktok-owner-bytedance-launches-us170-earbuds-china-push-ai-wearables?utm_source=rss_feed

ByteDance, owner of popular short-video app TikTok, on Thursday launched its first earbuds, which enable users to talk directly with the company’s generative artificial intelligence (GenAI) chatbot without waking up their smartphone.

The open-ear wearables, Ola Friend, are currently available only in China. They are designed to serve as an audio assistant when the user is travelling, practising English, listening to music, or simply looking for company, according to the product description.

Once installed on a smartphone and connected to the earphones, ByteDance’s chatbot can be activated with the prompt word “Doubao Doubao”, derived from the name of the company’s GenAI service launched last year. The service is powered by the firm’s large language model – the technology behind GenAI applications – that is also called Doubao.

Weighing 6.6 grams each, the earbuds come in four colour options: purple, silver, black and white. Priced at 1,199 yuan (US$170), the device is set to ship from October 17 and is available for order on Alibaba Group Holding’s Tmall marketplace, e-commerce platform JD.com, and ByteDance’s own Douyin, the Chinese sibling of TikTok.

Alibaba owns the South China Morning Post.

ByteDance introduced its latest product after completed the acquisition of Oladance, a five-year-old start-up based in the southern tech hub of Shenzhen in Guangdong province, last month.

The Beijing-based giant has doubled down on GenAI after OpenAI’s launch of ChatGPT in late 2022, which ignited a global race in the fast-developing technology. Those efforts have shown initial success.

Doubao is now China’s most widely used GenAI app, with 47 million monthly active users (MAUs) in September, followed by Baidu’s Ernie Bot – recently rebranded as Wenxiaoyan – and Moonshot AI’s Kimi, which had 12 million and 7 million MAUs, respectively, according to AIcpb.com, a site that tracks traffic to AI products worldwide.

Besides ByteDance, other Big Tech companies and start-ups have also been working on GenAI gadgets, betting that advancing AI technology can bring about a revival in wearables. Some, like Facebook owner Meta Platforms and rival Snap, have focused on smart glasses. Others, mostly start-ups, have been exploring more unconventional form factors, such as Rabbit’s palm-sized R1 device and Humane’s Ai Pin lapel.

ByteDance waded into hardware development as early as 2019, when it acquired local smartphone brand Smartisan. The team was later merged into ByteDance’s educational technology department, which launched in 2020 a smart lamp that let parents voice-call their children.

In 2021, ByteDance bought Chinese virtual-reality (VR) start-up Pico at the height of the metaverse frenzy. It launched the Pico 4 Ultra, the latest version of its VR headset, in Europe and several Asian markets last month, and in China in August.

Dubai’s DP World to use Hong Kong supply chain provider to connect China with the world

https://www.scmp.com/business/banking-finance/article/3281771/dubais-dp-world-wants-use-hong-kong-supply-chain-provider-connect-china-world?utm_source=rss_feed

Dubai’s port and logistics operator DP World wants to transport China’s products to the world, leveraging its recent acquisition of Cargo Services Far East in Hong Kong.

The United Arab Emirates company is bullish on the manufacturing and trading prowess of the world’s second-largest economy, and has boosted its capabilities in Hong Kong to take advantage of the significant growth opportunities, according to chairman and CEO Sultan Ahmed Bin Sulayem.

“We want to tap the China market more,” Bin Sulayem said in an interview in Hong Kong. “In the past, we used Dubai and now, we believe we can add value here, where we connect Chinese products to Africa, to surrounding countries.”

Last month, DP World completed the acquisition of Cargo Services Far East from Hong Kong tycoon John Lau. The supply chain provider will provide DP World with expertise to cater to customers in the retail and high-end fashion sectors, and deepen access to the Chinese market, Bin Sulayem said.

“China today is the factory of the world,” he said. “[The acquisition] complements us in China, giving us better access to logistics and connecting our customers to other regions.”

Founded in 1989 by Lau, Cargo Services Far East’s businesses include ocean and air-freight shipping, food and cold-chain logistics, and fashion logistics, according to its website. It has offices in China, the UK, the US, South Africa, India and Singapore. Lau is also the chairman and executive director of Hong Kong-listed CN Logistics International.

