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HK01: MSCI Removes 66 Chinese Companies From Indices

HK01, a popular Hong Kong-based online media network, recently reported that finance company MSCI removed 66 Chinese stocks from its benchmark China Index and its All Country World Index during the latest MSCI quarterly review. The move by MSCI comes as Mainland China and Hong Kong stock markets plummeted, losing trillions of dollars in market value from their peak in 2021.

Most of the removed companies are in the real estate, pharmaceuticals, internet, and aviation sector. Specific names removed including famous companies such as Weibo, China Southern Airlines, Ping An Healthcare and Technology, as well as real estate developers Gemdale Group and Greentown China. The number of Chinese companies removed was the greatest seen in at least two years. The removals will be effective from the close of trading on February 29, 2024.

China’s weight in global investment portfolios has fallen significantly as China’s real estate industry sinks further into crisis, Chinese consumer spending continues to weaken, and alternative emerging markets such as India continue to perform well. Some experts expressed that MSCI’s stock removals highlight how money is moving out of Chinese equities as investors reduce their exposure. Such investor behavior is largely due to recent weakness in Chinese market fundamentals, ongoing financial instability, regulatory uncertainty, and concern over national-level risks.

Source: HK01, February 14, 2024
http://tinyurl.com/5t2te57y

Guangming Daily Editorial: “The Economic Landscape in China Is Most Uniquely Beautiful”

Xi Jinping delivered a Lunar New Year address on February 8, comparing China’s economy last year to a beautiful landscape: “the [economic] scenery here [in China] is uniquely beautiful” (“风景这边独好”).

On February 10, Guangming Daily published an editorial propaganda piece titled “Living Better Days!” aiming to substantiate the idea that China’s economic “scenery” in the best in the world. Here is a key paragraph from the piece:

“You see, we decisively implemented a transition from the COVID-19 epidemic prevention and control  phase [to an open society]. The bustling streets and the prosperity of markets tell us that we have come through that difficult period. Agricultural production has again reached new highs: the rumbling of machinery and the reaping of silver sickles proclaim that we have achieved twenty consecutive years of abundant harvests. The vitality of strategic emerging industries can be seen in [the country’s] continuous breakthroughs in technological innovation, in the rapid formation of new productive forces, and in the total export of the “three new industries” (electric vehicles, lithium batteries, and solar cells) having surpassing one trillion yuan (US$ 140 billion). Despite the continued global economic downturn, we have still sent out 17,000 China-Europe freight trains and generated 126 trillion yuan in total economic output. ‘The economic scenery on China’s side is uniquely the best’ – this is the declaration that we have sent out to the world.”

Source: Guangming Daily, February 10, 2024
https://news.gmw.cn/2024-02/10/content_37142995.htm

Chinese Netizens Mock CCP’s Staged Picture

China News Service, one of the Chinese Communist Party’s (CCP) mouthpieces, released a short video on the X delivering a propaganda message about “soldiers guarding the border despite being covered in frost.” Sharp-eyed netizens discovered discrepancies in the picture and concluded that it must have  been staged. The posting was circulated widely on social media, attracting numerous onlookers and much ridicule.

Here are some comments that were posted in response to the China News Service tweet:

  • “With so much snow, why is there not a single snowflake on the railing? And the clothes and guns are also clean. Besides staging scenes to stir up people’s emotion, does the CCP’s Propaganda Department have any other specialties? 😂”
  • “Why is there only frost on the face and hat, while the rest of the body and the gun have none?”
  • “Would anyone be stupid enough to let frost accumulate on their face like this? 🤣🤣🤣🤣🤣 Sigh… (the media) loves to act…”
  • “The eyes are covered, why not clean them? How can they detect enemy movements?”
  • “It’s fake, staged! The necks of these two individuals are exposed. In temperatures of minus ten degrees, if we go by the amount of frost on the masks, their necks would have frozen to death already.”

Source: Aboluo, February 11, 2024
https://www.aboluowang.com/2024/0211/2016719.html

Guangming Daily: China Working With Global South to Reshape World Order

Guangming Daily published an article commenting that the Global South countries have been playing an increasing role in reshaping the world order. The following are some highlights from the article:

“The 3rd Summit of the Group of 77 and China concluded on January 22, 2024, in Kampala, Uganda, drawing attention to the Global South’s efforts in reforming the international order. … The concept of the “global South” has gained prominence, impacting global politics, economics, and culture significantly.”

“Firstly, the rise of the Global South has shifted the global power structure,” with the BRICS representing Southern countries “becoming an influential force on the international stage. … Secondly, it has diversified global development patterns. … Thirdly, it has introduced cultural and ideological diversity.”

“Southern countries are increasingly striving for a leading role in international affairs through participation in international organizations and advocating multilateralism, aiming to ensure international rules better reflect global diversity and interests. The 2023 Summit of the Group of 77 and China adopted the Havana Declaration, advocating for increased representation of developing countries in global decision-making bodies and promoting a more inclusive and coordinated global economic governance framework. China’s efforts in building a community with a shared future for humanity were reflected in the Declaration, highlighting China’s role in reshaping the international order.”

“China’s extensive diplomacy and cooperation with Southern countries, including aid to over 160 countries, the Belt and Road Initiative with over 150 countries, and various multilateral platforms such as the China-ASEAN Cooperation Mechanism, the Forum on China-Africa Cooperation, the China-CELAC Forum, and the China-Arab States Forum” demonstrate its commitment to South-South cooperation and to the elevation of the Global South’s role in reforming international order.

