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Georgia Bets on China for Black Sea Port, Jeopardizing Ties to the West

The Georgian government announced that a Chinese consortium will build a strategic port on Georgia’s Black Sea coast, a move that could strain Georgia’s relations with the West. The decision comes just after Georgia’s parliament attempted to pass a controversial “foreign agents” law.

The Chinese consortium that will build the port includes Chinese state-owned enterprises with a history of international controversies, ranging from fraud allegations in the Philippines to bribery in Bangladesh. Two of the companies in the consortium have even been banned from participating in World Bank-funded construction projects. This choice by the Georgian government could further escalate tensions between Georgia and the West.

The port project in Anaklia, a small Black Sea resort town, is seen as a critical part of the “Middle Corridor,” a global trade network between Europe and Asia. Critics worry that giving China control over this key port would allow them to dominate a crucial trade route.

The main company in the Chinese port-building consortium is the China Communications Construction Company (CCCC), a key player in China’s Belt and Road Initiative. Despite its global presence, CCCC faces scrutiny for its overseas practices. These include fraud scandals in the Philippines and contract termination controversies in Tanzania.

The Georgian port deal marks the country’s second attempt to build a deep-sea port in Anaklia; a previous attempt led by Georgia’s TBC Bank and the U.S. firm Conti International was canceled in 2020 amid political controversies.

Some see the timing of the Georgian government’s decision regarding port construction as a message about Georgia’s geopolitical leanings. The move comes at a time when Georgia’s relationship with the West is already strained due to the Georgian “foreign agents” law. According to Wikipedia, the foreign agents law “would require non-governmental organizations (NGOs) to register as foreign agents or ‘organizations carrying the interests of a foreign power’ and disclose the sources of their income if the funds they receive from abroad amount to more than 20% of their total revenue.”

Sources:

Voice of America, June 4, 2024
https://www.voachinese.com/a/china-georgia-controversial-blacksea-project/7641737.html

Wikipedia, Retrieved Jun 6, 2024
https://en.wikipedia.org/wiki/2023%E2%80%932024_Georgian_protests

Briefings | | |   Geo-Strategic Trend

China’s Live Streaming Boom: Riches for Few, a Struggle for Most

According to an article written by a Chinese academic, China’s live streaming industry is booming, with 15.08 million people making live-streaming into their primary occupation. Around 98% of these streamers may struggle to make ends meet, however. Industry insiders note that many “overnight” internet celebrities are actually backed by professional teams.

China’s Ministry of Human Resources and Social Security recently added “internet streamer” as an official occupation, aiming to reduce societal prejudice against live streamers. As China’s economy slows, more young people are joining the ranks of the live streamers. Over 60% of streamers are aged 18-29, with 95.2% earning less than ¥5,000 ($700) monthly. Only 0.4% make over ¥100,000 ($14,000), meaning that 2% of the streamers earn 80% of all the streamers’ income.

One example is Guo Youcai, who gained 10 million followers in 10 days by singing 90s hits at a train station. His success briefly turned his small town into a tourist hotspot. His fame was short-lived, however, due to accusations levied against him saying that he is a “social toxin.”

Experts suggest that such “overnight” successes are often orchestrated by behind-the-scenes teams who craft relatable stories that resonate with lower-class aspirations. While streaming can offer higher earnings than entry-level jobs, insiders are pessimistic about the industry’s future as China’s economy declines.

Source: Central News Agency (Taiwan), June 1, 2024
https://www.cna.com.tw/news/acn/202406010114.aspx

Briefings | | |   Economy/Resources

Chinese Banks Recruit Debt Collectors Amid Loan Woes

Several Chinese banks, including Sanxiang Bank, China Everbright Bank, and WeBank, are actively recruiting debt collection professionals in response to rising frequency of non-performing loans. This trend reflects attention being paid to financial risk in China’s banking sector.

Sanxiang Bank, a privately-owned bank in central China, announced on May 31 that it is seeking seven senior debt collection managers with at least five years of experience. Their responsibilities will include developing collection strategies, managing teams, and analyzing data to optimize collection efforts.

