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Kyodo Chinese: Japan Approved TSMC Plant Construction Plan

Major Japanese news agency Kyodo News recently reported in its Chinese edition that the Japanese government announced, based on the relevant laws,  to support the construction of semiconductor factories in Japan. The global semiconductor giant Taiwan Semiconductor Manufacturing Company (TSMC) and others have been approved to build factories in Kumamoto Prefecture. The Japanese government will give a subsidy of up to 476 billion yen (about US$3.5 billion). TSMC will join hands with the Sony Group and Denso to manufacture mainly in order to supply Japanese customers. The factory is expected to make its first shipments in December 2024. The monthly production capacity of semiconductors in the 10 to 20 nanometer scale will reach about 55,000 pieces. According to the plan, the factory covers an area of about 213,000 square meters and employs about 1,700 people. The government believes that TSMC has met the conditions of continuous production for at least 10 years and supplies more than half of the materials purchased in Japan. The Minister of Economy and Industry said at a press conference that the government looks forward to enhancing the resilience of the semiconductor supply chain.

Source: Kyodo Chinese, June 17, 2022–4760.html

DW Chinese: Russia Became China’s largest Crude Oil Supplier

Deutsche Welle Chinese Edition recently reported that, in May of this year, China’s crude oil imports from Russia hit a new high, an increase of 55 percent over the same period last year. So far, Russia has replaced Saudi Arabia as China’s largest crude oil supplier. Chinese customs data showed that, despite sanctions from the West, Russia has been able to find Chinese buyers for its crude, but has had to cut prices. Though China’s demand for crude oil has fallen due to Covid, yet companies such as PetroChina and Zhenhua Oil have increased imports of cheap Russian crude. Saudi Arabia is China’s second-largest oil supplier. Its daily supply to China fell to 1.84 million barrels in May from 2.17 million barrels in April. Chinese customs data also showed that China imported 260,000 tons of crude oil from Iran in May of this year, which is the third batch of Iranian crude oil China has imported since December of last year. Despite U.S. sanctions on Iran, China typically imports Iranian oil through third countries, with Iranian crude accounting for 7 percent of China’s total imports. Chinese customs data also showed that China imported 400,000 tons of Russian LNG (Liquid Natural Gas) in May of this year, a 56 percent increase from May of last year. In the first five months of this year, China’s LNG imports from Russia increased by 22 percent year-over-year to 1.84 million tons.

Source: DW Chinese, June 20, 2022

Lianhe Zaobao: Tencent Plans More Layoffs

Singapore’s primary Chinese language newspaper, Lianhe Zaobao, recently reported that, in the second half of this year, Chinese Internet giant Tencent will continue to lay off staff. All business groups will reduce their staff by at least 10 percent and will start laying off more staff from the management levels. In the first half of this year, Tencent “optimized” the personnel of each business group. In the second half of the year, the whole company will continue to lay off employees on the same basis as in the first half of the year. The proportion of layoffs in the different sub-divisions of the Platform and Content Business Group will even reach 40 to 50 percent. A few business groups will face discontinuation. Tencent’s core business groups, including the WeChat Group and the Gaming Group were not touched much in the first half. However, in this upcoming new round, 10 percent or more will also see layoffs. Tencent is currently at a low point in its performance. According to Tencent’s financial report for the first quarter of this year, Tencent’s adjusted net profit fell by 23 percent year-over-year and its net profit has declined for three consecutive quarters.

Source: Lianhe Zaobao, June 23, 2022   already

China Russia Interactions

While the Western world has imposed tough sanctions against Russia for its invasion of Ukraine, China and Russia held a series of activities recently.

  1. On June 10, the Heilhe-Bragoveshchensk road bridge officially opened. Hu Chunhua, China’s Vice Premier, attended and addressed the online opening ceremony.
  2. On June 15, Putin called Xi Jinping on Xi’s birthday.
  3. On June 17, Xi Jinping attended, online, and addressed the plenary session of the 25th St. Petersburg International Economic Forum in Russia.
  4. Russia and China sent naval ships which separately sailed around the Japanese archipelago.
  5. On June 17, China’s Ambassador to Russia Zhang Hanhui said that China is ready to provide airplane parts to Russian Airlines. The Western sanctions ban exporting airline parts and leasing or supplying airplanes to Russia.
  6. On June 20, Russia’s St. Petersburg Stock Exchange started trading 12 stocks listed on the Hong Kong Stock Exchange, including Tencent, Alibaba, Meituan, Xiaomi, and Jingdong.

