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Beijing Further Boosts Rare Earth Metal Production with Quotas, Hurts Producers’ Bottom Line

On June 29, China announced “Rare Earth Management Regulations” which stipulate comprehensive state supervision and control over the production and sales of rare earth products. China is currently the world’s leading manufacturer of rare earth metals, holding about 70 percent of the global reserves.

Beijing issued a production quota for Chinese companies – 135,000 tons in the first half of 2024, a 12.5 percent year-on-year increase. Market demand for rare earths did not go up as Beijing expected, however, and price dropped dramatically as a result of the government-mandated increase in rare earth production. The rare earth price index published by the China Rare Earth Industry Association on July 18 dropped by about 20 percent compared to late July 2023.

As a result of oversupply in the rare earth markets, all major Chinese rare earth producers saw significant declines in their profits, in the first quarter of this year. Northern Rare Earth’s net profit fell by 94 percent year-on-year, China Rare Earth reported a loss of approximately 289 million yuan (US$ 40 million), Guangdong Rising Nonferrous Metals a loss of 304 million yuan, and Shenghe Resources a loss of 216 million yuan.

Nikkei Asia pointed out that, in recent years, the CCP has continuously increased the production quotas for rare earth metals. In 2023, Beijing increased the quotas threefold, bringing the annual total to 255,000 tons, a 21 percent increase compared to 2022. Many believe this year’s quotas will go even higher. It seems that Beijing wants to use such increasing quotes to maintain its dominant position in rare earth production and export volume so that it can use rare earths as a bargaining chip in diplomatic negotiations.

Meanwhile, other countries are trying to reduce the reliance on China’s production of rare earths. The United States has expanded domestic rare earth production, and many countries have intensified local efforts to identify domestic rare earth deposits.

Source: Epoch Times, July 19, 2024
https://www.epochtimes.com/gb/24/7/19/n14293824.htm

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

Malaysia Applies to Join BRICS, China Responds With Open Arms

On July 28, the Malaysian Prime Minister’s Office issued a statement announcing that Malaysia has submitted a letter to Russia, the current chair of the BRICS nations, applying to join the BRICS cooperation mechanism. Lin Jian, Chinese Foreign Ministry spokesperson, stated at a regular press conference that “China welcomes more like-minded partners to participate in cooperation with BRICS, jointly promoting the development of the international order in a more just and reasonable direction.”

Source: China Youth Daily, July 29, 2024
http://m.cyol.com/gb/articles/2024-07/29/content_wdpQgohRMA.html

Briefings | | |   Geo-Strategic Trend

Nikkei Chinese: Honda Scales Back in China

Nikkei Chinese Edition recently reported that Honda plans to cut 30 percent of gasoline vehicle production capacity in China, the world’s largest auto market. The company will reduce capacity by about 500,000 vehicles, equivalent to 10 percent of Honda’s global production, through plant closures and other measures.

In China, there is currently an excess supply capacity as production capacity by domestic automobile companies has expanded faster than demand. Moreover, there has been a large flow of very low-priced Chinese into the Southeast Asian market, where Japan has an advantage; sales competition has become increasingly fierce.

Honda had been increasing its investment in China since the 1990s. China thus became Honda’s its largest production base worldwide. Now, Japanese automakers have reached a turning point in their confrontation with China over dumping of low-priced cars, and Honda is reducing its scale in China for the first time.

According to Nikkei, all Japanese automakers and suppliers have followed the trend of “adjusting” their businesses in China. Nissan closed its gasoline vehicle plant in Jiangsu Province in June, reducing annual production capacity in China by 10 percent, with further closures of factories under consideration. Hino Motors is exiting its engine production business in China. Meanwhile, Nippon Steel is also planning a significant reduction in its production capacity within China.

Source: Nikkei Chinese, July 25, 2024
https://cn.nikkei.com/industry/icar/56235-2024-07-25-09-31-44.html

Briefings | | |   Geo-Strategic Trend

Vietnam Proposes South China Sea Continental Shelf Delimitation to UN

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, according to the Ministry of Foreign Affairs of Vietnam, Vietnam has submitted a proposal to the United Nations Commission regarding delimitation of territory within the South China Sea, proposing use of suboceanic continental shelf limits as the delimitation.

