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Power and Production Restrictions Impact an Expanded List of Publicly Traded Companies

Shanghai Securities News recently reported that the Chinese government’s “dual energy consumption control” policy has been implemented across the country. In many provinces, the government has introduced intense restrictions on the consumption of electrical power and on manufacturing production; high energy consumption companies have received production restriction notices. These companies and related industrial chains have all been affected. On the upstream side, the prices of raw materials such as steel, cement, aluminum, and yellow phosphorus have risen due to limited production which stimulates short supply. The prices of some products have been setting record highs. On the downstream side, in addition to the ripple effects of price increases raising production costs, the supply cycle has begun to lengthen and the pressure on order delivery has increased. This round of electricity and production restrictions may force many high-energy small-and-medium-sized companies either to withdraw from the market or to transform and upgrade. The New Energy industry chain, including many photovoltaic industrial manufacturers as well as the vehicle battery industry, have also been affected by the power curtailment. Tens of the publicly traded companies issued announcements on the impact of the new government policies; some have had to pause production.

Source: Shanghai Securities News, September 24, 2021
https://paper.cnstock.com/html/2021-09/24/content_1522765.htm

Local Governments Face Fiscal Constraint as Land Sales Slow Down

Since Beijing introduced policies to curb the overheated housing market, land sale activities have also been slowing down. This is happening in Hangzhou, Shenyang, and Hefei where, last week, there was a significant drop in transactions involving the sale of land. According to statistics, in June and July of this year, nearly 500 parcels of land that were for sale in small to mid-sized cities, had no buyers. If this trend continues, local governments, which have been relying on land sales as part of their fiscal income, will face financial constraints.

Since the 1990s, China has embarked on large-scale construction in urban areas. Most of the land resources have come from rural areas. Local governments have benefited the most from it. In 2020, local governments received 8.4 trillion yuan (US$1.3 trillion) from selling land, up 16 percent from a year earlier. However, in June, all local governments were required to transfer the power for collecting land sales revenue to the tax authorities under the State Taxation Administration (STA). This has allowed the central government to take control over local finance.

Source: Radio Free Asia, September 20, 2021
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-09202021051803.html

Party Branches Established in China’s Film and Television Production Center

Hengdian World Studios in Zhejiang Province is China’s film and television production center; it is also known as China’s Hollywood. Temporary Chinese Communist Party (CCP) branch offices have been established in 11 cast teams that are currently filming TV and movie dramas. One of the party branches consists of the party members from the production, photography, editing, sound and explosion visual effects departments. Each of the 11 teams will conduct a regular study session on the party’s history and an understanding of the recent cultural and entertainment industry rectification directives from the central administration. Their goal is to further strengthen the party’s  leadership, plan party building activities and recruit more party members.

Source: China News, September 21, 2021
http://www.zj.chinanews.com/jzkzj/2021-09-21/detail-iharhwxc3213830.shtml

Kyodo News: 31 Japanese Universities Stepped Up Vetting of International Students to Prevent Technology Leaks

The Japanese government is tightening its control over sensitive technology leaks through international students. Universities in Japan will need to come up with measures to face the challenge. Kyoto News recently conducted a survey of 56 private or public universities that have either an affiliation with Chinese universities that have ties with the military or that have a large number of foreign students. Among them, 31 universities have implemented or are considering stricter identity checks on international students who are majoring in sensitive technology studies.

The results showed that only 24 universities would implement or consider implementing the vetting of students who signed an agreement not to take controlled technology out of Japan. Also, only a few universities disclosed whether they have received any foreign funding. All of these are indications that there is a lack of effective responses to the risk of technology leaks.

The Japanese government announced in June that it would strengthen export controls over sensitive technology and adopt a licensing program for universities that receive research funding from foreign governments or allow foreign students to access technologies.

Surveys show that more than half of the universities have or are considering increased identity checks on past academic qualifications, work resumes, and other areas of concern. Ten universities have asked their international students to answer whether they intend to join military-related organizations, and 14 universities now validate the details of financial support from foreign institutions.

The Japanese government is also urging the control of Japanese scholars to get them to take part in joint overseas research. According to the survey, less than 30 percent of the universities have a filing mechanism to report the joint research. There are currently 14 universities that have Confucius Institutes. One university said it was considering a restructure of its operations.

As of last May, the number of international students in Japan was about 280,000. China is the largest by nationality, accounting for more than 40 percent of the total.

Source: Kyodo News, September 7, 2021
https://china.kyodonews.net/news/2021/09/7e30cbd2f43c-31.html

Beijing Plans to Lead the World in Human Rights Work

Although the world recognizes that the Chinese Communist Party (CCP) has a poor record on human rights, the CCP does not view it that way. In its “National Human Rights Action Plan (2021 to 2025)” published on September 9, the CCP states that it plans to be active in helping the world manage human rights.