Source: Guangming Daily, January 29, 2024
https://news.gmw.cn/2024-01/29/content_37116113.htm

China’s Pension Funds Struggle with Widespread Losses amid Stock Market Slump

China’s pension-targeted funds, which aim to provide stable returns for retirement savings, have seen continued poor performance over the past year with widespread losses. Data from Wind shows there are currently 462 such funds in China. Of the 345 funds established before 2023, only 35 (10.14%) have realized positive returns over the last year. Additionally, only 11 funds achieved returns above 1% over the past year, while 34 funds saw returns decline by more than 10%. Seven funds have even been liquidated.

China’s pension-targeted funds experienced rapid growth after the first batch was approved for issuance in August 2018. However, since the beginning of 2022, performance has declined dramatically, a situation which has not improved in 2023.

According to a senior Chinese public fund researcher, the poor returns of China’s pension funds is largely due to the overall weak stock market, which has severely impacted pension funds. This highlights the factor that must be recognized – China’s pension-targeted funds are heavily tied to the performance of the broader financial markets. With the markets performing poorly over the past year, China’s pension funds have unsurprisingly also struggled to generate positive returns for retirement savers.

Source: Radio Free Asia, February 12, 2024
https://www.rfa.org/mandarin/Xinwen/3-02122024104433.html

BASF Withdraws from Xinjiang Joint Ventures After Reports of Human Rights Abuses

German chemical company BASF announced on February 9th that it will withdraw its stake from two joint ventures in Xinjiang, China after human rights groups accused its local partners of participating in the crackdown on ethnic minorities. The two joint ventures are Xinjiang Markor Chemical and Markor Meiou Chemical. BASF says it initiated the sale in late 2023 for other reasons but will now accelerate the process, subject to local approval.

In its statement, BASF said recent allegations indicate the joint ventures were engaged in activities inconsistent with BASF’s values. The two ventures employ about 120 people locally, with BASF holding roughly half the shares. Markor Chemicals produces butanediol, used to make fibers, plastics and rubber.

Last week, reports revealed Markor and its employees were directly involved in surveillance and repression of Uyghurs by the Communist Party, leading to arrests. BASF said it was unaware and does not condone such actions, emphasizing they only involve its partners, not BASF itself.

Human rights groups have long accused China of systematically cracking down on Uyghurs in Xinjiang by sending over a million to detention camps for “re-education.” Beijing denies this, claiming it is combating extremism.

Several Western companies like Volkswagen operate in Xinjiang. VW recently said a third-party investigation found no evidence its factories use forced labor after facing such allegations.

BASF stated that despite withdrawing from Xinjiang, its other China businesses will continue normally. It is spending $10 billion on a new production base in Guangdong province. The company says it remains fully committed to its investments in China.

Source: Deutsche Welle, February 10, 2024
https://p.dw.com/p/4cFeL

China Developing Integrated Antenna-Solar Satellites to Enable Cell Phone Connectivity with Space Networks

Chinese satellite internet startup GalaxySpace is developing a new generation of communication satellites with advanced technologies to support direct connections from satellites to cell phones, according China’s official Xinhua news agency. These satellites integrate phased array antennas and solar panels into a “wing array” design that greatly reduces satellite size and cost.

The key “wing array integration” technology hides the antenna within the solar wings. By unfolding the wings and antennas together in a two-dimensional plane spanning several square meters, GalaxySpace can reduce the volume satellites occupy in space while improving network efficiency.

Continued research aims to enable highly efficient cooling and distributed power supply for the integrated wing array satellites. This new compact, power-efficient design will facilitate affordable large-scale satellite constellation networks.

China has now designated commercial spaceflight as a strategic emerging industry after it was included in the 2023 Central Economic Work Conference. Flexible high-efficiency solar wings make possible satellites with abundant onboard power. Accelerated satellite infrastructure development is enabling ambitious space-based global information networks.

GalaxySpace Chief Scientist Zhang Shijie stated that direct satellite-to-cell phone connectivity will likely be an essential component of 6G networks. He said GalaxySpace will drive further innovation in low-cost, high-performance satellites for intelligent omnipresent space networks that integrate communication, computing, and sensing capabilities.

Source: Xinhua, February 12, 2024
http://www.xinhuanet.com/20240212/3f562115eeb44efa9f5f382883b9bcad/c.html

People’s Daily: Party Leadership on Culture Vital to Fate of Party and Nation

People’s Daily published an article on “adhering to the Chinese Communist Party’s (CCP’s) leadership on culture and ideology.” The following are some highlights:

Adhering to the Party’s cultural leadership is vital to the future and destiny of the Party and the country. “To adhere to the correct way is to fundamentally uphold Marxism’s guiding position in the ideological realm, and to uphold the CCP’s cultural leadership and the unique identity of Chinese culture.”

Since the 18th CCP National Congress, the Party’s Central Committee with Xi Jinping at its core has stipulated that the Party must manage propaganda, ideology, and media. This means adhering to the principle that [the CCP] politicians should run the newspapers, journals, radio, television, and news websites.

“Our comrades must enhance their awareness of the [ideological] battleground. If we do not occupy these grounds, others will,” Xi Jinping emphasized.

To firmly uphold the Party’s leadership over ideological work, the most basic and crucial thing is to firmly control, with our own hands, the fields of ideology and public opinion. The Party’s propaganda and ideological department “must shoulder responsibility for, be accountable to, and fulfill their duties to” their respective territories.

To guard our positions, the Party and its officials must dare to struggle and be adept at it. Nowadays the struggle in the field of ideology is increasingly sharp and complex. Xi Jinping emphasized that “comrades on the ideological and propaganda front should be warriors, not gentlemen. They should not be neutralists or opportunists who will pick the winning side. There is no room for compromise or concessions in the struggle over ideology.”

Source: People’s Daily, January 23, 2024
http://dangjian.people.com.cn/n1/2024/0123/c117092-40164528.html