The Chinese Ministry of Foreign Affairs Spokesperson said in a press conference that “Vietnam submitted the proposal to the UN Commission unilaterally,” and “its relevant claims cover parts of China’s Nansha Islands and infringe on China’s territorial sovereignty and maritime rights and interests. China firmly opposes this move and has lodged stern representations with Vietnam. According to the rules of the UN Commission on Limits of Continental Shelf, if there is a dispute, then no consideration will be given. So the UN Commission will not review or determine the cases filed by Vietnam. Such actions are in fact meaningless and will only intensify conflicts.”

In the meantime, Vietnam also submitted a note of objection to the United Nations in response to the Philippines’ submission on the outer continental shelf delimitation of the South China Sea. China has also opposed the Philippines’ proposal.

Source: Sina, July 18, 2024
https://finance.sina.com.cn/jjxw/2024-07-18/doc-incepxfy8687524.shtml

Briefings | | |   Geo-Strategic Trend

Lianhe Zaobao: Malaysia and Thailand Apply to Join BRICS

Singapore’s primary Chinese language newspaper Lianhe Zaobao reported that Malaysia and Thailand have recently expressed interest in joining the BRICS group of nations, led by Russia and China.

Last month, the Malaysian government stated that it would start the application process to join BRICS. Since the other BRICS members are very different from Malaysia, the Malaysian government’s decision to apply to join BRICS has led to heated debate among Malaysia’s political parties, with some questioning whether joining the BRICS would bring meaningful benefits to the country. Malaysia’s Prime Minister later stated to Congress that the primary benefit of joining BRICS would be expansion of Malaysia’s economic and trade network.

Thailand formally submitted its application to join BRICS last month. It is worth noting that Thailand is also in the process of applying to join the Organization for Economic Cooperation and Development (OECD) led by the United States and European countries.

In addition to Malaysia and Thailand, Indonesia and Vietnam are also considering joining BRICS.

BRICS is a cooperation mechanism established by Brazil, Russia, India and China in 2009. South Africa joined the group in April 2011. In January this year, the BRICS expanded to include Egypt, Iran, the United Arab Emirates and Ethiopia. There are more than 40 other countries who also intend to join.

Source: Lianhe Zaobao, July 25, 2024
https://www.zaobao.com.sg/news/sea/story20240725-4360331

Briefings | | |   Geo-Strategic Trend

CCP Attempts to Recruit Taiwanese Internet Celebrities to Produce “Cross-Strait Unification” Propaganda

Recently there has been a heated discussion in Taiwan about the Chinese Communist Party (CCP) targeting Taiwan’s Internet celebrities so as to influence Taiwan youth and politics.

A well-known Taiwanese internet celebrity with millions of followers, “Porter King,” stated that the “Cross-Strait Youth Association of China” will sponsor 10 groups of Taiwanese Internet celebrities for free trips to mainland China this summer to film videos. Taiwanese artist Ho Yi-chi mentioned that she received an invitation from a Beijing-based film production company last week to participate in a short film project, and that the project was related to politics. The “Beijing Ciguang Film and Media Company” proposed a bold plan to “construct a new type of cross-strait relationship” by preparing to invite Taiwanese artists and internet celebrities to “form a party and participate in Taiwanese elections.” It plans to establish the “Taiwan Harmony Party (台湾拥和党).” The plan is to hold an inaugural meeting in Taipei in July 2024, with the goal of participating in the 2026 local and mayoral elections in Taiwan by leveraging the high popularity of these internet celebrities and artists. Their minimum goal is to win one mayor and ten councilors.

In February this year, the Financial Times reported that the CCP’s United Front Work Department began hosting Taiwanese youth for trips to mainland China, hoping they would start producing short videos for TikTok and YouTube. The goal was to “foster patriotism” among Taiwanese youth (loyal to mainland China) and to “encourage them to join efforts to promote cross-strait unification.”

On June 18, Taiwan Premier Su Tseng-chang said that, more so than military and economic threats posed by mainland China, “the biggest threat is cultural invasion.” He expressed his “hope that the public will strengthen their inner defenses.” He emphasized that “the government certainly respects freedom of speech and internet autonomy, but it is absolutely necessary to issue very clear warnings when appropriate.”

