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China’s Official Media: Live a Frugal Life

On March 5, China’s Ministry of Finance (MOF) released the budget report for 2022 and the budget proposal for 2023, emphasizing that next year’s fiscal reform includes the strict implementation of the policy of “living a frugal life.”

The state-run Economic Daily followed up with an article stating that, in the face of various risk challenges and spending needs for people’s livelihood, the “money bag” is not loose and “fiscal revenue and expenditure will remain in a tight balance for a long time.”

The article said that Party and government organs must “live a frugal life” as a regular disciplinary requirement, strictly controlling non-essential and flexible expenditures, while cutting administrative expenses.

It called for “no spending without a budget” and advised against arbitrary extra spending. It also demanded that financial supervision be strengthened and that violations be seriously investigated and punished so that financial discipline becomes an untouchable “high voltage line.”

Source: Central News Agency (Taiwan), March 12, 2023
https://www.cna.com.tw/news/acn/202303120094.aspx

Briefings | | |   Economy/Resources

More than Ten Chinese Radio Stations Have Infiltrated Taiwan with Waves of Chinese Propaganda

Taiwan’s Democratic Progressive Party (DPP) lawmakers questioned in the Legislative Yuan, the island nation’s legislature, that China’s United Front radio waves have invaded all of Taiwan with more than ten different stations. Taiwan officials promised to meet within a month to review the situation.

Lai Pin-yu, a member of the ruling DDP, said, “Some people drive through the Miaoli and Hsinchu areas and want to listen to Taiwan’s local radio stations, but they can’t receive them. To their dismay, they receive several Chinese radio stations instead, all of which have united-front content and promote China’s policy toward Taiwan.

She added that all counties and cities in Taiwan can receive Chinese broadcasts, both AM and FM. She can even listen to China’s Voice of the Taiwan Strait station in her office in Taipei.

According to Lai, more than ten radio channels from China can be received in Taiwan. Taiwan’s radio channels are usually set in odd numbers, and these stations from across the strait are often set in even numbers.

In response, Chiu Tai-san, minister of the Mainland Affairs Council, said that there are two ways in which China is infiltrating Taiwan through broadcasting. One is that it transmits high-power signals directly to Taiwan. The second is to have Taiwan’s radio stations produce or broadcast Chinese-made content, which violates the Act Governing Relations between the People of the Taiwan Area and the Mainland.

Radio Free Asia interviewed Gong Yujian, a Chinese dissident now living in Taipei. Gong said he has been listening to Chinese broadcasts for the past two and a half years. He has also listened to Taiwan’s military radio, which broadcasts to mainland China.

Gong pointed out that the “Voice of the Taiwan Strait” station, which is affiliated with China National Radio under the Central Propaganda Department of the Chinese Communist Party, imitates a Taiwanese accent or uses young Taiwanese as anchors. It produces many soft programs on travel, food, and lifestyle to package the content of China’s united front.

Gong believed that Taiwan’s Kinsmen and China’s Xiamen are too close to each other. The radio frequency can easily be occupied by Chinese broadcasts, which is a geographical and technological problem. Recently, Matsu Island’s undersea cable was cut. As a result, people cannot connect to Taiwan’s network. Some local people have even used Chinese mobile phone numbers to access the Internet.

Gong added that Taiwan is a democratic and free society and cannot control information. The only way is for Taiwan to build radio stations in the same frequency and transmit radio waves that are stronger than the Chinese counterparts. Of course, that could cost a lot of money.

Source: Radio Free Asia, March 14, 2023
https://www.rfa.org/mandarin/yataibaodao/gangtai/hx1-03142023090956.html

Briefings | | |   Geo-Strategic Trend

China’s Military Spending to Increase by 7.2 Percent

On March 6th, Chinese Defense Ministry spokesman Tan Kefei responded to the 7.2 percent increase in the military budget for 2023 by stating that China’s “limited defense spending is entirely to safeguard national sovereignty, security and development interests.” The additional funds will be allocated toward strengthening military training and preparation, as well as major projects in science, technology, and equipment.

Tan explained that the Chinese government adheres to the policy of “coordinated development of national defense and economic construction,” and “reasonably determines” the scale of defense spending based on national defense needs and the level of national economic development. Over the past few years, China has maintained “moderate growth” in defense spending while ensuring sustained and healthy economic and social development. This approach aims to promote “simultaneous enhancement of national defense strength and economic strength.”

