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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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Discrepancies in China’s Trade Surplus Data with the U.S.

On June 20, the U.S. Treasury Department asked China to explain the discrepancy in its two sets of trade surplus data with the U.S.

Data reported by the Chinese customs office shows China’s trade surplus for 2023 being nearly $230 billion higher than the surplus reported by China’s State Administration of Foreign Exchange (SAFE). In prior years (going back to 2000), the average discrepancy between these two sources of trade surplus data was only $7 billion. The U.S. Treasury Department called on China to provide further quantitative evidence clarifying the issue.

One commentator on China affairs gave three possible explanations for the large discrepancy in 2023 trade surplus data:

  1. The Chinese customs office may have exaggerated the country’s export trade figures.
  2. A large number of export enterprises may have, in preparation for potential exit from China, kept their dollars overseas instead of taking them back to China (i.e. instead of converting them to RMB). This could have resulted in those businesses’ trade numbers being counted by the customs but not by SAFE.
  3. There may be an acceleration in people withdrawing money to flee China.

Sources:
1. Radio France Internationale, June 21, 2024
https://www.rfi.fr/cn/美国/20240621-美财政部吁中国提高汇率透明度-并澄清贸易顺差数据出现巨额落差
2. Epoch Times, June 22, 2024
https://www.epochtimes.com/gb/24/6/22/n14275135.htm

Briefings | | |   Economy/Resources US-China Relations

China Publishes Tough Law on ‘Taiwan Independence Elements,’ Including Death Penalty

On May 26, 2024, China’s Supreme People’s Court, Supreme People’s Procuratorate, Ministry of Public Security, Ministry of State Security, and Ministry of Justice jointly issued a document titled “Opinions on Lawfully Punishing Stubborn ‘Taiwan Independence’ Elements for Crimes of Splitting the State and Incitement of Splitting the State.”

The document defines ‘the crime of splitting the state’ as:

(1) Initiating or establishing “Taiwan Independence” separatist organizations, planning or formulating “Taiwan Independence” separatist action programs, plans, or schemes, or directing members of “Taiwan Independence” separatist organizations or other individuals to engage in activities that split the state or undermine national unity.

(2) Formulating, amending, interpreting, or repealing relevant regulations in the Taiwan region or through “referendums”, in attempt to change the legal status of Taiwan as part of China.

(3) Attempting to create “two Chinas,” “one China, one Taiwan,” or “Taiwan independence” in the international community by promoting Taiwan’s membership in international organizations whose members are limited to sovereign states or through official exchanges or military contacts.

(4) Abusing authority power to extensively distort or falsify the fact that Taiwan is part of China in the fields of education, culture, history, or news media, or suppressing parties, groups, or individuals that support the peaceful development of cross-strait relations and national unity.

(5) Other actions attempting to separate Taiwan from China.

It defines the principal offenders or those with particularly serious crimes shall be sentenced to life imprisonment or fixed-term imprisonment of more than ten years. Among them, those causing particularly serious harm to the state and the people, as well as those with particularly heinous circumstances, may be sentenced to death. Active participants shall be sentenced to fixed-term imprisonment of more than three years but less than ten years. Other participants shall be sentenced to fixed-term imprisonment of less than three years, detention, control, or deprivation of political rights.

Source: China Review News, June 21, 2024
https://bj.crntt.com/doc/1069/4/6/0/106946098.html?coluid=7&kindid=0&docid=106946098&mdate=0621155631

Briefings | | |   @CS Geo-Strategic Trend Government/Politics

Central Military Commission Tells PLA to Tighten Budget

Due to the sliding economy, Beijing has been asking local governments to keep tight budgets. Now it has also asked the People’s Liberation Army (PLA) to do the same.

China’s Central Military Commission recently issued a document titled “Measures on Building the Military with Hard Work and in Thrifty Way, to Improve the Military’s Quality and Efficiency.” The document states that “building the military with hard work and in a thrifty way is the fine tradition of the communist party and military,” and “must not be abandoned at any time or under any circumstances.” It urged the military to “firmly establish the mindset of living with a tight budget, meticulously calculate and manage all endeavors with thrift.” According to the website of China’s Ministry of Veterans Affairs, the document emphasizes the need to “adopt concepts such as resource constraints, cost-effectiveness, integration of support, performance management, and systematic governance, to enhance the operational efficiency of military systems and the utilization efficiency of defense resources.”

