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Lianhe Zaobao: China Foreign Investment Index Falls to 25-Year Low

Singapore’s primary Chinese language newspaper, Lianhe Zaobao, recently reported on data released by China’s State Administration of Foreign Exchange. The data show, between April and June of 2023, the growth rate of direct investment liabilities, a measure of foreign direct investment in China, dropped to US$4.9 billion.

The reported figure is 87 percent lower than the figure from the same period last year. This was the smallest quarterly total for foreign direct investment since records began in 1998.

The data from the Administration of Foreign Exchange reflects the trend of declining profits for foreign companies and reduction of their scale in China. Beijing’s three-year-long Zero-Covid program hampered the Chinese economy and limited access to Chinese markets, geopolitical tensions have been on the rise, and China’s post-Covid economic recover has been lackluster. As such, foreign companies are reevaluating the risks associated with doing business in China.

According to data previously released by the Chinese Ministry of Commerce, the actual use of foreign investment (FDI) in the country from January to June of this year fell by 2.7 percent year-over-year, the first decline in three years.

Source: Lianhe Zaobao, August 8, 2023
https://www.zaobao.com.sg/realtime/china/story20230808-1421584

Briefings | | |   Economy/Resources Geo-Strategic Trend

CNA: China Has One of the Lowest Fertility Rates Globally

Primary Taiwanese news agency Central News Agency (CNA) recently reported that fertility rates in China are now among the lowest in the world. According to projections, the country’s trend of negative population growth will continue until the 2070s or 2080s.

In 2015, Beijing announced the end of its one-child policy, which had been in place for decades. The two-child policy was enacted the following year, followed by a three-child policy in 2021. These attempts to mitigate the country’s low birth rates have met with little success.

According to data released by the National Bureau of Statistics of China in January this year, China’s population in 2022 decreased by 850,000 from the end of 2021. This was the first negative population growth in China in 61 years.

According to the article, China’s low fertility rate is attributable to three major factors: some people can’t afford children, some don’t want to have children, and some are not able to have children. The financial factor is due to unsatisfactory material conditions, such as housing pressure and low disposable income. Reluctance to give birth, on the other hand, stems from psychological factors. The government does not have many options to change the situation.

The future of China’s demographic structure looks quite pessimistic.

Source: CNA, August 12, 2023
https://www.cna.com.tw/news/acn/202308120027.aspx

Briefings | | |   Social Stability

Economy of “World Factory” Dongguan City Falters

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, according to the Dongguan City Bureau of Statistics, the city saw a first half-year GDP growth of 1.5 percent year-over-year. China’s national GDP growth during the same time period was at 5.5 percent, and GDP growth in Canton province (where Dongguan City is located) was 5.0 percent. Dongguan’s growth rate was second to last among major Chinese cities, and it ranked last among cities with an annual GDP of over one trillion yuan.

The Cantonese city of Dongguan, once nicknamed the “World’s Factory,” has manufacturing as the cornerstone of its economy. Last year, the city’s industrial value added reached RMB 624.4 billion (around US$86.7 billion), ninth in the country, and Dongguan ranked third among Chinese cities in manufacturing of computer, communication and other electronic equipment. In this year’s first first half, however, Dongguan’s computer, communication and other electronic equipment manufacturing sector fell by 4.9 percent, and electrical machinery and equipment manufacturing fell by 7.4 percent. The negative growth of these sectors has had a significant impact on Dongguan’s economy.

Take mobile phone production as an example — Dongguan is China’s manufacturing base for mobile phones nationally. Recently, one out of every four smartphones in the world was made in Dongguan. It used to produce 400 million mobile phones a year; production peaked in 2019 and then gradually declined. Last year, the production of mobile phones in Dongguan was only 197.6167 million units, a drop of more than half from the peak.

In the first half of this year, Dongguan’s exports decreased by 9.4 percent. The city’s past rapid growth was the result of globalization — the capital, technology, equipment, and orders driving economic activity in the city all came from abroad. This economic dependency on external factors has become a liability as global trade slumps, directly affecting Dongguan’s economy.

Source: Sina, August 13, 2023
https://news.sina.com.cn/o/2023-08-13/doc-imzhahxz5975357.shtml

Briefings | | |   Economy/Resources

Australian Broadcasting Corporation: Chinese Police Communicating With Australians Over the Internet

Australian Broadcasting Corporation recently reported that it has obtained a Chinese government document indicating that Chinese police have begun using cloud technology to operate “contact points,” extending the reach of Chinese policing into Australia. The “contact points” are operated by the Hai’an Police Department in Jiangsu Province, using cloud meeting by Tencent (similar to a Zoom meeting) and WeChat to communicate with Australian citizens as well as Chinese people living in Australia. According to Chinese media Xinhua Daily, Chinese students in Australia have been hired as overseas liaison officers to onboard people into this online system.

The report follows the high-profile discovery of several clandestine “Chinese police stations” operating in Canada, the U.S., and several European countries earlier this year. Chinese authorities maintain that these covert police stations were merely providing administrative services such as renewal of passports or driver’s licenses, while human rights experts have said that the police stations were likely used to intimidate Chinese dissidents and monitor Chinese nationals living abroad.

Westphalian sovereignty, a well-known principle in international law, holds that each country has exclusive sovereignty over its territory. A consequence of this principle is that states should not conduct official business (including policing) within other countries. Western countries have viewed Chinese police activities within their borders as violations of their sovereignty.