1. China’s Government Website, June 10, 2022
2. China’s Foreign Ministry Website, June 17, 2022
3. Net Ease, June 23, 2022
4. Epoch Times, June 21, 2022
5. Net Ease, June 17, 2022

Under Xi Jinping, the Number of Chinese Asylum-seekers Is Increasing. Despite COVID

Figures released by the United Nations’ refugee agency UNHCR showed that around 12,000 Chinese nationals sought asylum overseas in 2012, the year that Xi took office as CCP general secretary. By 2021 that number rose to nearly 120,000.

According to the release of Safeguard Defenders, a human rights NGO based in Madrid, Spain, “By 2019, that figure surpassed 100,000, and despite travel restrictions both in China and worldwide, it continued to increase in both 2020 and 2021. Last year, that figure reached nearly 120,000 people. That is ten times the number of asylum seekers the year Xi came to power.”

“In one year of Xi Jinping’s rule, 2021, China had more asylum-seekers than during the last eight years of the rule of his predecessor Hu Jintao.”

“In fact, since 2012 China has seen some 730,000 people seek asylum. Another 170,000+ persons are living outside of China under refugee status. The number of refugees has held steady for a long time (Many of them are Tibetans living in India).”

Source: Central News Agency (Taiwan), June 18, 2022

China Further Tightens Online Censorship, Mandating Real Name Commenting

The Cyberspace Administration of China (CAC), recently issued a draft version of the “Internet commenting service management regulations.” The country’s top Internet authority mandates that providers of commenting services shall authenticate the real identity of registered users and shall not provide commenting services to users who have not provided real identity information. The “comment service” refers to the Internet platforms that, by means of posting, reply, messaging and other means, provide users the ability to publish text, symbols, expressions, pictures, audio and video information.

CAC also requires service providers to establish mechanisms to review postings, conduct real-time inspections, and launch emergency responses. The online postings have to be reviewed before being published. Any “illegal and undesirable information” are to be detected, in a timely manner, processed, and reported to the Internet authorities.

CAC also proposed that the service provider establish a user grading system, which conducts a credit assessment of the user’s commenting behavior. Users with serious violations will be blacklisted, deprived of services, and prohibited from re-registering to use commenting services.

Source: Central News Agency (Taiwan), June 18, 2022

Multinational Corporations Have a Crisis of Confidence in China

The French newspaper Les Échos published an analysis on Multinational companies’ crisis of confidence in China, focusing on the business community’s shock at  the brutal closure of Shanghai. They have been forced to re-evaluate the “China risk” including factors such as the zero-Covid policy, the war in Ukraine and tensions between the US and China.

The analysis says that the closure, as well as the broader disruptions caused by China’s zero-Covid policy, translate into huge economic costs. Foreign companies have massively reduced their forecasts. According to data from the European Union Chamber of Commerce, as of April, 60 percent of European subsidiaries had lowered their business targets for 2022. Production could be suspended at any time, with the epidemic and China’s draconian Covid prevention policies becoming a sword of Damocles hanging over these companies. According to a survey by the French Chamber of Commerce and Industry in China, 80 percent of French subsidiaries said that China’s zero-Covid policy is affecting their investment strategy, with 76 percent believing China’s image has deteriorated.

Geopolitics and the growing competition between the U.S. and China are other major long-term factors. Trade wars have complicated the business of multinational companies in China. The war between Russia and Ukraine has abruptly posed new risks. The potential consequences of Beijing’s possible attack on Taiwan could be even greater than that of Western companies’ retreat from Russia. In addition, companies are weighing the effect of the rise of local competitors, increased regulatory restrictions and the reputational risk of doing business in China due to Western condemnation of issues such as Xinjiang and Hong Kong. Many factors are prompting these companies to reassess their long term “China risk.”

Source: Radio France International, June 21, 2022

China Again Fell to the Third Largest Trading Partner Position of the U.S.

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that, in the first four months of this year, the largest trading partner of the United States was Canada, with a bilateral trade volume of US$258.5 billion. Mexico also surpassed China to become the second largest trading partner of the United States, with a bilateral trade volume of $249.8 billion. China fell to the third position, with the total bilateral trade volume of US$241.1 billion. The primary reason for the US-China trade decline is that, in April, U.S. exports to China fell by $1.6 billion, and imports from China fell by $10.1 billion. An important reason for the continued rise in total U.S. trade is that inflation is going global, driving up the prices of imported goods. As we all know, inflation in the United States is very serious at the moment.The inflation rate has reached its highest level in 40 years. Consumer prices have continued to rise, especially gas prices. Thus the U.S. government has been heavily criticized. The U.S. Federal Reserve has already acted and raised interest rates. At present, the U.S. dollar is relatively strong and the currencies of many countries have depreciated, which will help promote U.S. imports. As the world’s factory, China has been the world’s largest trading country for many years. Last year’s total import and export trade volume exceeded US$6 trillion. The United States is China’s largest trading partner.

Source: NetEase, June 9, 2022