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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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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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RFI: Chinese EVs Flooding Europe, Will Challenge Core German Industries

Radio France Internationale (RFI) reported that “Chinese goods are pouring into European markets, and the first wave of repercussions for German industry has begun to take shape.” Below are some key points from the report:

Within China, sales of electric vehicles (EVs), consumer goods, and industrial products have stalled. State-owned enterprises are facing overcapacity. China’s plan [to alleviate the overcapacity] is to flood the European market with these products.

Products from China no longer just involve steel batteries and solar panels, which dominated the market for years with unparalleled prices. The mechanical engineering industry is another area where China has over-invested, and Chinese goods are now putting greater pressure on European manufacturers. It is said that Chinese manufacturers can produce around 50 million cars annually, but domestic demand may only be as much as 23 million vehicles. China plans to export the surplus to the rest of the world.

In terms of technical specifications, Chinese cars are at least comparable to most German cars, but they are often much cheaper in terms of price. “In the near future, a wave of industrial products may spread from China to Germany.” This is a harbinger for serious issues potentially facing Germany’s core automotive industry. Businesses and policymakers must find new answers to address these challenges.

Source: Radio France Internationale, March 15, 2024
https://rfi.my/AQv7

Briefings | | |   Economy/Resources Geo-Strategic Trend

China Sees Fewer New Unicorn Startups Amid “Contractionary” Policies

Taiwan’s Central News Agency (CNA) recently reported on data from Shandong-based Chinese weekly newspaper Economic Observer, saying that China saw the emergence of only 15 new “unicorn companies” (startups valued at over $1 billion) during 2023. Meanwhile, the United States added 179 unicorns during the same time period.

Lu Ming, executive dean of the China Development Research Institute at Shanghai Jiao Tong University, noted a widening economic gap between China and the US in the digital sector. Although China ranked second globally in terms of number of unicorn companies, with a total of 316 such companies in 2023, the addition of only 15 new unicorns in 2023 represented a sharp decline compared with new unicorn formation in previous years.

Lu cited four reasons for the widening gap between China and the US: technology, talent, capital markets, and policy factors:

  • The US has a strong advantage in generative AI technology and innovation, particularly in language models trained on vast English content.
  • The US remains a talent hub.
  • Foreign capital markets are better at valuing the growth potential of emerging industries, attracting more investment. In contrast, China’s capital markets lack openness and inclusiveness.
  • “While the US government takes a more diversified approach to emerging trends, China sometimes introduces ‘contractionary’ policies. ‘[The Chinese government] is more sensitive to negative sentiments, and uses contractionary policies to avoid problems. This leads companies to become overly cautious, hampering their development and potentially creating vicious cycles.'”

The CNA article went on to say, “Although the [Economic Observer] report did not provide specific examples, China’s recent antitrust crackdown on platform companies and proposed regulations to tighten control over online games have been seen as ‘contractionary policies that suppress industries,’ affecting business expectations and economic growth. Officials have repeatedly stressed the need for caution in introducing contractionary or restrictive measures.”

Source: Central News Agency (Taiwan), March 11, 2024
https://www.cna.com.tw/news/acn/202403110306.aspx

Briefings | | |   Economy/Resources

China’s Top 100 Real Estate Firms See January and February Sales Cut in Half

Shanghai-based Chinese financial news site East Money recently reported that in February 2024, the top 100 Chinese real estate companies suffered a sales volume decrease of 20.9 percent month-over-month. The year-over-year decrease for February was 60 percent. Single-month performance hit the lowest point seen in recent years.

During the period January through February 2024, total sales of the top 100 real estate companies had a year-over-year decrease of 51.6 percent. Among these companies, only 14 had sales exceeding RMB 10 billion (around US$1.41 billion), a decrease of 12 compared with the same period last year; eight companies had sales exceeding RMB 5 billion (around US$705 million), a decrease of 18 compared with the same period last year.

Both central state-owned real estate enterprises and private enterprises have been facing pressure. 38 of the top 50 real estate companies experienced a year-over-year sales decrease of more than 50 percent in a single month. Only one company achieved year-over-year growth in the month of February, compared with seven companies in January.

