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RFI: U.S. Companies’ Confidence in the Chinese Market Declines to Record Low

Optimism among U.S. companies operating in China has hit a “record low” according to a Radio France Internationale (RFI) Chinese Edition report on a survey conducted by the American Chamber of Commerce (AmCham) in Shanghai. More and more companies are seeking to withdraw investment from China even as the Chinese government is taking measures to boost the country’s sluggish economy.

The AmCham report stated that, after years of pandemic disruption and restrictions, 2023 was supposed to be a year of rebound in investor confidence and optimism. However, the Chamber’s 2023 survey of U.S. companies in China found that such a rebound has not materialized and business confidence has continued to deteriorate.

In addition to poor economic conditions, tensions between Beijing and Washington have also put heavy pressure on U.S. companies operating in China. The report indicated that respondents’ optimism about the next five years is the lowest on record: only 52 percent of companies, a decrease of three percentage points from the previous year, expressed optimism about their prospects for that time period. When asked about the top three challenges they face, 60 percent of the 325 surveyed companies mentioned that US-China relations were a significant challenge, and 60 percent of respondents mentioned economic slowdown as one of the top three headwinds. Around 40 percent of companies are planning to move or have already moved capital out of China, an increase of six percentage points over last year. Southeast Asia is the most popular alternative destination to which U.S. companies are moving their production and capital.

Source: RFI Chinese, September 19, 2023
https://tinyurl.com/2kkyuh26

Briefings | | |   Economy/Resources US-China Relations

Apple’s iPhone15 Pre-Sale in China Was Much More Successful Than Huawei

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that, within ten minutes of going on sale, Apple’s Chinese official website crashed and remained unavailable for six to seven minutes. And in the official Tmall Apple flagship store, the first batch of iPhone 15 Pro and iPhone 15 Pro Max were sold out within one minute. According to the online sales manager in charge of the Tmall site, in half an hour, they restocked nine times and are still restocking. For now, iPhone 15 Pro Max is selling the fastest, and iPhone 15 Pro sales are also very high.

According to the iPhone reservation data released by the JD.com platform, the number of reservations for the iPhone 15 Pro model exceeds 1.13 million; the number of reservations for the iPhone 15 Pro Max, which has higher specifications and a higher price, is even greater, with more than 1.43 million reservations. Judging from this reference data, the iPhone 15 Pro models are already far ahead, unmatched by any other manufacturer, not even the breakthrough Huawei Mate 60 series made recently. Huawei recently announced a new Mate model that utilized 7-nm technology which was considered an answer to the U.S. blockage. However, Apple’s latest iPhone employs 3-nm cutting-edge technology which is far ahead and attracted much more enthusiasm in China.

Sources:
(1) NetEase, September 16, 2023
https://www.163.com/dy/article/IEPM2QJ80526D8LR.html
(2) Economy Daily (Taiwan), September 17, 2023
https://money.udn.com/money/story/5603/7444856

Briefings | | |   Information/Technology US-China Relations

UDN: U.S. Discovered Lithium Deposit in Nevada – May Be the World’s Largest

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that, according to new research published in the journal Science Advances, scientists estimate that the lithium deposit located in the McDermitt Crater on the border of Oregon and Nevada contains 20 to 40 million tons of lithium. If the estimate is correct, the lithium reserves here will be greater than those in Bolivia’s salt flats, which contain about 23 million tons. Lithium is crucial for producing the batteries needed for electric cars and other green technologies, and the U.S. may have found the world’s largest lithium deposit. This estimate could change global lithium dynamics in terms of price, supply security and geopolitics. Some of the world’s richest lithium deposits are found in salt marshes. But McDermitt Crater’s lithium is locked in clay, and this clay mineral is easier to separate. As demand for lithium batteries grows exponentially nowadays, experts warn the world could face a lithium shortage by the end of the century. While global lithium supplies are likely to remain adequate in the next couple of years, regional supply imbalances are inevitable.

Source: UDN, September 11, 2023
https://udn.com/news/story/6813/7431205

Briefings | | |   Economy/Resources US-China Relations

PLA Officer Advocates Preemptive Strikes Against U.S. in Event of War

Li Li (李莉), a prominent military commentator and esteemed professor at China’s National Defense University, recently made a bold assertion during a televised discussion. In contemplating the prospect of armed conflict, Li recommended that the People’s Liberation Army (PLA) consider a proactive “preemptive” approach, targeting U.S. military installations in Japan as a primary strategic objective.

