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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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CCP: Xi Jinping’s Latest Speech: Five Musts and Five Never Agrees

On September 3, 2020, CCP General Secretary Xi Jinping delivered a speech at an event held in the Great Hall of the People in Beijing. The purpose was to commemorate the end of World War II, 75 years ago. The Chinese Communist Party News reported on it under the headline “Xi Jinping’s Latest Speech Lights up the Road Forward.”

In his speech, Xi talked about five “musts” and five “never agrees.”

The five “musts” are:

  • “To achieve the great rejuvenation of the Chinese nation, we must uphold the leadership of the Communist Party of China.”
  • “To achieve the great rejuvenation of the Chinese nation, we must adhere to the path of socialism with Chinese characteristics.”
  • “To achieve the great rejuvenation of the Chinese nation, we must insist on putting the people at the center.”
  • “To achieve the great rejuvenation of the Chinese nation, we must persist in the spirit of struggle.”
  • “To achieve the great rejuvenation of the Chinese nation, we must unswervingly follow the path of peaceful development.”

The five “never agrees” are:

  • “The Chinese people will never accept any attempt by anyone or any force to alter the history of the Chinese Communist Party and vilify the nature and purpose of the Chinese Communist Party!”
  • “The Chinese people will never accept any attempt by anyone or any force to distort and change the path of socialism with Chinese characteristics, or to deny or vilify the great achievements of the Chinese people in building socialism!”
  • “The Chinese people will never accept any attempt by anyone or any force to split the Communist Party of China from the Chinese people and have them oppose each other!”
  • “The Chinese people will never accept any attempt by anyone or any force to impose their will on China through bullying, to change the direction of China’s progress, and obstruct the efforts of the Chinese people to create their own beautiful life!”
  • “The Chinese people will never accept any attempt by anyone or any force to undermine the peaceful life and development rights of the Chinese people, undermine the exchanges and cooperation between the Chinese people and the people of other countries, or undermine the noble cause of human peace and development!”

Source: Chinese Communist Party News, September 4, 2020.
http://cpc.people.com.cn/n1/2020/0904/c164113-31848883.html

 

Briefings | | |   Government/Politics

RFI Chinese: The Chinese “Yiwu Index” Points to a Trump Win

Radio France Internationale (RFI) Chinese Edition recently reported that China’s unofficial “Yiwu Index” is spreading a wave of indicators across the Chinese language Web (the Mainland, Taiwan, Hong Kong and Singapore), pointing to a Trump win. Yiwu is a Chinese town in the Zhejiang Province. It is where most of the world’s small goods are manufactured and wholesaled. This includes campaign goods like flags and buttons that are used across the world’s political landscape. According to reports from major Mainland (Tencent News), Singapore (Lianhe Zaobao) and Taiwanese (CNA) news media, just counting a single 5-square-meter wholesale counter, the owner Li Qingxiang has sold over 100,000 “Trump 2020” 5 inch x 3 inch flags alone. Only a couple of thousand same-size Biden flags have been sold. Li said, “The orders don’t lie.” Another Yiwu salesman, Zhou, revealed that, since the winter of 2019, he has been receiving “continuous Trump flag orders” with more than ten patterns. Biden flags have only one pattern with less than one fifth of the order volume, and the orders only started coming in since February. Fairly early, the Yiwu Index had correctly predicted the 2016 U.S. election result.

Source: RFI Chinese, September 1, 2020
https://bit.ly/2ZaGvdy

Briefings | | |   Grapevine

Micron Announced Cut-Off of Supply to Huawei

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that Micron, Huawei’s sole primary memory and flash memory supplier for 20 years, announced compliance with the U.S. ban on Huawei. This is another major blow to Huawei’s supply chain after TSMC’s similar announcement. Micron is the world’s largest semiconductor memory vendor. Micron, Samsung and Hynix together own 95 percent of the world’s DRAM market. Micron is also one of the six vendors that together hold 99 percent of the world’s NAND flash memory market. The only hope Huawei has now is to obtain domestic support from Yangtze Memory Technologies for NAND, ChangXin Memory Technologies (CXMT) for DRAM, and Jinhua Integrated Circuit (JHICC) for DRAM. However, the U.S. already banned JHICC in 2018, due to a lawsuit that Micron filed for unauthorized use of intellectual properties. Yangtze Memory’s manufacturing process depends heavily on high-end equipment like the mask aligners from the Netherland’s SAML, which also uses U.S technology. If the U.S. blacklists the other two Chinese domestic suppliers, Huawei will face a death sentence on the memory side too, in addition to the central processing chips.

