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China Concedes in Dispute with Lithuania over Taiwanese Representative Office, Lifts Sanctions

China recently lifted the severe trade restrictions imposed on Lithuania after the Baltic state established a “Taiwanese Representative Office” in late 2021.

The sanctions were part of Beijing’s vigorous efforts to prevent  other countries around the world from establishing diplomatic relations with Taiwan. Representatives of the Chinese government said that it would only be permissible for the Taiwanese office in Lithuania to be referred to as a “Taipei Economic and Cultural Representative Office,” and that the terminology “Taiwanese Representative Office” was unacceptable. Under normal diplomatic relations between sovereign states, a similar outpost of one country within another would be called an “Embassy.”

German newspaper Frankfurter Allgemeine Zeitung quoted Lithuanian Foreign Minister Gabrielius Landsbergis on the new development in China-Lithuania relations: the Chinese government has ended its attempt at “economic coercion,” and the name “Taiwanese Representative Office” will remain despite Beijing’s criticism. Frankfurter Allgemeine Zeitung praised Lithuania, saying that the small country had won the principles-based fights.

Lithuania conducts trade with China worth tens of millions of euros. China’s restrictive measures led to an 80% drop in Lithuania’s 2022 exports to China. The EU raised the issue of Chinese-Lithuanian trade with the World Trade Organization at the end of 2022.

Many EU countries, including Eastern European countries, no longer see China as a favorable partner. Last year, Baltic countries Latvia and Estonia followed Lithuania’s lead in withdrawing from the China and Central and Eastern European Countries (China-CEEC) initiative, also known as the 14+1 initiative (formerly 17+1). These Baltic states have established trade offices with Taiwan. The Czech Republic also got closer to Taiwan, deviating from its historically-close ties with China. China’s support of Russia during the Russia-Ukraine war further alienated many countries in the EU.

Facing serious economic challenges domestically, China now seeks to ease relations with Western countries. This recent move on trade with Lithuania is one such effort, potentially lightening tensions with the European Union (EU) ahead of the upcoming China-EU Summit. In another such effort, Beijing has cancelled travel visa requirements for citizens of five different EU countries, enabling easier travel to China.

Source: Back China, December 3, 2023
https://www.backchina.com/news//2023/12/03/889175.html

Lianhe Zaobao: China’s Manufacturing PMI Fell in November

China’s November Manufacturing Purchasing Managers Index (PMI) was 49.4 percent, down 0.1 percentage points from the previous month, indicating that the market demand has declined. Among the five sub-indexes that make up the manufacturing PMI, the new orders index, the raw materials inventory index and the employment index are all lower than the critical level of 50 percent.

The raw materials inventory index for November stood at 48.0 percent, down 0.2 percentage points from the previous month, indicating a decrease in stock levels for major raw materials. The employment index was 48.1 percent, an increase of 0.1 percentage points from the previous month, indicating that the employment situation of the manufacturing companies has recovered slightly. Lianhe Zaobao, Singapore’s primary Chinese language newspaper, reported on the new PMI numbers, saying that the prosperity level in Chinese manufacturing is declining.

PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline. China’s PMI numbers are jointly published by the China Federation of Logistics & Purchasing and the China Bureau of Statistics.

Source: Lianhe Zaobao, November 30, 2023
https://www.zaobao.com.sg/realtime/china/story20231130-1453217

Walmart to Move Procurement Center to Vietnam

Well-known Chinese news site Tencent News recently reported that Walmart has announced it is moving procurement center from China to Vietnam.

As a global manufacturing center, China’s labor costs are rising, which undoubtedly brings additional burdens to large-scale retailers. Meanwhile, Vietnam is an emerging manufacturing country with relatively low labor costs and a loose regulatory environment. Thus, Vietnam has become Walmart’s first choice as an alternative to Chinese labor.

China’s status in the global manufacturing supply chain is gradually declining. At the same time, other countries are becoming more important links in a transformed global supply chain. These other countries include Mexico, India, Thailand, Vietnam, etc.

