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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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CNA: Chinese Pension Financial Gap Is Growing

Primary Taiwanese news agency Central News Agency (CNA) recently reported that, according to a report that the IAC (The Insurance Association of China), issued, China’s pension fund’s financial gap has widened. In the next five to ten years, the IAC expects that the financial gap for the Chinese pension fund will reach RMB eight to ten trillion yuan (around US$1.2 trillion to $1.5 trillion), and it won’t stop there. In the past few years, the Chinese pension gap has been a major concern among China’s elderly and even among middle-aged people. After 40 years of the birth control policy, the Chinese society is now aging very quickly. Those who pay into Social security are decreasing while the number of those receiving pensions is on the rise. The current Chinese pension system depends on social security, employers and personal funds. However, the system is not mature and lacks a managed investment market that is deep enough.

Source: CNA, November 20, 2020
https://www.cna.com.tw/news/acn/202011200241.aspx

Briefings | | |   Economy/Resources

HKET: China’s Q3 Debt Level Increased to 335 Percent of GDP

Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported that, according to a report that the Institute of International Finance (IIF) released, Chinese debt saw a rapid increase in the third quarter to 335 percent of its GDP. The same ratio was 302 percent at the end of last year. The total debt of the Emerging Countries grew to 250 percent of GDP. The IIF report points out that non-financial sector debts in Lebanon, China, Malaysia and Turkey had the biggest increase. Unlike previous years, non-financial corporate debts have been the main cause of China’s debts this year. By the third quarter, Chinese non-financial corporate debts reached 165 percent of China’s GDP, up from 150 percent for same quarter last year. With the coronavirus, China did not take the route of large-scale government-sponsored stimulus plans. Instead, the Chinese government allowed the companies to enlarge their borrowing scale. It appears China is asking the companies to channel through corporate bonds instead of bank loans. However, recently, many major Chinese companies have defaulted on their bonds.

Source: HKET, November 19, 2020
https://bit.ly/3lTC7Ji

Briefings | | |   Economy/Resources

NHK Chinese: Japan-US Jointly Developed ICBM Interceptor Had a Successful Test

NHK Chinese Edition recently reported that the U.S. Department of Defense announced the successful initial test of a new ICBM (Intercontinental Ballistic Missile) interceptor. The interception test was the first real-world use of the newly developed SM-3 Block IIA interceptor missile. On November 16, the interceptor correctly blocked an ICBM near Hawaii. The target ICBM for the test was launched in the Marshall Islands over 4,000 kilometers away. The United States Navy identified the target with high-performance radar and launched the interceptor from a warship equipped with the Aegis Combat System. Before this, the same model interceptor was only attempted on MRBMs (Medium-Range Ballistic Missiles). This was the first experiment on an ICBM. Currently North Korea has gained significant improvements with their ICBM technology. The United States has been very much concerned. This new success demonstrated that the U.S. has also significantly improved its defense capability. Japan is also planning to deploy the SM-3 Block IIA interceptor on its Aegis ships to improve the level of its defense.

Source: NHK Chinese, November 18, 2020
https://www3.nhk.or.jp/nhkworld/zh/news/267915/

Briefings | | |   Geo-Strategic Trend

U.S. Senate Majority Released New China Report

On November 18, U.S. Senator Jim Risch (R-Idaho), chairman of the Senate Foreign Relations Committee, published a majority report entitled, “The United States and Europe: A Concrete Agenda for Transatlantic Cooperation on China,” to advance greater collaboration between the United States and Europe on the challenges that China poses.

Risch’s counterparts from the EU and the U.K Foreign Affairs Committees are Member of the European Parliament David McAllister, chairman of the European Parliament’s Committee on Foreign Affairs, and Member of Parliament Tom Tugendhat, chair of the Foreign Affairs Committee of the Parliament of the United Kingdom, who joined him in the release of the report. Jamie Fly, senior fellow and senior advisor to the president at The German Marshall Fund of the United States moderated the event.

