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Hong Kong to Test Cross-border Use of Digital Chinese Currency

The cross-border use of digital Chinese currency will be fully rolled out for testing in Hong Kong. Hong Kong’s Financial Secretary Paul Chan Mo-po said that, in the coming year, preparations will be stepped up for the issuance of a central bank digital currency (CBDC) in Hong Kong at the wholesale and retail levels, including a study on the application of the electronic Hong Kong dollar (e-HKD) at the local retail level.

On Sunday, Chan said in his blogger that he is determined to promote the transformation of Hong Kong in the direction of a digital economy, to encourage more enterprises to use technology and to enhance operational efficiency and expand their businesses.

According to Sing Tao Daily, Hong Kong will continue to work with the People’s Bank of China in the coming year to conduct technical tests on the local use of CDBC, so as to provide convenient cross-border payment services for mainland and Hong Kong residents.

Source: Sing Tao Daily, June 28, 2021
https://std.stheadline.com/daily/article/2370853

Briefings | | |   Economy/Resources

Departing Ambassador: Chinese Americans Have a “Great Responsibility to Defend China’s National Dignity”

Chinese Ambassador to the United States Cui Tiankai announced on Monday June 21 that he would be leaving his post to return to China. In his farewell letter, Cui described that “Sino-U.S. relations are at a critical crossroads.” He told the Chinese people in the U.S. that they have a major responsibility to “promote the unification of the motherland” and national rejuvenation.

Cui said that the U.S. policy towards China is at a “crossroads” of “dialogue and cooperation vs confrontation and conflict,” and that Chinese Americans need to contribute to the “Chinese dream of the great rejuvenation of the Chinese nation.” In addition to mentioning the ongoing “restructuring” of U.S.-China relations, he also recalled that Chinese Americans have always stood up when China was in “crisis” and “spoken out firmly in defense of national dignity.”

In his farewell letter, on the 100th anniversary of the founding of the Chinese Communist Party, he called for Chinese Americans to continue their contribution to the “new journey of building a comprehensive socialist modern state of China.”

Since 2013, Cui, 69, has served as China’s ambassador to the United States for eight years.

Source: Radio Free Asia, June 22, 2021
https://www.rfa.org/mandarin/Xinwen/wul0622b-06222021053049.html

Briefings | | |   US-China Relations

Scholar Won Official Recommendation for “Beating” Theory of Relativity Using Marxism

China’s Hebei Provincial government recently announced a list of candidates for the province’s Natural Science Award this year. One scholar on the list sparked a public uproar when he used Marxist philosophy to invalidate Einstein’s “Theory of Relativity.”

Li Zifeng, a professor at Yanshan University in Hebei Province, proposed in his project titled, “Adhere to the Materialist View of Space-Time-Mass-Energy and Develop Newtonian Physics,” to use Marxist philosophy to overthrow Einstein’s theory of relativity. The Hebei Provincial government recommended his “research” for the Natural Science Award, as “a non-consensual theoretical physics project that adheres to materialistic philosophy and is subversive and innovative.” The content of the research is about “the most fundamental problems of philosophy and physics, correcting fallacies in physics, and exploring answers to ancient questions.”

The recommendation states that Li’s project “resolves a possible contradiction between physics and philosophy” and even “overturns Einstein’s theory of relativity, which has misled the physics community and mankind’s basic approach to understanding the world, and clears a huge obstacle to the healthy development of science.”

Li is a researcher and Ph.D. advisor at the School of Vehicles and Energy, with a focus on oil and gas mechanics and drilling engineering.

Although Li’s academic specialty has nothing to do with Marxism, his research has been encouraged by the Minister of Science and Technology and is featured in official media, including Xinhua News Agency.

A writer named Cai, who is based in mainland China, told Radio Free Asia that there are many cases like this. “These professors and scholars are doing these studies totally against basic common sense, and actually he was able to get funding for the subject.”

Source: Radio Free Asia, June 22, 2021
https://www.rfa.org/mandarin/yataibaodao/ac-06222021062526.html

Briefings | | |   Government/Politics

Swedish Court Excludes Huawei from 5G Equipment Suppliers

A Swedish court ruled Tuesday, June 22, to uphold an injunction excluding Chinese telecommunications equipment maker Huawei from being a 5G equipment supplier. The court stressed the importance of national security.

Last year, Sweden banned Huawei from participating in the construction of 5G networks on the grounds of national security. Huawei then appealed the decision. The court rejected Huawei’s appeal on Tuesday, stressing that the security of Sweden is of paramount importance and that, if used in the construction of Sweden’s 5G network, Huawei products could threaten Sweden’s national security.

The media said the court ruling dashed Huawei’s hopes of returning to Europe and that the possibility of China’s retaliatory action against Huawei’s rival, Swedish telecommunications company Ericsson, may increase.

Source: Radio France International, June 22, 2021
https://rfi.my/7VlQ.T

Briefings | | |   Geo-Strategic Trend

Shortage of Semiconductors in China Boosts Circulation of Fake Chips

The global shortage of semiconductors has increased the number of fake chips circulating in China. According to Chinese media, the illegal chips come from two channels. One source is electronic waste. The companies remove the evidence from the old chips. Then they clean and repackage them and sell the second-hand chips at a lower price. Others are defects directly from the manufacturers’ production line. Compared to the genuine product, the performance and reliability of the fake chips are usually inadequate.

These chips are mainly used in consumer electronic products. Unlike automobiles and other manufacturing industries, some OEMs (original equipment manufacturers) of consumer electronics do not conduct long-term verification and testing of chips and other supplies.