With the acquisition of Cargo Services Far East, DP World is eager to add more services for its customers. “The expertise of Cargo Services is going to complement us on fashion and many other products, for which they have the customers and the ability. These will allow me to bring more business,” Bin Sulayem said.

One of the business connections will be with Africa, where the company plans to invest US$3 billion over the next three to five years on new port and logistics infrastructure. Africa along with the Middle East and Europe contributed US$6.59 billion, or more than 70 per cent of DP World’s revenue in the first half of this year.

DP World, which has a presence in more than 800 locations globally, said it plans to operate more than 200 freight forwarding offices by the end of the year, covering up to 95 per cent of global trade flows. It operates Container Terminal 3 in Hong Kong’s Kwai Chung port.

China is an integral part of the company’s strategy as the country is involved in almost “every trade in the world”, Bin Sulayem said.

He said he disagrees with the view, held by some in the West, that China is slowing down. “They don’t understand that the market has more than doubled in the last 10 years. We envisage China’s products are more [than ever] in demand today.”

Hong Kong, with its proximity to mainland China and international connections, is important to DP World, which is also eyeing business opportunities in the .

Bin Sulayem said the company sees a lot of potential in the Greater Bay Area, citing the collective US$1.7 trillion gross domestic product and population of more than 86 million. Beijing created the Greater Bay Area five years ago to integrate Hong Kong, Macau and nine mainland cities in Guangdong province into an economic powerhouse.

“We watch the fantastic development in the Greater Bay Area. When you put Hong Kong as part of the Greater Bay Area, growth opportunities become very significant,” he said. For example, the firm is looking at the strong manufacturing ability in Guangzhou, the capital of Guangdong province in southern China, and how to make its products more efficient to ship to the world.

“We see an increase in business in China. There is growth and the growth will continue,” Bin Sulayem said.

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Some Chinese developers are scraping discounts after sales rebound during ‘golden week’

https://www.scmp.com/business/china-business/article/3281700/some-chinese-developers-cancel-discounts-after-golden-week-sales-rebound?utm_source=rss_feed

Chinese developers cancelled discounts as sales rebounded during the “golden week” holiday, underscoring signs of improved sentiment in the market, as officials called for stability in housing prices.

Midea Real Estate Holding raised prices by 2 per cent for its housing projects nationwide, starting from Tuesday, according to an official newspaper overseen by the Ministry of Housing and Urban-Rural Development.

On the same day, state-backed builder China Resources Land said it would withdraw the 2 per cent discounts for all its residential projects in Beijing, while China Construction Yipin Investment Development also pulled its 2 per cent discounts from at least five projects, the report said.

In the southern Chinese tech hub of Shenzhen, Golden Real Estate cancelled a 1 per cent discount for a property in the city’s Nanshan district soon after the end of the holiday, according to the project’s sales manager.

This project once offered gifts like gold bullion worth 500,000 yuan (US$71,000), or discounts of around 5,000 yuan per square metre, to attract buyers. It sold around 200 units during the week-long holiday, pulling in about 3 billion yuan in total.

According to Centaline Property Agency, one of the largest real estate agents in Shenzhen, two other developers are looking at raising selling prices for several projects in the city.

China’s troubled property market saw a glimmer of hope during the weeklong holiday, as buying interest picked up after Beijing rolled out measures intended to stimulate consumption, investment and property sales. Authorities reduced mortgage rates and down payments for second homes, while relaxing home-purchase restrictions in some major cities.

New-home transactions in 22 Chinese cities rose 26 per cent from a year earlier during the holiday, according to China Real Estate Information Corporation (CRIC).

Meanwhile, second-hand homes spanning a total of 1.14 million square meters were sold, CRIC said. This was up 161 per cent from a year earlier and 54 per cent higher when compared with another weeklong holiday in May.

“This is a positive signal for the housing market,” said Yan Yuejin, vice-president for Shanghai-based E-house China Research and Development Institute. “It reflects that Chinese developers have seen improved sales and are confident enough to retain their customers.

“While this is a stunt to induce more prospective buyers who hesitated to purchase, the advised pricing strategy also implies a new change between demand and supply.”

China’s property market has been troubled since summer 2020 when Beijing introduced a loan limit for real estate companies – known as . Distressed developers had to offer discounts or lower prices to attract buyers and be quicker about destocking their inventories, which led to price declines.

