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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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2023 Saw China’s First Net Capital Outflow in Five Years

Amid a slowing economy in 2023, China saw a net outflow of funds from transactions with foreign countries for the first time in five years. Net outflows totaled 68.7 billion yuan. The outflows were driven by shrinking investments by foreign businesses into China as well as by affluent Chinese households’ increased travel and investment overseas.

China saw a net direct investment outflow of 118.5 billion yuan in 2023, the highest figure since 2010. It is unclear whether a bigger portion of this investment outflow resulted from transfers by Chinese firms or by foreign firms operating in China. On the one hand, Chinese companies’ expansion abroad has led to outflows; on the other hand, foreign companies’ downsizing and capital withdrawal from China has certainly contributed. A late-2023 survey of Japanese companies operating in China found that nearly 50% of respondents either reduced or did not expand 2023 investments in China compared with 2022. The number of foreign manufacturing and foreign industrial companies in China fell in November 2023 to its lowest level since November of 2004, dropping 0.4 percent compared with the same period in 2022.

China’s stock market hit new lows in late January 2024, down nearly 20% from the 2023 market highs. Meanwhile, feverish trading in foreign exchange-traded funds (ETFs) linked to the Nikkei and U.S. indices has led to a temporary suspension of those ETFs’ trading within China.

Following the end of Beijing’s zero-COVID policy in January 2023, affluent Chinese households increased their investment and travel overseas. This contributed to 2023’s capital outflows. The trend of capital flight from China persists in 2024.

China’s ability to attract foreign capital has weakened as the economy has slowed. The government faces challenges in restoring confidence and financial inflows. Ebbing confidence in China’s economic progress is reflected in the country’s investment outflows, foreign corporate downsizing, Chinese travel and investment abroad, and ongoing capital flight.

Source: Nikkei, January 25, 2024
https://zh.cn.nikkei.com/china/ceconomy/54665-2024-01-25-09-53-18.html

Briefings | | |   Economy/Resources

China Leads in Genetic Modification and Cloning of Monkeys

China is leading the world in terms of research on genetic modification and cloning monkeys, aiming to improve scientific understanding of human evolution and disease. In 2023, Chinese researchers published studies on monkeys whose genomes had been modified by adding human brain genes; these monkeys demonstrated better memory abilities compared to unmodified monkeys. The research could help explain millions of years of human evolution and the separation of humans from other primates. The experiments have raised some ethical concerns in the West.

In recent years, China has invested heavily in primate research at both the national and local levels, to the tune of 600 million euros. The country aims to establish monkey models of human diseases. The number of genetically modified monkeys remains small, however, as creating transgenic animals is a costly procedure. According to Pierre Savatier, a researcher at the French National Institute of Health and Medical Research, such a procedure costs around 1 million euros per animal. Although cloning can save some time, it is still a very expensive procedure with low success rates.

Some Western experts argue that, despite China’s demonstrated technological advances in genetic modification and cloning of primates, the scientific results of such experiments have been limited. Roger Le Grand, who leads the principal non-human primate lab at the French Atomic Energy Commission, noted that initial stages of transgenic mouse research were quote laborious before the associated techniques eventually became routine. Pierre Savatier commented that establishing stable lineages of genetically modified monkeys would take at least a decade.

Realizing pharmaceutical profits resulting from primate models would likely take 20-30 years. Currently, China is the only country devoting infrastructure and resources to support such long-term research. Public opinion in the U.S. and Europe generally opposes animal testing; China’s bets in this area, made “at the highest political levels,” are not being matched in Western countries.

Source: Radio France International, January 24, 2024
https://rfi.my/AHaD

Briefings | | |   Economy/Resources

Crackdowns on Comic Conventions Highlight China’s Suppression of Japanese and Western Cultural Influence

Several comic conventions and video game events in China have recently been canceled, including the Qingdao Comic Con, the Zibo comic show, the Qingdao AS New Year’s Party, and miYoSummer 3. The cancellations appear to be due to government restrictions and censorship targeting Japanese and Western cultural influences.

