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Xinhua Commentary Series: Spotlight on the U.S. Presidential Election

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Wu Guoguang: Xi Jinping’s Reversal of the Course, Will China’s Transition be Peaceful or Marked with Bloodshed?

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Cheng Xiaonong: U.S.-China Strategic Relations Have Crystallized

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Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”

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China’s First-Child Birthrate Drops to 0.5

From 2019 to 2022, China experienced a significant decline in its fertility rate for first children, dropping from 0.7 to 0.5. This decline has raised concerns among population experts, who are now urging attention be paid to the growing trend of lifelong singleness and childlessness. Chinese authorities had previously estimated that the total number of newborns in China last year fell below 10 million for the first time and it is expected to continue declining this year, dropping below 8 million.

The internationally recognized replacement level fertility rate is 1.5, which is considered a critical threshold. When the fertility rate falls below 1.5, a country enters a low fertility trap. The Population and Development Research Center of China, a government think tank, has observed that China’s total fertility rate dropped from 1.52 in 2019 to 1.07 in 2022.

Of particular concern is the decline in the fertility rate for first-child births, which has decreased from 0.7 to 0.5. Additionally, the average age of first-time mothers has increased from 26.4 to 27.4 years old. This decline in the first-child fertility is expected to further reduce the rates of second and third-child births, exacerbating the overall downward trend in fertility levels.

A recent article published by the magazine Chinese Philanthropist estimated that the latest maternal records in Chinese hospitals suggest that the number of newborns this year will be less than 8 million. Some doctors have even estimated that the number of registered pregnant women has decreased by one-third compared to previous years.

An online article highlights the seriousness of a mere 8 million new births. With a total of 3,032 obstetrics and gynecology hospitals in China, an average of only 7 newborns per hospital per day is far from normal. This situation may lead to a crisis in the entire industry, from childbirth to childcare, as it puts immense strain on resources and facilities.

Source: Central News Agency (Taiwan), June 6, 2023
https://www.cna.com.tw/news/acn/202306060108.aspx

Briefings | | |   Economy/Resources

Chinese Local Government Debts Crisis Continues

Local governments in China are grappling with significant financial pressure and are implementing measures to increase revenue and expedite debt collection.

In late May, the city government of Wuhan in Hubei Province issued a debt collection notice, demanding repayment of over 100 million yuan (US$14 million) in debt from 259 debtors, including state-owned enterprises and lower-level fiscal authorities in Wuhan. Around the same time, Kunming in Yunnan Province also reported debt problems with the city’s platform for financing infrastructure projects, which has 27.31 billion yuan (US$3.8 billion) of bonds maturing before the end of this year.

Furthermore, county-level governments in central and western China are actively auctioning off parking lot operating rights many years into the future so that they can get a large one-time payment now (at the cost of not receiving parking income in subsequent years). Companies that win the parking operator’s rights might impose higher parking fees to recoup costs and make money. Nanning City, Guangxi Zhuang Autonomous Region, is under public scrutiny for high parking fees.

Official data reveals that, as of the end of 2022, the balance of local government debt in China stood at approximately 35.07 trillion yuan (US$4.9 trillion).

He Qinglian, an economist living in exile in the United States, recently told Radio Free Asia that the financial strain at the local level could directly impact China’s moderate 5% economic growth target for this year. Local governments that are unable to repay their debts will face potential collapse of local financing platforms and credit defaults.

Source: Central News Agency (Taiwan), June 5, 2023
https://www.cna.com.tw/news/acn/202306050309.aspx

Briefings | | |   Economy/Resources

Chinese Automobile Industry Under High Downward Pressure

Currently, China’s main strategy to boost its economy is to increase domestic consumption, with housing and automobiles being the two main drivers. However, a recent report on the well-known Chinese news site Sina painted a dismal picture of the country’s auto industry.