On Tuesday, Chinese officials said they would ramp up support to further stabilise the property market. National Development and Reform Commission chairman Zheng Shanjie said authorities would increase loan support and accelerate housing destocking.

Praise for fuss-free ‘hanging’ China baby triplets on high-speed train with dad

https://www.scmp.com/news/people-culture/trending-china/article/3281543/praise-fuss-free-hanging-china-baby-triplets-high-speed-train-dad?utm_source=rss_feed

A video of a father in China travelling on a high-speed train with triplets who were “hung” in their seats and calmly waited to be fed without any tears or fuss, has gone viral on social media.

The triplets from Changchun, Jilin province in northeast China, who are just eight months old, recently experienced their first high-speed train ride.

A trending online video shows the three babies comfortably “hanging” in baby carriers attached to train seats.

The infant trio are happily sucking on their pacifiers while patiently waiting for their father to feed them one after the other.

Occasionally, they chew on their fingers or exchange glances. The baby nearest the window even falls peacefully asleep.

“We were on a high-speed train from Changchun to Jilin, and it was time for their daily solid food feeding, so I hung them on the seats to make feeding easier,” said the father, whose name was undisclosed, in a report by China Jilin Net.

Many netizens playfully referred to their arrangement as buying “hanging tickets”, marvelling at the father’s smart solution.

Experienced parents explained that the “baby carriers” typically used to carry infants can be hung on train seats, not only freeing up their hands but also helping to keep the babies quiet.

Noisy children on high-speed trains have long been a headache for many passengers in China.

Instances of parents failing to manage their disruptive children often ignite heated debates on mainland social media.

In August, a female passenger from the southern province of Guangdong had to endure a child jumping around in the business class compartment for more than two hours while the child’s mother played with her phone.

When the passenger asked for a seat change, the mother said: “You are all adults, but my child is only two. What do you expect me to do? Don’t you have kids?”

The mother even criticised other passengers for scolding her child.

Although the law in China clearly stipulates that passengers must not disturb others with loud noises and that those “disrupting the order of public transportation” can face penalties.

In practice, disruptive children and their parents often face no legal consequences.

The well-behaved triplets and their attentive father have received an outpouring of praise on social media.

One person said: “These babies are so well-behaved. No crying, no fussing.”

“This dad is amazing. Truly a super dad!” said another.

Others called for more tolerance on public transport, saying: “It’s not normal for such young babies to not cry or fuss. Crying is what normal babies do. I hope society can be more understanding towards infants and young children.”

Chinese AI tool uncovers new viruses at the speed of a species per second: paper

https://www.scmp.com/news/china/science/article/3281733/chinese-ai-tool-uncovers-new-viruses-speed-species-second-paper?utm_source=rss_feed

An artificial intelligence tool has helped scientists discover unknown virus species at an unprecedented speed from data previously uploaded to databases, according to a joint study by researchers in mainland China, Hong Kong and Australia.

The team said the discovery of nearly 162,000 new species of RNA virus in different environments – including in the atmosphere, hot springs and hydrothermal vents – highlighted their diversity and resilience in harsh conditions, while potentially offering clues to how viruses and other elemental life forms came to be.

By analysing previously unrecognised genetic sequence data in public databases, the machine learning tool identified viruses based on their sequences and hidden protein structure information that RNA viruses use for replication, identifying whether a sequence represents an RNA virus species in one second or less.

The tool uses an algorithm developed by the Alibaba Cloud Intelligence team and was developed in partnership with a team of virologists. Alibaba is the owner of the South China Morning Post.

“We developed a data-driven deep learning model that outperforms conventional methods in accuracy, efficiency and, most importantly, the breadth of virus diversity detected,” the team wrote in an article published in the peer-reviewed journal Cell on Wednesday.

They said the study was the largest virus species discovery ever published in terms of the number of species reported in a paper.

Co-lead author Shi Mang, a virologist and professor at the Sun Yat-sen University School of Medicine, said the AI tool not only accelerated virus discovery, which would be tedious and time-consuming using traditional methods, but also enabled scientists to explore the realm of previously unknown viruses.

“All the viruses discovered in this study exist in the environment and were sequenced. Our previous methods were not able to identify them, leaving them as ‘dark matter’ to scientists,” he said, referring to sequences that cannot be isolated for study or found to be related to known viruses.