The Qingdao Comic Con scheduled for mid-February was canceled just weeks before the convention’s scheduled start. The cancellation followed online backlash in China criticizing the event for promoting Japanese culture and anime. The organizer cited “safeguarding visitor safety” as the reason for cancellation. The Qingdao AS New Year’s Party, scheduled for early February, faced similar pressure after recent public fomentation over comic shows, leading authorities and organizers to indefinitely postpone the event. Staff from the Zibo comic show said authorities ordered a stop to Shandong province’s animation exhibitions during the Chinese Spring Festival. HoYoverse, scheduled for summer 2024, also abruptly canceled its popular miYoSummer video game show in January.

Interviewees attribute the cancellations to government crackdowns reinforcing nationalistic boycotts of Japanese culture in particular. Some pointed out an incident in 2022 involving a Nanjing temple honoring Japanese war criminals which sparked widespread anti-Japanese sentiment and comic show cancellations last summer. Rigid over-enforcement is also exacerbated by the CCP’s culture encouraging government orders cascading down to the grassroots level.

Source: Radio Free Asia, January 24, 2024
https://www.rfa.org/mandarin/yataibaodao/kejiaowen/gt2-01242024052706.html

Briefings | | |   Social Stability

Xinhua: Chinese Scholar on Three New Characteristics of the U.S.’ China Policy

Su Xiaohui, Deputy Director of the American Research Institute at the China Institute of International Studies, delivered a keynote speech via video at Xinhua News Agency’s 14th “Discussing World Affairs” International Symposium on January 9, 2024. Su believes that the U.S. continues to view China as its “primary competitor” and “the most significant geopolitical challenge [facing the U.S].” According to Su, the U.S.’ recent policy on China exhibits three new characteristics:

  • Firstly, U.S. policy on China “has been forced to return to some degree of rationality.” Su suggests that “in 2023, the U.S. gained a clearer understanding of China, realizing that it cannot easily suppress or defeat China and that it thus must accept ‘peaceful coexistence.'” Also, “the U.S. recognizes that the China-U.S. relationship not only affects the two nations in question but also influences the overall international situation. The international community hopes for overall stability in the relations between these two major powers, and that relations [between the powers] will not get out of control.”
  • Secondly, the U.S. “has recognized the necessity of cooperation with China.”
  • Thirdly, U.S. policy is now along the lines of “contain China while engaging with China.” Su said that U.S. pressure on China is now “done via provocations through various means and on various levels,” and that in competing with China “the U.S. aims to precision-strike China while reducing the blowback on itself.”

Su also mentioned that China should “be cautious of U.S. attempts to use intergovernmental communication mechanisms for its own benefits or for fostering strategic competition. The U.S. believes that, by communicating with China about arms control, it can pull China into certain arms control treaties and thereby impose restrictions on China. This would enable the U.S. to ‘win without fighting.’ But China should not allow the U.S. to weaken it via such a low-cost approach.”

Source: Xinhua, January 12, 2024
https://app.xinhuanet.com/news/article.html?articleId=75adb2d947c23b8e9a06a8309ef97a03

Briefings | | |   US-China Relations

Beijing Pushing Mid-to-Long-Term Investor Funds into Stocks to Support Chinese Stock Market

China’s stock market performed poorly in 2023. To help buoy the stock market, Beijing has increased its efforts to “introduce mid-to-long-term into the market.”

People’s Daily reported that Lin Xiaozheng, Deputy Director of the Department of Supervision of Securities and Fund Institutions at China’s Securities Regulatory Commission (CSRC), stated at a press conference that the CSRC will make greater efforts to introduce more mid-to-long-term funds into the market. Lin mentioned that, in recent years, “the CSRC has vigorously developed equity funds and actively promoted various mid-to-long-term funds’ participation in the capital market, achieving phased results. As of the end of 2023, various professional institutional investors, including social security funds, public funds, insurance funds, and pension funds, collectively held 15.9 trillion yuan of A-shares [in the Chinese stock market], doubling the amount held in early 2019. Their stock ownership ratio increases from 17% to 23%. These institutions have become a significant force in promoting the stable and healthy development of the capital market. Among them, public funds held 5.1 trillion yuan of A-shares, and stock ownership ratio increased from 3.8% to 7.3%, making them the largest professional institutional investor in A-shares.”

