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

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Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”

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The CCP’s Performing Arts Troupes in the U.S.

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CCP, Master of Hostage Diplomacy

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China’s Imports and Exports Declined Sharply in March

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that, according to Chinese customs data, China’s imports and exports both experienced sharp declines in March, far below market expectations. Export shipments fell 7.5 percent year-over-year, while imports also fell 1.9 percent year-over-year. Chinese policymakers are facing challenges as they try to shore up a fragile economic recovery.

Exports suffered their biggest drop since last August, well above the 2.3 percent decline forecasted by economists. Exports for the period January through February increased by 7.1 percent year-over-year.

Over the past year, China’s exporters experienced many difficulties due to weak overseas demand and a tightening global monetary environment. At this point, with the U.S. Federal Reserve and other developed countries showing no urgency regarding the need for interest rate cuts, Chinese manufacturers may continue to face challenges as they try to boost international sales. Analysts warned that Western concerns about overcapacity in certain Chinese industries [and the impact of such overcapacity on Western markets] could bring more trade barriers to China’s manufacturing sector.

China’s imports for March fell 1.9 percent year-over-year, compared with a growth of 3.5 percent in the previous two months, indicating weakness in domestic demand. Analysts do not believe China’s economy will fully recover any time soon, mainly because the crisis in the Chinese real estate industry has been going on for quite some time.

Global ratings agency Fitch recently downgraded China’s sovereign credit rating outlook to negative, citing risks to public finances as the country’s economy faces growing uncertainty during a shift to a new growth model. Structural flaws in China’s economy have reduced the effectiveness of its central bank’s monetary policy tools.

Source: NetEase, April 12, 2024
https://www.163.com/dy/article/IVJQBCIC055292RI.html

Briefings | | |   Economy/Resources

RFI Chinese: China Asks Telecom Operators to Phase Out Foreign Chips

Radio France Internationale (RFI) Chinese Edition recently reported that, people familiar with the matter said Chinese officials earlier this year directed the country’s largest telecom operators to phase out foreign processors at the heart of their telecom networks by 2027. This would be a hit to U.S. chip giants Intel and Advanced Micro Devices (AMD). China’s Ministry of Industry and Information Technology set the 2027 deadline in order to speed up the government’s efforts to stop using such core chips in its telecommunications infrastructure. Chinese regulators also ordered state-owned mobile operators to check whether “non-Chinese” semiconductors are commonly used in their networks and to draft a timetable for replacement.

In the past, efforts by the Chinese telecommunication industry to wean itself from dependence on foreign semiconductors was to be hampered by a lack of quality chips produced domestically. Now, the quality of domestic chips has improved and their performance has become more reliable.

Currently, U.S. chipmakers Intel and AMD supply most of the core processors used in networking equipment in China and globally; geopolitical concerns now cloud their future business prospects in China. In October of last year, China Telecom purchased approximately 4,000 artificial intelligence servers, 53 percent of which used Intel processors. According to tender documents, the rest of the AI servers use Huawei’s processors. In the past, Intel chips accounted for a much higher share of server procurements.

Source: RFI Chinese, April 12, 2024
https://tinyurl.com/ykpb26j6

Briefings | | |   Geo-Strategic Trend Information/Technology

Chinese Military Attaché Tails Taiwanese Vice President-Elect in Czechia

Several vehicles followed Taiwanese Vice President-elect Ms. Hsiao Bi-khim during a visit to Prague in March. A Chinese Military Attaché, holding a diplomatic passport and working for the military department of the Chinese Embassy in Prague, was driving one of the vehicles. The Czech Ministry of Foreign Affairs is reportedly “handling” the matter, which is “not yet resolved;” the Czech government has summoned the Chinese ambassador and is considering designating the individual involved as persona non grata, potentially leading to his expulsion from the country.

Czech media outlet Seznam Zpravy reported that several vehicles were seen following Hsiao’s police motorcade when she arrived in the Prague city center. At an intersection, one of the trailing vehicles ran a red light, almost crashing into her convoy. The Czech police stopped the vehicle and found that the driver held a diplomatic passport of the People’s Republic of China. He worked for the military department of the Chinese Embassy in Prague. The Chinese military diplomat denied that he had been following Ms. Hsiao, claiming that he was just going to a nearby Chinese restaurant for a meal. Nevertheless, reports pointed out that the car had been following her all the way to her hotel.

Ms. Hsiao Bi-khim’s visit to Prague was part of a tour of the Czech Republic, Poland, and Lithuania in March.

Source: China Times (Taiwan), April 6, 2024
https://www.chinatimes.com/cn/realtimenews/20240406000948-260408

Briefings | | |   Geo-Strategic Trend

China’s Banks Ask Employees to Return Bonuses

As China’s economy slides downward and banks strive for survival, several banks have asked their employees to return bonuses and subsidies.

