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UDN: China Sanctions Six US Companies and Five Executives

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that, due to dissatisfaction with the U.S. arms sales of attack drones to Taiwan in June, the Chinese Ministry of Foreign Affairs just announced it will take countermeasures against six U.S. military companies and five senior executives.

On June 18, the United States announced the sale of two attack drone models to Taiwan, including Switchblade 300 and Altius 600M-V, for a total of US$360.2 million. This is the 15th U.S. arms sale to Taiwan under President Biden. China announced that, according to China’s “Anti-Foreign Sanctions Law”, for six companies, including Anduril Industries, Maritime Tactical Systems, Pacific Rim Defense, AEVEX Aerospace, LKDAerospace, and Summit Technologies Inc., their movable, immovable, and other types of properties in China will be frozen.

For two top executives of AeroVironment and three senior executives of Anduril, China have frozen their movable, immovable and other types of properties in China. China also prohibited organizations and individuals in China from conducting relevant transactions, cooperation and other activities with these individuals, who will not be issued Chinese visa and are not allowed to enter China (including Hong Kong and Macau).

Source: UDN, July 12, 2024

Lianhe Zaobao: Germany Starts Removing Huawei and ZTE 5G Components

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that the German government has imposed a ban on Chinese telecom equipment giants on national security grounds and will remove Huawei and ZTE components from Germany’s 5G network in two phases over the next five years. The German Interior Ministry negotiated an agreement with three domestic telecom providers operating 5G networks to protect Germany’s critical infrastructure from Chinese influence. This is Berlin’s latest move to reduce economic dependence on Beijing, a dependence which some fear could leave Germany vulnerable.

The three domestic German telecom operators are Deutsche Telekom, Vodafone and Telefonica Deutschland. According to their agreement with the German government, these telecom operators will remove key components of Huawei and ZTE Technologies from the 5G core network by the end of 2026 and will replace all components of Huawei and ZTE Technologies in the 5G network access and transmission infrastructure by the end of 2029.

The German government has informed Beijing about the agreement and does not expect retaliation for the move. Other European countries including the UK, Denmark, Sweden, Latvia, Estonia and Lithuania have already imposed bans on components from Huawei and ZTE. The United States began to impose restrictions on the use of Huawei equipment as early as 2019. Germany is considered to have lagged behind in implementing EU 5G network security measures.

The Chinese Embassy in Germany criticized Germany’s move on its official website, saying “the so-called cyber security risks are just an excuse.”

Source: Lianhe Zaobao, July 12, 2024

CNA: BMW Quits Price War in China

Primary Taiwanese news agency Central News Agency (CNA) recently reported that China’s auto market has been in serious trouble, and German luxury car brand BMW has been actively cutting prices since last year to maintain its market share. It now seems that BMW China will withdraw from China’s price war and adopt a new strategy of “volume reduction for price protection.” This became the hottest topic on Chinese social media at one point a few days ago.

According to local media reports, BMW China has been actively cutting prices. The average discount rate on BMW sales in 2023 was 17.66 percent. BMW delivered 825,000 vehicles last year in China, an annual increase of four percent. These delivery numbers came at the cost of a sharp decline in BMW’s profits, which fell more than 30 percent year-over-year.

In the first half of this year, BMW sold 375,947 vehicles (including the Mini brand, which is owned by BMW), with sales down four percent year-over-year. Now, price cuts are hurting both profit and sales. A BMW China salesperson revealed that the prices of all models will be adjusted upwards starting from July 10, and there will be another price increase after July 15. All previous price-cut offers will be cancelled.

Another German luxury car brand, Mercedes-Benz, has also entered the price war. Mercedes sales in the first half of the year also fell by nearly six percent. Mercedes has not made any official remarks regarding its pricing strategy. Meanwhile, Porsche sales China in have been even worse. In the first half of the year, Porsche sales in China totaled only 29,551 units, a 33 percent decrease from the same period last year.

Source: CNA, July 12, 2024

CBN: Indonesia to Impose High Tariffs on Certain Categories of Imported Products

China Business Network (CBN) recently reported that, Indonesian Trade Minister Zulkifli Hasan said not long ago that Indonesia will impose safeguard tariffs of 100 percent to 200 percent on imported products ranging from footwear to ceramics and restart plans to protect domestic industries. This new tariff policy will take effect after the relevant regulations are finalized, and may also affect the import of clothing, textiles, and cosmetics. According to data from Statistics Indonesia, Indonesia mainly imports clothing and clothing accessories from China, Vietnam and Bangladesh. The Indonesian government said that it would first launch two protective measures for textiles and textile products, namely the safeguard import tax (BMTP) and the anti-dumping import tariff (BMAD), to protect the local industry from the surge in imported textiles.