Li’s perspective can be summarized as follows: “In the event of war, our foremost imperative is to preemptively neutralize U.S. military bases situated in Japan.” In her discourse, Li used the term “American imperialism” to refer to the United States and emphasized that “we will not hesitate like Russia did”. She firmly asserted that “only decisive and swift counteraction can guarantee our nation’s survival and sustained progress. We shall not delay in neutralizing U.S. ‘black’ aircraft carriers and ‘black’ bombers. We shall seize the earliest opportunity to take actions and leave the enemy no chance to breathe.”

Source: Aboluo, September 8, 2023
https://www.aboluowang.com/2023/0908/1951318.html

Briefings | | |   @CS Defense/Military US-China Relations

Huanqiu: Ministry of State Security Commented on the U.S.’ Policies Towards China

Huanqiu published an unexpected commentary by the Ministry of State Security concerning the United States’ policies towards China. Typically, such remarks emanate from the Ministry of Foreign Affairs. The commentary asserts that while the U.S. has shifted its strategy from the “old two approaches” to the “new two approaches” and claims that it is doomed for failure.

The core excerpt from the commentary reads as follows:

In previous decades, the U.S. adhered to the “old two approaches” regarding China, characterized as “Contact + Containment.” This approach entailed on one hand, engaging China within the international system and fostering cooperation, while concurrently executing covert infiltration and containment strategies against China. This dual-handed approach intricately shaped the complexity that has historically marked Sino-U.S. relations.

In the contemporary geopolitical landscape, the rivalry between the two global powers, the United States and China, has unequivocally become the prevailing theme in international politics. Consequently, Sino-U.S. relations have entered a novel phase, with the U.S. unveiling its “Competition + Control Competition” strategy.

The crux of this strategy lies in “Competition,” constituting the primary thrust of the U.S. approach. It encompasses economic decoupling, political coalition-building, security deterrence, information warfare, and norm/rule setting endeavors. Both the Trump and Biden administrations have been steadfast and increasingly assertive in their pursuit of this approach. Looking ahead, the U.S. may well implement even more formidable “competition” measures, with many yet unseen.

Simultaneously, the U.S. has adopted a discernible “Control Competition” tactic. While “Competition” seeks to stymie China, “Control Competition” seeks to manage this suppression without permitting it to spiral out of control. The Biden administration has repeatedly referenced concepts like “guardrails,” “thresholds,” and “parameters,” transitioning from the notion of “decoupling” to “de-risking,” and vocally committing to the “Four No’s and One Unintentional.” All these actions are aimed at maintaining control over the competitive dynamics. “Competition” constitutes a strategic move, whereas “Controlling Competition” is more tactical and serves as a complementary aspect of the overall competitive strategy.

This shift in strategy reflects three underlying objectives of the U.S. government:

  • Dissemination of Ambiguous Signals: By releasing “mixed signals,” the U.S. aims to obfuscate its intentions and make it challenging for its opponent (China) to decipher and evaluate its actions—a fundamental tactic reminiscent of the Cold War era.
  • Mitigating Overreactions: The U.S. endeavors to forestall any excessive reactions from its opponent by exhibiting “self-restraint,” a strategy that has a historical precedent in the annals of great power politics over the past few centuries.
  • Expanding Channels of Influence: The U.S. seeks to create a “dialog window” to augment avenues for influence, thereby fostering limited cooperation with its opponent.

Source: Huanqiu, September 3, 2023
https://world.huanqiu.com/article/4EOkEEy2R3N

Briefings | | |   @CS US-China Relations

China Disclosed the Espionage Case of John Shing-wan Leung

Chinese authorities accused Chinese-American community leader John Shing-wan Leung (梁成運) of espionage and sentenced him to life imprisonment in May. On September 11, the Ministry of State Security unveiled the details of Leung’s case, claiming he had served as a U.S. spy for 30 years under the guise of a Chinese community leader in the U.S. and a purported “patriotic philanthropist” to China.

Leung, aged 78, was apprehended in China on April 15, 2021 and convicted of espionage by a local court on May 15. His sentence includes life imprisonment, a lifelong deprivation of political rights, and the confiscation of 500,000 RMB (US$ 69,000) in personal assets.

According to a report from the WeChat account of the “Ministry of National State Security,” Leung was born in Hong Kong in 1945 and relocated to the United States in 1983, where he operated a restaurant in a Midwestern city. U.S. intelligence personnel initiated contact with him in 1986 and formally established a cooperation agreement in 1989, recruiting him as an informant. Leung received a monthly payment of $1,000, with additional performance-based bonuses. In the same year, he acquired U.S. citizenship.

