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All posts by RWZ

Xinhua: More on “United Front Work” in the Private Sector

Because of the recently placed emphasis on United Front Work, Xinhua reported on the fact that the Chinese Communist Party (CCP) just had a National United Front Work Conference to discuss the Domestic Private Sector. Wang Yang, a member of the Standing Committee of the Political Bureau of the CCP Central Committee and the Group Leader of the Central United Front Work Leadership Group, attended the Conference. CCP General Secretary Xi Jinping delivered a written speech requiring the Party to strengthen the relationship with the domestic private sector companies and to “direct” them to stay “politically aware.” The targeted group includes business owners in Hong Kong and Macau. Taiwanese investors and other foreign investors were not mentioned. This is the first Communist Party official document describing the “United Front Work” strategy for the private sector in over 40 years. The strategy also mentioned the task of encouraging “politically sound” private business owners to join the Communist party.

(1) Xinhua, September 16, 2020

(2) RFI Chinese, September 16, 2020

RFA Chinese: Around 1,700 Japanese Applied for Government Aid to Leave China

Radio Free Asia (RFA) Chinese Edition recently reported that the Japanese government’s aid program to assist Japanese companies to leave China is gaining in popularity. The first batch of approved applicants consisted of nearly 90 companies. However, by the end of July, the program received almost 1,700 applications in the second batch. It appears Japan is moving its industrial supply chain out of China. The Japanese government added a supplemental budget of US$2.07 billion to its 2020 budget in order to sponsor Japanese manufacturers moving their supply chain out of China and back to Japan or somewhere else. The second batch of applications totaled US$16.57 billion. Experts expressed the belief that, right now, the CCP virus is serving as a wake-up call for many governments around the globe that restructuring their industrial supply chain is an urgent task. On the other hand, the steady increase in the cost of investing in China is also emerging as an important factor motivating companies to consider leaving China. According to a study that the Japan External Trade Organization conducted, China’s cost index was 80 in 2019, Vietnam was 74, and baseline Japan was 100.

Source: RFA Chinese, September 14, 2020

Canada Gave up on Free Trade Agreement Negotiation with China

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that the Canadian Minister of Foreign Affairs, François-Philippe Champagne, commented in an interview with the Globe and Mail on Canada’s Free Trade Agreement with China. He concluded that there is no value in continuing the negotiation and so Canada has given up on the process. The negotiation started four years ago when Prime Minister Justin Trudeau visited China. Champagne expressed the belief that the current political conditions are not suitable for further discussions. Prime Minister Trudeau has been under heavy domestic criticism for giving up too many of Canada’s principles in exchange for China’s business opportunities. Earlier, Champagne described China’s style of pushing foreign relationships as “arbitrary” and “coercive.” (Editor’s note: Sina’s report did not mention that, in the same interview with the Globe and Mail, Champagne stated Canada’s first priority is to bring home Michael Kovrig and Michael Spavor. In in June, in retaliation for Canada’s detention of Huawei’s CFO Meng Wanzhou, the Chinese Communists charged the two Michaels with espionage.)

Source: Sina, September 19, 2020

China Economy: Volvo’s Safety Reputation is Challenged Due to Massive Recalls

China Economy recently reported that China-owned Swedish automobile manufacturer Volvo issued multiple recalls for a total of 380,000 cars in the Chinese domestic market in the last month alone. Volvo ranked number one on the recall list in August in China. Volvo made its name in the Chinese market for its quality and safety. However, numerous design mistakes and manufacturing issues caused multiple large-scale recalls and have been eating into the brand’s reputation. Volvo has recalled over half a million cars this year in China. The latest batch of recalls in September impacted 135,316 cars, which is greater than all the recalls issued in the past four years (2016-2019) combined. As the inventor of the safety belt, Volvo’s recent global safety belt recall of 2.2 million cars added to the crisis, as it was the largest recall in the company’s history since its founding in 1927. Chinese multinational automotive company Geely Holding Group acquired Volvo from Ford in 2010.