“The AI tool fills this gap for us with high accuracy comparable to conventional methods in bioinformatics. It can uncover ‘dark matter’ sequences, along with those more closely related to established viral groups,” he said.

Shi said the discovery advanced future research by laying the basis for virus diversity.

“For example, the study informs us of the existence of viruses in extreme conditions, such as hot springs. This knowledge will enable scientists to develop more comprehensive descriptions of the ecology in various ecosystems,” he said.

“As for pathogenicity of viruses, we will be able to study further how viruses interact with their hosts, as well as identify the groups of viruses that can infect a particular host.”

Co-lead author Li Zhaorong, who researches computational biology in Alibaba Cloud Intelligence’s Apsara Lab, said the study showed that the deep learning algorithm could effectively perform tasks in biological exploration.

He said the team continued to update the tool with advanced AI technologies such as new pre-trained models for nucleotide and protein analysis.

“We are also re-examining classic problems in virology with a new AI and data-driven mindset, such as the structure and functions of viruses and the relationship between viruses and humans and animals,” he said.

The team said it would continue to train the model to uncover more virus diversity, and the same approach could be applied to identifying bacteria and parasites.

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China unveils US$70 billion swap tool to enhance stock market liquidity

https://www.scmp.com/economy/policy/article/3281769/china-unveils-us70-billion-swap-tool-enhance-stock-market-liquidity?utm_source=rss_feed

China’s central bank on Thursday unveiled a new swap tool to enhance the liquidity of the stock market and “promote the healthy development of the capital markets”, with an initial size of 500 billion yuan (US$70.7 billion).

The new Securities, Funds and Insurance companies Swap Facility would enable qualified securities, mutual funds and insurance companies to swap government bonds or central bank bills with their holdings of corporate bonds or stock exchange-traded funds as collateral, according to a statement released on the website of the People’s Bank of China.

The central bank would begin to accept applications immediately and the size could be further expanded, it added.

The move is widely believed to increase non-banking financial institution’s ability to invest in China’s stock market, which has turned volatile in the past two weeks because of market speculation over a strong government stimulus package.

However, it would not mean an increase of money supply and the law forbids the central bank from lending to non-banking institutions, the state-backed China Securities Journal reported.

More to follow …

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US envoy to Japan pushes for Nato-like trade bloc to counter China’s economic coercion

https://www.scmp.com/news/asia/east-asia/article/3281770/us-envoy-japan-pushes-nato-trade-bloc-counter-chinas-economic-coercion?utm_source=rss_feed

The United States and its allies should form a coalition that can be a sort of Nato to counter China’s economic coercion with a unified stance, Washington’s envoy to Japan said in an opinion piece published on Wednesday.

US Ambassador to Japan Rahm Emanuel said in an article for The Wall Street Journal that the administration of President Joe Biden has succeeded in expanding multilateral security partnerships in the Indo-Pacific region and now is the time to consider adding new economic measures against China.

One idea could be such a trade-defence coalition, Emanuel said, and for that to be effective, he suggested it “would need the economic equivalent of the North Atlantic Treaty Organisation’s Article 5 – an attack on one is an attack on all – at its core”.

Emanuel said countries such as Australia, which had to grapple with higher tariffs imposed by China after calling for an independent probe into the Covid-19 outbreak in 2020, have provided valuable lessons.

He suggested the importance of like-minded countries working even more closely, given that Australia curbed its economic reliance on China by expanding exports to other markets with the help of its network of allies and making it possible for Canberra to eventually force Beijing to back down.

He said the US “must now further integrate economic statecraft into its wider strategic latticework architecture”.

His proposals come as Japanese Prime Minister Shigeru Ishiba’s idea of creating a Nato-like collective defence architecture in Asia has grabbed headlines.

The ambassador, known for his tough stance on China, was chief of staff to former president Barack Obama between 2009 and 2010, and speculation is rife that he will assume a key post if Vice-President Kamala Harris wins November’s presidential election.

While acknowledging the need to better deal with growing threats from China, North Korea and Russia, many officials in Tokyo and Washington, as well as in other Asian capitals, view Ishiba’s concept as unrealistic.

Ishiba has also played down the idea after becoming Japan’s prime minister on October 1.

