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China’s Reaction to Trump’s Election Win

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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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Lianhe Zaobao: MSCI Index Removes 60 Chinese Stocks

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that MSCI, a stock market index compilation company, removed 60 Chinese stocks from its indices. The stocks will be dropped both from the MSCI China Index as well as from the MSCI All Country World Index. This is likely a reflection of global investors’ cautious attitude towards Chinese A-shares. The latest adjustment by MSCI may further intensify the downward pressure on China’s stock market.

The MSCI August Index Review results showed that the MSCI China Index added two component stocks, both A-shares, while excluding 60 constituent stocks, including five Hong Kong HKSE stocks and 55 Mainland A-shares.

China’s economic outlook is increasingly bleak, with the country’s stocks at risk of losing their  dominance in emerging market portfolios to rivals such as India and Taiwan. After MSCI’s adjustments, the number of MSCI China Index constituent stocks has been reduced from 655 to 597, comprising 432 A-shares, with a weight of 15.2 percent; 148 Hong Kong stocks, with a weight of 75.3 percent; 14 U.S. Chinese-concept stocks, with a weight of 9.2 percent; and three B-shares with the weight of 0.2 percent.

Sources:

Lianhe Zaobao, August 13, 2024
https://www.zaobao.com.sg/news/china/story20240813-4481962

Bloomberg, August 13, 2024
https://www.bloomberg.com/news/articles/2024-08-13/msci-trims-china-s-index-presence-by-removing-dozens-of-stocks

Briefings | | |   Economy/Resources US-China Relations

HP Comments on Reports Saying That it Will Reduce Production Footprint in China

According to well-known Chinese news site Sina (NASDAQ: SINA), some recent media reports have said that HP was seeking to move more than half of its PC production out of China. HP responded by calling these reports incorrect. Instead, HP confirmed that “In China, HP’s PC manufacturing business still maintains a pivotal position.” However, HP also indicated in the same response that “to further enhance the resilience of the supply chain, we are actively optimizing our strategy and enhancing flexibility to better serve our global customer base.”

Earlier, Nikkei Asia reported that HP is considering moving more than half of its PC production out of China and setting up a “backup” design center in Singapore, citing “geopolitical risks.” The Nikkei Asia article did point out that the move is HP’s most aggressive move to “diversify its supply chain.” At present, most of HP’s PCs are produced in China. Nikkei Asia reported that HP is currently negotiating with suppliers on the migration and plans to achieve this target within two to three years. The company has even set an internal goal to eventually have 70 percent of its laptops produced outside of China. Nikkei Asia also reported that HP’s main destination for this relocation is Thailand. At least five HP suppliers are building new manufacturing plants or warehousing centers in Thailand.

Source: Sina, August 8, 2024
https://finance.sina.com.cn/roll/2024-08-08/doc-inchxefi8595209.shtml

Briefings | | |   Information/Technology US-China Relations

Talkie: Another Chinese Chat App Making Waves in the U.S. Market

As TikTok faces potential banishment from the U.S., chatbot app Talkie (also developed by a Chinese company) has become a sensation in America. With more than 10 million downloads on the Google Play Store, Talkie’s audience is similar to that of TikTok, predominantly young people, including many American youths. As of this June, Talkie ranks fifth on the list of entertainment app downloads in the U.S. Globally, it boasts around 11 million active users, with over half in the U.S., and many in the Philippines, the U.K., Canada, and other countries.

Since the app’s launch about a year ago, it has rapidly gained popularity. The app features AI technology (large language models and image generation), providing users with a customized role-play chat interaction featuring virtual representations of celebrities such as Donald Trump, Taylor Swift, and Elon Musk, as well as cartoon characters or fictional characters made up by users of the app. The app can be used to simulate conversations with virtual romantic partners.

Public information shows that Talkie is a startup based in Singapore, but its true parent company is MiniMax, headquartered in Shanghai. MiniMax is recognized as one of the “Four Little AI Dragons,” which are the four largest unicorns (large, privately-held startup companies) in China’s tech sector.

