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Alibaba to Invest $1.1 Billion Expanding Business Footprint in South Korea

According to exclusive information obtained by the South Korean news agency Yonhap News Agency, Alibaba Group plans to expand its business footprint in South Korea over the next three years with $1.1 billion in new investment.

Alibaba recently submitted its business plan to the South Korean government. According to the plan, Alibaba will begin construction of a comprehensive logistics center in South Korea this year. The logistics center will comprise an area of 180,000 square meters, equivalent in size to 25 soccer fields.

Alibaba will invest $100 million to help South Korean sellers bring their products to foreign markets. In June, Alibaba will establish a procurement center to source high-quality Korean goods for resale via global sales channels. Alibaba plans to utilize its various e-commerce platforms to sell Korean products, including AliExpress, Lazada (one of the largest e-commerce operators in Southeast Asia), and Spanish e-commerce platform Miravia. Over the next three years, Alibaba aims to support 50,000 South Korean small- and medium-sized enterprises in exporting their products.

Source: Yonhap News Agency, March 14, 2024
https://cn.yna.co.kr/view/ACK20240314000300881

Li Qiang: Resolving Local Government Debts Will be a Protracted Battle

On March 22, the Chinese State Council held a video conference on Preventing and Resolving Local Debt Risks. People’s Daily reported that “Premier Li Qiang gave a speech emphasizing that the work of preventing and resolving local debt is both an offensive assault and a war of attrition. All regions and departments should improve their political stance, strengthen their sense of responsibility and systems thinking, properly resolve risks from existing debts, and strictly prevent new debt risk. We must continue in-depth work to resolve risks from local government debt and resolutely implement requirements regarding tight budgets.”

Source: People’s Daily, March 23, 2024
http://politics.people.com.cn/n1/2024/0323/c1024-40201534.html

Chinese Ambassador to Russia: In Principle There is No Problem With Russia Borrowing Money From China

Russian state-owned news agency Sputnik reported that Zhang Hanhui, China’s Ambassador to Russia, told Sputnik that in principle there is no problem with Russia borrowing money from China by issuing bonds or taking out loans; only technical matters of how to implement such borrowing remain.

Zhang said, “More than 90% of bilateral settlements [between China and Russia] are now denominated in RMB. The percentage may grow even higher in the future. Both sides conduct settlements in RMB as well as in other currencies, including the Ruble. Regarding [Russia] issuing Bonds in China and borrowing money in China, this matter is open for discussion. There is no problem in principle [with Russia taking out debt from China], though the technical matter of how specifically to accomplish this requires further discussion among [financial] professionals.”

Zhang also said that the recent obstacles to cross-border transfers between Russia and China have to do with interference from third-party countries. He said “The obstacles occurred because some countries created troubles for us, but I believe we can find ways to overcome them.”

Russian Finance Minister Anton Siluanov said in an earlier interview with Sputnik that he had been in discussions with his Chinese counterpart about the feasibility of RMB borrowing, with the two countries’ finance ministries touching on the topic near the end of 2023, but as of yet no final decision has been made.

Source: Sputnik, February 28, 2024
https://sputniknews.cn/20240228/1057339595.html

Lu Shaye: China Should Play Bigger Role on Global Stage; It Has Become an Elephant and Can No Longer Hide

Lu Shaye, China’s Ambassador to France, returned to China to attend the National Committee of the Chinese People’s Political Consultative Conference. During an interview on March 6th with China Youth Daily, Lu Shaye said, “If a country (China) wants to expand its position and influence internationally, it must actively participate in global governance and multilateral affairs.” He said that in the past, during the period when China was relatively poor, Western countries would “look down” while dealing with China, but now they are basically “looking straight ahead,” and in some cases they may in fact be “looking up” at China.

Again referring to China, Lu Shaye stated that a big country should act like a big country, and it cannot simply “hide its light (capabilities) and bide its time” as it did in the past. “This light cannot be hidden, and time cannot be bidden. You have become an elephant; you are no longer able hide behind a tree.”

