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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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Mitsubishi Motors to End Car Production and Sales in China

The Japanese Mitsubishi Motors Corporation announced on October 24th that it will end production of vehicles in China, and that it will end car sales in China once the company’s existing inventory is depleted. The company’s decision was driven by the rapid rise of local Chinese electric vehicle (EV) companies (negatively impacting Mitsubishi’s own EV car sales) as well as the downturn in sales of Mitsubishi’s gasoline cars.

Mitsubishi’s board of directors has finalized the withdrawal from China; the company’s 2023 fiscal year statements will include a 24.3 billion yen (approx $172 million) special loss from the departure. Going forward, Mitsubishi intends to focus its resources on the market in Southeast Asian.

Mitsubishi launched a new Outlander hybrid vehicle in China in December 2021 but sales fell short of expectations. From January to August 2022, Mitsubishi’s sales in China almost halved, dropping 47.6% year-over-year. Besides Mitsubishi, other Japanese automakers are also lagging in terms of EV sales within China. Local giant BYD and Tesla dominate China’s EV market. Research firm MarkLines stated that in 2022, Chinese automakers accounted for 51% of passenger car sales within China, while Japanese automakers had only an 18% share of the market.

Mitsubishi’s joint venture GAC Mitsubishi Motors and its plant in China’s Hunan Province, which produced gasoline vehicles, stopped production in March. Mitsubishi will sell its shares in the joint venture and dissolve the partnership, though Mitsubishi’s other joint ventures in China will continue engine production.

Source: Kyodo News, October 24, 2023
https://china.kyodonews.net/news/2023/10/db6e9f1790e0.html

Briefings | | |   Geo-Strategic Trend

CCTV: Beijing Cracks Another U.S. Spy Case

State broadcaster China Central Television (CCTV) said in a special program that an employee of a Chinese defense company was coerced into revealing Chinese state secrets while he was a visiting scholar at a U.S. university in 2013. The employee, named Hou, was then developed into a spy for the U.S., according to the report. Hou was arrested for espionage. CCTV’s coverage of his case highlights Beijing’s desire to steer public sentiment in China regarding Chinese state security and involvement with the U.S.

CCTV said that a professor in the U.S. introduced Hou to someone claiming to work for a consulting firm, and that this person was actually a U.S. intelligence officer. Over time, the intelligence officer cultivated a close relationship with Hou and paid him to provide information about China. Although Hou acted under duress, he was arrested in July 2021 by Chinese authorities and charged with espionage. The report stated that Hou has now been sent to stand trial, and that the case was a major security breach engineered by the U.S.

The CCTV program said that “any acts jeopardizing China’s security would be punished” and that China’s Ministry of State Security had issued a reminder that espionage often involves deception. The program did not name the university that Hou visited, nor did it name his work unit.

Source: Radio France International, October 22, 2023
https://rfi.my/A2Yb

Briefings | | |   US-China Relations

Lianhe Zaobao: China Further Restricts Export of Graphite Products

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that Beijing has expanded the list of Chinese-made graphite-based materials that are subject to export controls. Such products are used in the production of electric vehicle batteries, and may not be exported from China without permission.

The updated graphite export controls were published by the Chinese Ministry of Commerce and the General Administration of Customs of China. The measures “optimize and adjust the temporary export control of certain graphite products.” The controls newly included three “highly sensitive” graphite products in a dual-use export control checklist.

Spheroidized graphite, which was previously subject to temporary controls, was included in the updated list. Graphite products subject to export controls now include artificial graphite materials of high purity (99.9+ percent purity), high strength (flexural strength 30Mpa), and high density (1.73 grams per cubic centimeter), as well as derivative products of these materials. Also restricted is natural flake graphite and its derivatives (including spheroidized graphite, expanded graphite etc.).

According to the U.S. Geological Survey, China is currently the world’s largest producer of graphite, accounting for 67 percent of the world’s natural graphite supply. A spokesperson for China’s Ministry of Commerce said that “China, as the world’s largest producer and exporter of graphite, has long firmly fulfilled its non-proliferation and other international obligations and implemented export controls on specific graphite items in accordance with the need to safeguard national security and interests.”

Source: Lianhe Zaobao, October 20, 2023
https://www.zaobao.com.sg/realtime/china/story20231020-1444412

Briefings | | |   Economy/Resources Geo-Strategic Trend

China Rushing to Buy Up Wheat Via Foreign Trade

Chinese stock market news site Stock Star recently reported that China is scouring the world for wheat, with annual imports on track to hit a record high as recent heavy rains have damaged domestic crops. Wheat traders say that China has ordered large quantities of wheat in October, buying from a number of major exporters including the United States, Canada and France. The current buying spree follows high-volume wheat purchases from Australia earlier this year.

Growing wheat demand from China is adding uncertainty to supply chains that are increasingly vulnerable to war and protectionist trade policies. Chinese imports totaled a record 9.96 million tons last year as the agricultural sector shifted to use more wheat as animal feed and Chinese citizens ate more bread. China is currently competing with Egypt to become the world’s largest Wheat importer. Chinese overseas procurement volume in the first eight months of 2023 has reached 9.56 million tons, of which more than 60 percent came from Australia.