Source: East Money, March 1 2024
https://finance.eastmoney.com/a/202403012999671120.html

Briefings | | |   Economy/Resources

Lianhe Zaobao: Netherlands Closes Consulate General in Chongqing

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, as China faces difficulties in attracting foreign investment, the Netherlands announced the closure of its consulate in the city of Chongqing. According to the Dutch Embassy in China, the Consulate General of the Netherlands in Chongqing was officially closed on March 1. The Dutch Embassy in Beijing will now handle consular matters in Chongqing, Sichuan, Shaanxi, Yunnan and Guizhou.

An unnamed source quoted a Dutch representative at a gathering of foreign businessmen in Chengdu as saying that the consulate was closed due to the limited Dutch business activities in the region. Data released in mid-February by China’s State Administration of Foreign Exchange showed that China’s foreign direct investment (FDI) growth last year was at the lowest level since the early 1990s; China is facing challenges as it seeks more overseas funding to boost a sluggish economy.

Recent changes in trade relations between China and the Netherlands have been significant. The Dutch intelligence agency issued a report last year saying that China “posed the greatest threat” to the economic security of the Netherlands. The Netherlands recently decided to withdraw the license of Dutch photolithography giant ASML for export of certain products to China, citing concerns over Chinese use of advanced chip-making equipment for military purposes.

Source: Lianhe Zaobao, March 4, 2024
https://www.zaobao.com.sg/news/china/story20240304-1472075

Briefings | | |   Geo-Strategic Trend

2023 Saw Record High Purchases of South Korean Real Estate by Foreigners, 70% Were Chinese

According to a report by Yonhap News Agency on March 10th, data from the South Korean court’s property registration website showed that in 2023, over 15,000 foreign nationals applied for property ownership transfers in South Korea after purchasing real estate, accounting for 0.9% of all property registrations. The number of foreigners earning rental income is also increasing.

When the collection of such data began in 2010, only 4,307 foreigners purchased properties in South Korea, making up just 0.2% of total buyers. However, this number has been rising annually since 2014, reaching a new high last year. Among foreign buyers, mainland Chinese accounted for the largest group at 113,840 or 72.9%. They were followed by Americans (7,892), Canadians (1,627), Taiwanese (521), and Australians (510).

By property type, 12,027 foreigners purchased multi-family housing units, comprising 1.21% of all such buyers. The city of Incheon had the highest proportion of foreign-purchased multi-family housing units at 2.09%, followed by South Chungcheong (1.74%), Gyeonggi (1.68%), Jeju (1.53%), and North Chungcheong (1.21%).

As foreign ownership of Korean properties increases, more foreigners are earning rental income. In 2023, 17,786 rental contracts were signed by foreign landlords, the highest number since collection of such statistics began in 2010.

Source: Sputnik News, March 10, 2024
https://sputniknews.cn/20240310/1057570944.html

Briefings | | |   Geo-Strategic Trend

Hong Kong’s Proposed Article 23 Law Would Sever Foreign Ties, Restrict Information Flow

The Hong Kong government has proposed draft legislation to implement Article 23 of the Hong Kong Basic Law. The proposed law has provisions that increase prison sentences for various crimes if they involve colluding with “foreign forces.” Legal scholars have said that the broad definition of “foreign forces” in the draft, combined with the explicit criminalization of espionage-related activities, forms a stronger “firewall” that could cut off international connections to Hong Kong.

The draft states that “foreign forces” include foreign governments, foreign political parties, overseas organizations pursuing political agendas, and international organizations. “Colluding with foreign forces” refers to cooperating with them or acting under their control or funding. Some crimes would carry heavier sentences if foreign forces are involved.

A new “foreign interference crime” prohibits actions aimed at interfering in policymaking, elections or judiciary operations in Hong Kong using improper means like intentionally making false statements. This is punishable by up to 14 years in prison.

