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China Squeezes German Products in European Market

German newspaper Handelsblatt reports growing concern among German companies over rising competition from Chinese exports, not just in low-tech goods but increasingly in complex, high-tech products. A recent study by the German Institute for Economic Research found China’s share of EU imports in industrial goods such as machinery and autos is rapidly increasing, while Germany’s is declining. In 2000, China accounted for just 2.5% of EU industrial imports versus 17.7% for Germany; by 2022, China’s share grew to 13% while Germany’s declined to 15.5%.

Experts attribute China’s gains to generous government subsidies throughout entire supply chains as well as the country’s recent efforts to catch up on technology and innovation. In machinery, China’s EU import share grew from 6.8% in 2010 to 11.4% last year, while Germany’s share fell from 22.6% to 20.5%. The auto market could be China’s next target, with capacity to produce 40 million EVs annually, greatly exceeding China’s domestic demand of 20-25 million units annually.

Source: Deutsche Welle, August 15, 2023
https://p.dw.com/p/4VCfM

Briefings | | |   Geo-Strategic Trend

Chinese MSS: Retired Cadres Plotted “Death Squads” to Topple Regime

The China’s Ministry of State Security (MSS) website revealed that in 2016 it uncovered and foiled a plot by a retired school official in Yunnan province to “violently overthrow the government.” The official, surnamed Su, had posted anti-government rhetoric online for years before contacting members of a “foreign hostile organization” to purchase weapons and recruit “death squads” for what he called the “Benghazi Project of China.” Su planned to carry out violent operations to subvert state power. China’s state security organs reportedly identified and arrested all those involved while the plot was still in early stages of planning.

The MSS said this case reflects the threat of “color revolutions” (referring to revolutions in post-Soviet states attempting to establish Western-style liberal democracy) and other attempts by “hostile forces” to undermine China’s political system and Chinese Communist Party leadership. “Political security is the foundation of national security,” it emphasized.

Source: Central News Agency (Taiwan), August 15, 2023
https://www.cna.com.tw/news/acn/202308150324.aspx

Briefings | | |   Social Stability

Chinese Automakers Now Dominate Half of Russian Car Market

Central News Agency (Taiwan) reported that Chinese automakers’ market share in Russia has surged to 52%, making Russia the largest overseas market for Chinese cars. This growth in market share follows the suspension of exports to Russia by automakers from many other regions, a reaction to Russia’s invasion of Ukraine. Chinese brands have taken advantage of this situation, filling the void left by foreign auto firms.

In July, China’s Chery sold 17,735 cars in Russia, up 4.2 times from the same period last year. Geely sold 8,800 new cars in Russia, and several other Chinese brands also made the top 10 in terms of sales volume in Russia.

The report noted that, due to import tariffs and other factors, Chinese cars retail in Russia at much higher prices than they sell for in China. Chinese cars are still competitive in the Russian market, however, as the Chinese brands have been able to deliver value by focusing on a small number of models with high product strength.

The Russian market is only one facet of the recent, dramatic increase in Chinese automobile exports. In the first half of this year, China’s automobile exports to all regions increased by 76.9% annually, surpassing Japan as the world’s top auto exporter.

Source: Central News Agency (Taiwan), August 15, 2023
https://www.cna.com.tw/news/acn/202308150387.aspx

Briefings | | |   Geo-Strategic Trend

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