Source: Epoch Times, August 5, 2024
https://www.epochtimes.com/gb/24/8/5/n14305303.htm

Briefings | | |   @CS Economy/Resources US-China Relations

China Warns of ‘Anti-China’ Study Abroad Agencies, Tightens Control of Overseas Students

China’s Ministry of State Security (MSS) has reported that some overseas study agencies have been “altering student resumes” to include anti-China rhetoric in study abroad applications, posing a threat to national security. The MSS claims to have uncovered a case where an agency assisted foreign anti-China forces in infiltrating student groups by modifying application materials with “illegal content that damaged China’s image.” The MSS warned “students and parents to be cautious of study abroad opportunities being used as bait for anti-China activities.” It cited laws that classify the “fabrication or distortion of facts harmful to national security” as espionage-related offenses. The MSS release reflects the tightening control of China’s government over overseas students, possibly reflecting CCP fears of losing ideological influence over the Chinese youth as well as a reaction to growing political awareness among the middle class.

One such study abroad agency allegedly promised students a “green channel” for admission to foreign universities by “polishing” their application essays. In May, the agency and its leadership were reportedly “dealt with according to law.” Meanwhile, some have described increasingly strict procedures facing Chinese students wishing to study abroad, including political screenings and as a requirement that prospective students sign guarantees of loyalty to the Chinese government.

The MSS announcement has created a chilling effect among Chinese netizens, with some parents expressing concerns about their children being labeled as anti-China or being accused of endangering national security while studying abroad.

Source: Radio Free Asia, August 9, 2024
https://www.rfa.org/mandarin/yataibaodao/zhengzhi/hx2-chinese-security-agencies-08092024075724.html

Briefings | | |   Social Stability

Foreign Direct Investment in China Declines Amid Economic Challenges and Capital Outflows

China’s State Administration of Foreign Exchange released data on China’s international balance of payments for the period April-June, showing the first negative growth in foreign direct investment (FDI) in three quarters. Due to business contraction, new investment in China by foreign entities (e.g. construction of factories) was lower than capital withdrawals from China.

Foreign companies’ direct investment in China decreased by $14.8 billion, with outflows exceeding inflows for factory construction and M&A funds. This capital outflow surpassed the $12.1 billion in negative growth recorded in July-September 2023, which was the first quarter of negative growth since collection of such statistics began in 1998.

China’s economic stagnation, caused by insufficient domestic demand, has reduced foreign investment interest. The turning point for potential investors was Beijing’s enforcement of strict COVID-19 controls during the years following the start of the pandemic.

The Shanghai lockdown in spring 2022 caused economic turmoil, leading to a significant decline in FDI during the period April-June 2022. Although strict COVID policies ended in January 2023, China’s economy has not fully recovered, now suffering from weak domestic demand linked to the country’s current real estate slump.

China’s economic recovery remains weak, with Q2 2024 GDP growth slowing to 0.7% quarter-on-quarter, down from 1.5% in Q1. Net debt outflows from foreign-invested enterprises in China reached $22 billion, the highest since comparable data became available in 1998, indicating that overseas parent companies are withdrawing funds from their local subsidiaries.

Source: Nikkei, August 12, 2024
https://zh.cn.nikkei.com/china/ceconomy/56392-2024-08-12-10-14-19.html

Briefings | | |   Economy/Resources

China Successfully Launches First Batch of Satellites for Massive Internet Constellation to Compete with Starlink

On August 6, China’s Long March 6 rocket was launched from the Taiyuan Satellite Launch Center, successfully placing the Qianfan Polar Orbit 01 satellite group (18 satellites) into the designated level of orbit.

According to Reuters, China intends to build a massive internet constellation to compete with the Starlink satellite network operated by U.S.-based SpaceX. Starlink is an expanding commercial broadband satellite constellation with approximately 5,500 satellites in space, providing service to consumers, businesses, and government agencies.

The recent Chinese rocket launches are part of the “Qianfan Constellation (千帆星座)” plan, also known as the “G60 Starlink” plan, which aims to deploy over 15,000 low-orbit satellites. The “Qianfan Constellation” is one of three “Ten-Thousand-Star Constellation” projects that China hopes will help narrow its gap with SpaceX. The Qianfan Constellation plan aims to launch 108 satellites this year, 648 satellites by the end of 2025, to provide “global network coverage” by 2027, and to complete the deployment of 15,000 satellites by the end of 2030.

