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Briefings - 105. page

In the First Four Months, China’s Sizeable Industrial Enterprises Saw Profits Drop by 20.6 Percent

The National Bureau of Statistics of China recently released official data on industrial enterprises for the first four months of this year. The total profits of industrial enterprises above a designated size reached RMB 2,032.88 billion (around US$288 billion), a year-over-year decrease of 20.6 percent. Among them, State-owned companies saw a year-over-year profit decrease of 17.9 percent; joint-stock companies had a profit decrease of 22.0 percent; foreign and Hong Kong, Macao and Taiwan-invested companies had a profit decrease of 16.2 percent; and privately-owned companies suffered a decrease of 22.5 percent. During the first four months, the manufacturing industry saw a profit decrease of 27.0 percent and the electricity, heat, gas and water production and supply industry had a profit increase of 34.1 percent. Among the 41 major industrial sectors, the total profit of 13 industries increased year-over-year. One industry was flat, and 27 industries declined. It is notable that the general equipment manufacturing industry profit increased by 20.7 percent and the automobile manufacturing industry profit increased by 2.5 percent. However, the textile industry profit decreased by 30.2 percent, the agricultural and sideline food processing industry profit decreased by 36.3 percent, and the computer, communication and other electronic equipment manufacturing industry profit decreased by 53.2 percent.

Source: National Bureau of Statistics of China, May 27, 2023
http://www.stats.gov.cn/sj/zxfb/202305/t20230526_1940198.html

Briefings | | |   Economy/Resources

Global Times: Japan Officially Introduced Export Control Measures for Semiconductor Equipment

Global Times recently reported that the Japanese government officially introduced export control measures for semiconductor manufacturing equipment, which will be implemented on July 23. China’s Ministry of Commerce responded on the same day that this is an abuse of export control measures and a serious departure from free trade and international economic and trade rules. China firmly opposes this. Japan announced in late March this year that it would amend the Foreign Exchange and Foreign Trade Law to strengthen export controls on 23 items of chip manufacturing equipment in an effort to “cooperate with the United States to prevent technology from flowing to China and being transferred to military use.” According to the Japanese Ministry of the Economy, Trade and Industry, the restricted scope includes semiconductor cleaning, thin film deposition, heat treatment, etching, product inspection and more.The Japanese Minister of the Economy, Trade and Industry Yasutoshi Nishimura previously stated that “this is not aimed at any specific country.” However, considering the latest export management trends of countries related to semiconductor manufacturing equipment, public opinion believes that this is a measure against China. While Japan’s restrictions on semiconductors are less extensive than in the United States, about ten Japanese manufacturers will be affected to some extent by the new rules. The spokesperson for the Ministry of Commerce of China stated that the measures announced will seriously damage the interests of Chinese and Japanese companies, seriously damage the Sino-Japanese economic and trade cooperation, disrupt the global semiconductor industry structure, and impact the stability of the global industrial supply chain.

Sources:
(1) Global Times, May 24, 2023
https://3w.huanqiu.com/a/de583b/4D17o6aPvPe?agt=11
(2) Xinhua, May 23, 2023
http://www.news.cn/fortune/2023-05/23/c_1129640086.htm

Briefings | | |   Geo-Strategic Trend Information/Technology

EU Chamber of Commerce: European Companies Pause on Investments

Primary Taiwanese news agency Central News Agency (CNA) recently reported that the president of the European Union Chamber of Commerce in China said that China’s economic growth is not what it used to be. At present, European companies are cautious about investment. Although large companies continue to invest, smaller companies have pressed the pause button or they have left. He believes that the biggest problem in China’s economy is the real estate industry, which accounts for a quarter of the total Chinese GDP. There are almost no new developments. In addition, in the field of exports, China exported 6.4 million containers to the EU last year, while the EU only exported 1.6 million containers to China. This shows China’s dependence on European consumers. In terms of industrial production, energy supply problems continue to arise. Youth unemployment remains high. China’s large private enterprises are facing serious difficulties. They are being punished, while state-owned enterprises are being rewarded with strong government support. In China, the EU Chamber of Commerce does not yet see the same way that they did  during the Cultural Revolution in the 1960s, but the country is heading in that direction.

Source: CNA, May 27, 2023
https://www.cna.com.tw/news/acn/202305270037.aspx

Briefings | | |   Economy/Resources Geo-Strategic Trend

COVID Is Back in China

A new wave of COVID, led by the XBB variant, is spreading in China. Zhong Nanshan (钟南山), a Chinese government endorsed COVID expert, stated this week that this wave – the second COVID pandemic in China – started in late April. He said the simulation model showed it will reach its peak by the end of June and by then each week there will be 65 million people who got infected. There were 5 million people infected each week in the U.S. during its worse time in 2022. Zhong mentioned this wave was expected.

