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China Alienates Israel: Picking Sides by Bloc, Not by Country-Level Relationship

Zhang Ping, a Chinese scholar living in Israel, posted a tweet on X about why China has chosen not to condemn Hamas, alienating Israel following the start of the Israel-Hamas war. China made this decision despite good relations between Israel and China in the past.

Zhang Ping said that the world’s nations are now bifurcating into two blocs: the China-Russia-Iran camp, and the opposing camp led by the U.S. and its allies (including Israel). This bloc-based logic is now guiding China’s strategy for international relations.

In the past, China’s modus operandi was something like “which camp you belong to doesn’t matter; what matters is whether our relationship is good.” Recently, however, China’s operating principle has changed to “our relationship does not matter; what matters is which camp you belong to.” According to Zhang Ping, this shift in attitude started during the Russia-Ukraine War and has further developed during the recent Israel-Hamas war. Both Israel and Ukraine had good relations with China in the past. However, once conflicts arose, China chose to use bloc membership as its guiding principle, being unwilling to support either Ukraine or Israel.

During the time of globalization prior to these recent wars, individual relationships between countries held more weight [in Beijing’s eyes] than did bloc allegiances. This enabled countries, including Israel and Australia, to engage with China despite their being U.S. allies. Both Israel and Australia provided strategic port access to the Chinese, with Israel even allowing China a certain amount of control over two of its largest strategic ports in Haifa and Ashdod. Now, however, China will not support these countries no matter how good their past relations have been, as they belong to the Western camp rather than the Chinese camp. Meanwhile, European nations relied on Russia for their energy needs in the past, whereas the West has unified against Russia following the Russian invasion of Ukraine in 2022.

Source: Twitter @pingzhang632, Oct 17, 2023

Briefings | | |   @CS Geo-Strategic Trend US-China Relations

Chinese Authorities Detain Employee of Japanese Rare Metal Company

Chinese authorities have detained two Chinese nationals, one of whom was employed by Nippon Kinzoku, a Japanese metal trading company. The other detainee worked for a Chinese state-owned enterprise. Both companies are engaged in the rare metal businesses. {1}

The arrests may have been motivated by suspicion that the detained individuals have leaked technical information related to rare earth metals. Beijing regards such metals as a strategic resource and is tightening its control over export of the metals as well as associated technical knowledge. {2} Such metals are crucial for powering electric vehicles.

These recent detentions may result in increased pressure on the companies in question.

Sources:
{1} Kyodo News, October 23, 2023
https://china.kyodonews.net/news/2023/10/2d08f984450d.html

{2} Chinascope, October 24, 2023

Lianhe Zaobao: China Further Restricts Export of Graphite Products

Briefings | | |   Economy/Resources Geo-Strategic Trend Government/Politics

Mitsubishi Motors to End Car Production and Sales in China

The Japanese Mitsubishi Motors Corporation announced on October 24th that it will end production of vehicles in China, and that it will end car sales in China once the company’s existing inventory is depleted. The company’s decision was driven by the rapid rise of local Chinese electric vehicle (EV) companies (negatively impacting Mitsubishi’s own EV car sales) as well as the downturn in sales of Mitsubishi’s gasoline cars.

Mitsubishi’s board of directors has finalized the withdrawal from China; the company’s 2023 fiscal year statements will include a 24.3 billion yen (approx $172 million) special loss from the departure. Going forward, Mitsubishi intends to focus its resources on the market in Southeast Asian.

Mitsubishi launched a new Outlander hybrid vehicle in China in December 2021 but sales fell short of expectations. From January to August 2022, Mitsubishi’s sales in China almost halved, dropping 47.6% year-over-year. Besides Mitsubishi, other Japanese automakers are also lagging in terms of EV sales within China. Local giant BYD and Tesla dominate China’s EV market. Research firm MarkLines stated that in 2022, Chinese automakers accounted for 51% of passenger car sales within China, while Japanese automakers had only an 18% share of the market.

Mitsubishi’s joint venture GAC Mitsubishi Motors and its plant in China’s Hunan Province, which produced gasoline vehicles, stopped production in March. Mitsubishi will sell its shares in the joint venture and dissolve the partnership, though Mitsubishi’s other joint ventures in China will continue engine production.

Source: Kyodo News, October 24, 2023
https://china.kyodonews.net/news/2023/10/db6e9f1790e0.html

Briefings | | |   Geo-Strategic Trend

Lianhe Zaobao: China Further Restricts Export of Graphite Products

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that Beijing has expanded the list of Chinese-made graphite-based materials that are subject to export controls. Such products are used in the production of electric vehicle batteries, and may not be exported from China without permission.

The updated graphite export controls were published by the Chinese Ministry of Commerce and the General Administration of Customs of China. The measures “optimize and adjust the temporary export control of certain graphite products.” The controls newly included three “highly sensitive” graphite products in a dual-use export control checklist.

Spheroidized graphite, which was previously subject to temporary controls, was included in the updated list. Graphite products subject to export controls now include artificial graphite materials of high purity (99.9+ percent purity), high strength (flexural strength 30Mpa), and high density (1.73 grams per cubic centimeter), as well as derivative products of these materials. Also restricted is natural flake graphite and its derivatives (including spheroidized graphite, expanded graphite etc.).