The move comes as Sanxiang Bank’s non-performing loan rate reached 1.75% in 2023, up 0.22 percentage points from 2022. More alarmingly, the bank’s overdue loan balance rose by 5.20 billion yuan to a new total of 13.41 billion yuan, with the overdue loan rate climbing to 3.61%, a 1.16 percentage point increase.

This trend is not isolated. China Everbright Bank and WeBank have also posted job openings for debt collectors. The surge in recruitment reflects the banking sector’s growing unease over loan quality. On May 15, the National Internet Finance Association of China issued guidelines for post-loan collection, advising financial institutions to strengthen their debt collection management and even suggesting the creation of specialized departments for this purpose.

Source: Central News Agency (Taiwan), June 4, 2024
https://www.cna.com.tw/news/acn/202406040295.aspx

Briefings | | |   Economy/Resources

To Pressure Taiwan, China Suspends Tariff Concessions on 134 Taiwanese Products

On May 31, the Customs Tariff Commission of China’s State Council announced the suspension of tariff concessions on the second batch of products listed under the “Cross-Strait Economic Cooperation Framework Agreement.” Starting from June 15, preferential tariff rates under the agreement will no longer apply to 134 lines of products exported from Taiwan to China. These include certain auto parts, textiles, and petrochemical products.

Scholars believe this move is part of Beijing’s continued efforts to exert economic pressure on Taiwan. At the same time, most of the affected products are those for which China has overcapacity, meaning that Beijing can afford to reduce Taiwanese imports of those products. The move could be detrimental to cross-strait relations and may accelerate Taiwan’s decoupling from China.

Source: VOA, June 1, 2024
https://www.voachinese.com/a/china-suspends-ecfa-tariff-concessions-on-another-134-items-for-taiwan-20240531/7637639.html

Briefings | | |   @CS Economy/Resources Geo-Strategic Trend

CCP Claims 115 Million Children Affiliated Communist Young Pioneers Organization

The Chinese Communist Party (CCP) released data on the number of children in its affiliated Communist Young Pioneers organization. According to the National Young Pioneers Work Committee, as of December 31, 2023, there were 114.807 million Young Pioneers nationwide. There are a total of 276,000 grassroots-level Young Pioneers Committees across the country, including 190,000 in primary and secondary schools, 83,000 in townships (streets) and villages (communities), and 3,000 in youth centers.

The CCP has three communist organizations: the CCP is for adults, the Communist Youth League is for youths (ages 14 to 28), and Communist Young Pioneers is for children (ages 6 to 14). According to China’s National Bureau of Statistics there were 159 million children in the 6-to-14 age range in 2020. If these numbers are correct, then the CCP has made the majority of China’s youth join its Young Pioneers organization.

Sources:
1. People’s Daily, June 2, 2024
http://cpc.people.com.cn/n1/2024/0602/c64387-40248399.html
2. National Bureau of Statistics website
https://www.stats.gov.cn/zs/tjwh/tjkw/tjzl/202304/P020230419425666818737.pdf

Briefings | | |   Government/Politics

China Releases “2023 Report on Human Rights Violations in the United States”

On May 29th, China’s State Council Information Office released a “2023 Report on Human Rights Violations in the United States.” The following are some highlights from the report:

In 2023, the human rights situation in the U.S. continued to deteriorate. Some 76 percent of Americans believe their country is heading in the wrong direction.

Intense partisan fights, governmental dysfunction, and ineffective governance have resulted in the inability to effectively protect civil and political rights. Mass shootings remain rampant, with approximately 43,000 people dead from gun violence [in 2023], averaging 117 deaths per day. Police brutality is rampant, with at least 1,247 people dying due to police violence in 2023, the highest number since 2013. Although the U.S. population accounts for less than 5 percent of the global population, it holds 25 percent of the world’s prisoners, truly making it a “prison nation.” Partisan strife continues to intensify, with elections manipulated by gerrymandering and with two “house speaker election debacles” in the U.S. House of Representatives. Only 16 percent of surveyed Americans expressed that they trust the federal government.