Risch stated, “Legislatures in free and open nations must step up and do our part to protect our freedoms and uphold the interests and values that nations on both sides of the Atlantic share. It is my hope that this report and event are just the starting point as we continue to chart a cooperative path forward on China.”

David McAllister said, “The transatlantic partners are facing similar challenges as regards China: unfair trade practices, cyber security, disinformation and the pursuit of geopolitical and technological dominance.”

Tom Tugendhat added, “It is clear to policymakers on both sides of the Atlantic that we’re seeing active attempts by the Communist Party of China to undermine the rules based system and rewrite the code of global exchange. We need to back our values and invest in our allies to defend our interests, and that means a coordinated response. The peace and prosperity of the last 70 years is based on the values of freedom that matter to us; together we can defend them.”

“Just as the United States and its European allies have tackled so many other challenges together, hopefully leaders on both sides of the Atlantic will follow this report’s advice and find common approaches to ensure that China does not further threaten the prosperity and security of Americans and Europeans,” said Jamie Fly.

Source: Senate Foreign Relations Committee, November 18, 2020
https://www.foreign.senate.gov/press/chair/release/chairman-risch-publishes-report-discusses-greater-transatlantic-cooperation-on-china-with-parliamentarians

Briefings | | |   US-China Relations

Wuhan District Government Took over Hongxin Semiconductor Company

Wuhan Hongxin Semiconductor, a failed example of the “Great Leap Forward” in the Semiconductor industry, was on the verge of bankruptcy. The Wuhan Dongxihu District Government recently took it over but made no change to the board members of the company. Wuhan Hongxin was reported to be a 128 billion-yuan (US$19.5 billion) project. It was established in November 2017. From the very beginning, it claimed that it owned the technology to make a 14nm chip, and will make a 7nm chip one year later. It also invited Chiang Shang-yi, former TSMC Chief Operating Officer, to be the CEO. In July of this year, the media report showed that Wuhan Hongxin was at risk of a capital chain rupture and payments to the subcontractors were delayed for months. In June, Chiang Shang-yi also submitted his resignation.

In recent years, there has been an upsurge to build semiconductor-related factories in different parts of China. However, one after another, the investment of tens of billions or even hundreds of billions in Jiangsu, Sichuan, Hubei, Guizhou, and Shaanxi, failed and the local governments who came up with the initial funding ended up taking them over. On October 20, a spokesperson from China’s National Development and Reform Commission said that they have noticed that companies with no experience, no technology, and no talent intend to invest in the chip industry. Some local governments are standing behind and push for the project. For projects that ended up with major losses and wasted resources, they must understand that “whoever supports the project should bear the full responsibility.”

Source: Central News Agency, November 17, 2020
https://www.cna.com.tw/news/acn/202011170324.aspx

Briefings | | |   Information/Technology

Former Raytheon Engineer Sentenced for Violating Arms Export Control Act

The U.S. Department of Justice (DOJ) announced on Wednesday, November 18, that the Arizona District Court sentenced Wei Sun, a 49-year-old Chinese engineer, to 38 months in prison. Sun previously pled guilty to a felony charge of violating the Arms Export Control Act (AECA).

According to the DOJ’s press release, Sun is a naturalized citizen of the United States. “Sun was employed in Tucson for 10 years as an electrical engineer with Raytheon Missiles and Defense. Raytheon Missiles and Defense develops and produces missile systems for the United States military. During his employment with the company, Sun had access to information directly related to defense-related technology. Some of this defense technical information constituted what is defined as ‘defense articles,’ which are controlled and prohibited from export without a license under the AECA and the International Traffic in Arms Regulations (the ITAR).”

“From December 2018 to January 2019, Sun traveled from the United States to China on a personal trip. On that trip, Sun brought along unclassified technical information on his company-issued computer, including data associated with an advanced missile guidance system that was controlled and regulated under the AECA and the ITAR.”

“Despite having been trained to handle these materials correctly, Sun knowingly transported the information to China without an export license in violation of the AECA and the ITAR.”