According to the U.S. Geological Survey, China is currently the world’s largest producer of graphite, accounting for 67 percent of the world’s natural graphite supply. A spokesperson for China’s Ministry of Commerce said that “China, as the world’s largest producer and exporter of graphite, has long firmly fulfilled its non-proliferation and other international obligations and implemented export controls on specific graphite items in accordance with the need to safeguard national security and interests.”

Source: Lianhe Zaobao, October 20, 2023
https://www.zaobao.com.sg/realtime/china/story20231020-1444412

Briefings | | |   Economy/Resources Geo-Strategic Trend

China Rushing to Buy Up Wheat Via Foreign Trade

Chinese stock market news site Stock Star recently reported that China is scouring the world for wheat, with annual imports on track to hit a record high as recent heavy rains have damaged domestic crops. Wheat traders say that China has ordered large quantities of wheat in October, buying from a number of major exporters including the United States, Canada and France. The current buying spree follows high-volume wheat purchases from Australia earlier this year.

Growing wheat demand from China is adding uncertainty to supply chains that are increasingly vulnerable to war and protectionist trade policies. Chinese imports totaled a record 9.96 million tons last year as the agricultural sector shifted to use more wheat as animal feed and Chinese citizens ate more bread. China is currently competing with Egypt to become the world’s largest Wheat importer. Chinese overseas procurement volume in the first eight months of 2023 has reached 9.56 million tons, of which more than 60 percent came from Australia.

China’s summer wheat output fell by 0.9 percent this year to 134.53 million tons, the first decline in seven years. Continued rains have caused the quality of 30 million to 40 million tons of wheat to deteriorate as this year’s crops near harvest, making the grains suitable for livestock feed but unsuitable for human consumption. Much of China’s recent buying activity has resulted from these weather problems.

Source: Stock Star, October 12, 2023
https://wap.stockstar.com/detail/IG2023101300008165

Briefings | | |   Economy/Resources Geo-Strategic Trend

HKET: China Bans Mainland Chinese Investors from Opening Foreign Trading Accounts

The Hong Kong Economic Times (HKET) reported that the Shanghai Supervision Bureau of the China Securities Regulatory Commission issued a notice on September 28 requiring Chinese securities firms to stop providing new investors from Mainland China with securities trading services via Hong Kong accounts and other offshore accounts. Existing accounts held by Mainland Chinese are to be strictly monitored so as to prevent investors from bypassing China’s foreign exchange regulatory rules. This is the first time that China has explicitly limited Mainland Chinese investors ability to use foreign trading accounts.

The move serves to limit capital outflows and to support the RMB, which is facing downward pressure. The targeted offshore accounts are relatively more difficult for the authorities to control. This contrasts with cross-border trading through formally-sanctioned channels such as Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, where the authorities are better able to ensure that Mainland investors’ funds will be managed in a “closed loop,” that is, when securities are sold, the funds will immediately flow back into the RMB instead of into another currency. When Chinese investors use offshore investment accounts to invest abroad, it is more difficult for the Chinese authorities to manage the use currencies other than the RMB.

Although the new instruction does not clearly specify the implementation date, sources said that the regulatory agency’s intention is for the regulation to take effect immediately. Brokerages will need to remove apps or websites that attract Mainland customers by the end of October.

The article by HKET, which is Hong Kong’s leading financial daily paper, cited Reuters, which in turn cited four anonymous sources.

Sources:
HKET, October 12, 2023
https://tinyurl.com/55k8dwyr

Yahoo Finance Hong Kong, October 12, 2023
https://tinyurl.com/muy2tsvz

Briefings | | |   Economy/Resources Geo-Strategic Trend

Chinese Warplanes Aggressive Maneuver Near Canadian and U.S. Planes

On October 17 a Chinese military aircraft provocatively intercepted a Canadian Armed Forces Aurora aircraft in international airspace near China’s territorial waters. At the time, the Canadian aircraft was in an operation to enforce United Nations sanctions that prevent illegal transportation of oil to North Korea. The Canadian crew had identified a “suspicious vessel” that was on a watchlist.

During its eight hours of flight, the Canadian aircraft was intercepted by at least two Chinese fighter jets who flew with the Canadian plane for several hours. Chinese jet aircraft at one point came as close as 15 feet from the Canadian aircraft. The Chinese aircraft also launched multiple illumination flares in the vicinity of the Canadian aircraft.

The Washington Post reported that in the past few years Beijing has intensified these kinds of dangerous maneuvers targeting planes of the U.S. and its allies and partners. The total number of such encounters is now near 300. On October 17, Pentagon released videos and photos of some incidents, including an incident in January 2023 where a Chinese J-11 fighter jet flew about 30 feet from an American RC-135 plane and lingered for 15 minutes, and an incident in May 2022 where a Chinese fighter jet flew 15 feet laterally below a US Navy EP-3 plane.

Sources:
1. Radio France International, October 17, 2023
https://www.rfi.fr/cn/国际/20231017-加媒-中国战机以-挑衅方式-拦截加拿大军机
2. Washington Post, October 17, 2023
https://www.washingtonpost.com/national-security/2023/10/17/china-fighter-jet-dangerous-maneuvers/

Briefings | | |   @CS Defense/Military Geo-Strategic Trend US-China Relations