Beijing has been low-key in reporting the second COVID wave, since it has been focusing on stabilizing its economy.

Source: Voice of America, May 26, 2023
https://www.voachinese.com/a/china-faces-a-new-covid-wave-that-could-peak-at-65-million-cases-a-week-052523/7108934.html

Briefings | | |   Social Stability

Chinese Lung Transplant Doctor Revealed Organ Harvesting Secret

Chen Jingyu (陈静瑜) and her team published a paper on China’s lung transplantation in JAMA Network Open, a publication under the Journal of the American Medical Association  (JAMA). Chen’s Lung Transplant Center in Wuxi City, Jiangsu Province, claimed this as the first time that Chinese lung transplant clinical data has been accepted by a top international journal. Chen is known as “the number one doctor in China’s lung transplants.”

Chen excitedly posted the news on WeChat and Weibo on May 8. She stated, “For a long time because we used organs from death row prisoners, the foreign (medical community) boycotted the organ transplantation in China because of ethical issues… In 2015, China fully implemented organ donation from people under heart and brain death. The organs of citizens with brain death have become our only source for organs. There is much gratitude for the 6,000 or so cases of organ donations each year in our country, which have allowed us to go global with lung transplants.”

Chen’s statement admitted two things: One: the Chinese Communist Party (CCP) has long taken organs from death row inmates. Two: China is using organs from “brain-dead” people, not the “heart-brain-dead” people as the CCP ostensibly claimed.

Whether “brain-death” is considered real death is debatable in the medical community, since a “brain-dead” person can still keep breathing and has a heartbeat under medical equipment for a while. “Heart-brain-death” is fully dead.

China does not have a law on “brain-death.” Its definition of death in the Criminal Law is in line with the definition of “heart-brain-death.” Therefore, using organs from “brain-dead” people is illegal according to China’s own law.

China has been using the “Primary Brainstem Injury Impactor” device, invented by Wang Lijun, the former Vice Mayor and Public Security Chief of Chongqing. It is capable of precisely creating brainstem death without damaging other brain tissues or other organs. This invention was patented by China’s State Intellectual Property Office in 2012 under the patent number CN 202376254 U.

Source: Epoch Times, May 22, 2023
http://cn.epochtimes.com/gb/23/5/22/n14001686.htm

Briefings | | |   @CS Government/Politics Social Stability

Leaked Meeting Minutes Showed Kunming City Investment Companies Are Running Out of Money

An article, said to be the minutes of an internal meeting of Kunming City Investment Companies, was widely spread on the Internet. The triggering event for the meeting was that Kunming Land Investment Company struggled to pay back a 200 million Yuan (US$28) debt which was due on May 19. Kunming is the capital city of Yunnan Province and is supposed to be the richest city in Yunnan.

A few highlights of the minutes are:

To help Kunming Land Investment Company make its payment, Kunming city gave 130 million Yuan from its fiscal budget. The investment company itself raised 35 million Yuan, and Kunming Land Reserve Investment Company provided 40 million.

Collectively, city investment companies in Kunming have 20 billion Yuan in debt due in the second half of this year. Kunming city does not have the money. The Yunnan Province government might have some money, but a Deputy Governor already stated that the province will not rescue every company.

The Deputy Major of Kunming led three chairmen of three investment companies, including Kunming Industry Investment Company, Kunming Urban Investment Company, and Dian Investment Company, to Shanghai on May 20 and 21. They were to ask Shanghai Urban Investment Company to transfer some money – Shanghai was tasked to provide Yunnan Province with financial support (several hundred billion Yuan each year), but it didn’t transfer money last year.

The Kunming city government has gathered all the money it can gather from its investment companies. If there is another debt crisis, the city has no money and no means but to issue new debt.

All loans (to Kunming city investment companies) that can be extended have already been extended. Principle and interest payments on fixed asset loans have all been deferred. Kunming Transportation Investment Company, Kunming Production Investment Company, Kunming Land Investment Company, Kunming Rail Transit, and Kunming Urban Investment Company have already accomplished this extension.

Source:
1. Pingcong website
https://pincong.rocks/question/58589
2. Net Ease, May 23, 2023
https://www.163.com/dy/article/I5EBF1QL0519B61A.html

Briefings | | |   @CS Economy/Resources Government/Politics

China’s EV Battery Material Industry Unleashes Global Expansion

The Chinese company Yunnan Energy New Material (Semcorp), the world’s largest manufacturer of battery separators, is planning to launch its first overseas factory in Hungary and aims to increase its global market share to 50 percent by 2025. The company has dispatched approximately 100 employees to the Hungarian factory and is currently recruiting locally. The factory, with an investment of approximately €340 million, is expected to start production in 2023.