According to Assistant Attorney General John C. Demers, “Sun was a highly skilled engineer entrusted with sensitive missile technology that he knew he could not legally transfer to hostile hands.” “Nevertheless, he delivered that controlled technology to China. Today’s sentence should stand as a warning to others who might be tempted similarly to put the nation’s security at risk.”

Source: Department of Justice, November 18, 2020
https://www.justice.gov/opa/pr/former-raytheon-engineer-sentenced-exporting-sensitive-military-related-technology-china

Briefings | | |   Defense/Military US-China Relations

CCP Uses Education Base to Export Ideology to Southeast Asian Countries

Recently, Epoch Times has obtained a number of internal CCP documents that expose how the CCP used the Lancang-Mekong cooperation to export its ideology to Southeast Asian countries along with the “Belt and Road” initiative.

According to the “Application for 2018 Special Funding on the Lancang-Mekong Cooperation project” that the Yunnan Nationalities University submitted, the total project funding was 7.62 million yuan (US$1.16 million), where 200,000 yuan (US$30,474) was self-raised funds. The application shows that China plans to build the Lancang-Mekong Vocational Education Base at Yunnan Nationalities University. It will consist of the International Vocational Institute, the Vocational Education Alliance, the Research Institute on Vocational Education and Industry Development, the Industry-Education Integration Zone and the International Cadre Academy. One of the objectives of the education base is to “gain advanced knowledge in a number of fields, including Chinese politics, economics, social studies and the humanities.” The specific courses consist of “The Theory and Practice of Socialism with Chinese Characteristics,” “Innovative Theory Research of the Chinese Communist Party” as well as several others. At the same time, the content of the training includes courses on “Chinese Culture.” One of the examples is “spreading China’s voice in areas such as current affairs, history and foreign policy.” The trainees were also asked to understand the “Belt Road Initiative” and to learn more about China’s experience through the reform and development.

A separate document that the Epoch Times obtained included a report dated May 28, 2020, from the Yunnan Police Academy titled, “Activities on Promoting the Joint Development of the ‘Belt and Road’ Initiative.” The document reveals that, since 2015, the Academy has trained 56 foreign students from Afghanistan, Argentina, Angola, Pakistan, the Philippines, Cambodia, Laos, Mongolia, and Myanmar and has granted them master’s degree. The Ministry of Public Security provided full scholarships for these students. The academy also recruited 26 undergraduate Law students from Laos with full scholarships. Most of the graduates who returned to their home country are working in a field that has a direct interaction with China so these graduates can assist China in cooperating with their home countries in police enforcement. The Academy has established a Southeast Asian police training base to train police officers from the “Belt and Road” countries in South Asia and Southeast Asia. From 2016 to 2019, the Academy held 67 training courses and trained 1,241 officers.

Source: Epoch Times, November 12, 2020
https://www.epochtimes.com/gb/20/11/12/n12542962.htm

Briefings | | |   Geo-Strategic Trend

Hong Kong Media: Many People in the Biden Camp Contacted China

According to Hong Kong’s South China Morning Post on the 13th, after the US presidential election, China and the United States restarted their stalled behind-the-scenes diplomacy. This semi-official communication channel is usually through former officials, think tanks and business leaders. A Chinese government consultant revealed that semi-official exchanges between China and the United States have been suspended in recent months, but they have now resumed. Professor Wang Xiangsui of Beijing University of Aeronautics and Astronautics revealed that several people close to Biden have recently contacted China and discussed with Chinese think tanks how to restart Sino-US relations.

Wang Xiangsui said that the message from the Biden camp is positive. The message sent by the Democrats visiting China is that China and the United States should avoid a Cold War or direct conflict. Both parties must learn how to manage their differences and find ways to coexist. A Chinese government adviser had previously met Kurt Campbell and Jake Sullivan from the Biden camp. He said that in the past few years, some former Democratic Party officials have visited Beijing many times.

Source: China Press, November 16, 2020
http://www.uschinapress.com/static/content/SZ/2020-11-16/777859594532954112.html

Briefings | | |   US-China Relations