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Briefings - 46. page

China Hacks and Leaks Confidential Japanese Diplomatic Cables

Japan’s Kyodo News reported that in 2020 China conducted a cyberattack on the Japanese Ministry of Foreign Affairs’ system for exchanging diplomatic messages with foreign embassies, resulting in classified information being leaked. The messaging system, called the “International IPVPN,” operates on a virtual private network separate from the general internet. Leaks of confidential diplomatic communications are extremely rare.

At a press conference, Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said he could not answer questions about the cyberattack due to information security issues. He also said that he was unaware of any classified information from Japan’s Ministry of Foreign Affairs having been leaked.

The compromised diplomatic messages include sensitive reports and instructions exchanged between the Ministry’s headquarters and embassies abroad. They may have also contained private information that Japan collected regarding foreign governments. The Japanese government has not disclosed the extent of the leak, the specific contents of the messages, or how the attack was discovered.

The hacking demonstrates the increasing importance of cyberspace as a theater for espionage and geopolitical confrontation. Japan’s diplomatic communications likely contain valuable intelligence for other countries seeking greater influence in the region. The Japanese government’s lack of transparency around the attack makes it difficult to assess the full implications of the incident, however. Going forward, Japan’s government plans to make a top priority of bolstering cybersecurity in its confidential diplomatic relations with strategic partners.

Source: Kyodo News, February 5, 2024
https://china.kyodonews.net/news/2024/02/5147b37c47db–.html

Briefings | | |   Geo-Strategic Trend

Chinese Commercial Spaceflight Industry Poised for Liftoff Despite Lagging 10 Years Behind SpaceX

China’s official state news agency Xinhua has published a long article on the country’s commercial spaceflight industry.

The Chinese rocket industry saw significant growth in 2023. Twelve out of thirteen rocket launches by private companies reached orbit successfully, a record among the 8 years that private rocket companies have been operating in China. However, there still remains a gap between these Chinese companies and SpaceX, which launched 96 times in 2023. SpaceX also dominates in terms of launch mass, accounting for 80% of the 2022 global total. Experts estimate China’s commercial space industry lags SpaceX by about 10 years.

Looking forward, China’s private rocket companies are poised to accelerate development. The central government’s fourteenth 5-year plan puts a strategic focus on commercial aerospace. Multiple commercial companies like i-Space and Blue Arrow are aiming to launch reusable liquid-fueled rockets capable of dramatic cost reductions by 2025. The future holds huge demand for satellite launches, with China Satellite Network Group Co planning a constellation of 13,000 satellites. Further policy and financial support for the industry is expected as well.

Financing remains a current bottleneck for the industry, as innovation within the industry requires costly continuous testing and design and iteration are required. Local governments are now the main investors in commercial spaceflight companies. The industry also hopes to tap public capital markets for funding.

China’s economic work conference specifically called out commercial space as a strategic emerging industry. Experts foresee strong momentum for China’s commercial space industry in the next few years as companies move toward mature reusable rocket technologies. Key players are concentrated in Beijing, which aims to build a strong base for the industry centered around China’s Economic Development Zone.

Source: Xinhua, January 24, 2023
http://www.xinhuanet.com/20240124/4dd09cfced3d4931aee94c0e0ca2ef44/c.html

Briefings | | |   Defense/Military

Chinese Tech Giants Ramp Up Lobbying in Face of US Government Scrutiny

Chinese tech companies like TikTok and SHEIN have rapidly increased their spending on lobbying efforts within the United States. TikTok’s parent company ByteDance spent $8.74 million on lobbying in 2023, a 77% increase over the previous year. SHEIN spent $2.12 million in 2023 on lobbying, a 760% increase. The moves come as the U.S. government ramps up scrutiny and rhetoric targeting the companies amid broader U.S.-China tensions. The statistics on lobbying expense come from mandatory disclosure reports that the companies filed with Congress. TikTok and SHEIN aim to expand in the massive U.S. consumer market as growth slows at home in China.