Source: Central News Agency (Taiwan), March 8, 2024
https://www.cna.com.tw/news/acn/202403080300.aspx

All Levels of Government Must Maintain a Tight Budget, Top Chinese Officials at National People’s Conference Repeatedly Emphasize

During China’s National People’s Conference, Premier Li Qiang delivered the annual “Government Work Report” on March 5th. His report stated that “governments at all levels should get used to living with a tight budget, truly tighten their belts, and effectively use fiscal funds where they are most needed and can produce real results.”

At a press conference on March 6th, Chinese Finance Minister Lan Fo’an answered a question about tight budgets, saying that “the Party Central Committee has set the clear requirement that party and government organs must live under a tight budget. Governments at all levels should take the lead in implementing [such financial constraint] and be thrifty in all undertakings. This year’s government work report emphasizes [such restraint] again, further highlighting that this is not just a temporary need but rather a long-term strategy.”

At the Guizhou provincial delegation’s discussion on March 6, Li Bingjun, Governor of Guizhou Province, said, “At the end of last year, [Party] General Secretary Xi Jinping emphasized at the Central Economic Work Conference that Party and government organs should get used to ‘living within a tight budget.’” He added, “In my understanding, ‘living with a tight budget’ is not a temporary measure, but rather the new norm.”

Sources:
1. Chinese Government Website, March 5, 2024
https://www.gov.cn/yaowen/liebiao/202403/content_6936325.htm
2. Guancha, March 6, 2024
https://www.guancha.cn/politics/2024_03_06_727443.shtml
3. Phoenix, March 6, 2024
https://news.ifeng.com/c/8XjUlPgYsXM

Taiwanese Scholar: Wang Huning’s “Spider Strategy” to Slowly Swallow Taiwan

On March 4th, chairman Wang Huning of the Chinese People’s Political Consultative Conference delivered a statement on the topic of China-Taiwan relations. The statement, titled “Work Report of the Standing Committee,” proposed a strategy of “strengthening cross-strait industrial cooperation, building a common market across the straits, holding the sixth Cross-Strait Grassroots Governance Forum, and promoting the integrated development of both sides of the strait.”

Song Guocheng, a Senior Researcher at the International Relations Research Center of Taiwan’s Chengchi University, called Wang Huning’s plan a “spider strategy” to gradually swallow Taiwan. Song published an article on the implications of Wang’s strategy, analyzing four key phrases used in Wang’s statement. Below are translations of the major points from Song’s analysis.

The first key phrase from Wang Huning’s statement was “cooperation” (合作). Cooperation sounds great. By just saying “cooperation,” the Chinese Communist Party (CCP) can sidestep sanctions and allegations over foreign interference, as it is not “changing the status quo across the Taiwan Strait.” Cross-strait cooperation is, however, a “big brother leading the little brother” style. It could lead to the so called “peaceful evolution” of Taiwan – using economic ties to drive political change, using profit to lure Taiwanese people into acting against their country’s best interest, merging with Taiwan [economically], and making its people willing to submit to subjugation [by China].

The second key phrase is “shared marketplace” (共同市場). This term implies “mutual benefit and shared interests.” But the strategy behind this term is to use the “big economy” of mainland China to “melt/dissolve” the “small economy” of Taiwan; this is the “spider strategy,” with the big enveloping the small, trapping Taiwan in a huge “economic spider web,” using honey as poison to slowly consume Taiwan.

The third key phrase is “grassroots cross-strait governance” (兩岸基層治理). Governance sounds neutral, but it is a sovereignty issue when one discusses “cross-strait governance.” Neither side of the [Taiwan] strait is subordinate to the other, and the governance on each side is unrelated to that on the other side. Of course, the CCP will be able to achieve [such governance] if it can rope in Taiwan’s municipal leaders, public figures, community organizations, agricultural associations, guilds, chambers of commerce, student unions, hometown associations… etc. It uses various pretexts such as “exchange, learn, observe, and inspect” to break through the wall of sovereignty between the two sides. This is its softest, most gentle, and most intimate “slow swallowing” policy.

