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Central Military Commission Tells PLA to Tighten Budget

Due to the sliding economy, Beijing has been asking local governments to keep tight budgets. Now it has also asked the People’s Liberation Army (PLA) to do the same.

China’s Central Military Commission recently issued a document titled “Measures on Building the Military with Hard Work and in Thrifty Way, to Improve the Military’s Quality and Efficiency.” The document states that “building the military with hard work and in a thrifty way is the fine tradition of the communist party and military,” and “must not be abandoned at any time or under any circumstances.” It urged the military to “firmly establish the mindset of living with a tight budget, meticulously calculate and manage all endeavors with thrift.” According to the website of China’s Ministry of Veterans Affairs, the document emphasizes the need to “adopt concepts such as resource constraints, cost-effectiveness, integration of support, performance management, and systematic governance, to enhance the operational efficiency of military systems and the utilization efficiency of defense resources.”

Source: China’s Ministry of Veterans Affairs website, June 20, 2024
https://www.mva.gov.cn/sy/xx/gfxx/202406/t20240621_425230.html

Briefings | | |   Defense/Military

2024 “Praise China” Online Commentary Conference Held in Changsha, Hunan Province

On June 14, 2024, the “Praise China” Online Commentary Innovation Conference was held in Changsha, Hunan Province. Representatives of outstanding authors from the “Praise China” Online Commentary Contest, along with experts, scholars, and media representatives, gathered to discuss and promote innovative methods for the production and dissemination of online commentary that “amplifies China’s positive voice.” The conference was organized by the Cyberspace Administration of China (中央网络安全和信息化委员会办公室) and a few other government agencies.

The 2023 “Praise China” Online Commentary Contest received a total of 88,467 submissions including text, video, and comic commentaries. The content “covered a wide range of topics, including news and current affairs, rural development, economy, livelihood, internet civilization, education, culture, and sports.”

Source: China Daily, June 14, 2024
https://cn.chinadaily.com.cn/a/202406/14/WS666c0265a3107cd55d266f0a.html

Briefings | | |   Government/Politics

Huawei Hires TSMC Talents to Build Out Chinese Semiconductor Capabilities

Financial journalist Emmy Hu recently revealed on her Facebook account “Emmy’s Drama Watch Time” (“Emmy追劇時間”) that Huawei is poaching talents from Taiwan’s chipmaker TSMC so that Huawei can expand beyond the telecommunications business into chip manufacturing. Huawei establishes new legal entities for such poaching operations, making it hard for outsiders to connect the dots back to Huawei.

As early as 2022, a TSMC employee informed Emmy Hu that Huawei had been conducting a lot of interviews with TSMC staff. Huawei poached a star TSMC plant manager using a legal entity “Sheng Wei Xu (昇维旭)” which claimed to be manufacturing memory chips. The interview questions posed were all about integrated logic circuits (logic ICs), however, and all the interviewees were Huawei personnel. “Peng Xin Wei (鹏芯微)” is another company established by Huawei. This company moved even faster in purchasing equipment than “Sheng Wei Xu.” Emmy Hu was told that Huawei aimed to poach 300 mid-to-senior level employees at once because Beijing realized that poaching a single person, like Liang Mong Song (currently the CEO of SMIC), would result in slower progress (in terms of setting up manufacturing capabilities) than poaching a larger number of people. According to Emmy, Huawei’s goal is to bring in an entire factory management team to ramp up operations quickly.

Emmy Hu mentioned that two years ago SMIC (a Chinese chipmaker) attempted to produce 7nm chips supporting Huawei’s new Mate60 smartphone, but SMIC could not handle the task by itself. Huawei masterminded the effort, putting to work its resources recruited from Taiwan. Fujian Jinhua Integrated Circuits, an independent Chinese company, now follows Huawei’s direction; it used to produce memory chips but now has switched to producing logic ICs. There are now a total of seven such logic IC chip companies working with Huawei; they are refer to the “Seven Little Dragons.”