Source: NetEase, September 2, 2020
http://dy.163.com/article/FLJ48FM70517M7S3.html

Briefings | | |   Information/Technology US-China Relations

Google and Facebook Gave Up on Hong Kong Submarine Cable Plan

Well-known Chinese news site Sohu (NASDAQ: SOHU) recently reported that the Google and Facebook joint venture plan of laying new submarine cable now officially dropped the U.S.-to-Hong Kong segment. The two quickly adjusted and submitted a new plan to connect with the Philippines and Taiwan. The adjusted pacific fiber cable plan eliminated the earlier partner named Pacific Optical Data Communications, headquartered in Hong Kong. The move was in response to the objection from multiple U.S. government organizations, including the FCC and the Justice Department, as well as several U.S. national security agencies. In April, Google obtained a six-month temporary permit to proceed. The new plan is the official amendment to the original application. The FCC confirmed the national security concerns. Google validated the report and ensured the public that the application is going through the proper channels for final approval. A Facebook representative encouraged people to check the official FCC filing information for more details.

Source: Sohu, August 30, 2020
https://www.sohu.com/a/415573819_99956743

Briefings | | |   Geo-Strategic Trend Information/Technology US-China Relations

EU’s New Strategy on ‘Critical Raw Materials’

As the Wuhan pneumonia epidemic has highlighted the global dependence on electronic products and technologies required for remote work and teaching, the European Union (EU) has become worried that, in the production of smartphones and related products, it will increasingly have to rely on raw materials that other countries supply. The EU recently proposed a new strategy to reduce its dependence on China, Chile, South Africa and other countries through the establishment of the “European Raw Materials Alliance.”

On September 4, 2020, Vice President of the European Commission Maros Sefcovic pointed out that 75 to 100 percent of the majority of the metals that the EU uses come from countries outside of the European Union, and China provides 98 percent of its rare earth supply. The EU realized that it is necessary to reduce risks in the supply of critical raw materials during the era of green and digital transformation. Critical raw materials have increased from 27 in 2017 to 30 in 2020. The reason for the EU to regard these materials as “critical” is mainly that there is either an insufficient supply or the concentration lies in a handful of suppliers.

In addition, Turkey supplies 98 percent of the borate that the EU consumes; 68 percent of the cobalt comes from the Democratic Republic of the Congo. Chile supplies 78 percent of lithium, and South Africa supplies 71 percent of the platinum.

“We have to change our approach drastically,” said Sefcovic. He added, “We are largely dependent on unsustainable raw materials from countries with much lower environmental and social standards, less freedom and poor, unsustainable economies.”

By 2050, the EU will need around 60 times more lithium, essential for e-mobility, and 15 times more cobalt, which is used in electric car batteries. Therefore, the EU must accelerate its independence in the supply of raw materials. “We need to make better use of the resources within the European Union, where we would apply the highest environmental and social standards,” Sefcovic said.

The EU’s new strategy is to establish the “European Raw Materials Alliance,” consisting of industry stake holders, investors, the European Investment Bank, and member states to ensure the supply chain of mineral raw materials. Supply diversification also requires partnerships. Starting next year, the European Commission hopes to start partnerships with Canada, Australia, and interested African countries.

Source: Radio Free Asia, September 4, 2020
https://www.rfa.org/mandarin/yataibaodao/junshiwaijiao/cl-09042020125542.html

Briefings | | |   Geo-Strategic Trend

China Agreed to Restructure Low Income Countries’ Debts

China has recently reached agreements with a number of low-income countries that applied for debt restructuring to assist these countries in fighting the epidemic. Analyses show that China holds the large debts of many low-income countries. Therefore, this agreement is significant.

The Financial Times reported that China’s Ministry of Foreign Affairs stated that China has reached an agreement with half of the 20 low-income countries that have requested debt restructuring. The Debt Service Suspension Initiative (DSSI) of G20 countries leads the negotiation framework for this agreement.

