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HKET: Polls Showed Strong Canadian Public Opinion against China and Huawei

Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported that, based on the latest polls conducted by the Angus Reid Institute, the number of Canadians with positive views about China reached a record low. Among the 1,518 people surveyed, only 14 percent viewed China positively. The same number was 29 percent six months ago. Around 85 percent of the sample expressed the belief that the Chinese government was not honest on reporting the status of the coronavirus. The poll also showed that 78 percent of the people were against allowing Huawei into Canada’s 5G network. At the same time, 88 percent said China could not be trusted on human rights and the rule of law. Only 11 percent of the people now believe Canada should focus on trading with China. This poll was designed to find out the Canadian public’s view about twelve key countries that are important to Canada. Ever since the Chinese government arrested Canadian citizens Michael Kovrig and Michael Spavor, plus sentencing Robert Lloyd Schellenberg to death, the Canadian public’s view on China has rapidly turned negative.

Source: HKET, May 14, 2020
https://bit.ly/2Ty0dxb

Briefings | | |   Geo-Strategic Trend

Escaping Nasdaq – Chinese High-Tech Heavy-Weights Prepare Plan B

Well-known Chinese news site Sina recently reported that, with the recent success of Chinese high-tech leader Alibaba going public on the Hong Kong Stock Exchange (HKSE) for the second time, key Chinese high-tech companies are coming up with Plan B to face the high probability of being kicked out of the U.S. stock markets, mainly Nasdaq. Luckin Coffee’s latest scandal story about accounting fraud served as the last straw that pushed U.S. senators to propose regulations to delist Chinese companies traded on U.S. stock exchanges, due to their lack of transparency. The Chinese search engine leader Baidu (Nasdaq listed since 2005), though it denied it publicly, is actively preparing to withdraw from the U.S. market for the HKSE. Jing Dong (JD.com), NetEase and CTrip are all looking at IPOs or re-IPOs in Hong Kong. The planning even started in January. Nasdaq has been strengthening its restrictions on reporting requirements for foreign companies, especially audit requirements to align with international accounting standards. The U.S. Senate’s recent passage of the Holding Foreign Companies Accountable Act sent a very strong signal to drive Chinese companies out of all U.S. stock markets, though China’s name was not mentioned. Currently there are around 200 companies that this new act may impact if it also passes the House.

Source: Sina, May 22, 2020
https://finance.sina.com.cn/roll/2020-05-22/doc-iircuyvi4458096.shtml

Briefings | | |   Information/Technology US-China Relations

China Pumps US$22.5 billion into its Chipmaker SMIC

Semiconductor Manufacturing International Corporation (SMIC), headquartered in Shanghai and incorporated in the Cayman Islands, is a Chinese semiconductor foundry company. On May 15, the Hong Kong-listed chip maker announced that two China state-backed funds injected a total of US$22.5 billion into its wafer factory that will help SMIC produce advanced chips.

As the Trump administration has moved to block global chip supplies to blacklisted telecoms equipment giant Huawei Technologies, which is gradually shifting its own wafer design and production from Taiwan based TSMC to SMIC in response to the possibility of more restrictive measures, China is betting the local chip foundry can help reduce the country’s reliance on US technology.

The plant has the capacity to produce 6,000 14-nanometre wafers a month and plans to boost that to 35,000. After the capital infusion, the SMIC plant’s registered capital jumped from US$3.5 billion to US$6.5 billion. The chip maker’s stake in the facility will drop from 50.1 per cent to 38.5 per cent, according to the company.

Source: Central News Agency, May 17, 2020
https://www.cna.com.tw/news/acn/202005170185.aspx

Briefings | | |   US-China Relations

China’s Spy Activities in Belgium

The State Security Service, the Veiligheid van de Staat (VSSE), a Belgian state intelligence agency, recently spoke out about China’s spy activities in the military and scientific arena posing threats to EU security.

In October 2019, Belgium declared Song Xinning, the Confucius Institute president of the Free University of Brussels (VUB), as persona non grata, revoking his visa and banning his entry into the 26 European Schengen states for 8 years. During his ten-year tenure at VUB, Song had engaged in espionage activities for the Chinese Communist Party (CCP) and was regarded as “sabotaging national security.”

“As part of the ambitious ‘Made in China 2025’ project, which provides for rapid development of know-how in China itself, all available means must be used to import as much knowledge as possible into China,” the VSSE told the EUobserver, a not-for-profit online newspaper based in Brussels, when it was describing China’s goal of siphoning information from abroad. “These include formal knowledge transfer programmes, such as exchanges between researchers, joint ventures, and takeovers of companies. In some cases, China also does economic espionage.”

On May 7, the EUobserver disclosed some details of some confidential VSSE reports dated from 2010 to 2016, which stated that Chinese spies have targeted Belgian biological warfare and vaccine experts, British pharmaceutical giant and vaccine-maker GlaxoSmithKline (GSK) in Belgium and Belgian high-tech firms.