Source: China’s Ministry of Veterans Affairs website, June 20, 2024
https://www.mva.gov.cn/sy/xx/gfxx/202406/t20240621_425230.html

Briefings | | |   Defense/Military

2024 “Praise China” Online Commentary Conference Held in Changsha, Hunan Province

On June 14, 2024, the “Praise China” Online Commentary Innovation Conference was held in Changsha, Hunan Province. Representatives of outstanding authors from the “Praise China” Online Commentary Contest, along with experts, scholars, and media representatives, gathered to discuss and promote innovative methods for the production and dissemination of online commentary that “amplifies China’s positive voice.” The conference was organized by the Cyberspace Administration of China (中央网络安全和信息化委员会办公室) and a few other government agencies.

The 2023 “Praise China” Online Commentary Contest received a total of 88,467 submissions including text, video, and comic commentaries. The content “covered a wide range of topics, including news and current affairs, rural development, economy, livelihood, internet civilization, education, culture, and sports.”

Source: China Daily, June 14, 2024
https://cn.chinadaily.com.cn/a/202406/14/WS666c0265a3107cd55d266f0a.html

Briefings | | |   Government/Politics

Huawei Hires TSMC Talents to Build Out Chinese Semiconductor Capabilities

Financial journalist Emmy Hu recently revealed on her Facebook account “Emmy’s Drama Watch Time” (“Emmy追劇時間”) that Huawei is poaching talents from Taiwan’s chipmaker TSMC so that Huawei can expand beyond the telecommunications business into chip manufacturing. Huawei establishes new legal entities for such poaching operations, making it hard for outsiders to connect the dots back to Huawei.

As early as 2022, a TSMC employee informed Emmy Hu that Huawei had been conducting a lot of interviews with TSMC staff. Huawei poached a star TSMC plant manager using a legal entity “Sheng Wei Xu (昇维旭)” which claimed to be manufacturing memory chips. The interview questions posed were all about integrated logic circuits (logic ICs), however, and all the interviewees were Huawei personnel. “Peng Xin Wei (鹏芯微)” is another company established by Huawei. This company moved even faster in purchasing equipment than “Sheng Wei Xu.” Emmy Hu was told that Huawei aimed to poach 300 mid-to-senior level employees at once because Beijing realized that poaching a single person, like Liang Mong Song (currently the CEO of SMIC), would result in slower progress (in terms of setting up manufacturing capabilities) than poaching a larger number of people. According to Emmy, Huawei’s goal is to bring in an entire factory management team to ramp up operations quickly.

Emmy Hu mentioned that two years ago SMIC (a Chinese chipmaker) attempted to produce 7nm chips supporting Huawei’s new Mate60 smartphone, but SMIC could not handle the task by itself. Huawei masterminded the effort, putting to work its resources recruited from Taiwan. Fujian Jinhua Integrated Circuits, an independent Chinese company, now follows Huawei’s direction; it used to produce memory chips but now has switched to producing logic ICs. There are now a total of seven such logic IC chip companies working with Huawei; they are refer to the “Seven Little Dragons.”

Source: Facebook, account “Emmy追劇時間,” June 5, 2024
https://www.facebook.com/story.php/?story_fbid=1005948894485371&id=100052108087251&_rdr

Briefings | | |   Economy/Resources Geo-Strategic Trend Information/Technology

Jiang Zemin’s Son Jiang Mianheng Demoted at ShanghaiTech University

On June 5, ShanghaiTech University’s website posted a message stating that Jiang Mianheng, son of the former Chinese Communist Party (CCP) leader Jiang Zemin, has been demoted. He stepped down from the position of President of the university and has now been appointed to the position of Dean of the university’s Administrative Committee. Feng Donglai, an Academic from the Chinese Academy of Sciences, has taken over as the new President.