Source: People’s Daily, January 13, 2024
http://finance.people.com.cn/n1/2024/0113/c1004-40158192.html

Briefings | | |   Economy/Resources Government/Politics

People’s Daily: China’s Largest Corporation of Foreign Culture Performing Arts is Making Connections Abroad

People’s Daily Online interviewed Li Jinsheng, the Communist Party Secretary and Chairman of China Arts and Entertainment Group. Below are some excerpts from the interview:

“Established in 2004, China Arts and Entertainment Group originated from the China Foreign Performance Company and the China Foreign Art Exhibition Center, founded in 1957 and 1950, respectively. Over the past 70 years, especially in the nearly 20 years since its formation, China Arts and Entertainment Group has been dedicated to engaging in cultural exchanges, telling China’s stories, and spreading the country’s voice abroad.”

“As the largest and only state-owned enterprise specializing in foreign cultural exchanges, the group aligns its work with the country’s diplomatic priorities. One significant aspect is coordinating cultural activities in conjunction with major national events. Incomplete statistics show that, since 2013, the group has organized over 70 cultural performances and exhibitions in support for China’s major diplomatic activities.”

“In October 2016, under the guidance of the former Ministry of Culture, the Silk Road International Theatre Alliance was formed. As of today, the alliance has 155 member units from 45 countries and regions, including 83 overseas members and 72 domestic members. Since its establishment, the alliance has played an active role in information exchange, personnel exchanges, and collaboration in performance production among theatre members. It has fostered long-term and deepened cooperation in the field of performing arts with countries participating in the Belt and Road Initiative.”

Source: People’s Daily, November 7, 2023
http://www.people.com.cn/n1/2023/1107/c32306-40112644.html

Briefings | | |   Economy/Resources Geo-Strategic Trend

Economist: Pensions of China’s Rural Elderly Only a Few Dozen Dollar Per Month

On January 8, 2024, Lu Ting, Chief Economist of Nomura Securities in China, spoke at the 46th Tsinghua University Forum on China and the World Economy. According to Lu, China’s 170 million rural-area retired pensioners over age 60 receive an average monthly pension of only a little over 100 Yuan (US$14), with the majority not receiving more than 300 Yuan (US $41) per month. Lu mentioned that there is a vast disparity between the pensions of this group and those of retired department-level cadres, some of whom receive 70 to 100 times as much in their pensions.

Source: Epoch Times, January 11, 2023
https://www.epochtimes.com/gb/24/1/11/n14155803.htm

Briefings | | |   @CS Economy/Resources

Chinese Student Barred From Canada Over Espionage Concerns

The Federal Court of Canada has barred Chinese student Yuekang Li from entering the country, citing “potential espionage risk.” Li, born in 1998, obtained a bachelor’s degree in mechanical engineering from Beihang University, a Chinese university with strong ties to Chinese military, in 2020. In 2022 he completed a master’s degree in mechanical engineering at the U.S.A’s North Carolina University (via remote study due to COVID restrictions). After graduation, the U.S. rejected Li’s visa application. Li was subsequently admitted to a Ph.D. program at the University of Waterloo in Canada in April 2022.

Li’s application to the Canadian government for a student visa was rejected by Canadian immigration authorities after a lengthy background check, citing the potential for future espionage activities harmful to Canadian interests. Li applied for a judicial review from the Federal Court of Canada. The court supported the immigration authorities’ decision, emphasizing non-traditional espionage strategies of the Chinese government that make use of Chinese international students. The judge highlighted Li’s graduation from a university associated with the defense industry in China as well as the strategic importance of Li’s chosen field.

While lacking hard evidence that Li has been involved in espionage, the Canadian court’s decision takes into account the change of potential future activities by Li which could harm Canada’s interests. The court ruling underscores concerns in Canada about China’s use of students as an intelligence gathering mechanism.

Source: Voice of America, January 10, 2024
https://www.voachinese.com/a/vancouver-landmark-espionage-ruling-canadian-court-bars-chinese-student20240109/7432713.html

Briefings | | |   Defense/Military Geo-Strategic Trend