Multiple Chinese import/export businesses commented that, if high tariffs are imposed, it will obviously slow down the trend of purchasing directly from Chinese export companies. Indonesia has recently revealed that one of the main reasons to have additional safeguard tariffs is to keep the American orders for domestic companies. Nowadays more and more Chinese companies have begun to build factories locally in Indonesia. Analysts expressed the belief that, with the global reorganization of supply chains, Chinese companies going overseas is an increasingly important trend. For Chinese entrepreneurs, on one hand, they need the courage to go out, and on the other hand, they need the necessary new knowledge and skillsets.

Source: CBN, July 1, 2024

UDN: Amazon E-Book Store Officially Withdraws from China

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that, Amazon China announced on its official website on June 30 that the Kindle China e-book store has ceased operations on June 30, 2023, and will stop cloud download services on June 30, 2024. After that, undownloaded e-books will not be available for download. Already downloaded e-books will remain readable on the local Kindle device. Kindle customer service will also remain only until June 30, 2024. After the news of Kindle’s complete withdrawal from the Chinese market came out, many Mainland China netizens expressed regrets on “yet another foreign investor leaves China.”

Amazon initially launched Kindle in 2007, setting off a global e-book reading craze. Kindle officially entered the Mainland Chinese market in June 2013. In 2018, the sales of Kindle Readers in China exceeded one million. Amazon announced in 2022 that its e-book business will withdraw from the Chinese Mainland market in three phases.

Source: UDN, July 1, 2024

RFI Chinese: Germany Banned VW from Selling Gas Turbine Business to China

Radio France Internationale (RFI) Chinese Edition recently reported that, the German government banned the sale of Volkswagen’s gas turbine business to Chinese companies, citing national security concerns. The deal failed due to the German cabinet approved the ban proposed by the Economics Ministry. The reason is that the potential buyer’s parent company, China State Shipbuilding Corporation (Group), has too close ties with China’s military. Therefore, sales are not allowed under the Foreign Trade Act, which allows the government to ban sales to non-EU countries if it could endanger national security. Volkswagen’s MAN Energy Solutions said it would not seek a new buyer but would stop developing new gas turbines and limit its services to only maintenance.

According to anonymous Chinese sources, the potential buyer – CSICL (China Shipbuilding Industry Company Limited) Longjiang Guanghan Gas Turbine Co. – is part of China State Shipbuilding Corporation’s 703rd Research Institute. Both are Chinese defense suppliers. The 703rd Research Institute is also included in the U.S. list of untrustworthy entities. China wants to modernize its largest Naval fleet in the world. In the future, it could run on gas turbines instead of diesel engines.

Source: RFI Chinese, July 3, 2024

Lianhe Zaobao: China’s Marriage Registrations Declined in the First Quarter

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, according to statistics just released by China’s Ministry of Civil Affairs, the number of marriage registrations nationwide in the first quarter of this year was 1.969 million, a decrease of 178,000 couples compared with 2.147 million couples in the same period in 2023. The decline is significant, and it shows that the “compensation effect” after Covid-19 has gradually faded, and the number of marriage registrations is expected to continue to decline this year. He Yafu, a demography expert who has long tracked Chinese marriage registration data, said that due to the decline in the population of childbearing age, the number of marriage registrations in China has continued to decline for nine consecutive years since peaking in 2013. However, in the long term, due to the decline in the young population and changes in fertility concepts, the downward trend in China’s fertility rate and number of births will be difficult to fundamentally change unless strong fertility support policies are implemented in the future to address this challenge. The current Chinese economic environment is blurring the future of the young generation and is having an impact on their planning.

Source: Lianhe Zaobao, June 17, 2024

LTN: China’s Financial Industry Asks Employees to Give Up Deferred Bonuses

Major Taiwanese news network Liberty Times Network (LTN) recently reported that, since Chinese leader Xi Jinping launched the “Shared Prosperity” campaign, several companies in China’s financial industry have implemented strict new restrictions on their senior employees to coordinate with the Xi’s policies. The era of high salaries for Chinese financial workers is coming to an end. China’s largest financial groups have asked senior employees to forego deferred bonuses and, in some cases, return salary from several years ago to comply with a pre-tax annual pay cap of RMB 2.9 million yuan (around US$399,047). Some mutual fund managers are also facing pressure to return non-compliant wages from previous years. Chinese state-owned financial institutions such as China Merchants Group, China Everbright Group and CITIC Group have conveyed the above guidance to employees in some of their departments in recent weeks, people familiar with the matter said. Highly paid financial workers, including investment bankers and fund managers, have been denounced by Beijing as “hedonistic” for their extravagant lifestyles and are among the groups hardest hit by Xi Jinping’s “shared prosperity” campaign. It is unclear at this moment how many financial institutions are subject to the guidance. The incomes of most of the high-ranking financial managers are from deferred bonuses.

Source: LTN, June 27, 2024