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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

Nippon Steel Exits Joint Venture with Baosteel, Signaling Shift in China Strategy

Nippon Steel Corporation, Japan’s largest steelmaker, announced on July 23rd that it would withdraw from its joint venture with Chinese steel giant Baosteel. The decision came as Japanese automakers struggle with sales in China due to the rising popularity of Chinese electric vehicles. Nippon Steel likely foresees difficulty in increasing its own sales volumes. After exiting the joint venture with Baosteel, Nippon Steel’s steel production capacity in China will decrease by 70%, with Nippon resources focused on the US and India going forward.

In 2004, Nippon Steel, Baosteel, and ArcelorMittal established a joint venture to manufacture and sell automotive steel sheets. The 20-year agreement expires in late August of this year, prompting Nippon Steel’s decision to dissolve the partnership.

Nippon Steel’s current annual steel production capacity in China is about 3.6 million tons, with the joint venture with Baosteel accounting for 70% of that figure. Nippon stated that its initial goal of supporting Japanese automakers’ local production through steel supply has been achieved. Meanwhile, the competitive landscape has changed as Chinese steel companies have improved their technical capabilities.

Starting just after the 1978 Japan-China Peace and Friendship Treaty, Nippon Steel has been a contributor to the modernization of China’s steel industry, providing Japanese technology and expertise in China. At the Chinese government’s invitation, Nippon Steel supported the construction of Shanghai’s Baoshan Iron and Steel Plant.

Source: Kyodo News, July 23, 2024
https://china.kyodonews.net/news/2024/07/bde5daef8687.html

Briefings | | |   Geo-Strategic Trend

China Bans Guatemalan Coffee and Macadamia Nuts in Retaliation for Pro-Taiwan Stance

In retaliation against Guatemala for the country’s pro-Taiwan stance, Beijing has banned the import of Guatemalan coffee and macadamia nuts. Last year, Guatemala exported $82 million worth of goods to mainland China, with the main products being coffee, nickel, iron, steel, and macadamia nuts.

After China’s ban, Guatemala has been seeking alternate destinations for its export. It has shipped 75 containers of coffee to Taiwan, Singapore, Japan, and South Korea, with Japan receiving most of them. Guatemala currently has eight containers of macadamia nuts stranded at Chinese ports. These containers were already in transit when the ban was issued. Guatemalan exporters are looking for other countries to reship them to.

Source: Epoch Times, July 16, 2024
https://www.epochtimes.com/gb/24/7/16/n14291776.htm

Briefings | | |   Economy/Resources Geo-Strategic Trend

Saudi Arabia Places Two Large Orders with Chinese Companies

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that Saudi Arabia’s sovereign fund Public Investment Fund (PIF), Saudi energy equipment company Vision Industrie and China’s second largest wind turbine manufacturer Envision Group have reached an agreement to build a wind turbine manufacturing plant in Saudi Arabia to promote the Kingdom’s renewable energy production goals. The joint venture will carry out localized production and manufacturing of wind turbines and key components. At the same time, Saudi Arabia is also vigorously developing energy storage facilities to improve the reliability of the power grid. Since Saudi Arabia proposed its “Vision 2030” plan, the country has committed to developing renewable energy to accelerate the green transformation.

Chinese photovoltaic company Sungrow announced that the company signed a contract with Saudi Arabia’s Algihaz for the world’s largest energy storage project, with a capacity of 7.8GWh. The three sites of the project are located in the Najran, Al Madaya and Khamis Mushait areas of Saudi Arabia. Delivery is expected to begin in 2024, and the connection to the grid at full capacity will be in 2025.

Previously, Chinese technology company Huawei also announced its cooperation with Saudi Arabia to build an off-grid battery energy storage system for the Saudi Red Sea New City project. Under the leadership of Huawei, this energy storage project has recently reached 1.3GWh capacity. Saudi Investment Minister Khalid Al-Falih said last December during his visit to China that, Saudi Arabia invites Chinese companies to participate in the green transformation supply chain. Both in the capital city and throughout the Kingdom, there is a large workload that requires China’s participation.

Source: Sina, July 16, 2024
https://k.sina.com.cn/article_1887344341_707e96d501901hx78.html

Briefings | | |   Geo-Strategic Trend

Chinese Electric Vehicles (EVs) Gain Market Share in the Middle East

Xinhua reported that Chinese EVs are popular in Middle Eastern countries since those countries are focused on developing the green transportation.