Taiwan’s Central News Agency cited a Securities Times post on WeChat saying that several Chinese banks are reclaiming performance bonuses “totaling nearly 100 million yuan (US$ 13.8 million). The China Merchants Bank, Bohai Bank, and Bank of China together accounted for a total of 89.48 million yuan.”

“In 2022, more than half of the approximately 40 listed banks disclosed such bonus reclamations in their annual reports. For example, China Merchants Bank reclaimed a total of 58.24 million yuan in 2022, and 43.29 million yuan in 2023.”

Source: Central News Agency (Taiwan), April 3, 2024
https://www.cna.com.tw/news/acn/202404030315.aspx

Briefings | | |   Economy/Resources

China and Thailand to Carry Out Joint Moon Exploration

On April 5th, China’s National Space Administration and Thailand’s Ministry of Higher Education, Research and Innovation jointly signed a “Memorandum of Understanding on Cooperation for Exploration and Peaceful Utilization of Outer Space” as well as a “Memorandum of Understanding for Cooperation on an International Lunar Research Station.”

Xinhua reported that “China and Thailand will establish joint committees and working groups to strengthen cooperation in the fields of space exploration, space applications, building space capacity. This will be done through joint space projects, scientific exchange programs, personnel training plans, data and information exchange, and organization of joint thematic workshops and scientific seminars.”

“China’s Chang’e-7 mission [planned for 2026] will reportedly carry a ‘Global Space Weather Monitoring’ device developed by Thailand. This will be the first time a Thai scientific instrument enters deep space from Earth orbit. China’s Chang’e-8 mission [planned for 2028] provides opportunities for international collaboration, with the ability to carry payloads of 200 kilograms. Thailand has submitted several applications regarding lunar surface robots and scientific payloads. The applications are currently being processed.”

“China has already signed space cooperation agreements with more than 10 countries and international organizations.”

Source: Xinhua, April 5, 2024
http://www.xinhuanet.com/20240405/8b67999f500143a0825a9609a5283f91/c.html

Briefings | | |   Geo-Strategic Trend Information/Technology

Before Yellen’s Trip to China, Official Mouthpiece Reports on Yellen “Public Opinion Flop”

In the days leading up to U.S. Treasury Secretary Janet Yellen’s trip to China, official Chinese state news agency Xinhua published a report titled “Blaming China, U.S. Treasury Secretary Yellen Suffers Public Opinion Flop.” The report states that, on March 27th, Yellen visited a photovoltaic battery factory in Norcross, Georgia, and accused China’s renewable energy industry of “overcapacity” only to face a backlash in public opinion.

During her speech at the factory, Yellen expressed concern over “global spillovers from the excess capacity that we are seeing in China,” saying that such excess capacity distorts global prices and production patterns, ultimately harming American firms and workers.

Xinhua reported that Yellen’s comments sparked immediate criticism from netizens. One commenter said that her complaint about China’s rapid development of green energy technology is akin to a weightlifter who doesn’t train but complains that another weightlifter can lift heavier weights. Others questioned why it would be problematic if China increases production to lower prices, suggesting that this would benefit consumers and promote the adoption of renewable energy technologies like solar panels.

Xinhua also quoted netizens who challenged Yellen’s notion of “global prices,” arguing that prices are determined by manufacturing costs, transportation, and profit margins, saying that any manufacturer can set their own prices.

The report added that, on news sites such as the Financial Times, hundreds of netizens overwhelmingly criticized Yellen’s remarks. Reportedly, some commenters called her remarks fallacious, accusing the U.S. of initially claiming that China was not doing enough in green energy, and now reversing course to criticize them for doing too much on the issue. Others pointed out America’s “double standards,” saying that the U.S. talks about free markets when it has a competitive advantage but resorts to protectionism when it doesn’t.

The Xinhua report concluded by quoting a netizen who accused the U.S. of hypocrisy, saying “the U.S. has one set of rules for itself and another for others.”

Source: Xinhua News Agency, March 29, 2024
http://www.xinhuanet.com/world/20240329/dbcaa69345b84253a27bd4c115869d7c/c.html

Briefings | | |   US-China Relations

Chinese Department Stores Face Challenges Amid Slow Consumer Recovery

Recovery of China’s consumer spending has been slow, impacting not only small shops but also department stores. According to the “2023-2024 China Department Store Retail Industry Development Report,” 70.1% of department stores reported foot traffic has not returned to 2019 levels, and 64.9% say sales have not returned to 2019 levels.

Over 10 department stores have closed so far this year, including Shanghai Meilong Town Isetan Department Store. At least 21 stores closed in 2023, and 35 closed in 2022. Stores reported an 8.8% increase in department store sales in 2023; this increase was due to the low base period in 2022 caused by the COVID-19 pandemic. Challenges persist, including the impact of e-commerce, rising costs leading to staff cuts, and declining foot traffic.

Source: Central News Agency (Taiwan), April 6, 2024
https://www.cna.com.tw/news/acn/202404060151.aspx

Briefings | | |   Economy/Resources