Source: BBC, June 20, 2024
https://www.bbc.com/zhongwen/simp/chinese-news-69131401

Briefings | | |   @CS Geo-Strategic Trend

Philippines Resupplies its Soldiers on Second Thomas Shoal After Reaching Temporary Agreement with China

China and the Philippines have clashed multiple times at the disputed Second Thomas Shoal (仁爱礁). Earlier this month, the two parties reached a “temporary arrangement” enabling the Philippines to resupply the soldiers it has stationed on a ship grounded at the Second Thomas Shoal. The details of the temporary agreement have not been made public.

China’s Foreign Affairs Ministry spokesperson state “three principles” regarding the agreement:

  1. The long-term grounding of a Philippine “warship” on the Second Thomas Shoal infringes on China’s sovereignty. China still demands that the Philippines tow away the vessel and restore the shoal to its original unoccupied and unconstructed state.
  2. Before the Philippines tows away the “grounded” warship, if the Philippines needs to provide living supplies to the personnel on the ship, China is willing to allow the Philippines to carry out supply operations on humanitarian grounds. This would be permitted after prior notification to China and on-site verification, with China monitoring the entire process.
  3. If the Philippines transports large quantities of construction materials to the ship, attempting to build permanent structures and outposts, China will resolutely block such actions in accordance with the law.

Philippine Foreign Affairs Department spokesperson said that Beijing’s characterization of the agreement was distorted.

On July 27, 2024, the Philippines conducted a supply operations to the “grounded” warship. China’s Foreign Affairs Ministry’s spokesperson stated that, under the temporary arrangement reached between China and the Philippines, the Philippines supply operation was conducted with prior notice to China; upon on-site verification by China, China confirmed that only humanitarian living supplies were being transported, and China allowed the passage. The Philippines, however, stated that it had not sought China’s approval, and that China’s Coast Guard had not in fact stepped on the Philippines vessel to inspect its cargo.

Sources:
1. VOA, July 28, 2024
https://www.voachinese.com/a/philippines-says-china-mischaracterised-south-china-sea-resupply-mission-deal-20240728/7715929.html
2.  China’s Ministry of Foreign Affairs website, July 22, 2024
https://www.fmprc.gov.cn/fyrbt_673021/202407/t20240722_11457472.shtml
3.  China’s Ministry of Foreign Affairs website, July 27, 2024
https://www.fmprc.gov.cn/fyrbt_673021/202407/t20240727_11461676.shtml

Briefings | | |   Defense/Military Geo-Strategic Trend

China Facilitates Reconciliation of Fatah, Hamas, and Other Palestinian Factions in Beijing

At the invitation of China, senior representatives from 14 Palestinian factions held reconciliation talks in Beijing from July 21 to 23. They signed the “Beijing Declaration on Ending Division and Strengthening Palestinian National Unity.” Chinese Foreign Minister Wang Yi attended the closing ceremony. Foreign Ministry spokesperson Mao Ning stated that “The most significant consensus from the talks was achieving major reconciliation and unity among all 14 factions. The most core outcome was the reaffirmation that the Palestine Liberation Organization (PLO) is the sole legitimate representative of the Palestinian people.”

Wang Yi met Hamas political leader Ismail Haniyeh and Fatah Deputy Chairman Mahmud Alul on July 21 and July 23, respectively.

Commentaries pointed out that Beijing has once again intervened to save Hamas, allowing it to survive and to continue to play a significant role in the future Palestinian government, posing a long-term threat to Israel.

The U.S. State Department reiterated that the United States has designated Hamas as a terrorist organization and that it believes Hamas should not be involved in Gaza’s post-war governance.

Israel’s Foreign Minister Yisrael Katz made a post on the X platform saying “Hamas and Fatah signed an agreement in China for joint control of Gaza after the war. Instead of rejecting terrorism, Mahmoud Abbas embraces the murderers and rapists of Hamas, revealing his true face. In reality, this won’t happen because Hamas’s rule will be crushed, and Abbas will be watching Gaza from afar. Israel’s security will remain solely in Israel’s hands.”

Sources:
1. Xinhua, July 24, 2024
http://www.news.cn/mrdx/2024-07/24/c_1310782573.htm
2. Aboluo, July 24, 2024
https://www.aboluowang.com/2024/0724/2083006.html
3. X Platform, Yisrael Katz’s account @Israel_katz,
https://x.com/Israel_katz/status/1815670709378560503

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