China expands project ‘white list’ to ease blues in property market

https://www.scmp.com/economy/policy/article/3281712/china-expands-project-white-list-ease-blues-property-market?utm_source=rss_feed

As China marshals its resources to safeguard home deliveries and restore stability to its teetering property market, authorities are pushing local governments and financial institutions to provide essential funding for ongoing projects and build on a recent wellspring of positive momentum.

Tools like the “white list” should be carefully expanded to boost financing for struggling developers and tamp down wider market risks, the country’s Ministry of Housing and Urban-Rural Development and National Financial Regulatory Administration said at a joint video conference in late September.

According to an official readout from the conference released on Wednesday, the two bodies called for “strengthening the oversight of white list projects, the restoration of problem projects and increasing the issuance of loans to meet the reasonable financing needs of real estate developments.”

The white list is an itemised register of real estate projects or developers that have been ruled compliant with regulations and thereby eligible for financial support. These projects receive priority in the allocation of loans and other funding to ensure they can continue construction and meet delivery deadlines as part of a broader effort to stabilise the real estate market.

“This is a critical stage in the battle to ensure project deliveries,” the conference summary read. “Local task forces and financial institutions must strengthen their sense of responsibility and urgency, widening the scope of the white list to ensure all compliant real estate projects are included.”

The agencies also urged responsible parties at the national, provincial, and municipal levels to address “key problems” – including judicial processes for insolvent projects – remain focused on meeting annual delivery targets, manage the inventory of unsold properties and deal with the issue of idle land.

The meeting was held amid a roll-out of wide-ranging stimulus measures by several state institutions ahead of the National Day holiday, a multipronged effort from the country to inject life into the weary property sector, stoke consumption and revive capital markets – all of which have been cited as significant challenges to achieving this year’s economic targets.

However, observers said, alleviating downward pressure on real estate may require more.

“Whether it’s the white list or project delivery accounts, the key is ensuring a steady cash flow for developers. Saving projects without supporting the developers themselves will be difficult,” said Peng Peng, executive chairman of the Guangdong Society of Reform, a think tank connected to the provincial government.

“The financial nature of real estate cannot be simply resolved through liquidation. Project delivery accounts need to be legally exempt from bank seizures; otherwise, it’s solving one problem while creating another. A large number of foreclosed properties can trigger a chain reaction within the banking system.”

He added that rate cuts and the lifting of purchase restrictions will be viewed as a drop in the bucket by investors, particularly in smaller cities where a substantial inventory of unsold properties remains.

“In third- and fourth-tier cities, idle land can only be retrieved through government borrowing to alleviate market pressure,” Peng said.

As part of the earlier salvo of stimulus announcements, the People’s Bank of China announced it would cut mortgage rates by half a point and lower the minimum down payment for second homes from 25 per cent of purchase price to 15 per cent, which would help an estimated 150 million homeowners save 150 billion yuan (US$21.24 billion) annually.

Swift policy interventions and a promotional blitz ahead of the National Day holiday did appear to bring a welcome warm spell to the real estate market after a prolonged frost.

Sales data revealed a surge of interest in new homes, with projects in Beijing, Guangzhou, and the provinces of Hunan and Sichuan seeing as much as a 50 per cent year-on-year increase in visits from potential buyers.

From October 1 to 5, the transaction area of commercial housing in Shanghai rose 43.87 per cent, while Beijing saw a 30.62 per cent jump compared with the same period last year.

More than 130 cities in over 20 Chinese provinces organised promotional activities for prospective homebuyers, including special holiday deals, transport subsidies and further discounts for residents making purchases in their hometowns.

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How much is China’s massive trade-in programme driving consumption of everyday items?

https://www.scmp.com/economy/china-economy/article/3281713/how-much-chinas-massive-trade-programme-driving-consumption-everyday-items?utm_source=rss_feed

In March, Beijing rolled out a new round of large-scale trade-ins focusing on equipment renewals and upgrades, as well as consumer products, in hopes of abating sluggish consumption and overcapacity pressure across multiple industries.

The central government plans to utilise around 300 billion yuan (US$42.5 billion) worth of ultra-long-term special government bond funds this year to support the trade-in programmes. The implementation of purchase subsidies has been handed over to local governments.

