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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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Xinhua: China Reached 100 GBPS Inter-Satellite Communication Speed

Xinhua News Agency reported that Changguang Satellite Technology Co., Ltd. has successively completed high-speed inter-satellite laser communication tests at rates of 10 gigabits per second (GBPS) and 100 GBPS. During stable link establishment, the communication bit error rate was 0. The satellite also successfully transmitted high-resolution remote sensing images between satellites, marking China’s first achievement of inter-satellite laser communication at a super-high speed of 100 GBPS for high-resolution remote sensing image transmission. According to Xinhua, the satellite company has also developed technology for high-speed communication between satellites and ground stations on earth.

Source: Xinhua, January 11, 2023
http://www.news.cn/20240111/c6a4ea092bec415aaf65fa577df4b576/c.html

Briefings | | |   Information/Technology

Lianhe Zaobao: Hyundai Motor Sells Chongqing Factory at Half Price

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that South Korea’s Hyundai Motor Co.’s joint venture in China sold its factory in Chongqing for RMB 1.62 billion (around US$227.6 million), less than half the original asking price from when the factory was originally put up for sale in August of last year. Hyundai faces fierce price competition and slowing demand in China.

The factory started operations in August 2017 and is the second factory sold by Hyundai Motor in China. In addition to the recent sale, Hyundai Motor sold a Beijing-based factory in 2021. There are now three remaining Hyundai factories in China, down from five at the peak.

Hyundai said the sale was a move to optimize its business structure in China, aiming to shift focus from the volatile Chinese market to other Asian countries such as India and Indonesia. As China rapidly transitions to electric vehicles, South Korean carmakers Hyundai and Kia are facing difficulties in their China strategies. China is the world’s largest auto market. It’s worth noting that sales in the Chinese market accounted for only five percent of the two companies’ total global sales in the third quarter of 2023.

Source: Lianhe Zaobao, January 17, 2024
https://www.zaobao.com.sg/realtime/china/story20240117-1462659

Briefings | | |   Economy/Resources Geo-Strategic Trend

HKEJ: Dimon Said China’s Risk-Reward Profile Has Changed Dramatically

Hong Kong Economic Journal (HKEJ) recently reported that JPMorgan CEO Jamie Dimon said China has been “very consistent” in opening its markets to financial services companies, but calculating the potential benefits for U.S. companies has become more complicated. In an interview with CNBC at the World Economic Forum in Davos, Dimon said investors that are considering expanding into China have to be “a little worried.” He added that he met with Chinese Premier Li Qiang on the sidelines of the Davos conference and “it’s a good thing they’re here.”

In the wide-ranging interview, Dimon also talked about the U.S. economy. In recent months, Dimon has repeatedly said that inflation may not disappear as quickly as the market expects, and that the Fed may have to further raise the benchmark interest rate. He said it would be a mistake to think that the future is all bright given that the U.S. already had so much fiscal and monetary stimulus — he would remain cautious.

Source: HKEJ, January 17, 2024
https://www2.hkej.com/instantnews/article?id=3664469

Briefings | | |   US-China Relations

Mingpao: Moody’s Downgrades China’s Four Major Distressed Asset Management Firms

Mingpao, one of the primary Hong Kong newspapers, recently reported that rating agency Moody’s has just downgraded the credit ratings of the four major Chinese non-performing asset management companies.

  • Huarong’s (HKSE 2799) long-term issuer rating was downgraded by one notch to Ba1, a non-investment grade commonly known as junk level. The rating outlook for Huarong remained negative.
  • Moody’s also downgraded Oriental Asset Management by one level to Baa2.
  • Cinda (HKSE 1359) fell below A3 and was downgraded by one level to Baa1, the same rating as Huarong. The downgrade reflects continued tension in the Chinese real estate market and slowing economic growth. There is pressure on Cinda’s asset profitability, asset quality and capital position.
  • Moody’s also downgraded Great Wall Asset Management’s long-term credit rating by one notch to Baa3, just one notch above junk status. This was mainly due to Great Wall’s continued major deficiencies in corporate governance and pressure on its capital position – they delayed the release of the 2022 annual performance report.

The other two major rating agencies, S&P and Fitch, also downgraded the credit ratings of China’s four major asset management companies in September of last year and January of this year, respectively. According to the Mingpao article, there is a lack of sustainability and transparency in supporting asset management companies that have suffered large losses and capital erosion. Moody’s expects that Chinese officials will prioritize resources to support state-owned enterprises.