 

Source: Australian Broadcasting Corporation, August 4, 2023
https://www.abc.net.au/chinese/2023-08-04/china-overseas-police-station-australian-contact-point-cloud/102685646

 

 

Briefings | | |   @CS Geo-Strategic Trend Government/Politics

People’s Daily: “Strike Hard!” – CIA Spy Busted by Chinese National Security

People’s Daily reported that a Chinese national, last name Zeng, has been arrested for spying on behalf of the US. According to the article, Zeng was born in July 1971 and works at a Chinese military industrial company. Zeng had access to important classified information. When Zeng was sent to study in Italy by the Chinese government, an official named “Seth” from the U.S. Embassy in Italy approached him and eventually recruited him to be a CIA spy. Zeng signed a spy agreement with the U.S. and participated in CIA examinations and training. After returning to China, Zeng met secretly with CIA personnel many times, providing a large amount of core intelligence information to the U.S. and receiving money from the U.S.

The People’s Daily article follows CIA Director William Burns’ recent statement that the U.S. has made progress in rebuilding its spy networks in China, as well as the U.S.’ recent arrest of two Navy servicemen accused of transmitting military information to China.

Source: People’s Daily, August 11, 2023
http://society.people.com.cn/n1/2023/0811/c1008-40054456.html

Briefings | | |   Defense/Military US-China Relations

Shanghai Police Target China’s Largest Provider of Emigration Services

The Shanghai Police have arrested Chairperson He Mei of Wailian Group (外联出国), Shanghai’s largest China-US immigration intermediary company. The arrest is part of an investigation into illegal foreign exchange transactions totaling over a billion RMB. In addition to He, four others have also been arrested.

Wailian Group has been a prominent firm in enabling emigration from China, facilitating quick approvals for various countries’ visas and residency permits.

Several people posted on the internet citing insiders, saying that the police demanded that He Mei hand over all information on clients for whom the firm has provided immigration services over the company’s several decades of operation. One tweet said that the authorities are targeting rich Chinese who have exited China but who still have a lot of property in the country. This would enable the local and national Chinese government to confiscate those valuable properties. Another social media post, seen on Chinese social media Weibo, speculated that the authorities may be aiming to collect information on emigration of lower-ranking government bureaucrats and their family members.

Source: Epoch Times, August 10, 2023.
https://www.epochtimes.com/gb/23/8/10/n14051577.htm

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

LinkedIn, the Last Western Social Media Company in China, Pulls Out

LinkedIn, Microsoft’s social media platform for the workplace, withdrew from Chinese markets on August 9, officially closing the Chinese version of the LinkedIn application.

LinkedIn’s 2014 debut in China came on the heels of Google’s withdrawal from the country in 2010. Google withdrew following the company’s refusal to comply with the Chinese communist regime’s demands that Google censor the content available in China.

LinkedIn took the opposite approach of Google, opting for cooperation with the Chinese regime, implementing censorship mechanisms for the platform. LinkedIn users saw some postings on the platform (e.g. mentioning 1989 the Tiananmen Massacre) deleted by LinkedIn.

The communist regime’s control of the platform gradually became tighter and tighter. In March 2021, the New York Times reported that Chinese regulators had criticized LinkedIn’s executives for failing to control content when they discovered “sensitive” posts during China’s National People’s Congress. As punishment, China required LinkedIn to conduct a “self-assessment” and submit a report to China’s Central Internet Information Office.

LinkedIn’s latest Transparency Report, released in 2023, showed that the Chinese government made 43 requests to LinkedIn to remove content in 2021. LinkedIn complied with all of these requests except one. The number of removal requests was similar in 2020, following relatively lower numbers of requests in 2018 and 2019.

LinkedIn announced in October 2021 that it would remove several features from the Chinese version of its website, including the ability to make posts and interact with user-generated content. Without these social functions, LinkedIn became merely a resume-hosting website and saw its user base decline.

Source: Voice of America, August 8, 2023
https://www.voachinese.com/a/linkedin-becomes-the-last-western-social-platform-to-officially-leave-china-20230808/7216109.html

Briefings | | |   @CS Government/Politics Information/Technology

People’s Daily: Chinese Cars Taking Over “Southern Markets”

People’s Daily stated that cars made in China are taking over the global markets, especially the “Southern World” (non-Western countries).

According to the latest data from the China Association of Automobile Manufacturers, China’s automobile exports reached 2.14 million units in the first half of 2023. This marks a year-on-year increase of 75.7 percent in reported auto exports.

Total reported export value reached $99.97 billion, up by 41.7 percent from the previous year. Total automobile export for this year is anticipated to reach 4 million units, a significant increase from the prior two years. Reported exports were just over 2 million units in 2021 and about 3.3 million units in 2022.

Chinese automakers dominate the fast-growing electric vehicle market in Southeast Asia, contributing three-quarters of the region’s electric vehicle sales in the first quarter of this year. Chinese cars are also gaining traction in markets like the UAE, Africa, the Middle East, and Latin America due to their affordability, features, and comprehensive warranty services.

The main factor driving Chinese car exports is competitive pricing, including the market’s ability to offer more features at the same price as competitors. Chinese car companies have been setting up joint ventures for localized auto production in countries such as Thailand and Brazil.

Source: People’s Daily, August 7, 2023
http://world.people.com.cn/n1/2023/0807/c1002-40051652.html

Briefings | | |   Economy/Resources Geo-Strategic Trend