The trade-in programme has already expanded quickly to areas such as home appliances and even property. However, many local governments are burdened with heavy debt and are reluctant to offer generous subsidies to promote the programme.

With residents and local governments taking a lukewarm response to the programme, the government decided in August to increase the subsidy standards for automotive trade-ins and raise the proportion of support from central funds.

The subsidies were raised to 20,000 yuan from 10,000 yuan for the purchase of a new-energy vehicle, and to 15,000 yuan from 7,000 yuan for the purchase of fuel-powered passenger cars of a certain size.

According to the Ministry of Commerce, during last week’s National Day holiday week, which is seen as an important period to assess China’s domestic demand, about 2.52 million consumers purchased home appliances under the trade-in programme. A total of 3.745 million units were sold, totalling more than 17.83 billion yuan, covering eight major categories: refrigerators, washing machines, televisions, air conditioners, computers, water heaters, household stoves, and range hoods.

The three bestselling categories during the period were air conditioners, refrigerators and computers, with respective sales of 4.52 billion yuan, 3.80 billion yuan and 2.62 billion yuan.

Since the launch of the trade-in programme, more than 8.23 million consumers have purchased 11.78 million major appliances under the eight categories, generating more than 55.79 billion yuan in sales.

In the automotive sector, as of October 7, the Ministry of Commerce’s automotive trade-in platform had received more than 1.27 million subsidy applications, resulting in more than 160 billion yuan from new vehicle sales. Among the applications, those for new-energy vehicles accounted for more than 60 per cent.

The numbers of home appliances and vehicles in use have respectively surpassed 3 billion and 300 million in China, leading authorities to believe there is substantial demand for trade-ins.

According to statistics from the China Automobile Dealers Association, retail sales in the passenger-vehicle market reached 2.1 million units in September, a 4 per cent year-on-year increase and a 10 per cent rise compared with the previous month.

The National Development and Reform Commission (NDRC) stated at a press conference last month that the trade-in scheme had not only boosted consumption but also indirectly driven investment and growth in related industries.

In addition to the eight major home-appliance categories subsidised by the central government, 20 local-level governments, including in Shanghai and the provinces of Guangdong and Hubei, have expanded the scope of subsidies to cover more products, such as dryers, robotic vacuums, dishwashers, smart toilets, smartphones, tablets and wearable devices.

Each purchase can receive a subsidy equivalent to 15-20 per cent of the transaction price, with a single subsidy of up to 2,000 yuan per purchase.

The most favourable incentives for purchasing new-energy vehicles are in the Guangdong cities of Guangzhou and Shenzhen, where subsidies can reach up to 16,000 yuan.

As of September, more than 130 cities nationwide had introduced housing trade-in policies, as the real estate market faces challenges.

Many families have taken a wait-and-see attitude towards the policy. For example, since Beijing launched its housing trade-in programme for the commercial housing market on July 19, more than 10,000 new housing units have participated, but only 62 homes had been secured by buyers with deposits as of October 4, according to the China Securities Journal.

China stocks: small-cap ETFs send danger signals to bulls in world’s biggest market frenzy

https://www.scmp.com/business/china-business/article/3281697/china-stocks-small-cap-etfs-send-danger-signals-bulls-worlds-biggest-market-frenzy?utm_source=rss_feed

Many exchange-traded funds (ETFs) that track China’s least valuable stocks have been halted from trading after their prices overshot the underlying equities, raising red flags about the frenzy in the world’s biggest market rally.

At least 15 ETFs linked to the ChiNext benchmark of small companies on the Shenzhen exchange issued warnings to investors within the first hour of trading today after their prices overshot the net-asset values of the underlying portfolios.

E Fund Management’s ChiNext ETF commanded a 25 per cent premium, while a similar financial product by Guotai Asset Management traded almost 30 per cent higher than its underlying value.

“If investors buy at high premiums, they may face significant losses,” because secondary-market prices are affected by demand-supply relations and liquidity risk, Guangzhou-based E Fund said in a statement that called for sobriety among its customers.

The investment frenzy in small-cap ETF offers a peek at how frantic China’s 200 million retail investors and tens of thousands of institutional funds have become, as they jostled to get into a market that has risen in value by 3 trillion yuan (US$424.8 billion) in just three weeks. The speed of the gains have raised doubts about how durable and sustainable the rally is.