Source: Mingpao, January 20, 2024
http://tinyurl.com/mr23wrr5

Briefings | | |   Economy/Resources US-China Relations

China Obtains 99 Year Lease on Myanmar Port After Brokering Regional Ceasefire

China has obtained rights to a Port in Kyaukpyu, Myanmar for 99 years after Beijing negotiated a ceasefire between the Myanmar government and an armed alliance of opposition groups. The Kyaukpyu Port will give China a logistical presence on the Indian Ocean, enabling bypass of the Malacca strait shipping route. Some have said that Beijing supported the opposition group in Myanmar so as to pressure Myanmar’s government.

The past few months’ conflict in Myanmar started with three armed groups in northern Myanmar (the Kachin, the De’ang, and the Shan) banding together to form a “Myanmar Alliance Army.” The group launched attacks against Myanmar’s government forces in the name of “rescuing Chinese people and combating electronic fraud.” The alliance army secured a series of victories against the Myanmar government army, taking some territory.

On January 10th and 11th, China successfully brokered a ceasefire agreement between the two sides. The deal was struck in Kunming City, Yunnan Province, China. As part of the agreement, Beijing demanded that the Myanmar government enter a contract leasing Myanmar’s Kyaukpyu Port to China for 99 years. Having suffered defeats in the field, the Myanmar government had no choice but to cede use of the port.

According to the Aboluo website, Beijing provided support to the Myanmar Alliance Army in the form of advanced weapons, communication equipment, and drones. There were also rumors that Chinese soldiers dressed as members of the alliance army and fought some of the battles against the Myanmar government’s military. Aboluo commentary suggests that China supported the armed opposition in Myanmar not to “stop electronic fraud crime rings in Myanmar” but rather to secure use of the port in Kyaukpyu.

The Kyaukpyu Port is situated on the Indian Ocean; it may well become the best seaport serving the southwest and central regions of China. Its use will significantly reduce China’s dependence on shipping routes through the Strait of Malacca, making it easier for China to import and export to the global market directly via the Indian Ocean.

Beijing proposed a development plan for Kyaukpyu Port as early as 2007 under its “Belt and Road Initiative,” aiming to establish a land-sea transportation network connecting Kyaukpyu to China’s Kunming city via railways and highways. Negotiations between Beijing and Myanmar went on for 12 years. China and Myanmar signed a 50-year lease agreement for the port in 2018, but this agreement fell apart when Myanmar’s current leader Min Aung Hlaing came to power in a 2021 military coup.

Source: Aboluo, January 15, 2024
https://www.aboluowang.com/2024/0115/2004525.html

Briefings | | |   @CS Defense/Military Geo-Strategic Trend

Commentator: Local Government Debts Driving Chinese Market Decline

Lao Man (老蛮), a well-known Chinese Internet commentator, posted on the X platform about why China’s stock market keeps losing money:

“Local governments [in China] have been approved to issue 2.7 trillion yuan (US$ 380 billion) in bonds, and issuance of these debts is now underway. This is the fundamental reason for the continued decline in the stock market, draining over 20 billion yuan from the stock market every day.

In 2024, the most important economic factor [in China] is the local government debt. Keep an eye on it; it is the underlying factor behind all economic phenomena.”

Source: Twitter, @laomanpindao

Briefings | | |   Economy/Resources

People’s Daily: A New Form of Warfare Has Emerged, China Must Keep Up

People’s Daily published an article asserting that a new form of warfare is emerging in the modern era, calling for China to become familiar with the new modes of battle. “There are new rules on battlefield, rules of information and intelligence. Those who can lead in this new setting will seize victory. … There are some who claim to fight against us in a high-level war. That ‘high-level war’ refers to a new form of warfare, with new rules and new styles. It no longer relies on our traditional advantages, but rather on technological warfare, informational warfare, and hybrid warfare.”

The article went on to analyze recent military trends: “Recent regional wars have demonstrated new developments in hybrid warfare and proxy warfare. Various forms of combat, such as unmanned warfare, cognitive offense and defense, intelligence gathering, and force deployment, are emerging as crucial variables influencing the course of conflict. Especially in modern warfare, combat formations are shifting from being ‘people-based’ to being ‘machine-based,’ and the mode of engagement is transitioning from ‘human-in-the-loop’ to ‘human-out-of-the-loop.'” (Editor’s note: the term “human-out-of-the-loop” may refer to increased use of unmanned vehicles/drones in combat, or perhaps to the rise of automated systems that can engage targets without input from a human pilot.)