The plan listed the following as some of its goals for creating and implementing its action plan: “To participate actively in global human rights governance; to deepen (China’s) involvement in the work of the United Nations human rights mechanisms; to promote the construction of a fairer, more equitable, reasonable, and inclusive global human rights governance system; and jointly to build a community with a shared future for mankind.”

Source: People’s Daily, September 9, 2021
http://politics.people.com.cn/n1/2021/0909/c1001-32222401.html

China’s Central Bank Governor: Large Fintech Firms May Lead to Market Monopoly

Yi Gang, the Governor of China’s central bank, recently pointed out that the “winner-take-all” attribute of large fintech firms could lead to market monopoly. Yi noted that there are more than 4,000 small and medium-sized banks in China. He expressed concern about the banks increased reliance on large technology companies.

As China recently took a heavy-handed approach toward fintech giants such as Alibaba and Tencent, the website of the People’s Bank of China released Yi’s speech on September 14th at a Sino-German video conference on financial technology .

Yi noted that China’s rapid development in fintech has also highlighted a number of problems. These include the payment institutions entering into the financial sector and offering a variety of financial products such as insurance and microfinance. They thereby add to the chances of cross-product and cross-market contagion of financial risks.

Yi said Chinese regulatory authorities will bring all financial activities under financial supervision and make sure that financial businesses must be licensed. China also requires that payment methods be divorced from other financial products. In addition, Yi vowed to strengthen anti-monopoly efforts and promote large Internet companies to protect consumers’ choice of payment methods.

Yi also noted that the development of fintech will have an impact on the traditional banking industry. “Small and medium-sized banks are facing greater challenges. With limited resources of their own, small and medium-sized banks can only rely on the technology and platforms provided by large IT companies for customer maintenance, credit analysis and risk control.”

Source: People’s Bank of China, September 18, 2021
http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4345544/index.html

HK01: Xi Jinping Said, “The Days When the Hong Kong Real Estate Tycoons Influenced Hong Kong Policy Are Gone

HK01 reported on September 21 that, in 2018, Xi Jinping made a clear statement in an internal meeting of the Chinese Communist Party’s (CCP’s) Hong Kong and Macau Coordination Group. He Stated, “The days of the Hong Kong business community influencing the Central Government’s policies on Hong Kong are gone.” A source familiar with the situation said that the “Hong Kong business community” actually refers to the real estate developers there.

The article also reported that the richest real estate tycoon invited key officers from the Office for Safeguarding National Security of the Central People’s Government in Hong Kong for a family banquet. The tycoon had all important members of his family attend the banquet. He explained (to one of the key officers) that his family’s comments during the anti-Extradition Law movement were not “sympathetic to the gangsters or the violence.” {Editor’s comment: This is likely referring to Li Ka-shing, who is Hong Kong’s richest man and also published a neutral-toned page in the newspaper regarding the Hong Kong protest. Some people felt his message was pro-Hong Kong protesters.}

The article mentioned that Reuters recently reported that Beijing requested Hong Kong real estate developers to solve the housing shortage problem. It stated, “The rules of the game have changed” and Beijing will no longer tolerate “monopoly.”

For a while, the CCP has not been happy with Hong Kong’s real estate tycoons. During the anti-Extradition Law protest, these tycoons remained silent. It was not until a mainland newspaper criticized them for not lining up with the central government that they start making statements to support the government’s actions to “stop violence.” In September 2019, the People’s Daily also blamed the Hong Kong protest on the real estate developers for making the housing prices unaffordable.

In July this year, Xia Baolong, the Director of the Hong Kong and Macao Affairs Office of the State Council (central government), stated that he expects the housing problem in Hong Kong will be greatly improved.

HK01 is a newspaper close to Xi Jinping’s group.

Source: HK01, September 21, 2021
https://www.hk01.com/政情/679198/01消息-習近平內部會議明言-地產商-左右治港-已一去不復返

September 22, 2021, Pandemic Report: COVID Is Spreading in China

COVID-19 continues to spread in Fujian Province, with an accumulative 418 confirmed cases from September 10 to September 21. The two major cities impacted are Xiamen and Putian. For the past four days the number of cases in Xiamen has surpassed the number in Putian. The Chinese Communist Party (CCP) is known for hiding the details about the actual spread of COVID in China, so the actual number of infections is unknown.

Vice Premier Sun Chunlan visited Xiamen and Putian on September 18. Sun usually represents the central government to visit locales about their COVID-19 work only when the local pandemic situation has become extremely severe.

Also, Harbin City, Heilongjiang Province reported eight confirmed cases from September 21 to September 22. The CCP Harbin Municipal Committee Secretary Wang Zhaoli said that the current situation in Harbin is severe and complex.

Related postings on Chinascope:

Sources:
1. Radio Free Asia, September 22, 2021
https://www.rfa.org/mandarin/Xinwen/4-09222021100621.html
2. China’s government site, September 20, 2021
http://www.gov.cn/guowuyuan/2021-09/20/content_5638441.htm
3. Lianhe Zaobao, September 22, 2021
https://www.zaobao.com.sg/realtime/china/story20210922-1196116