Source: Xinhua, August 7, 2024
http://www.news.cn/milpro/20240807/c7833a3629cd4ba18d1c363d7d7c56ea/c.html

Briefings | | |   Information/Technology

Sino-North Korean Relations Show Signs of Cooling

South Korean media and some experts believe that, after Kim Jong-un’s visit to Russia and his summit with Vladimir Putin in September 2023, there are subtle signs of changes in the relationship between China and North Korea.

Earlier, several South Korean media outlets reported that the “bronze footprints” left by Kim Jong-un during his visit to China’s Dalian city in May 2018, where he walked with Xi Jinping on the Bangchuidao beach, had disappeared by May of this year. The original location of the “bronze footprints” has been covered with asphalt and no traces are visible. Additionally, the South Korean newspaper Chungang Ilbo reported that, in early July of this year, China demanded the repatriation of all North Korean laborers within its borders. North Korea is also transferring some of its IT workers from China to Russia; these workers earn foreign currency by conducting cyberattacks. Such overseas laborers are a significant source of foreign currency for North Korea.

The Chungang Ilbo quoted sources indicating that Kim Jong-un had instructed North Korean diplomats working in China to “not be intimidated by China.” This directive was issued following Putin’s visit to Pyongyang in June of this year and his signing of a “comprehensive strategic partnership” agreement. North Korea has also tightened control over the Chinese expatriates within its borders, restricting their movement and limiting their contact with North Korean residents. On July 27, the Chinese ambassador to North Korea was notably absent at an event in Pyongyang commemorating the 71st anniversary of the Korean War armistice. Ambassadors from Russia, Vietnam, and Cuba were present at the event.

Some experts caution that apparent changes in Sino-North Korean relations should not be overinterpreted. The relationship between the countries may not grow as rapidly as the relationship between North Korea and Russia, but this does not necessarily indicate that North Korea is abandoning its ties with China.

Source: Aboluo, August 13, 2024
https://www.aboluowang.com/2024/0813/2090571.html

Briefings | | |   Geo-Strategic Trend

The First Known Survivor of CCP’s Forced Organ Harvesting Speaks Out in Washington, DC

Cheng Peiming, a 58-year-old Chinese man from Northeast China, is regarded as the first known survivor of the Chinese Communist Party’s (CCP’s) program of forced live organ harvesting from prisoners of conscience. On August 9, at a forum in Washington, D.C., he publicly shared his experience in which the Chinese authorities forcibly removed his organs twenty years ago.

Cheng stated that he was repeatedly detained and tortured by the CCP for practicing Falun Gong. In 2002 he was sentenced to eight years in prison. In July 2004, in a state of good health, he was dragged from prison to a hospital where guards tried to make him sign a form of consent for surgery. When he refused to sign, the guards knocked him down and anesthetized him. When he woke up three days later, Cheng found himself handcuffed to a bed with a 35-centimeter-long incision on his chest. In 2006, prison guards again took Cheng to a hospital. He said, “They had no reason for any surgery, so I knew I would be killed.” He managed to escape while the guards were sleeping. Cheng spent the next nine years hiding in China and managed to flee to Thailand in 2015. Four years ago, with assistance from the U.S. government, he came to America through the United Nations refugee program.

When media reports on China’s forced organ harvesting practices first emerged in 2006, Cheng realized that this was what had happened to him. It was only after arriving in the U.S. that transplant specialists confirmed through scans that part of his liver and left lung had been removed. Cheng said that he still cannot feel certain parts of his chest and struggles daily with severe pain throughout his body.

In 2019 an independent tribunal in London (“The China Tribunal”) ruled that the CCP has committed crimes against humanity through its continuous harvesting of organs from minority groups, including Falun Gong practitioners. Two years later, a United Nations human rights expert reported that, in addition to Falun Gong practitioners, other minorities, including Uyghurs, Tibetans, Muslims, and Christians detained in China, had also become targets of forced organ harvesting. In June of this year the U.S. House of Representatives passed the Falun Gong Protection Act, aimed at compelling the CCP to end its persecution of Falun Gong and the forced harvesting of organs from detained practitioners.

Source: Radio Free Asia, August 9, 2024
https://www.rfa.org/mandarin/yataibaodao/renquanfazhi/kw8-forced-organ-harvesting-08092024135324.html

Briefings | | |   @CS Government/Politics Social Stability