Counterfeit or refurbished components have always been in circulation, but the situation this year is serious. Originally, the price of a used chip was only 50 percent of the market price, but now the price is rising and is even close to the market price.

China’s electronic components trading hub is almost the world’s largest, with many companies dismantling tens of thousands of e-waste items every day. This provides opportunities for counterfeit chips, which have even found their way to overseas supply chains.

Source: Central News Agency, June 22, 2021
https://www.cna.com.tw/news/acn/202106220168.aspx

Briefings | | |   Economy/Resources

UNESCO Science Report 2021: 44 Percent of Increase in R&D Investment is from China

The United Nations Educational, Scientific and Cultural Organization (UNESCO) publishes its science report once every five years. The report for 2021 shows that the global average science expenditure, as a share of GDP, increased from 1.73 percent in 2014 to 1.79 percent in 2018.

The data show that China is the most aggressive of all countries in the world in increasing its science spending, with 44 percent of the incremental global R&D investment coming from China. In 2018, 24.5 percent of global R&D spending was from China, compared to 21.2 percent in 2014.

The report reads that China’s spending on science increased to 2.19 percent of GDP in 2018, compared with 2.03 percent in 2014. Meanwhile, in absolute terms, the U.S. still spends more on science than China, taking into account purchasing power parity, with $460.6 billion in the U.S. and $439 billion in China. Science spending as a share of U.S. GDP rose to 2.84 percent in 2018 from 2.72 percent in 2014. The country with the largest share of science spending in GDP is Germany, where this share increased to 3.09 percent in 2018 from 2.87 percent in 2014.

In addition, the report notes that the country with the most international patents registered is China (31.7 percent of the global total), followed by the U.S. (21.7 percent), Japan (20 percent) and the EU (13.9 percent).

Source: UNESCO
https://www.unesco.org/reports/science/2021/en/race4smarter-development

Briefings | | |   Geo-Strategic Trend

China’s FDI in Europe Fell to a Ten Year Low

According to a joint report by the US-based Rhodium Group and the Mercator Center for China Studies (MERICS) in Berlin, China’s FDI in Europe continued to fall, to a 10-year low: Shrinking M&A activity meant the EU-27 and the United Kingdom saw a 45 percent decline in completed Chinese foreign direct investment (FDI) last year, down to EUR 6.5 billion from EUR 11.7 billion in 2019, taking investment in Europe to a 10-year low.

The UK saw Chinese investment plummet by 77 percent, although more than half of total Chinese investment in Europe went to the “Big Three” economies – Germany, the UK and France. Infrastructure, ICT and electronics were the top three sectors, attracting 51 percent of the total investment from China. Poland rose to become a popular destination, though inflows of EUR 815 million were largely concentrated on one acquisition.

Chinese FDI faces greater scrutiny by EU member states: The Covid-19 crisis prompted the EU to issue guidelines stepping up scrutiny of FDI in Europe’s critical assets. 14 EU member states, including Italy, France, Poland and Hungary, updated their FDI screening mechanisms last year. Member states have also moved to block several acquisitions by Chinese firms.

Headwinds against Chinese investment in Europe will grow in 2021: Chinese FDI activity into Europe continued to fall in the first quarter of 2021 and has remained weak elsewhere. Europe remains an attractive investment location. However, continued disruption from Covid-19, high barriers to outward capital flows in China and rising regulatory barriers to foreign investment in Europe have all contributed to low levels of Chinese investments. Deteriorating EU-China relations will create additional headwinds for Chinese investors going forward.

Source: Radio France International, June 16, 2021
https://rfi.my/7Uin.T

Briefings | | |   Geo-Strategic Trend

China Enacted New Data Security Law

The Standing Committee of China’s National People’s Congress passed the Data Security Law (DSL) on June 10, elevating government regulation of private sector data. The new law, which will take effect on September 1, regulates the collection, use, processing and transmission of data and demonstrates Beijing’s growing ambition for data control.

The DSL provides that companies that violate the national core data management system, “endanger national sovereignty, security and development interests,” or illegally transfer “important national data” overseas will face fines of up to 10 million yuan ($1.6 million) and may be forced to close down.

The law applies a broad definition of “core data.” It refers to any data “related to national security, the lifeline of the national economy, important people’s livelihoods, vital public interests, and other concerns.”

DSL details how data collected by enterprises inside China should be exported, including operators of “critical information infrastructures,” energy, transportation, finance, public communication and other fields. The cross-border transfer of such data will be subject to the provisions of the Cybersecurity Law.

In the Cybersecurity Law enacted effective in 2017, Chinese regulators formally made data localization a prerequisite for foreign financial institutions attempting to gain a foothold in China. In the same year the U.S. tech giant Apple promised to store its customers’ cloud-based data in a company owned by the Chinese government, and to set up data centers in China.

On May 12, China also released “Certain Regulations on the Security Management of Automobile Data Security (Draft for Public Opinion),” which prohibits the transmission of driving data involving road traffic, vehicle location, images and other data outside China. Soon afterwards, Tesla announced that it would set up several data centers in China. On June 11, the second of the enactment of DSL, Tesla posted on its Weibo account, “(We) will strictly comply with the data security law.”

Chinese President Xi Jinping is increasingly inclined to tighten data control. Radio Free Asia cites sources familiar with internal discussions that Xi once said in a closed-door meeting, “Whoever controls the data has the initiative.”

Source: Radio Free Asia, June 14, 2021
https://www.rfa.org/mandarin/yataibaodao/jingmao/cm-06142021103254.html

Briefings | | |   Information/Technology