Racism is deeply rooted in the U.S. Nearly 60 percent of Asian Americans report facing racial discrimination, and the “China Initiative” targeting Chinese scientists has had far-reaching negative impacts.

The gap between rich and poor in the U.S. is widening, with the “working poor” phenomenon becoming more prominent and with economic and social rights protection systems failing.

Women’s and children’s rights in the United States have long been systematically violated.

Despite being a nation historically and presently benefiting from immigrants, the U.S. has severe issues of exclusion and discrimination against immigrants.

The U.S. has long practiced hegemony, pursuing power politics, and abusing military force and unilateral sanctions. It continues to export weapons such as cluster munitions to other countries. This has exacerbated regional tensions and armed conflicts, causing numerous civilian casualties and severe humanitarian crises. Moreover, the U.S. has carried out extensive “foreign agent” operations, destabilizing other societies and infringing on their human rights. To this day, it refuses to close the Guantanamo Bay detention camp.

Source: People’s Daily, May 29, 2024
http://politics.people.com.cn/n1/2024/0529/c1001-40246324.html

Briefings | | |   Government/Politics US-China Relations

Great Wall Motors to Close European Headquarters

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that Chinese electric vehicle manufacturer Great Wall Motors will close its European headquarters in Munich, Germany. The company is facing dual pressures of slowing electric vehicle sales in the European market and uncertainty around EU policy. It also faces stiff price competition from other EV companies, some of which are offering large discounts to boost their car sales.

Great Wall Motors’ headquarters are expected to close at the end of August, with the company expected to hand off responsibility for European operations to a domestic department in China. Around 100 employees have received layoff notices so far. Employees to be laid off include Steffen Cost, head of Great Wall Motors’ European operations.

The closure of Great Wall Motors’ EU headquarters does not mean that the company will withdraw from the European market entirely. Sales business and after-sales services in the European market will still be handled by local dealers. Business units in China will conduct remote supervision and management. The previous market expansion plan, which include plans to enter eight new countries in Europe, will be suspended.

Great Wall Motors sold 1,621 units in the EU during the first four months of this year — the overall scale of the company’s market share is very small.

The EU has launched an investigation into possible Chinese government subsidy of Chinese electric vehicles; it may impose tariffs on Chinese EVs in the future. Recently, many Chinese car brands have planned to build factories in Europe to avoid the threat of tariffs.

Source: Sina, May 30, 2024
https://finance.sina.cn/2024-05-30/detail-inawyyru7266581.d.html?from=wap

Briefings | | |   Geo-Strategic Trend

Chinese Manufacturing PMI Declined in May

The Chinese National Bureau of Statistics just released its May Manufacturing PMI (Purchasing Managers’ Index) numbers. The overall PMI declined to 49.5 percent, a month-over-month drop of 0.9 percentage point. The PMI’s new orders sub-index (49.6 percent) and the new export orders (48.3 percent) sub-index both fell back into contraction territory.

The employment sub-index was at 48.1 percent, indicating that employment in manufacturing companies continues to shrink. The purchase price sub-index for major raw materials climbed to an eight-month high, reflecting rising commodity costs. A fragile recovery persists in manufacturing (with the production sub-index at 50.8 percent), but rising trade protectionism will pose a major headwind in the coming months.

In May, the PMI of large enterprises was 50.7 percent. However, the PMI numbers for small and medium-sized enterprises were 49.4 percent and 46.7 percent respectively, down 1.3 and 3.6 percentage points from the previous month. Medium and small companies hired the majority of the Chinese workforce.

China’s manufacturing sector is under pressure. Beijing is currently facing rising trade tensions with the United States and the European Union — China’s two largest export markets. New trade barriers have been erected that will hinder sales of key products such as electric vehicles and parts.

Source: The Chinese National Bureau of Statistics, May 31, 2024
https://www.stats.gov.cn/sj/zxfb/202405/t20240530_1956234.html

Briefings | | |   Economy/Resources