TikTok now has 170 million U.S. users, gaining popularity despite previous bans. An e-commerce feature was added to the platform in 2023. TikTok’s lobbying focuses on pushing back against bills in Congress that would restrict the company’s U.S. business or ban use on government devices. Starting after U.S. regulator discussion of a possible ban in 2020, TikTok has grown its lobbying staff to about 14 people. TikTok lobbying was likely successful in slowing momentum for a ban as public opposition fell.

SHEIN lobbies on apparel, e-commerce, and trade controls. The company reportedly hired a former U.S. Trade Representative employee to argue SHEIN’s economic benefits to Congress as the company plans a U.S. IPO. Some in Congress claim that SHEIN uses a customs loophole to sell goods that have been produced with forced labor.

Both companies aim to expand within the U.S. while facing more scrutiny over data and economic security.

Source: Nikkei, February 2, 2024
https://zh.cn.nikkei.com/china/ccompany/54759-2024-02-02-10-55-24.html

Briefings | | |   US-China Relations

Chinese Stock Investors Vent Frustration in Comments on US Embassy Weibo Posts

The Chinese stock market has been continuously declining since mid-2023, reaching new lows as the Shanghai Composite Index fell below 2,700 points on February 2nd. Many investors who suffered heavy losses flooded the comments section on the official Weibo account of the U.S. Embassy in China, venting their frustration or imploring the United States to take over the Chinese stock market. (Weibo is a Chinese social media platform)

A large number of pleas from Chinese stock investors flooded a U.S. Embassy post titled “Science and Technology Help Researchers Protect Giraffes by Increasing Awareness”:

  • “Do you want to protect me? Giraffes are life forms, but so am I.”
  • “Anyway, (the Chinese officials) eventually will take our money (from the stock market) away and immigrate to your country. How about we give you the money directly? Otherwise they will charge us processing fee (in addition).”
  • “We know they are lying, and they know they are lying. They know we know they are lying, and we know they know we know they are lying. But they still keep lying. Can you tell me which ‘glorious era’ this description refers to?”

On the same day, a post by the U.S. embassy titled “Joint Statement on the Third Anniversary of the Military Coup in Myanmar” was flooded with messages from Chinese stock investors asking for help from the U.S.:

  • “America, please come and rescue the hundreds of millions of A-share investors in deep trouble.”
  • “Save the poor Chinese stock investors. I love America.”
  • “I beg the United States to save A-shares.”
  • “America, the Earth needs you! It desperately needs you! God bless America.”
  • “Whoever treats us well, we will love them.”
  • “I love the United States of America.”
  • “The official media doesn’t let us speak. I come here to request rescue.”
  • “Before trading stocks, I was very patriotic.”
  • “Trading stocks has brought hatred to our country. It’s also tragic.”
  • “Get rid of the China Securities Regulatory Commission!”

Source: Epoch Times, February 3, 2024
https://www.epochtimes.com/gb/24/2/3/n14172430.htm

Briefings | | |   @CS Economy/Resources Social Stability

UDN: The United States Releases the List of Notorious Markets for 2023

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported on the global “2023 Notorious Markets List” recently announced by The Office of the U.S. Trade Representative (USTR). The list including 39 online markets and 33 physical markets where piracy is rampant. Among them, China’s online markets Taobao, WeChat, Pinduoduo (U.S. branch name Temu), and seven physical markets (including Shopee) were named again.

These Notorious Markets are considered to be involved in or to be abetting a large volume of trademark counterfeiting or copyright piracy. This year’s list focuses on the potential health and safety risks posed by counterfeit goods, which use poor quality materials and are manufactured without supervision or safety controls, resulting in products that are substandard, ineffective or dangerous. U.S. Trade Representative Katherine Tai said that counterfeit and pirated goods harms workers, consumers and small businesses, and ultimately harm the U.S. economy. She added that crackdown on trade in these goods is important for economic growth.

This year, seven Chinese physical markets were named on the list, including Huaqiang Electronic World, Luohu Commercial City, Beijing Silk Street Market, and Wuai Market. Although Shopee, headquartered in Singapore, has invested heavily in the past year to enhance anti-counterfeiting capabilities, there still remain a large number of counterfeit goods on the platform, and problems such as slow response times remain.