Underscoring the scepticism, China’s stock market has seesawed between surges and plunges, as investors locked in short-term profits from outsize gains and a briefing by the nation’s top planning body failed to deliver on investors’ expectations. The CSI 300 Index, which tracks the largest stocks in Shanghai and Shenzhen, has swung between today’s 7.4 per cent drop and yesterday’s 10.8 per cent increase, following a 35 per cent rally over 10 days.

E Fund’s ChiNext ETF tumbled 12 per cent to 2.359 yuan today (yesterday) in Shenzhen, giving up some of the 20 per cent gains made a day earlier and narrowing its premium to 0.1 per cent. Bank of China Investment Management’s ETF tumbled 15 per cent to 0.905 yuan, while its premium shrank to about 1 per cent.

The two funds track the ChiNext index of the 100 biggest stocks on the board for start-ups. The ChiNext Index tumbled 10.9 per cent on Wednesday, its biggest one-day decline on record, after surging 67 per cent over the past six trading days. Its biggest weightings are Contemporary Amperex Technology Limited, the world’s biggest maker of lithium batteries for electric vehicles, and brokerage firm East Money Information.

Implementation of fiscal stimulus expected by investors would be the key to the sustainability of the market rally, according to market observers.

China, US locked in lose-lose tech battle whoever wins White House, experts say

https://www.scmp.com/news/china/diplomacy/article/3281480/china-us-locked-lose-lose-tech-battle-whoever-wins-white-house-experts-say?utm_source=rss_feed

The presidential race between and comes at a time of rising geopolitical tensions on multiple fronts. In the first of an in-depth series, Jane Cai takes a look at what lies ahead for the hi-tech rivalry between China and the US.

Washington and Beijing’s hi-tech rivalry is expected to continue and even intensify, regardless of who wins the US presidential election, according to analysts who say the tone for further strained US-China relations has already been set.

Former president Donald Trump’s boast that he took “billions and billions of dollars” from China through tariffs on a wide variety of Chinese imports, including hi-tech products, suggest that higher duties could be on the way if he wins the White House.

Meanwhile, Vice-President Kamala Harris has promised to make sure “that America – not China – wins the competition for the 21st century and that we strengthen, not abdicate, our global leadership”.

The approaches of the candidates may differ but the tech competition between China and the US will continue to weigh heavily on the international economic and geopolitical landscape, analysts said.

“Breakthroughs in science and technology will be central to the geopolitical landscape of the 21st century and to efforts by the US and China to dominate it,” said Sourabh Gupta, a senior policy specialist with the Institute for China-America Studies in Washington.

“To be clear, there is no ‘new cold war’ that is about to break out as yet in US-China relations [of] the sort of overarching zero-sum rivalry that played out between Washington and Moscow during the second half of the 20th century,” Gupta said.

“However, there is a palpable cold war-style, zero-sum equation settling into their competition to dominate the high-technology and advanced manufacturing industries of tomorrow.”

The US has been tightening its grip on technology transfers with China for years, denying market access to Chinese tech products and cracking down on technology-related investments in both directions.

Telecoms equipment giants Huawei and ZTE were banned from the US during the Trump administration because of alleged links to the Chinese government and military.

Sales of advanced chips and chip-making equipment to China by the US and its allies have also been banned on national security grounds.

Chinese President Xi Jinping has repeatedly emphasised the importance of technological self-reliance and the development of home-grown industries of the future, including AI and quantum computing, to keep China in the global tech race.

Analysts expect Harris to stick with President Joe Biden’s “small yard, high fence” approach to China if she wins in November. The strategy puts strict restrictions on a few military-related technologies while maintaining normal economic exchanges in other areas.

But the same semiconductors that are subject to export controls because of their use in advanced artificial intelligence models, weapons and surveillance systems are also used in autonomous vehicles, 5G-connected phones, and commercial applications of AI.

The Biden administration has also barred hundreds of Chinese companies from importing almost all US-origin products from the US and its allies and introduced inbound and outbound investment screening if tech firms are involved.

Harris is also expected to raise the fencing over computing-related technologies, biotech and clean tech – areas singled out by the Biden administration as a “national security imperative” for the US to hold its leadership position.