The U.S. embellished Leung’s academic credentials in the U.K., his alleged role as a U.N. official, and his purported involvement in the Vietnam War to enhance his profile. Leung was also directed to make donations to American state legislators to bolster his influence.

With financial support from the U.S., Leung held leadership positions in various overseas Chinese organizations, thereby amplifying his sway within the Chinese diaspora. He was tasked with making charitable donations in China, effectively projecting the image of a “patriotic philanthropist.”

Through social gatherings and community events, Leung cultivated close connections with Chinese diplomatic missions and personnel in the U.S., gathering intelligence, and monitoring Chinese nationals and diaspora communities. Whenever he learned of Chinese officials visiting the U.S. for official purposes, he promptly reported them to U.S. intelligence agencies. Following their directives, he would arrange meetings with them in restaurants or hotels equipped with surveillance equipment to collect information, even including setting up sexual traps to coerce those Chinese individuals.

Under the direction of multiple American intelligence operatives, Leung reportedly accumulated a substantial volume of intelligence related to China and assisted U.S. intelligence agencies in fabricating “Chinese spy cases.” He was even bestowed with a “Medal of Merit” by the head of the U.S. intelligence agency.

In 2020, amidst the COVID-19 pandemic and the suspension of international flights, U.S. intelligence agencies urgently required Chinese intelligence. Consequently, they directed Leung to travel to China at the end of 2020, where he actively participated in various social activities to gather intelligence.

The report concludes by advising overseas Chinese individuals who may be “coerced by foreign intelligence organizations” to promptly report their situations to Chinese diplomatic missions or, upon entering China, to inform national state security agencies. Those who demonstrate remorse may be granted leniency in prosecution.

Source: Central News Agency (Taiwan), September 11, 2023
https://www.cna.com.tw/news/acn/202309110037.aspx

Briefings | | |   US-China Relations

China’s Top Computer Server Manufacturer Suffered Major Profit Decline

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, with the advent of the artificial intelligence era, the traditional CPU server market has gradually shrunk, and new AI servers have soared. However, Inspur Information is subject to tight supply of GPUs, and it has not been able to jump onto the bandwagon. According to the global server market report for the third quarter of 2022 released by Gartner, Inspur ranked first in China, and second in the world, after Dell, with a global market share of 10.3 percent. However, in the first half of this year, Inspur’s server revenue fell by 29.03 percent year-over-year. Its net profit in the second quarter of this year suffered a year-over-year decrease of 81.46 percent. Inspur explained that its server product revenue was “affected by factors such as the tight supply of global GPUs and related special chips.” With the short supply of AI chips by Nvidia and Intel, the company emphasized that “the raw materials of the domestic server industry are currently mainly imported.” If there are major changes in supply, it will have an impact. Inspur’s server products are highly dependent on upstream chip suppliers. The company’s 2019 annual report showed that Intel and Nvidia are its top two suppliers respectively. Since 2020, Inspur has no longer published information about its main suppliers.

Source: Sina, September 7, 2023
https://finance.sina.com.cn/tech/csj/2023-09-07/doc-imzkwctn6755618.shtml

Briefings | | |   Information/Technology US-China Relations

People’s Daily: Worsening Homelessness Crisis in the U.S.

An article published by People’s Daily, titled “Homeless Problem in the U.S. Is Getting Worse,” talks about the deteriorating homelessness crisis in the United States. The piece cites several Western media outlets, stating that the number of homeless individuals in the U.S. has surged to 577,000, marking an 11 percent increase from the previous year and the most significant spike since 2007 when records were first maintained. This crisis is particularly pronounced in major U.S. cities, with Los Angeles witnessing a staggering 55 percent rise in homelessness since 2015. In New York, approximately one in every 80 people lacks shelter, and the number of homeless individuals in the city’s shelters has surpassed 100,000.

The article attributes this dire situation to “deeply-rooted social inequality” and the vast wealth disparity between the affluent and the impoverished in the U.S. It criticizes government policies as ineffective, emphasizing that the federal, state, and local governments are merely passing the issue around, engaging in political blame games, and implementing largely symbolic measures.

In conclusion, the article underscores that despite being the world’s most powerful developed nation, the presence of a substantial homeless population living on the streets tarnishes not only the U.S.’s human rights record but also its societal governance and governmental efficacy. It quotes Nobel Prize-winning economist Joseph Stiglitz’s assertion that the United States has become a wealthy nation full of poor people.

Source: People’s Daily, September 9, 2023
http://world.people.com.cn/n1/2023/0909/c1002-40073771.html

Briefings | | |   US-China Relations