The report covered the newly published 2023 ranking of China’s Top 100 Auto Dealer Groups. It also included a 2022 report pointing out that China’s auto market is facing big changes. Auto dealer groups are facing the pressure of both transformation and the impact of channel changes. The 2022 report shows that the dealers’ annual profitability was disappointing due to factors including COVID, the decline in demand for transportation, loss of talent, and increased customer acquisition costs. Among all dealers, only 29.7 percent made a profit. This was almost half of the number when compared with the 53.8 percent which profited in 2021. Dealers suffering losses accounted for 45.2 percent, an increase of 27.7 percentage points compared to 2021. Only 25 percent of dealers broke even and three percent suffered a decrease when compared to a year ago. According to the 2022 financial report, out of 11 publicly listed dealer groups, only three have achieved a positive growth in revenue, only two had a positive growth in profit, and only one had both revenue and net profit growth. The downward pressure on the auto market is still great, and the signs of recovery have not yet appeared. Sluggish consumer spending has been the biggest sourced of downward pressure in the auto market. As for new energy automobiles, although the market size continues to grow, most new energy car companies are selling at a loss.

Source: Sina, May 29, 2023
https://finance.sina.com.cn/tech/roll/2023-05-29/doc-imyvnaav5155518.shtml

Briefings | | |   Economy/Resources

BBC Chinese: Mainland Poll on Taiwan Militarily Reunification

BBC Chinese recently reported that the well-known periodical Journal of Contemporary China published the results of a poll of nearly 1,800 Mainland Chinese citizens regarding the military reunification of Taiwan. According to the poll results, 55 percent of respondents expressed support for Beijing’s military reunification of Taiwan and 33 percent disagreed with the use of force. Only 1 percent expressed their desire to launch a war against Taiwan immediately. Studies of Mainland people’s views on cross-Taiwan-Strait issues, due to the political sensitivity of the topic, have been rare. The most important finding of this latest poll was that people in Mainland China are relatively willing to consider different means to solve the Taiwan issue besides military force.

The results of the study show that the military approach did not enjoy overwhelming support among the respondents. At the moment when the situation across the Taiwan Strait is tense and the relationship between the United States and China is not harmonious, the poll has aroused attention.

Some observers outside of China have raised some concern over the results of the survey. Consider that 55 percent, more than half of the respondents, support military action against Taiwan. Thus, even if China were to suddenly become a democracy, Taiwan might still be under threat. It is surprising that 22 percent of the respondents agreed that the two sides of the Taiwan Strait do not necessarily need to be unified. The poll also found that older, male, and highly educated respondents were more supportive of the use of drastic measures, including the military. This Research poll was conducted via an online opt-in panel. The sample respondents were from all across mainland China, ranging across different ages, incomes and genders. The survey was conducted between the end of 2020 and the beginning of 2021. A total of more than 2,000 questionnaires were collected.

Source: BBC Chinese, May 30, 2023
https://www.bbc.com/zhongwen/simp/chinese-news-65745337ight

Briefings | | |   Defense/Military Geo-Strategic Trend

Chinese Manufacturing PMI Continues Decline in May

Xinhua recently reported that the Chinese National Bureau of Statistics and the China Federation of Logistics and Purchasing jointly released China’s May Manufacturing Purchasing Managers Index (PMI) data. PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 percent typically reflects business contraction.

The May manufacturing PMI was 48.8 percent, down 0.4 percentage point from the previous month. Statistics show that both production and demand have slowed down. In May, the production index and new order index were 49.6 percent and 48.3 percent respectively, down 0.6 and 0.5 percentage point from the previous month. Chinese market demand for manufacturing is still short, and the release of production capacity is restrained. The raw material inventory index was 47.6 percent, a decrease of 0.3 percentage points from April, showing continued decline in the manufacturing industry’s main raw material inventory. The employment index was 48.4 percent, a decrease of 0.4 percentage point from April, indicating the end of the post-COVID employment boom in manufacturing enterprises. The PMI of large enterprises was 50 percent, 0.7 percentage point higher than the previous month. However, the PMIs of medium and small enterprises were 47.6 percent and 47.9 percent respectively, down 1.6 and 1.1 percentage points from the previous month — the prosperity of small and medium-sized enterprises was still weak.