Source: Facebook, account “Emmy追劇時間,” June 5, 2024
https://www.facebook.com/story.php/?story_fbid=1005948894485371&id=100052108087251&_rdr

Briefings | | |   Economy/Resources Geo-Strategic Trend Information/Technology

Jiang Zemin’s Son Jiang Mianheng Demoted at ShanghaiTech University

On June 5, ShanghaiTech University’s website posted a message stating that Jiang Mianheng, son of the former Chinese Communist Party (CCP) leader Jiang Zemin, has been demoted. He stepped down from the position of President of the university and has now been appointed to the position of Dean of the university’s Administrative Committee. Feng Donglai, an Academic from the Chinese Academy of Sciences, has taken over as the new President.

{Editor’s Note: Jiang Mianheng is 73 years old. This demotion would be less controversial if he had simply retired from the position of President. Giving him a lower position at the same university after his stepping down from being president is fairly humiliating, however.}

Mianheng’s father Jiang Zemin held the top position as leader of the CCP for over a decade (until 2002). He died in November 2022. He was called the “Grand Master of Corruption in the CCP.” Jiang Zhicheng, Jiang Mianheng’s son who was born in 1986, manages the Jiang family’s assets of over 1 trillion yuan (US$140 billion) and is viewed as one of the world’s top hidden tycoon. There have been widespread rumors that Xi Jinping wants to single out the Jiang family as the biggest culprit spreading corruption in China.

Source: Epoch Times, June 5, 2024
https://www.epochtimes.com/gb/24/6/5/n14264595.htm

Briefings | | |   Government/Politics

Banks in Shenzhen Require Reservations for Large Cash Withdrawals

Multiple banks in Shenzhen, China, have recently required customers to make reservations in advance if they wish to withdraw over 50,000 yuan (around $7,500 USD) in cash. Some banks even require reservations for withdrawals of over 20,000 yuan. Bank staff say this is to avoid scenarios where too many customers withdraw cash on the same day, leading to cash shortages at the banks.

Reporters at Southern Metropolis Daily have found that, at some Shenzhen banks, withdrawals of sums under 20,000 yuan can be made at ATMs, withdrawals of between 20,000 and 50,000 yuan can be made directly at the counter, and withdrawals of over 50,000 yuan require an advance reservation. Large withdrawals may require banking customers to document their intended use for the cash.

Specific withdrawal limits vary between banks. China Merchants Bank requires advanced reservations for withdrawals of over 20,000 yuan, whereas Shenzhen Rural Commercial Bank only requires it for sums of over 100,000 yuan. Hangzhou Bank requires proof of intended use for sums of over 200,000 yuan. China Construction Bank requires advance reservation (via an app) and approval for over withdrawals of over 200,000 yuan.

Staff at the Bank of Beijing and the Industrial Bank branches in Shenzhen said the 50,000+ yuan reservation requirement aims at preventing customers from making sudden large withdrawals. Such withdrawals could result in the branch having insufficient cash on hand. Customers are required to provide details when making their withdrawal reservation.

A branch manager at Postal Savings Bank said that reservations for next-day withdrawals must be made before 3pm.

A bank in Jilin province previously required police approval for withdrawals of over 20,000 yuan. This drew public controversy. The bank said that the requirement was for anti-fraud purposes.

The Southern Metropolis Daily report notes that bank staff will generally allow withdrawals after assessing the customer’s recent transaction activity, and that the process aims to be efficient for customers.

Source: Central News Agency (Taiwan), June 15, 2024
https://www.cna.com.tw/news/acn/202406150113.aspx

Briefings | | |   Economy/Resources

Visas Revoked as More Chinese Tourists Overstay in Japan

Recently there has been an increase in the number of Chinese tourists leaving their tour groups without authorization while visiting Japan. According to insiders in China’s tourism industry, more than ten groups of Chinese tourists have gone missing from their tours to Japan during May and June of this year.