According to the Tencent article, these countries are likely to succeed China and become the next world factory. The impact of Walmart’s departure from China is not only the loss of an important foreign-owned retail system, but more importantly, there is a series of chain reactions that may result from Walmart’s departure. As one of the world’s largest retailers, Walmart has a huge procurement operation. Once Walmart leaves, it will no longer have demand for Chinese suppliers, which may lead to increased pressure on the survival of some small and medium-sized Chinese manufacturers. Also, Walmart has a large number of employees in China, and the departure may result in significant job losses. This will bring pressure to China’s job market and social stability. However, Walmart’s departure will provide more opportunities for Walmart’s rivals to compete for the Chinese consumer market share.

Walmart began to close its stores in China in 2016. Over 130 Walmart locations in China have closed since then.

Source: Tencent News, November 23, 2023
https://new.qq.com/rain/a/20231123A00DCU00

China’s Seafood Imports from Japan Dropped by More Than 99 Percent

China responded angrily when Japan discharged treated nuclear wastewater into the sea near the Fukushima Daiichi Nuclear Power Station, imposing a comprehensive suspension of Japanese seafood imports since August. The General Administration of Customs of China reported that the total value of seafood imported from Japan to China in October 2023 was 2.4 million yuan (US$ 339,000), a significant decrease of 99.3 percent compared to the same month last year.

The recently-released statistics did not include data regarding September imports specifically. However, subtracting the cumulative value of January to August from the cumulative value for January to September, the remaining amount (which represents September’s seafood imports) was only 60,000 yuan, a drastic year-on-year reduction of 99.98 percent. The drop for August was 67.6 percent.

China has made up for the reduced imports by using domestic products or importing from other countries instead.

Source: Kyodo News, November 19, 2023
https://china.kyodonews.net/news/2023/11/8cbede403e53-1099.html

Market for Falsified Chinese Birth Certificates Comes to Light

Numerous Chinese medical institutions have recently been exposed for illegally selling birth certificates, revealing their pivotal role in an underground market for baby trafficking and surrogacy. Recent arrests in Xiangyang City, Hubei Province, and reports from Nanning City, Guangxi Zhuang Autonomous Region, and Foshan City, Guangdong Province, highlight a widespread issue.

The birth certificate market has historical roots, enabling families to violate family planning policies (e.g. the one-child policy) or helping human traffickers to create identities for abducted children. There is an increasing trend of parents selling their biological children for profit.

Surrogacy fees range from 400,000 to 550,000 yuan (US$ 56,000 to 78,000), with an additional 10,000 yuan cost for birth certificate processing. This market involves forged documents, misrepresented information, and collaboration between medical institutions and intermediaries. In some cases, corrupt regulatory bodies are implicated as well.

Source: Central News Agency (Taiwan), November 20, 2023
https://www.cna.com.tw/news/acn/202311200298.aspx

Over 3 Million Chinese Take Civil Service Exam in Scramble to Fill Open Government Positions, Setting New Record

There were a record high number of applicants taking this year’s Chinese Civil Service Exam, known as the Guokao. Over 3 million Chinese signed up to take the test, competing for a limited number of job positions the government sector.

On average, there were over 70 candidates competing for every single available position. The most competitive position had 3,572 applicants vying for just 1 opening. Many netizens commented that civil service jobs have become the only viable route for college graduates amid China’s weak economy and grim employment outlook.

Experts say the surge in Guokao applicants is likely tied to post-pandemic economic and hiring difficulties facing China’s private sector. With restaurants forced to slash prices to retain customers and other businesses shutting down, civil service jobs are extremely appealing; they offer stable income and good benefits for life. Some have argued, however, that top talent should not join the government bureaucracy and should instead create value in the private economy.

While economic factors would seem to explain this year’s record high number of exam takers, one researcher cautioned that deeper analysis of candidates’ backgrounds is needed. The increase could also be a “lag effect” from China lifting its zero-COVID policy in 2023.