“In the intelligence era, future battlefields will expand from traditional domains such as land, sea, air, space, and electronics to new realms including information, algorithms, cognition, and more. This change will manifest in characteristics such as spatial expansion [of war], the intertwining of multiple domains, and multi-dimensional interaction, making for an extremely complex battlefield environment. All of this is inseparable from scientific and technological development. Those who possess a scientific and technological advantage will have the upper hand on the battlefield.”

Source: People’s Daily, January 8, 2024
http://military.people.com.cn/n1/2024/0108/c1011-40154565.html

Briefings | | |   Defense/Military

People’s Daily on Recent Financial Cooperation Between China and Arabic Countries

CCP newspaper People’s Daily has published a list of ways that China has been cooperating with Arabic countries recently.

  • Starting on January 1, 2024, Saudi Arabia, Egypt, the United Arab Emirates (UAE), Iran, and Ethiopia officially became members of the BRICS countries, increasing the total number of BRICS member countries from 5 to 10. Abdullah, the Minister of Economy of the UAE, stated that there would be additional capital injection into the BRICS Development Bank.
  • On November 28, 2023, China People’s Bank and the UAE Central Bank renewed their Renminbi/Dirham Bilateral Currency Swap Agreement, valid for 5 years, with a swap scale of 35 billion RMB/18 billion UAE Dirhams.
  • In November 2023, the People’s Bank of China signed a bilateral currency swap agreement with the Saudi Central Bank, with a swap scale of 50 billion RMB/26 billion Saudi Riyals. The agreement is valid for 3 years and can be extended with mutual consent.
  • In October 2023, the China Export-Import Bank signed a cooperation agreement with the African Bank of Morocco. Both parties will “actively promote economic and trade exchanges and financial cooperation through project financing, parallel financing, and trade financing.”
  • The Chinese Ambassador to Saudi Arabia, Chen Weiqing, said that as of 2023 the China’s Export-Import Bank and the National Bank of Saudi Arabia have successfully implemented the first RMB loan project [to Saudi Arabia]. The Bank of China and the Industrial and Commercial Bank of China have also opened branches in Saudi Arabia.
  • The 2023 International Maritime Awards ceremony was held in Shanghai, where the COSCO Shipping Ports’ Abu Dhabi Terminal won the “Port Terminal Innovation Award.” The terminal was jointly constructed by COSCO Shipping Ports and the Abu Dhabi Ports Authority, with support from China’s Silk Road Fund. Since opening in 2018, the terminal has established direct connections with 65 ports worldwide. Its container throughput exceeded 1 million standard containers in 2022.
  • On October 30, 2023, the China Development Bank completed the full disbursement of a 7 billion RMB loan agreement with the Central Bank of Egypt.
  • On October 9, 2023, the China Export Credit Insurance Corporation issued the first medium-to-long-term insurance policy for a “new energy power” financing project, providing medium-to-long-term export buyer credit insurance support for the “Manna 2” 500 MW photovoltaic power (solar power) station project in Oman. In the same month, the performance test for Unit 4 of the Hassyan Power Station project in Dubai was successfully completed, marking the commercial operation of all 4 units at that power station. The power station was jointly financed and constructed by China’s Silk Road Fund, the Harbin Electric Group, and UAE investment institutions, representing the first investment of the Silk Road Fund in the Middle East.
  • The Industrial and Commercial Bank of China recently held a bond listing ceremony at the Nasdaq Dubai Exchange. The “green bonds” issued by the bank were simultaneously listed on stock exchanges in Hong Kong, Dubai (UAE), Singapore, and Luxembourg, with a total issuance size of approximately USD 2 billion.
  • In November 2023, Shanghai Stock Exchange signed a “memorandum of understanding for cooperation” with Dubai Financial Market. Both parties “plan to jointly explore and develop financial products related to ESG (environmental, social, and corporate governance) and sustainable development, as well as cross-border indices, exchange-traded funds (ETFs), and other financial products.”

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Briefings | | |   Economy/Resources Geo-Strategic Trend