Sources:
(1) Xinhua, May 31, 2023
http://www.news.cn/fortune/2023-05/31/c_1129658686.htm
(2) Chinese National Bureau of Statistics, May 31, 2023
http://www.stats.gov.cn/sj/zxfb/202305/t20230531_1940267.html

Briefings | | |   Economy/Resources

State Media: China Spearheads Four-Country Joint Patrol of Gulf Region

An article posted in Chinese media suggested that China is leading the efforts to form a new maritime patrol in the Persian Gulf.

The article stated:

China is leading the coordination on forming a new joint patrol in the Persian Gulf. Four countries – Iran, Saudi Arabia, the United Arab Emirates, and Oman – are in discussion to establish a mechanism to defend the safety of navigation in the region.

On contrary, the Combined Maritime Force (CMF), a 34-country patrol group that the US created in the region, is in limbo. The United Arab Emirates recently quit the group and joined the China-led group, as the UAE was disappointed with the US actions. Clearly, the Gulf countries place more value on China’s peace efforts than on those of the US.

If the four-country group works, the US CMF will collapse. The Gulf region is not a place to allow the US to keep messing things up.

Source: Net Ease, June 2, 2023
https://www.163.com/dy/article/I67NK4BQ0515D8SH.html

Briefings | | |   @CS Geo-Strategic Trend

State Media: “As Expected, China Did not Indulge the US, It Rejected Meeting of Defense Ministers”

A Chinese media commented that China has rejected U.S. Secretary of Defense Lloyd Austin’s request to meet with China’s Defense Minister Li Shangfu as not to “spoil” the U.S. (as one might spoil a child).

The article stated:

Why did China reject the meeting request? The U.S. should reflect on itself. In the past year, the U.S. created many frictions and caused Sino-U.S. relations to hit rock bottom. The U.S. has maliciously speculated about China’s military threat to the U.S., continued to impose malicious sanctions on China, and even embarrassed China in the diplomatic field. It wants to restore high-level communication, especially on military matters, to avoid misjudgments by either side that might lead the two countries into military conflict. This is for the U.S.’s own interest – so that it can continue its military surveillance and border provocation and not to worry about getting its military into danger.

Not removing the sanction on Li Shangfu is another reason for China to reject the meeting.

Since 2021, China has rejected or not answered more than 10 requests initiated from the U.S. Department of Defense on key leadership contact. The U.S. should look at itself for reasons – it has unshirkable responsibility for damaging the relationship between China and the United States.

Source: Net Ease, May 30, 2023
https://www.163.com/dy/article/I5VL0HNG05562BTO.html

Briefings | | |   @CS US-China Relations

Chinese Marine Police May Begin Arresting Foreign “Offenders”

China passed the Provisions on Procedures for Marine Police Agencies to Handle Criminal Cases on May 15. The law will be in effect starting on June 15. There are concerns over whether China will use this law to arrest citizens of other countries in the disputed waters of the South China Sea.

Article 15 stated:

For maritime criminal cases occurring outside the territory of the People’s Republic of China (PRC), the jurisdiction shall be determined in accordance with the following principles:

(3) If a foreigner commits a crime against the state or a citizen of the PRC in waters other than the territorial waters of the PRC and is punishable under the Criminal Law of PRC, he is under the jurisdiction of the marine police agency of the place where the foreigner landed, entered, or resided after entering, the jurisdiction of the marine police agency of the place where the victim resided before leaving the country or currently resides, or the jurisdiction assigned by the Chinese Maritime Police Bureau if he has not entered the country and there is either no victim or the crime is against the state of PRC.

(4) For crimes under international treaties created or participated in by PRC and within the scope for the PRC to exercise criminal jurisdiction under the treaty obligations, the jurisdiction is the marine police agency of the place where the suspect was apprehended or the place he landed or entered.

Source:
1. Epoch Times, June 1, 2023
https://www.epochtimes.com/gb/23/6/1/n14007942.htm
2. Peking University Law Library, May 2023
https://law.pkulaw.com/chinalaw/bc12742e184847e1bdfb.html

Briefings | | |   Geo-Strategic Trend