Source: China Economy, September 8, 2020

India Is Coming up with New Trade Barriers for China

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, according to two anonymous Indian government officials and one industrial official, India will soon ask domestic importers to register. The purpose is to protect domestic manufacturers. The next step will be to impose import restrictions on copper and aluminum so that the government must approve all import contracts. India buys a large amount of copper and aluminum from China. The up-coming plan also includes the implementation of Prime Minister Modi’s strategy to reduce imports and to increase India’s exports of high value-added products. The registration requirement is also designed to track more accurately and to understand the level of metal dumping into the Indian market. The Indian Ministry of Mines and the Ministry of Commerce refused to comment on this matter. India has been creating new anti-China trade policies recently, such as the ban on hundreds of Chinese mobile apps. The Chinese Ministry of Commerce expressed the opinion that India has been violating the legal rights of both Chinese investors and the Indian consumers.

Source: Sina, September 10, 2020

SMIC’s Claim of Having No Military Tie Is Questionable

Taiwanese news site NewTalk recently reported that U.S. Pentagon officials advised that the Trump administration is considering blacklisting Chinese domestic chip maker SMIC due to its ties to the Chinese military. This could cause major damage to the Chinese chip-making industry, since SMIC is China’s largest and the most advanced chip manufacturer. It is also Huawei’s only hope for low-end chip supply. SMIC has issued announcements claiming it has no relationship with the Chinese military. However, according to Mainland media reports, SMIC was the sole manufacturer for the KD5660 Level-A network exchange chip designed by a company named ArmyFly, which is headquartered in Beijing and is dedicated to serving the Chinese military with focuses on army information network and equipment innovation. The KD560 chip even won the highest award issued by the Equipment Development Department of the Central Military Commission. ArmyFly’s customers are all military branches and SMIC, as its award-winning chip supplier, now declares it has nothing to do with ArmyFly.

Source: NewTalk, September 10, 2020

RFI Chinese: The Chinese “Yiwu Index” Points to a Trump Win

Radio France Internationale (RFI) Chinese Edition recently reported that China’s unofficial “Yiwu Index” is spreading a wave of indicators across the Chinese language Web (the Mainland, Taiwan, Hong Kong and Singapore), pointing to a Trump win. Yiwu is a Chinese town in the Zhejiang Province. It is where most of the world’s small goods are manufactured and wholesaled. This includes campaign goods like flags and buttons that are used across the world’s political landscape. According to reports from major Mainland (Tencent News), Singapore (Lianhe Zaobao) and Taiwanese (CNA) news media, just counting a single 5-square-meter wholesale counter, the owner Li Qingxiang has sold over 100,000 “Trump 2020” 5 inch x 3 inch flags alone. Only a couple of thousand same-size Biden flags have been sold. Li said, “The orders don’t lie.” Another Yiwu salesman, Zhou, revealed that, since the winter of 2019, he has been receiving “continuous Trump flag orders” with more than ten patterns. Biden flags have only one pattern with less than one fifth of the order volume, and the orders only started coming in since February. Fairly early, the Yiwu Index had correctly predicted the 2016 U.S. election result.

Source: RFI Chinese, September 1, 2020

Micron Announced Cut-Off of Supply to Huawei

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that Micron, Huawei’s sole primary memory and flash memory supplier for 20 years, announced compliance with the U.S. ban on Huawei. This is another major blow to Huawei’s supply chain after TSMC’s similar announcement. Micron is the world’s largest semiconductor memory vendor. Micron, Samsung and Hynix together own 95 percent of the world’s DRAM market. Micron is also one of the six vendors that together hold 99 percent of the world’s NAND flash memory market. The only hope Huawei has now is to obtain domestic support from Yangtze Memory Technologies for NAND, ChangXin Memory Technologies (CXMT) for DRAM, and Jinhua Integrated Circuit (JHICC) for DRAM. However, the U.S. already banned JHICC in 2018, due to a lawsuit that Micron filed for unauthorized use of intellectual properties. Yangtze Memory’s manufacturing process depends heavily on high-end equipment like the mask aligners from the Netherland’s SAML, which also uses U.S technology. If the U.S. blacklists the other two Chinese domestic suppliers, Huawei will face a death sentence on the memory side too, in addition to the central processing chips.

Source: NetEase, September 2, 2020