Source: UDN, January 30, 2024
https://udn.com/news/story/6809/7743640

Briefings | | |   US-China Relations

Lianhe Zaobao: Profits of Chinese Industrial Companies Fell Last Year

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, according to the official data released by the Chinese National Bureau of Statistics, China’s industrial enterprises above a designated size achieved a total profit of RMB 7.6858 trillion yuan (around US$1.08 trillion) last year, a year-over-year decrease of 2.3 percent. This decrease reflects how lower prices and weak domestic and foreign demand have continued to weigh down profit growth for industrial companies. Among these industrial enterprises, there was a significant drop of 6.7 percent year-over-year in total profits for foreign-owned enterprises and Hong Kong, Macao and Taiwan-owned enterprises. The profits of state-controlled enterprises fell by 3.4 percent year-over-year. The profits of joint-stock enterprises fell by 1.2 percent year-over-year. The total profits of private enterprises had a growth of 2.0 percent year-over-year. However, many companies are nearing the end of an inventory destocking cycle.

Source: Lianhe Zaobao, January 27, 2024
https://www.zaobao.com.sg/news/china/story20240127-1464777

Briefings | | |   Economy/Resources

People‘s Daily: Sullivan Admits that US Efforts to Change the PRC Over the Past Several Decades Have Failed

People’s Daily posted a 17-seconds video clip (with Chinese subtitle) of Jake Sullivan, National Security Advisor of the United States, with title “Sullivan’s Admission: the U.S.’ Efforts to Change China over the Past Several Decades Have Failed.” In the video, Sullivan said:

“We realize that efforts, implied or explicit, to shape or change PRC (People’s Republic of China) over several decades did not succeed. We expect that PRC will be a major player on the world stage for the foreseeable future. That means that even as we compete, we have to find ways to live alongside one another.”

{Editor’s Note: The video clip seems to be from Sullivan’s long speech on the future of U.S.-China relations delivered at the Brookings Institution on January 30, 2024. A transcript of the entire speech is available here.}

Sources:
1. People’s Daily, February 2, 2024
http://world.people.com.cn/n1/2024/0202/c1002-40172130.html
2. White House, January 30, 2024
https://www.whitehouse.gov/briefing-room/speeches-remarks/2024/01/30/remarks-and-qa-by-national-security-advisor-jake-sullivan-on-the-future-of-u-s-china-relations/

Briefings | | |   US-China Relations

Nikkei Chinese: U.S. Surpassed China to Become Japan’s Largest Export Destination

Nikkei Chinese Edition recently reported that, for the first time in four years, the United States surpassed China as the top destination for Japanese exports in 2023. The United States economy currently appears strong, and Japan’s exports to the United States are recovering in the aftermath of the COVID-19 pandemic. Meanwhile, the Chinese economy is struggling, and Japanese exports to China are sluggish.

The 2023 trade statistics report released by the Japanese Ministry of Finance showed that the country’s total exports were 100.8865 trillion yen (around US$681 billion), exceeding 100 trillion yen for the first time and representing an increase of 2.8 percent over the previous year. Total imports were valued at 110.1779 trillion yen (around US$743 billion), a decrease of 7 percent. Japan’s trade deficit was 54.3 percent smaller than in 2022. Exports to the United States were 20.2668 trillion yen (around US$137 billion), a year-over-year increase of 11 percent. Exports to the European Union were 10.374 trillion yen (around US$70 billion), an increase of 10.9 percent year-over-year. Japanese automobile exports to the U.S. grew 35.5 percent year-over-year, driving overall growth. A weaker yen helped exports too.

Japan’s exports to China were significantly affected by China’s economic slowdown, a major component of which is rooted in China’s current real estate market slump. China’s unemployment rate is high, and willingness to consume within the country has been weakened.

Despite strong year-over-year growth, Japan’s future exports to the United States still face many risks, including potential slowdown in the U.S. economy. Moreover, China’s economy could be slow to recover, leading to slow export growth for Japan and continued trade deficits.

Source: Nikkei Chinese, January 26, 2024
https://cn.nikkei.com/politicsaeconomy/investtrade/54664-2024-01-26-05-00-10.html

Briefings | | |   Geo-Strategic Trend