Japan has decided to stop issuing visas to freelancers and low-income groups, and the Japanese government has revoked the visa issuance rights of 11 travel agencies in Guangdong and other provinces for tours to Japan. Another 15 provinces and cities have been added to a “high-risk” list and are being denied visas.

In recent months there have been multiple incidents of Chinese tourists from various travel agencies defecting from their tour groups and illegally overstaying in Japan during their visits. This phenomenon is particularly prevalent among 6-day tour groups from Guangdong to Osaka and Kyoto. As a result, Japan has tightened visa requirements for Chinese tourists across the board.

A leaked notice from the Japanese Consulate General in Guangzhou states that 11 travel agencies, including Guangdong Tieqing International Cultural Tourism Group and Shenzhen China Merchants International Travel Co., Ltd., have had their rights to apply for Japanese tourist visas revoked due to violations.

Travel industry insiders reveal that, in just the first part of June, there were already two tour groups from Guangdong with tour members defecting in Japan. Defectors included tourists from Fujian province. Japanese authorities are now requiring additional financial documentation from tour members when applying for visas.

Japan is denying visas to freelancers, those with low education levels or with no social insurance, as well as residents of provinces like Liaoning, Heilongjiang, Jilin and Shandong, which are considered high-risk areas for illegal overstays when touring in Japan.

Source: Radio Free Asia, June 18, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-06182024073312.html

Briefings | | |   Geo-Strategic Trend

China Levies Heavy Corporate Back Taxes From Up to 30 Years Back

Many listed companies in China have recently received notices that they must pay back taxes from several years ago. Some back taxes date as far back as 30 years and amount to hundreds of millions or even billions of yuan. Private enterprises have gone silent after hearing this news, with some announcing that they will cease operations. Last week, seven large companies in Guangdong went bankrupt, including some that had been operating for 30 years.

A recent announcement that companies need to pay back taxes over a 30-year period has caused unease among many enterprises in China and has drawn public attention. On June 13th, VV Drink Co. announced that it had received a notice from China’s tax bureau requiring the company’s former subsidiary to pay over 85 million yuan in unpaid consumption taxes dating from 1994 to 2009. Other companies like Shanghai Shunho New Materials Technology Co., Peking University Healthcare Corp., ChinaLin Securities Co., and LianTronics followed with similar tax repayment announcements, with BoHui Chemical Technology Co. ordered to pay 500 million yuan (US$ 69 million) and consequently issuing a production halt notice.

A lawyer commented that retroactively taxing companies on the past 30 years presumes guilt and violates administrative law principles. He stated that China’s economic downturn has severely reduced government fiscal revenue, leaving tax collection as their only income source, but that pursuing more taxes will only force more private enterprises out of business and increase unemployment.

The report notes examples of companies in Guangdong being taxed retroactively for 20-25 years. A banker noted that, despite local government salary cuts, governments are still in need of more tax revenue due to strained finances. Concerns were raised that taxing private enterprises so heavily could threaten livelihoods.

Source: Radio Free Asia, June 18, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql2-06182024033604.html

Briefings | | |   Economy/Resources

“Southern Water” Has Become the Main Water Supply Source Supplying Beijing

China has a South–North Water Transfer Project to channel fresh water from the Yangtze River in southern China to the more arid and industrialized north, with Beijing as one of the destinations for water transfer. Xinhua reported that by June 12, the project has transferred 10 billion cubic meters of water to Beijing since December 2014 when the first phase of the project started operation.

According to Xinhua, the “southern water” piped in from the Yangtze has met the water quality requirement and directly benefited over 16 million people. It has become the main water supply source for Beijing. However, despite the “southern water” supplying Beijing, the megacity continues to face a severe water shortage.

Source: Xinhua, June 12, 2024
http://www.news.cn/politics/20240612/8bbcbe099a2c44b991261c19d9d1b2fa/c.html

Briefings | | |   Economy/Resources