Besides the record number of Guokao applicants, another noteworthy trend was a reduction in the number of applicants to study at Chinese graduate schools. Chinese youth may now be prioritizing civil service jobs, with all their attendant benefits, over further studies in academia.

Source: Deutsche Welle, November 27, 2023
https://p.dw.com/p/4ZTPO

China’s Pediatric Wards Overwhelmed by Surge in Childhood Respiratory Illnesses

Taiwan’s Central News Agency reported that respiratory illnesses like mycoplasma pneumonia are currently surging across China, leading to overflowing pediatric wards. Many students are taking sick leave from school. In some areas, nearly half the seats in classrooms are empty, and some schools have temporarily suspended classes entirely due to the high rate of absences.

In Jinan, one parent reported that nearly 50% of the approximately 50 students in their child’s class were out on leave. In Hangzhou, over 20 students in one 36-student elementary school class had fevers, leading to a 2-day class suspension. A Shaoxing elementary school saw over 5 students with fevers above 38 C in one class, prompting a 4-day suspension. An entire class in Taizhou also suspended for 5 days due to students taking leave.

Children are presenting with high fevers upwards of 40C (104 F). The spread of influenza, rhinovirus, Mycoplasma pneumonia, respiratory syncytial virus, adenovirus and other pathogens is hard for parents and students to prevent. Some students have returned from leave only to fall ill again with another virus.

Hospitals have been inundated with pediatric cases. Some images have surfaced on social media of children do their homework while receiving IV treatments. Meanwhile, some localities have prohibited teachers from mandating homework completion for sick students and have advised ill teachers and children not to attend school.

Experts predict that this wave of respiratory disease could continue for some time before improving in the spring when warmer weather arrives. The simultaneous circulation of multiple viruses is making it difficult to accurately forecast the end of the surge.

Source: Central News Agency (Taiwan), November 28, 2023
https://www.cna.com.tw/news/acn/202311280381.aspx

RFA: China’s Use of Foreign Capital Continues to Fall

Radio Free Asia (RFA) reported that China’s Ministry of Commerce  has released data on foreign direct investment (FDI) in China. Nationwide FDI was RMB 987.01 billion for the first ten months of this year, a year-over-year decrease of 9.4 percent. The decline expanded from the 8.4 percent over the previous nine months, and was the fifth consecutive month of continuous decline.

Foreign investors are pulling more money out of China than they put in. This is happening through repatriation of profits, repayment of intra-company loans, and the sale of assets. The trend reflects that foreign businesses are disillusioned with China’s economic prospects and policy climate.

Some analysts expressed the belief that Xi Jinping’s national security policy has caused a large-scale flight of foreign capital, and that the situation will be difficult to change in the short term. With national security remaining Beijing’s top priority, the downward trend in foreign investment will likely not change any time soon, even if the Chinese government were to launches a gesture promoting foreign investment. China currently faces many economic challenges in many areas, including taxation, technological upgrades, rapid withdrawal of foreign investment, a surge in unemployment, stagnant growth, and decline in international cooperation. These are all dangerous signals regarding the Chinese economy.

China’s high-tech, medical equipment and high-end instrument industries are not doing too poorly in terms of foreign direct investment. Investment into the service industry, however, has taken a big hit, declining by 15.9 percent. The service industry is responsible for more of the country’s employment and accounts for a greater share of GDP than China’s manufacturing sector.

Just a short while ago, China announced that third-quarter foreign investment (in U.S. dollars) was negative for the first time, with a deficit of US$11.8 billion. Meanwhile, the most recent announcement by China’s Ministry of Commerce reported a positive number for foreign direct investment, denominated in RMB. Although calculation using RMB resulted in a positive number, actual U.S.-dollar-denominated foreign direct investment has been negative. The Chinese Ministry of Commerce has not released FDI data measured in U.S. dollars since August this year.

Source: RFA, November 20, 2023
https://www.rfa.org/mandarin/yataibaodao/jingmao/hx1-11202023101220.html