Battery separators are essential components in lithium-ion batteries that prevent short circuits and regulate the movement of lithium ions between the positive and negative electrodes during charging and discharging. Yunnan Energy New Material surpassed Japan’s Asahi Kasei in 2018 to become the global market leader in the separator market. By 2022, the company had achieved a market share of 37 percent.

Yunnan Energy New Material’s overall production capacity reached 7 billion square meters by the end of 2022. The company recently held a groundbreaking ceremony for its second-phase factory in Suzhou, Jiangsu Province, and plans gradually to establish and expand factories in China. By 2025, the production capacity is expected to reach 16 billion square meters, a 2.3-fold increase from the current level.

The company’s revenue for the 2022 fiscal year increased by 58 percent compared to the previous year, reaching ¥12.5 billion, and its net profit increased by 47 percent to ¥4 billion. Yunnan Energy New Material has experienced continuous revenue and profit growth since its listing on the Shenzhen Stock Exchange in 2016, driven by the rapid development of Chinese battery manufacturers such as CATL and BYD.

While the company faces competition from technologically advanced Japanese and South Korean enterprises, it maintains a cost advantage due to its overwhelming production scale. Its customers include major battery manufacturers such as Panasonic and Samsung. However, the company faces three major challenges in achieving further growth: technological gaps with Japanese and South Korean competitors, economic security concerns between China and the United States, and the risk of oversupply in the separator market.

Yunnan Energy New Material has approximately 500 researchers, including Chinese experts who previously worked for Asahi Kasei and Toray. While the company is catching up with leading Japanese and South Korean companies in terms of quality, battery industry experts believe that expanding market share in Europe will require higher technical capabilities. Entry into the vast US market also poses difficulties due to the potential exclusion of foreign companies from tax incentives under the Biden administration’s inflation reduction law.

In the global market for the four main lithium-ion battery materials (positive electrodes, negative electrodes, separators, and electrolytes), Chinese companies hold a market share of 74 to 88 percent, while Japanese companies’ presence is declining. The focus of the market share battle will shift to the next generation of batteries, including semi-solid-state and all-solid-state batteries, which are expected to improve battery performance and safety.

Overall, Yunnan Energy New Material is aggressively expanding its presence in the global market, but it faces challenges in terms of technology, economic security, and potential oversupply. The company aims to leverage its production scale and continue its research and development efforts to remain competitive in the evolving battery industry.

Source: Nikkei, May 24, 2023
https://zh.cn.nikkei.com/china/ccompany/52475-2023-05-24-05-00-00.html

Briefings | | |   Geo-Strategic Trend

Chinese Police Demand to Inspect Students’ Phones to Remove Chat Apps like Telegram

Chinese authorities have issued notifications in several regions, urging parents, under the pretext of “preventing online crimes,” to check their children’s mobile phones in order to remove “secret chat apps.”

According to reports from state media outlets like Guangming Daily Online, the official WeChat public account of the Nanjing Public Security Bureau stated on the 16th that secret chat apps, known for their strong encryption and features like “disappearing messages,” provide criminals with a convenient means to destroy evidence, making these apps a “gray area.”

Law enforcement agencies have expressed concern that criminals exploit secret chat apps to manipulate minors through deception, coaxing them into providing personal information and engaging in illegal activities. In some cases, individuals who assist in such online crimes can be charged with “assisting information network criminal activities,” which carries a penalty of up to three years’ imprisonment, detention, or a fine for serious offenses.

Apart from the Nanjing police, similar warnings have been issued by authorities in various locations, including Fuzhou City in Fujian Province, Dazhou City in Sichuan Province, Hainanzhou in Qinghai Province, Hezhou City in Guangxi Province, Tongliao City in Inner Mongolia, and Lanzhou City in Gansu Province.

Some notifications also urge teachers and parents to check if their children have installed such apps on their phones, warning that their children may be assisting overseas fraudsters in illegal activities. If any installed apps are discovered, it is advised to take the matter seriously, inform the child about the potential harm, and accompany them to the nearest public security agency to investigate whether they are involved in any illegal activities.

The mentioned problematic apps include WhatsApp, Telegram, and Twitter, which are commonly used overseas.

Source: Central News Agency (Taiwan), May 22, 2023
https://www.cna.com.tw/news/acn/202305220035.aspx

Briefings | | |   Information/Technology