The US House of Representatives passed 25 laws in just one week of September, in a largely bipartisan push to limit China’s influence by restricting access to China-linked biotech companies, China-made drones and even Chinese electric vehicle components.

Wu Hailong, president of the semi-official China Public Diplomacy Association, warned that the “anti-China bills could potentially push the Sino-US relationship into a dangerous position once again”.

The latest bills follow the Chips and Science Act, enacted in August 2022, that set aside US$53 billion to fund American semiconductor production and research and was hailed by the White House for “protecting national security” as well as “bringing semiconductor supply chains home”.

According to Pang Zhongying, chair professor in international political economy at Sichuan University in Chengdu, “there is already a complete set of rules and regulations to curb China’s technological development”.

“If Harris is elected, policy continuity will be the main theme, though she may show her own preference later, if she has a second term,” he said.

If Trump is returned to the presidency, he is likely to tilt towards a “smaller government”, reduce industry subsidies and resort to trade tariffs again as a bargaining tool, Pang said.

Trump has recently called for up to 20 per cent tariffs on all imports and 60 per cent on Chinese goods, prompting many experts to predict that a second Trump presidency would be more confrontational towards Beijing.

In 2018 and 2019, the Trump administration imposed four rounds of tariffs on about two-thirds of US imports from China, after an investigation found China’s practices related to technology transfer, intellectual property and innovation were “unreasonable or discriminatory and burdened or restricted US commerce”.

“The silver lining [for China] may be Trump’s attitude towards American allies. After all, not all companies in other countries are willing to abandon the massive market of China,” Pang said.

The Biden administration has been pressing US allies – including the Netherlands, Germany, South Korea and Japan – to tighten restrictions on China’s access to semiconductor technology.

However, Trump, an “America First” advocate, is dubious about alliances and has been a vocal critic of world organisations such as Nato.

There are also concerns in Europe that a victory for Trump in November could mean a decline in US aid to Ukraine.

Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said that while their approaches may vary, both candidates intend to press ahead with technology curbs on China.

According to Mei, the confrontation is likely to reach a peak during the next US president’s four-year tenure.

“During that period, China’s focus will be on technological development. It will spare no effort to innovate and industrialise innovation results as soon as possible by taking advantage of its economic scale.”

Beijing has pumped nearly 690 billion yuan (US$97 billion) into the chip industry since 2014, in its bid to be able to mass produce its own advanced chips, and is also pursuing a bigger say in global AI governance.

China has also doubled down on its efforts to persuade the many leading Chinese scientists overseas to return home and train domestic talent in the emerging hi-tech industries.

In June, Xi wrote to world-renowned computer scientist and AI expert Andrew Yao Chi-Chih, the only Chinese winner of the AM Turing Award, to praise his decision to leave the US two decades ago to teach at Tsinghua University.

Xi urged Yao – who heads the university’s Institute for Interdisciplinary Information Sciences and the new College of Artificial Intelligence – to continue helping China achieve self-reliance and become an educational, scientific and technological powerhouse.

According to Richard Suttmeier, a University of Oregon researcher looking at science and technology in the context of US-China relations, “in many ways, the current situation is one of lose-lose for both countries”.

“China’s commitment to high levels of self-reliance in science and technology development, in spite of numerous international ties, puts it somewhat at odds with global trends,” he said.

“US efforts to build a network of cooperation in science and technology among democracies will have some national and international benefits in the shorter run, but as a strategy that attempts to isolate China’s emergence as a science and technology superpower, is likely to run into big problems over the longer run.”

Six of the top 10 rising institutions in artificial intelligence between 2019 and 2023 were in China, but they remained relatively decoupled from US-led global collaboration networks, according to the latest Nature Index.

The AI index, compiled by part of the group that owns the British journal Nature, found that China’s global connectivity is lagging behind the US – the leading AI research nation – as well as Britain and Germany.

According to Michael Frank, chief executive and founder of business intelligence platform Seldon Strategies, the US-China relationship has settled into a new equilibrium that will persist for a long time.

“Tactics may change, but the US strategy of limiting technology transfer to China, and the Chinese strategy of achieving technological self-sufficiency, are fixed,” he said.

“Many countries are wary of being forced to choose between the US and China. Even if the competitors don’t make those demands explicitly, global companies will have to make a decision between which ecosystem to prioritise.”