According to statistics from the China Association of Automobile Manufacturers, China exported 1.2 million new energy vehicles in 2023, an increase of 77.6 percent from 2022. China’s new energy vehicles now account for over 60 percent of the global market. To the Middle East market, China exported 578,100 automobiles in the first ten months of 2023, a year-on-year increase of 32.61 percent; among them, over 110,000 are new energy vehicles, a year-on-year increase of 66.44 percent.

China’s Yutong Bus provided Qatar with 1,002 electric buses for the 2022 Qatar World Cup. These were later integrated into Qatar’s public transportation system. Among the electric buses serving the 2023 United Nations Climate Change Conference (COP28) in Dubai, more than half were from Chinese manufacturers such as Yutong, BYD, and King Long. In October 2022, Hongqi electric cars successfully “joined” the Dubai police force, becoming the first electric vehicles in the Dubai police fleet. The Hongqi E-HS9 has now become a favorite among local sheikhs, royal family members, and government officials.

Geely vehicles are sold in the UAE, Saudi Arabia, Qatar, and Bahrain. BYD has entered the markets of the UAE, Saudi Arabia, Jordan, Qatar, and Israel, establishing a leading position for its electric vehicle brand in the Middle East. Other Chinese electric vehicle companies such as Great Wall Motors, BAIC, Changan, XPeng, and Skyworth are also expanding into the Middle East market.

In 2023, Chinese EVs accounted for about 61 percent of the EV market in Israel. This share increased to 68.31 percent in the first half of 2024. In countries such as Jordan and Egypt, sales of Chinese brand EVs are also continuously growing.

Source: Xinhua, July 18, 2024
https://app.xinhuanet.com/news/article.html?articleId=9c0096426aa5ed72eba9f6629fae2619

Briefings | | |   Economy/Resources Geo-Strategic Trend

Lianhe Zaobao: Germany Starts Removing Huawei and ZTE 5G Components

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that the German government has imposed a ban on Chinese telecom equipment giants on national security grounds and will remove Huawei and ZTE components from Germany’s 5G network in two phases over the next five years. The German Interior Ministry negotiated an agreement with three domestic telecom providers operating 5G networks to protect Germany’s critical infrastructure from Chinese influence. This is Berlin’s latest move to reduce economic dependence on Beijing, a dependence which some fear could leave Germany vulnerable.

The three domestic German telecom operators are Deutsche Telekom, Vodafone and Telefonica Deutschland. According to their agreement with the German government, these telecom operators will remove key components of Huawei and ZTE Technologies from the 5G core network by the end of 2026 and will replace all components of Huawei and ZTE Technologies in the 5G network access and transmission infrastructure by the end of 2029.

The German government has informed Beijing about the agreement and does not expect retaliation for the move. Other European countries including the UK, Denmark, Sweden, Latvia, Estonia and Lithuania have already imposed bans on components from Huawei and ZTE. The United States began to impose restrictions on the use of Huawei equipment as early as 2019. Germany is considered to have lagged behind in implementing EU 5G network security measures.

The Chinese Embassy in Germany criticized Germany’s move on its official website, saying “the so-called cyber security risks are just an excuse.”

Source: Lianhe Zaobao, July 12, 2024
https://www.zaobao.com.sg/news/china/story20240712-4249314

Briefings | | |   Geo-Strategic Trend Information/Technology

Japanese Beauty Brand BAUM Exits China amid Broader Foreign Business Exodus

Japanese cosmetics brand BAUM, owned by Shiseido, announced its withdrawal from the Chinese market. This move is part of a broader trend of multinational companies leaving China in recent years, extending from manufacturing to the beauty industry.

BAUM’s Tmall flagship store will stop accepting new orders from July 10, and its concept store in Shanghai has already closed. Shiseido cited “strategic adjustment” as the reason for this decision.

Experts attribute this trend to various factors, including China’s “dynamic zero-COVID” policy, difficulties faced by foreign businesses, and the inability to repatriate profits easily. The recent controversy over Japan’s nuclear wastewater discharge has also led to a boycott of Japanese beauty products in China.

Despite these challenges, some Chinese officials continue to welcome foreign investment. The Vice Minister of Industry and Information Technology stated that China has lifted all restrictions on foreign investment in manufacturing.

However, critics argue that the deteriorating business environment in China is driving foreign companies to relocate to Southeast Asia, India, and even back to their home countries. This exodus includes major corporations like Samsung, Philips, Tesco, Yahoo, Canon, Lotte, and Sony.

The trend reflects broader concerns about China’s economic policies and international relations, potentially impacting its position in global supply chains and its appeal as a market for foreign businesses.

Source: Radio Free Asia, July 8, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql2-shiseido-baum-withdraw-china-07082024065833.html

Briefings | | |   Geo-Strategic Trend