According to Tan, China’s increased defense spending this year will primarily be used to: comprehensively strengthen military training and preparation for war, in line with the 14th Five-Year Plan for military construction; accelerate the construction of a modernized logistics system; implement major projects in defense science and technology and weaponry, and transform science and technology into combat power; consolidate and expand the achievements of national defense and military reform; and improve the level of military governance. The increased funding will also adapt to the level of national economic and social development and continuously improve the working, training, and living conditions of troops.

Source: Central News Agency (Taiwan), March 6, 2023
https://www.cna.com.tw/news/acn/202303060281.aspx

Briefings | | |   Defense/Military

China to Limit the Export of Solar Technology; Experts Express Concern

On December 30, 2022, China’s Ministry of Commerce and the Ministry of Science and Technology released a draft of the “Catalogue of China’s Prohibited and Restricted Technologies for Export” for public consultation. It includes “photovoltaic silicon wafer (solar silicon wafer) technology” in the list of restricted export technologies.

However, some experts have expressed concerns that limiting the export of solar technology could harm China’s related industries. Bai Chong’en, dean of the School of Economics and Management of Tsinghua University, who is also a member of the National Committee of the Chinese People’s Political Consultative Conference, stated in his proposal that many overseas enterprises are already seeking alternative solutions to Chinese technology. In particular, companies in Europe and the United States are restarting the manufacturing of slicer equipment and the construction of solar rod pulling and slicing capacity.

Bai believes that foreign countries have been reducing their dependence on China’s energy sector in recent years and that restricting the exportation of solar silicon wafer preparation technology would be detrimental to China’s related industries. He also stated that the technological barrier for solar silicon wafer preparation is not high and that China’s solar industry mainly relies on the advantages of a mature supply chain and low labor costs to maintain its leading position. Moreover, other countries such as the United States, Europe, Japan, and Taiwan already possess semiconductor-grade monocrystalline silicon wafer production technology, which naturally equips them with the ability to produce solar silicon wafers.

Bai expressed concern that if China restricts the export of this technology, the prolonged approval process could make overseas cooperation and negotiations more uncertain, potentially missing the best opportunities for overseas deployment. Instead, foreign companies that master semiconductor silicon wafer technology, such as those in Europe, the United States, Japan, and South Korea, could quickly form a substitute for Chinese solar companies.

Source: Central News Agency (Taiwan), March 6, 2023
https://www.cna.com.tw/news/acn/202303060220.aspx

Briefings | | |   Economy/Resources

The Low Birth Rate Impacts Education in China

In 2014, China introduced the “two-child” policy, resulting in a peak of 17.86 million births in 2016, the highest number since 2000. However, the “two-child effect” has diminished significantly, with only 15.23 million births in 2018 and a continuous decrease in subsequent years. In 2022, the number of births fell below 10 million, which means that the birth rate in China has dropped by almost half in six years.

The government’s plan to build a public preschool education system with wide coverage, basic protection, and quality by 2020 has resulted in the construction of new public kindergartens throughout the country. However, due to the decline in births, the situation has changed. A kindergarten in Wuhan, Hubei province, which was previously exclusive to children of employees of large state enterprises, is now enrolling children from the general public.

According to a professor at China’s University of International Business and Economics, the decrease in the number of educational institutions, including kindergartens, primary, and secondary schools, has been going on for some time due to the declining birth rate. In rural areas, schools have merged due to the shrinking population. In an interview with Chinese media, a professor at Beijing Normal University predicted a decline of 30 million in the number of students in compulsory education by around 2035, compared to 140 million in 2020.

The low birth rate has impacted China’s education sector, making kindergarten enrollment difficult and resulting in the shrinkage of educational institutions.

Source: Sputnik News, March 6, 2023
https://sputniknews.cn/20230306/1048470268.html

Briefings | | |   Economy/Resources

China’s Development and Reform Commission Manages National Defense Mobilization

China’s National Development and Reform Commission (NDRC), a macroeconomic management agency under the State Council, is managing the country’s defense mobilization efforts. Several Chinese provinces and cities have listed their defense mobilization offices under the NDRC’s management, including Shanghai and Fujian.