China’s summer wheat output fell by 0.9 percent this year to 134.53 million tons, the first decline in seven years. Continued rains have caused the quality of 30 million to 40 million tons of wheat to deteriorate as this year’s crops near harvest, making the grains suitable for livestock feed but unsuitable for human consumption. Much of China’s recent buying activity has resulted from these weather problems.

Source: Stock Star, October 12, 2023
https://wap.stockstar.com/detail/IG2023101300008165

Briefings | | |   Economy/Resources Geo-Strategic Trend

HKET: China Bans Mainland Chinese Investors from Opening Foreign Trading Accounts

The Hong Kong Economic Times (HKET) reported that the Shanghai Supervision Bureau of the China Securities Regulatory Commission issued a notice on September 28 requiring Chinese securities firms to stop providing new investors from Mainland China with securities trading services via Hong Kong accounts and other offshore accounts. Existing accounts held by Mainland Chinese are to be strictly monitored so as to prevent investors from bypassing China’s foreign exchange regulatory rules. This is the first time that China has explicitly limited Mainland Chinese investors ability to use foreign trading accounts.

The move serves to limit capital outflows and to support the RMB, which is facing downward pressure. The targeted offshore accounts are relatively more difficult for the authorities to control. This contrasts with cross-border trading through formally-sanctioned channels such as Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, where the authorities are better able to ensure that Mainland investors’ funds will be managed in a “closed loop,” that is, when securities are sold, the funds will immediately flow back into the RMB instead of into another currency. When Chinese investors use offshore investment accounts to invest abroad, it is more difficult for the Chinese authorities to manage the use currencies other than the RMB.

Although the new instruction does not clearly specify the implementation date, sources said that the regulatory agency’s intention is for the regulation to take effect immediately. Brokerages will need to remove apps or websites that attract Mainland customers by the end of October.

The article by HKET, which is Hong Kong’s leading financial daily paper, cited Reuters, which in turn cited four anonymous sources.

Sources:
HKET, October 12, 2023
https://tinyurl.com/55k8dwyr

Yahoo Finance Hong Kong, October 12, 2023
https://tinyurl.com/muy2tsvz

Briefings | | |   Economy/Resources Geo-Strategic Trend

Chinese Warplanes Aggressive Maneuver Near Canadian and U.S. Planes

On October 17 a Chinese military aircraft provocatively intercepted a Canadian Armed Forces Aurora aircraft in international airspace near China’s territorial waters. At the time, the Canadian aircraft was in an operation to enforce United Nations sanctions that prevent illegal transportation of oil to North Korea. The Canadian crew had identified a “suspicious vessel” that was on a watchlist.

During its eight hours of flight, the Canadian aircraft was intercepted by at least two Chinese fighter jets who flew with the Canadian plane for several hours. Chinese jet aircraft at one point came as close as 15 feet from the Canadian aircraft. The Chinese aircraft also launched multiple illumination flares in the vicinity of the Canadian aircraft.

The Washington Post reported that in the past few years Beijing has intensified these kinds of dangerous maneuvers targeting planes of the U.S. and its allies and partners. The total number of such encounters is now near 300. On October 17, Pentagon released videos and photos of some incidents, including an incident in January 2023 where a Chinese J-11 fighter jet flew about 30 feet from an American RC-135 plane and lingered for 15 minutes, and an incident in May 2022 where a Chinese fighter jet flew 15 feet laterally below a US Navy EP-3 plane.

Sources:
1. Radio France International, October 17, 2023
https://www.rfi.fr/cn/国际/20231017-加媒-中国战机以-挑衅方式-拦截加拿大军机
2. Washington Post, October 17, 2023
https://www.washingtonpost.com/national-security/2023/10/17/china-fighter-jet-dangerous-maneuvers/

Briefings | | |   @CS Defense/Military Geo-Strategic Trend US-China Relations

CCP Reduces Functions of China’s Central Bank

China’s State Council recently announced an adjustment to the structure and responsibilities of China’s central bank, the People’s Bank of China:

  1. The State Council Financial Stability and Development Committee and its office will no longer be retained. Its responsibilities will be transferred to the office of the Chinese Communist Party’s (CCP’s) Central Financial Committee. The Secretariat of the State Council Financial Stability and Development Committee, previously located within the People’s Bank of China, will be transferred to the office of the CCP’s Central Financial Committee.
  2. The daily supervisory responsibilities for financial holding companies and other financial groups will be transferred to the China Banking and Insurance Regulatory Commission.
  3. The responsibilities for establishing and improving the basic system for the protection of financial consumers will be transferred to the China Banking and Insurance Regulatory Commission.

The People’s Bank of China will reduce 30 administrative positions and 6 leadership positions at the bureau level. After these adjustments, the People’s Bank of China will have 20 internal institutions, with 714 administrative positions and 87 leadership positions at the bureau level.

Chinese news website Aboluo published an article saying that analysts believe this move reflects Xi Jinping’s increasing centralization of power in the CCP’s Central Committee over the State Council, diminishing the role of Premier Li Qiang. Also, the China Banking and Insurance Regulatory Commission is believed to be under the control of Xi’s confidant He Lifeng.

Sources:
1. China Government website, October 13, 2023
https://www.gov.cn/zhengce/202310/content_6908743.htm
2. Aboluo, October 14, 2023
https://www.aboluowang.com/2023/1014/1965621.html

Briefings | | |   Economy/Resources Government/Politics