The DSSI was launched in April this year to help some low-income countries to focus on responding to the health and economic crisis that the COVID-19 epidemic caused. Eligible countries can freeze the repayment of bilateral loans until the end of this year. This is the first time that China has participated in a multilateral debt relief initiative. The agreement between China and Angola is critical.

In the past 20 years, among the African countries, Angola has been the largest recipient of loans from China, receiving about one third of China’s total loans to the continent. According to data from the World Bank, Angola’s loan payable of approximately US$2.6 billion may be suspended in 2020, accounting for 3.1 percent of the country’s gross domestic product (GDP). The Central Bank of Angola said that the country’s total outstanding external government debt approximates US$49 billion, of which China is owed 45 percent.

As the COVID-19 disease has caused severe damage to developing countries, more countries may request debt restructuring in the future. Redd Intelligence’s senior analyst Mark Bohlund said that, under the DSSI framework, “much of the burden falls primarily on China.”

Analysts pointed out that tracking the progress of DSSI negotiations in the past has not been easy. In particular, it is because China provides a large proportion of the loans and often does not fully disclose information. At present, China’s state-owned export credit agency, the Export-Import Bank of China, has issued most of China’s loans, but some also come from the state-owned China Development Bank.

Source: Central News Agency, September 2, 2020
https://www.cna.com.tw/news/acn/202009020167.aspx

Briefings | | |   Economy/Resources Geo-Strategic Trend

Scholars’ View on China’s “Domestic Circulation” Strategy

Recently, at the semi-annual meeting of the Chinese Communist Party’s (CCP) Politburo, General Secretary Xi Jinping proposed a new economic strategy in response to the deteriorating relationship with the U.S. and the slowdown of the global economy. The “dual circulation” strategy aims to replace the prevailing one driven by exports and infrastructure investment with one led by domestic consumption, or “domestic circulation.” He Jiangbing, a Chinese financial expert told the Taiwan based Central News Agency that the truth is, “People don’t have money.” This is the basis for China to implement “domestic circulation.” It is because they cannot afford the expensive imports.

According to the calculations of the Income Distribution Research Institute of Beijing Normal University, 964 million Chinese people earn a monthly income below 2,000 yuan (US$ 292.50); 364 million earn a monthly income between 2,000 (US$ 292.50) and 5,000 yuan (US$ 731.10); and only 72 million people, or 5.13 percent of the total population, have a monthly income of more than 5,000 yuan (US$ 731.10). Data from China’s National Bureau of Statistics (NBS) also shows that 40 percent of the households, a population of 610 million, make about 1,000 yuan (US$ 146.20) a month on average.

He pointed to three issues related to “domestic circulation.” The first is the widening food shortage; the second is advanced technology that depends on advanced economies such as the United States, especially the annual import of over US$ 300 billion worth of chips; the third is the energy sources such as oil and natural gas that rely on imports.

Liu Kaiming, director of the Shenzhen based nongovernmental organization, the Institute of Contemporary Observation organization, believes that it is difficult for export oriented companies to switch to domestic sales. Generally speaking, “China’s total production capacity exceeds the domestic demand by about one-third.” Without external demand, “one third of those companies will go bankrupt.” China’s total exports last year were about 17 trillion yuan (US$2.5 trillion). Even a drop of 1 percent, or 170 billion yuan (US$25 billion), is enormous. The gap must be filled by the corresponding domestic market.

Liu added that China’s manufacturing industry consists of two parts: the domestic market and the foreign market including Hong Kong, the U.S. and Europe. The products made for the former domestic market are of lower quality, while those made for the latter have a higher quality and technology, and employees are paid better. If the government promotes “domestic circulation” as the main driver of the economy, because the income of Chinese people is generally low, firms will have to lower the quality and resort to price competition. “The domestic circulation cannot drive and improve the quality of products made in China.”

Liu believes the major problem for the Chinese people is “no money.” To reduce its dependence on exports, China has to increase domestic consumption.

Source: Central News Agency, September 1, 2020
https://www.cna.com.tw/news/acn/202009010223.aspx

Briefings | | |   Economy/Resources