Eric Lai, a research fellow at Georgetown Center for Asian Law, points out that the broad definitions and heavy penalties for collusion appear aimed at severing connections between Hong Kong and overseas entities, impeding the flow of information, resources and funds. The draft also criminalizes illegally obtaining or disclosing state secrets under a broad definition.

Lai argues these measures create a stronger “firewall”, allowing authorities to block outbound information flows on national security grounds while restricting inbound overseas information. Certain provisions also give police powers to restrict detainees’ access to lawyers in national security cases.

Source: Central News Agency (Taiwan), March 12, 2024
https://www.cna.com.tw/news/acn/202403120330.aspx

Briefings | | |   Government/Politics

People’s Daily: Chinese Manufacturing PMI Declined in February

People’s Daily recently reported that, according to data jointly released by the Chinese National Bureau of Statistics and the China Federation of Logistics and Purchasing, China’s February manufacturing purchasing managers index (PMI) was 49.1 percent, down 0.1 percentage points from the previous month.

“The manufacturing industry was in the traditional off-season in February. In addition, the easing of COVID-19 controls means that more employees are returning home for the holidays than in previous years. This has greatly affected the production and operation of [Chinese] companies. The overall activity of the manufacturing industry has declined.”

The production sub-index of the PMI was 49.8 percent, down 1.5 percent from the previous month, reflecting a deceleration of corporate production activities; the new orders sub-index was 49.0 percent, remaining the same as in January. The PMI of large enterprises remained above the critical point, at 50.4 percent, the same reading as the previous month. The PMI for medium-sized enterprises was 49.1 percent, an increase of 0.2 points from the previous month. The small business PMI was 46.4 percent, a decrease of 0.8 percentage points from January. The high-tech manufacturing PMI was 50.8 percent, down 0.3 percentage points from January. The PMIs for equipment manufacturing and producers of consumer goods were 49.5 percent and 50.0 percent, respectively, down 0.6 and 0.1 percentage points from the previous month.

Source: People’s Daily, March 2, 2024
http://finance.people.com.cn/n1/2024/0302/c1004-40187337.html

Briefings | | |   Economy/Resources

Miles Yu Refutes Wang Yi’s “Four Questions” Blasting the US

On March 7, 2024, at the press conference of the Second Plenary Session of China’s 14th National People’s Congress, Chinese Foreign Minister Wang Yi raised four questions challenging the United States. On March 9, 2024, Miles Yu, former Chief China Adviser to the U.S. State Department, refuted Wang Yi’s questions point by point.

  • Wang’s Question #1: “If the United States always says one thing and does another, where is the credibility of [its being] a great power?”

Yu: There is credibility because the U.S. follows international norms, while the Chinese Communist Party (CCP) is self-absorbed and delusional. The CCP’s credibility has long been lost. It has become isolated internationally, turning into a source of risk and conflict. Domestically, everyone is thinking of escaping out of China or lying flat (not doing work anymore). There is no credibility for the CCP.

  • Wang’s Question #2: “If the United States becomes nervous and anxious at the mention of ‘China,’ where is the confidence of [its being] a great power?”

Yu: The American people, the Chinese people, and the whole world are pleased to hear the word “China,” but they become nervous and anxious when they hear “CCP,” because the CCP is an enemy of freedom. “Why does the CCP become nervous and anxious at the mention of the ‘United States,’ which represents freedom and democracy? Where is the confidence of your glorious party?” Yu countered.

  • Wang’s Question #3: “If the United States only seeks its own prosperity and does not allow other countries to develop legitimately, then where is international justice?”

Yu: The development of the CCP is not legitimate and goes against international justice.

  • Wang’s Question #4: “If the United States insists on monopolizing the high-end of the value chain and only allows China to remain at the low end, then what of fair competition?”

Yu: The CCP uses the mechanism of international fair competition to undermine the principle of fair competition, endangering the global free trade system. Not only is the United States vigilant, but the entire global market economy system is also actively working to prevent the CCP’s anti-market behavior and policies.

Source: Epoch Times, March 9, 2024
https://www.epochtimes.com/gb/24/3/9/n14198330.htm

Briefings | | |   @CS US-China Relations