Chinascope – Page 219

Leadership: Fantasia Holdings, a Business of Zeng Qinghong’s Niece, Is in Trouble

Zeng Baobao, the niece of Zeng Qinghong, owns Fantasia Holdings. Zeng Qinghong is a retired Chinese Communist Party (CCP) top official. He is former CCP head Jiang Zemin’s right-hand man, the Vice President of China, and a CCP Politburo Standing Committee member. He is still believed to have considerable political influence in China. Many media have reported him as heading a CCP faction that is against Xi Jinping.

Zeng Baobao established Fantasia Holdings in 1996. The company went IPO in Hong Kong in 2009. Its main business is real estate development.

Recently, Citibank and Credit Suisse gave a zero loan value to Fantasia’s notes, meaning that their private wealth management customers can no longer use Fantasia’s notes as collateral for loans. On September 14, S&P Global Ratings announced a negative outlook on the company and affirmed a “B” rating, as the company’s large foreign debt maturity will weigh on its financials.

Many real estate companies in China are facing cash flow problems. However, the fact that Fantasia Holdings is facing trouble may also carry a political message. It may mean that Zeng Qinghong is likely to be in bad shape. He is not able to save his family’s company.

Sources:
1. Liberty Times, September 7, 2021
https://ec.ltn.com.tw/article/breakingnews/3663843
2. Sina, September 15, 2021
https://finance.sina.com.cn/roll/2021-09-15/doc-iktzqtyt6156639.shtml

Hot Topics | | September 16, 2021 | Economy/Resources Government/Politics

U.S.-China Relations: Huanqiu’s Editorial on the U.S.-Taiwan Connection

Huanqiu published an editorial regarding two developments in U.S.-Taiwan relations. The first was a report that the U.S. is considering Taiwan’s proposal to rename Taiwan’s representative office in Washington from the “Taipei Economic and Cultural Representative Office” to the “Taiwan Representative Office.” The second development was that senior U.S. officials had an in-person meeting with the Taiwan Foreign Minister in Annapolis, MD, which is a one hour drive away from Washington, DC.

Huanqiu’s editorial said,

“The U.S. side is well aware that this is not a trivial matter, and they are now in the stage of releasing information and testing the reaction of mainland China.

What is there to test? They want to push the matter to the tipping point of a showdown. Mainland China has no choice but to meet the challenge and prepare for a showdown with them.

If the U.S. changes the name of the Taiwan Representative Office, the mainland’s diplomatic response will not be lower than our response to Lithuania at all. It can fully expected that China will recall its Ambassador from the U.S.

Having only a diplomatic response is obviously not enough. If the U.S. and Taiwan rename Taiwan’s office, they have violated the red line of (China’s) Anti-Secession Law. Mainland China needs to take severe economic and military measures to combat the arrogance of the U.S. and Taiwan. The mainland should apply severe economic sanctions against Taiwan or even impose an economic blockade, depending on the situation.

Militarily, mainland warplanes should fly over the sky of the Taiwan island and include Taiwan’s airspace as part of the People’s Liberation Army’s (PLA’s) cruising patrol. This is a step that mainland China must take sooner or later, and the office renaming will provide a sufficient reason for the mainland to assert its sovereignty over Taiwan. We expect that the Taiwanese military will dare not stop the PLA warplanes from flying over Taiwan. If they dare to open fire, let us deliver a decisive and devastating blow to the ‘Taiwan independence’ forces without hesitation.

Actually, the Taiwan issue is a willpower contest. Since Beijing has declared that Taiwan is China’s core interest, we will act resolutely to guard this bottom line of our national interest and pay any price for it.

It seems that sooner or later, a big, earth-shaking storm will come to the Taiwan Strait. Even if the U.S. and Taiwan retreat their foot this time, their foot will cross the line the next time. Now we need to get ready to ‘break their legs’ in the Taiwan Strait at any time.”

Source: Huanqiu, September 12, 2021
https://opinion.huanqiu.com/article/44k3twGoFQh

Hot Topics | | September 15, 2021 | Defense/Military US-China Relations

Indian Scholar on China’s Promised Aid to Afghanistan

Not long ago, Chinese Foreign Minister Wang Yi announced that China has decided to provide Afghanistan 200 million yuan (US$31 million) worth of food, winter supplies, vaccines and medicine. China also promised, when security and other conditions are in place, to help build projects there to improve people’s livelihood and to support Afghanistan’s peaceful reconstruction and economic development.

Nandan Unnikrishnan, an Indian political scientist and honorary member of the Observer Research Foundation in New Delhi, India, said, “People just forget that in 1996 and 2001, respectively, China and the Taliban (a group banned in Russia) reached an agreement on the exploitation of mineral resources. So, this is not the first time for China.”

During the period of the Taliban’s rule from 1996 till 2001, China and the Taliban had some low level economic and technical cooperation. Some accounts suggest that after the US’ cruise missile attack on Afghani militant bases, Beijing reached out to the Taliban to offer Chinese support in the form of access to a missile computer guidance system. As the Taliban strengthened its hold over the country, Beijing signed a military pact in 1998 to train Afghan (and therefore Taliban) pilots. Then in 1999 they signed an economic cooperation agreement.

Source: Sputnik News, September 12, 2021
https://sputniknews.cn/politics/202109121034450249/
Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), September 03, 2021
https://idsa.in/issuebrief/beijings-strategic-moments-taliban-jpanda-030921

Briefings | | September 15, 2021 | Geo-Strategic Trend

Think Tank Report Points to Widened North-South Gap

On September 8, the Academy of National Development and Strategy at Renmin University of China (RUC), RUC’s School of Economics, and China Chengxin Credit Ratings, jointly issued a special report on China’s macro economy. The report states that the gap between economic development in the north and in the south of China continues to widen and has “reached a point that cannot be ignored.”