{Editor’s Note: Jiang Mianheng is 73 years old. This demotion would be less controversial if he had simply retired from the position of President. Giving him a lower position at the same university after his stepping down from being president is fairly humiliating, however.}

Mianheng’s father Jiang Zemin held the top position as leader of the CCP for over a decade (until 2002). He died in November 2022. He was called the “Grand Master of Corruption in the CCP.” Jiang Zhicheng, Jiang Mianheng’s son who was born in 1986, manages the Jiang family’s assets of over 1 trillion yuan (US$140 billion) and is viewed as one of the world’s top hidden tycoon. There have been widespread rumors that Xi Jinping wants to single out the Jiang family as the biggest culprit spreading corruption in China.

Source: Epoch Times, June 5, 2024
https://www.epochtimes.com/gb/24/6/5/n14264595.htm

Briefings | | |   Government/Politics

Banks in Shenzhen Require Reservations for Large Cash Withdrawals

Multiple banks in Shenzhen, China, have recently required customers to make reservations in advance if they wish to withdraw over 50,000 yuan (around $7,500 USD) in cash. Some banks even require reservations for withdrawals of over 20,000 yuan. Bank staff say this is to avoid scenarios where too many customers withdraw cash on the same day, leading to cash shortages at the banks.

Reporters at Southern Metropolis Daily have found that, at some Shenzhen banks, withdrawals of sums under 20,000 yuan can be made at ATMs, withdrawals of between 20,000 and 50,000 yuan can be made directly at the counter, and withdrawals of over 50,000 yuan require an advance reservation. Large withdrawals may require banking customers to document their intended use for the cash.

Specific withdrawal limits vary between banks. China Merchants Bank requires advanced reservations for withdrawals of over 20,000 yuan, whereas Shenzhen Rural Commercial Bank only requires it for sums of over 100,000 yuan. Hangzhou Bank requires proof of intended use for sums of over 200,000 yuan. China Construction Bank requires advance reservation (via an app) and approval for over withdrawals of over 200,000 yuan.

Staff at the Bank of Beijing and the Industrial Bank branches in Shenzhen said the 50,000+ yuan reservation requirement aims at preventing customers from making sudden large withdrawals. Such withdrawals could result in the branch having insufficient cash on hand. Customers are required to provide details when making their withdrawal reservation.

A branch manager at Postal Savings Bank said that reservations for next-day withdrawals must be made before 3pm.

A bank in Jilin province previously required police approval for withdrawals of over 20,000 yuan. This drew public controversy. The bank said that the requirement was for anti-fraud purposes.

The Southern Metropolis Daily report notes that bank staff will generally allow withdrawals after assessing the customer’s recent transaction activity, and that the process aims to be efficient for customers.

Source: Central News Agency (Taiwan), June 15, 2024
https://www.cna.com.tw/news/acn/202406150113.aspx

Briefings | | |   Economy/Resources

Visas Revoked as More Chinese Tourists Overstay in Japan

Recently there has been an increase in the number of Chinese tourists leaving their tour groups without authorization while visiting Japan. According to insiders in China’s tourism industry, more than ten groups of Chinese tourists have gone missing from their tours to Japan during May and June of this year.

Japan has decided to stop issuing visas to freelancers and low-income groups, and the Japanese government has revoked the visa issuance rights of 11 travel agencies in Guangdong and other provinces for tours to Japan. Another 15 provinces and cities have been added to a “high-risk” list and are being denied visas.

In recent months there have been multiple incidents of Chinese tourists from various travel agencies defecting from their tour groups and illegally overstaying in Japan during their visits. This phenomenon is particularly prevalent among 6-day tour groups from Guangdong to Osaka and Kyoto. As a result, Japan has tightened visa requirements for Chinese tourists across the board.

A leaked notice from the Japanese Consulate General in Guangzhou states that 11 travel agencies, including Guangdong Tieqing International Cultural Tourism Group and Shenzhen China Merchants International Travel Co., Ltd., have had their rights to apply for Japanese tourist visas revoked due to violations.

Travel industry insiders reveal that, in just the first part of June, there were already two tour groups from Guangdong with tour members defecting in Japan. Defectors included tourists from Fujian province. Japanese authorities are now requiring additional financial documentation from tour members when applying for visas.

Japan is denying visas to freelancers, those with low education levels or with no social insurance, as well as residents of provinces like Liaoning, Heilongjiang, Jilin and Shandong, which are considered high-risk areas for illegal overstays when touring in Japan.

Source: Radio Free Asia, June 18, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-06182024073312.html

Briefings | | |   Geo-Strategic Trend