The fourth key phrase is “integrated development” (融合發展). Development sounds so pleasant, and integration sounds wonderful: you are part of me, and I am part of you! But the true meaning behind this phrase is as follows. “Integration” means slow erosion of Taiwan’s anti-communist consciousness, and “development” means gradual subsumption of Taiwan’s sovereignty. This is a “patchwork policy” to unify Taiwan, also known as the “stacking blocks” policy or the “great dissolution” strategy. Once the puzzle is completed and the blocks are stacked, the time will be ripe for natural unification of China.

Source: Up Media, March 7, 2024
https://www.upmedia.mg/news_info.php?Type=2&SerialNo=196367

German Investment in China Declines Amid Concerns Over Economic Environment

According to a report in German newspaper Handelsblatt, German investors are avoiding China, and German direct investment in China has declined sharply. Some large companies, however, are going against the tide, expanding their businesses in China.

A study commissioned by Handelsblatt and conducted by the Cologne Institute for Economic Research shows that German investment flows to China plunged in the third quarter of 2023, reaching a six-year low of negative €2.2 billion. German equity investment in China fell particularly sharply, with a flow of negative €3.9 billion.

Funds flowing to China from other countries also decreased. During the third quarter of 2023, total foreign investment was negative for the first time in a quarter century, meaning more capital flowed out of China than flowed in. Some large companies like BASF, however, are going against the flow and continuing to expand their business in China.

On the other hand, there were positive signs regarding reinvested profits. Although German reinvestment in China was lower than during prior periods, German companies still reinvested some €1.7 billion of profits earned in China back into their Chinese operations in Q3 of 2023. The study found that many foreign companies operating in China are transferring profits out of the country.

Observers cite several reasons for the investment downturn in China, including a significantly worsened investment environment in recent years as the Communist Party exerts greater control over the economy. China’s economic growth and consumption have also slowed. Many Western countries are also pursuing de-risking strategies to reduce dependence on China.

Source: Radio France International, December 14, 2023
https://rfi.my/AB83

Germany at Risk Over Dependence on China for Imported Raw Materials

A report by IW Consult and Fraunhofer ISI, commissioned by KfW Research, highlights Germany’s reliance on imports for critical raw materials such as copper, lithium and rare earth elements (REEs). Nearly a third of Germany’s manufacturing gross value added comes from copper products, 10% from lithium products, and 22% from REE-containing products. Automakers, electronics and optics manufacturers are particularly reliant on imports.

The German markets for such products are dominated by a few major suppliers. The report says that a third of Germany’s lithium as well as 19% of its copper and REE imports are subject to supply chain risk. The largest known REE deposits are in China, while reserves in Greenland, Canada and Sweden remain underexplored. Germany’s top three lithium and REE suppliers control over 80% of German market share for those commodities. Furthermore, Russia’s copper and Chile’s lithium carbonate (which comprises 72% of German lithium carbonate imports) are crucial in Germany’s supply chain. Altogether, China accounts for 84% of German REE imports.

Matthias Wachter from the Federation of German Industries (BDI) compared Germany’s dependence on China for raw materials to the dependence on Russian natural gas [before the 2022 Russian invasion of Ukraine]. He said that imports have reached “the highest level of risk” and that the danger lies “not in availability of such materials but in the [geographic] concentration within China of their production.” He added, “this high degree of dependence makes people vulnerable to threats and blackmail. China has shown that it can regulate these key areas by imposing export controls on some rare earths.”

Fritzi Köhler-Geib, Chief Economist at KfW, said that there may be initial costs to pay in securing resilience throughout Germany’s supply chain, but the resulting stability and flexibility are necessary prerequisites for enabling the green transition and digital transformation. Cornelius Bähr, Senior Advisor at the German Economic Institute, stressed the importance of German supply chain diversification, exploration of substitutes for key raw materials, expansion of domestic resources, and recycling [of key supply chain inputs]. He cautioned that there could be economic consequences, e.g. forgone EV production, if imports such as lithium are disrupted.

Source: Deutsche Welle, March 17, 2024
https://p.dw.com/p/4dWaS