The report mentions three areas of imbalance: manufacturing, investment, and R&D and innovation.

The secondary (manufacturing) industry in the North has been stagnant over the past decade. The years between 2012 and 2020 saw zero nominal growth of that sector in northern China.

Although southern China’s consumption, investment and import and export growth are all higher than in Northern China, the main issue is investment. By 2017, investments in the North had plateaued. The gap in exports between the two regions is alarming. At present, 80 percent of the country’s exports come from the South, and the North accounts for only 20 percent.

The North also lags behind in R&D and innovation. A decade ago, the R&D funding, manpower and number of projects in the South was about twice as much as in the North. Now the gap has enlarged so it is about 3 or 4 times as much.

Over the past 10 years, southern China has registered a speedier industrial development. Twenty years ago, the number of large size industrial enterprises in the South was 1.56 times as much as the number in the northern region. Now the difference has widened to 2.65 times as much.

Source: Central News Agency, September 10, 2021
https://www.cna.com.tw/news/acn/202109100255.aspx

Briefings | | September 15, 2021 | Economy/Resources

Xinhua: Wang Yi Attended the First Meeting of Foreign Ministers of Afghanistan’s Neighbors

Xinhua recently reported that, on September 8, Chinese State Councilor and Minister of Foreign Affairs Wang Yi attended the first meeting of Afghanistan’s neighboring foreign ministers. Wang said Afghanistan today stands at the crossroads of history. China, as a neighbor, should seize the critical time window of the transition and exert a positive influence on the changes in the situation. China agreed to institutionalize the Afghan Neighboring Foreign Ministers’ Meeting. The first meeting was chaired by the foreign minister of Pakistan. The foreign ministers or deputies of Iran, Tajikistan, Uzbekistan, and Turkmenistan also attended the meeting. Right before the meeting, Dai Bing, Chargé d’affaires of the Permanent Mission of China to the United Nations, said at the UN Security Council that the evolution of the Afghanistan issue shows that foreign military intervention will eventually end in failure. The hastily and disorderly withdrawal of a certain country’s troops from Afghanistan has caused Kabul to fall into chaos and turmoil, leading to a major humanitarian disaster.

Source: Xinhua, September 8, 2021
http://www.news.cn/mrdx/2021-09/09/c_1310177719.htm

Briefings | | September 14, 2021 | Geo-Strategic Trend

State-owned Enterprises Ordered to Migrate to State-owned Cloud Services

China’s national data security law went into effect on September 1, 2021. Just days before it became effective, the China State Council’s State-owned Assets Supervision and Administration Commission (SASAC) for Tianjin issued a directive mandating state-owned enterprises in Tianjin to accelerate data migration from cloud services of tech companies like Alibaba and Tencent to the state-owned infrastructure. Currently, Alibaba, Huawei, and Tencent dominate the cloud computing market in China.

In a directive dated August 12, 2021, Tianjin’s SASAC directed state-owned enterprises in Tianjin not to build new data centers, or purchase servers and other storage hardware. State-owned enterprises cannot renew or sign new contracts with cloud platforms owned by Huawei, Alibaba, Tencent, China Unicom, China Mobile, and China Telecom. Data stored in these platforms must be migrated to cloud platforms controlled by SASAC within two months of the expiration of existing contracts, with the final deadline being at the end of September 2021.

Section 3(3)(1) on page 7 of the SASAC directive reads, “The data of state-owned enterprises are state assets and must be put under state-owned assets supervision and administration…”

Since early 2021, local SASACs have started local state-owned cloud platform projects. The essence of “state-owned cloud” is to shift from a cloud platform hosted by a third party to a state-owned cloud built and operated by local state-owned enterprises. In March 2021, Tianjin state-owned cloud started operation, with three state-owned enterprises, including Tianjin Communications Group and Tianjin State-owned Capital Investment and Operation Co., Ltd. In March, the SASAC of Zhejiang Province also initiated a project that included a state-owned cloud platform. In April, SASAC of Sichuan Province officially kicked off its state-owned cloud platform.

Sources:

Lianhe Zaobao, September 4, 2021
http://www.haozaobao.com/shiju/20210904/99713.html

State-owned Assets Supervision and Administration Commission of Tianjin, August 12, 2021
http://www.d1net.com/uploadfile/2021/0827/20210827062000825.pdf

Yicai, September 7, 2021
https://www.yicai.com/news/101166263.html

Briefings | | September 14, 2021 | Information/Technology

China Has 149 “Aged” Cities

According to the internationally accepted standard, a region in which the percentage of the population aged 65 and over has reached 7 percent is called an aging society. When the population that is age 65 and over reaches 14 percent, It is called an “aged” society. When those over 65 exceeds 20 percent, it is called a “hyper-aged” society.

According to China’s 7th National Census data, in 2020, 149 cities had a population in which those over 65 years of age exceeded 14 percent, thus becoming “aged” cities. In terms of regional distribution, 41 of them are from the eastern coastal region, 36 are from the northeast region, and 72 are from the central and western regions. Overall, the “aged” cities are concentrated in the northeast and the central region, the Yangtze River Delta, the middle and lower reaches of the Yellow River, and the Chengdu-Chongqing city clusters.

A major reason is the exodus of young adults and the low percentage of working age population. The eastern cities of Shandong, Jiangsu and Zhejiang have many “aged” cities. In these more economically developed regions, the fertility rates tend to stay low.

Source: www.yicai.com, September 5, 2021
https://www.yicai.com/news/101164016.html

Briefings | | September 14, 2021 | Economy/Resources

China’s Reaction to Trump’s Election Win

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

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

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