VSSE is also concerned about the China Belgium Technology Centre (CBTC), a Chinese-funded “smart valley” in Louvain-la-Neuve. It houses 23 Chinese and Belgian firms in the life sciences, IT, and high-tech manufacturing sectors, and will house up to 800 Chinese high-tech specialists and entrepreneurs when it is completed in late 2021. “And even if the CBTC itself was not a front for Chinese intelligence, it could be used by the MSS (Ministry of State Security) as a back door in the future, the VSSE warned.”

On May 15, the French newspaper Le Monde,  also reported on long-held VSSE suspicions that Chinese intelligence had installed surveillance equipment in Malta’s EU embassy in Brussels in 2007, when a Chinese firm renovated the building.

Source: Radio Free Asia, May 15, 2020.
https://www.rfa.org/mandarin/yataibaodao/junshiwaijiao/cl-05152020125714.html
EUobserver, May 6, 2020
https://euobserver.com/science/148244

Briefings | | |   Geo-Strategic Trend

China’s Revenue Hit Hard in First Four Months of This Year

According to the statistics released by China’s Ministry of Finance on May 18, in the first four months of this year, Mainland China’s general public budget revenue fell by 14.5 percent year-on-year, indicating that the Chinese economy has been hit hard by the Wuhan virus and its fiscal revenue has also declined. The general public budget revenue is a tax-based revenue according to Article 6 of China’s Budget Law.

The statistics further show that the revenue of the central government and local governments decreased by 17.7 percent and 11.5 percent year-on-year, respectively.  The national government fund budget revenue decreased by 9.2 percent year-on-year.  According to Article 9 of China’s Budget Law, the government fund budget revenue is revenue collected, charged or raised from specific targets and exclusively used for the development of certain public undertakings.

Tax revenue from industry sectors affected by the Wuhan virus has been hit the hardest. From January to April, hospitality and restaurants, transportation, and sports and entertainment declined by 46.8 percent, 29.8 percent, and 28.2 percent, respectively.

On a monthly basis, the national fiscal revenue from January to April decreased by 3.9 percent, 21.4 percent, 26.1 percent, and 15 percent respectively. The national fiscal revenue includes both tax and nontax revenues.

Source: People.com, May 18, 2020
http://finance.people.com.cn/n1/2020/0518/c1004-31713705.html

Briefings | | |   Economy/Resources

DW Chinese: Chinese Investments in the U.S. Dropped Sharply

Deutsche Welle Chinese Edition recently reported that the U.S. National Committee on U.S.-China Relations and the U.S. consulting firm Rhodium Group just jointly published the 2019 report on investment trends between the United States and China. With the background of a continuously worsening U.S.-China relationship, Chinese investments in the United States reached the lowest level since the global financial crisis a decade ago. The newly signed U.S.-China Phase One Trade Agreement brought some brightness to the future. However, the coronavirus is now casting a dark shadow for the near term. In the first quarter of this year, China’s direct investment in the U.S. declined to US$200 million, which is far less than the 2019 average quarterly investment level of US$2 billion. The Chinese investment in the U.S. saw declines before the coronavirus came. The causes were mainly the poor relationship between the two countries, strengthened U.S. regulations, and China’s restrictions on overseas investments.

Source: DW Chinese, May 12, 2020
https://bit.ly/3dQ3gbr

Briefings | | |   US-China Relations

HKET: A Large Number of Chinese Mask Makers Went Bankrupt

Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported that a large number of Chinese mask manufacturers have filed for bankruptcy. With the spread of the coronavirus, the global demand for masks fueled a rush in China to manufacture more masks. However, most of the international customers have high quality requirements. This has led the Chinese government to enforce manufacturing standards that are much more strict in order to battle massive international returns. Tougher quality checks in China resulted in a sudden widespread bankruptcy of mask makers in China. An online video showed a huge pile of low-quality masks left in front of a factory in the city of Anqing, which is China’s primary manufacturing base for protective masks. Many mask companies in Anqing also stopped manufacturing because of the dramatic increase in the price of raw materials and manufacturing machinery. Now the masks produced there are very hard to export.

Source: HKET, May 6, 2020
https://bit.ly/2X3wqx5

Briefings | | |   Economy/Resources

ABC News Chinese: China Banned Imports from Four Australian Meat Providers

The Australian Broadcasting Corporation (ABC) News, Chinese Edition, recently reported that China just announced a new import ban on four Australian meat providers, three of which are from Queensland and one from New South Wales. Most analysts expressed the belief that this new trade barrier is obviously retaliation against Australian Prime Minister Scott Morrison, who insisted on an independent investigation into the source of COVID-19. The four companies banned are Kilcoy Pastoral, Beef City, Dinmore, and Northern Cooperative Meat. These four companies hold a 35 percent share of the total Australian beef exports to China, which is expected to be AU$3.5 billion (around US$2.25 billion) this year. The Australian government explained that the new ban is related to “highly technical” issues. Last month, the Chinese ambassador to Australia threatened that, if Australia were to investigate China’s handling of COVID-19, Chinese consumers might strongly resist Australian goods. Ironically, one of the companies, Kilcoy, is funded by Chinese investments. China is Australia’s largest trade partner.

Source: ABC News Chinese, May 12, 2020
https://www.abc.net.au/chinese/2020-05-12/china-trade-escalation-as-beef-farmers-are-targeted/12239690

Briefings | | |   Geo-Strategic Trend