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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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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

China’s Real Estate Woes: 30% Surge in Non-Performing Loans, Government Responses Conflicted

Financial strains related to real estate in China are increasingly evident in local banks. By December 2023, non-performing loans (NPLs) had risen by about 30% compared to the previous year. This impedes banks’ ability to grow their lending, possibly hindering China’s economic recovery. Hong Kong investors are shying away from trading Chinese local bank stocks due to concerns over the banks’ exposure to real estate woes.

The rise in NPLs is confirmed by 2023 fiscal reports of 27 Hong Kong-listed large and mid-sized banks, with NPLs totaling 106.8 billion yuan, a 27% increase from the previous year. The average NPL ratio for real estate loans reached 6.5%, indicating a surge in bad loans.

Analysis shows a worsening situation for local banks in economically challenged regions, such as the northeastern provinces, with Jiutai Rural Commercial Bank experiencing a 37% increase in real estate-related NPLs.

Government responses have been conflicted, as it is difficult to stimulate the economy while also maintaining stability in the banking sector. The government introduced a mechanism for coordination of real estate financing, potentially aggravating financial risks by pushing banks to lend out funds to whitelisted projects. Meanwhile, concerns have arisen over banks’ ability to handle bad loans in the face of shrinking net interest margins (NIMs). By December 2023, NIMs had reached a historic low of 1.69%, prompting speculation that the People’s Bank of China (PBOC) may cut interest rates in the future to stimulate demand. At the same time, a further reduction in interest rates could lead to further strain on banks’ resources and ability to manage bad loans.

 

Source: Nikkei Chinese, April 9, 2024
https://zh.cn.nikkei.com/china/ceconomy/55288-2024-04-09-05-00-00.html

Briefings | | |   Economy/Resources

RFI: Taiwan Rejects China’s Relief Aid After Earthquake

Following the magnitude 7.4 earthquake that struck Taiwan on the morning of April 3rd, Radio France Internationale (RFI) reported that Taiwan’s Mainland Affairs Council quickly rejected aid offered by mainland China, saying it was not needed.

Analysts explained that Beijing’s aid always comes with conditions attached and is not a true gesture of goodwill. Some suggested that, instead of providing aid, it would be better for the mainland to stop interfering with the Taiwanese government’s disaster relief effort.

The report stated that “China has been unwilling to give up the threat of force to expand its control over Taiwan, and the Taiwanese people are naturally highly suspicious of China’s intentions.” The article mentioned that mainland China blocked the United Nations from providing much-needed assistance to Taiwan 25 years ago when it suffered “The Great 921 Earthquake.” In recent years, mainland aircraft and warships frequently disturb the areas surrounding Taiwan. This trend is only intensifying. Because of these ongoing military threats, people in Taiwan are highly suspicious of China’s intentions.

Some scholars expressed the belief that China may have anticipated Taiwan’s reaction. The argument is as follows: When Beijing made an offer that was very likely to be rejected, they were not actually trying to help; they were setting a trap to embarrass Taiwan for rejecting aid that appears to have been offered in goodwill.

Source: RFI, April 5, 2024
https://tinyurl.com/nhdmnk2s

Briefings | | |   Geo-Strategic Trend

Half-Stopped Factories Become Norm in Chinese Lithium Battery Industry

Shanghai-based Chinese financial news site East Money recently reported that, “as the period of frenzied investment has passed, the Chinese lithium battery industry has been shrouded in the shadow of overcapacity and price wars. .. After the Chinese New Year, which is often the peak period for job hunting and employment, many battery companies reported suspensions of production, layoffs, and salary cuts.” Below are some translated excerpts from the article.

The oversupply situation in the lithium battery industry has been reflected in all aspects of the entire supply chain. Some sources told the reporters that, in the new energy industry chain from top to bottom, no orders and half-stopped factories have become the norm. “The bosses themselves are looking to find a more stable job.” Starting this year, even large companies are in danger. Other than the two “super players,” CATL and BYD, the question is: how many battery companies can survive past spring?

The turning point for the lithium battery industry’s sharp decline occurred in the fourth quarter of 2022. The trigger was that the sales growth rate of new energy vehicles began to slow down significantly, which was not expected by the industry. Because of this, since 2023, the battery industry has fought a fierce price war, and capacity utilization has further declined as well. Even for CATL, its 2021 manufacturing capacity utilization rate was as high as 95 percent, dropped to 83.4 percent in 2022, and further dropped to 70.47 percent in 2023, which is still much higher than the industry average capacity utilization rate – around 41.8 percent.

Right now, the lithium battery industry is still facing the challenge brought by the worsen high EV inventories as the result of the rapid expansion of new energy vehicles. In the meantime, the battery inventory of the energy storage industry is piling up too. No one knows when the lithium battery industry will emerge from the bottom. A new round of elimination in the market seems to be just starting.

Source: East Money, April 1, 2024
https://finance.eastmoney.com/a/202404013031165676.html

Briefings | | |   Economy/Resources Information/Technology

CNA: China Changes Names of 30 Places Along Indian Border

Primary Taiwanese news agency Central News Agency (CNA) recently reported on the territorial dispute between China and India.

“The territorial dispute between China and India has intensified. After India recently reaffirmed its sovereignty over Arunachal Province in southern Tibet, the Chinese Ministry of Civil Affairs announced another batch of 30 names to be used for locations in southern Tibet.

Indian Prime Minister Modi visited Arunachal Pradesh, a province known in China as ‘South Tibet.’ He presided over the opening ceremony of the Sela Tunnel (the world’s longest bi-lane tunnel). This triggered dissatisfaction and protests in China.”

The Chinese Ministry of Civil Affairs announced name changes in the Chinese and Tibetan languages for these 30 places. “It also listed the name category, administrative region, and longitude and latitude for each location. Most of these 30 locations are located on mountain peaks and rivers, and only 11 of them are residential areas.”

“Prior to this, China issued three batches of official name changes for locations in southern Tibet. … However, this batch made the most changes.”

The Indian government immediately issued a statement refusing to accept the name changes, emphasizing that the relevant areas were part of India’s “indivisible” territory. A Chinese Foreign Ministry spokesperson then responded that southern Tibet is part of China’s territory and that the name changes “are completely within the scope of China’s sovereignty.”

Source: CNA, March 30, 2024
https://www.cna.com.tw/news/acn/202403300217.aspx

Briefings | | |   Geo-Strategic Trend