According to scholars, military operations require economic mobilization and resource dispatch, which is one of the main responsibilities of the NDRC. In addition to managing economic construction, the NDRC works with relevant authorities to formulate strategies to promote the coordinated development of economic and national defense construction and undertakes specific work related to the National Defense Mobilization Commission.

Chen Shimin, an associate professor of the Department of Political Science at National Taiwan University, explained that national defense mobilization involves the overall economy, resource allocation, and scheduling. For example, in the event of a military operation, it is necessary to get manpower to the battlefield, which requires the coordination of the production of materials by the NDRC and other related operations.

China Defense News, the official outlet for the People’s Liberation Army, notes that the new round of national defense mobilization system reform is characterized by the establishment of national defense mobilization offices in a number of places and transferring the functions of coordination and management from the provincial military districts to the local governments. This change aims to address the situation of military organs doing everything and to organize and deploy resources in a better manner so as to form an overall joint force to deal with war or emergencies.

Overall, the management of national defense mobilization by the NDRC highlights the importance of coordination between economic and defense efforts in China. With the establishment of national defense mobilization offices in various places, the country can better prepare for potential emergencies and respond more effectively to military operations.

Source: Central News Agency (Taiwan), February 28, 2023
https://www.cna.com.tw/news/acn/202302280193.aspx

Briefings | | |   Defense/Military

Ex PBOC Chief Admits Deficiency of China’s Pension System

The former Governor of the People’s Bank of China, Zhou Xiaochuan, has acknowledged that China’s current pension system is facing challenges due to the country’s large and aging population. Zhou made these comments at the “5th Global Wealth Management Forum” hosted by Caijing Magazine on the 25th. According to Zhou, the expansion of the pension coverage in China has created a shortage of funds, making it difficult for the national pension arrangement to provide adequate coverage. He suggested that, in the future, personal pensions will play a crucial role in supplementing the national pension arrangement.

Zhou stated that China’s personal pension system is good in terms of social discussion, but the incentives are weak. The existing personal income tax has some flaws, as a large proportion of individuals in China do not fall within the scope of paying a personal income tax. Furthermore, Chinese enterprises are not anxious to cooperate with the personal pension system due to the high cost burden. This affects their competitiveness. Although the social security funds paid by Chinese enterprises have been adjusted down by 4 percentage points, at 16 percent, the rate of payment is still high, compared to the world.

Regarding the extension of the retirement age, Zhou believes that while there is room to extend the retirement age, it cannot be extended as many years as desired. This involves the average health level and productivity of the elderly, and companies must also take into account the costs involved.

Source: Central News Agency (Taiwan), February 26, 2023
https://www.cna.com.tw/news/acn/202302260106.aspx

Briefings | | |   Economy/Resources

New CSRC Regulations Restrict Chinese Companies Overseas Listings from Endangering National Security

The China Securities Regulatory Commission (CSRC) issued a new regulation for overseas listings of domestic companies which explicitly prohibits those overseas listings that may endanger national security and prohibits enterprises from leaking state secrets.

On March 17, CSRC’s official website released the “Trial Measures for the regulation of Overseas Listings and Securities Issuance for Domestic Enterprises,” with five guidelines,

The measures are to be implemented on March 31.

The “Trial Measures” specify that enterprises to be listed overseas should comply with the laws pertaining state secrets and should not disclose state secrets and secrets of state organs.

Companies cannot issue stocks outside China under five scenarios. First, the sectors that laws and regulations explicitly prohibit the listing or financing. Second, authorities under the State Council determine that listing abroad may endanger national security. Third, enterprises or their controlling shareholders or the actual controller are found to have committed corruption, bribery, misappropriation of property, or criminal offenses against the socialist market economic order within the last three years. Fourth, the enterprise is suspected of crimes or major violations of the law and is under investigation. Fifth, there is a major ownership dispute involving controlling shareholders or the actual controller.

The “Trial Measures” also mentioned that enterprises listing abroad should comply with national security laws regarding foreign investment, network security and data security, and “fulfill their obligations to safeguard national security.” “Enterprises should take measures such as timely rectification or divestment of assets in accordance with the requirements of the Chinese authorities to avoid impacting national security in their overseas listings.”

Source: Central News Agency (Taiwan), February 18, 2023
https://www.cna.com.tw/news/acn/202302180169.aspxT

Briefings | | |   Economy/Resources