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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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China’s “Panda Diplomacy”

The Epoch Times reported that the Chinese Communist Party (CCP) has been using giant pandas for its diplomacy agenda. As Sino-U.S. relations have soured, China plans to take back three pandas on loan to the U.S. National Zoo at Washington, DC. by end of this year. If the Atlanta Zoo cannot renew its panda contract with Beijing by next year, then the U.S. will have no panda for the first time in 50 years.

The CCP started its “Panda Diplomacy” with the West in 1972 when it gifted two giant pandas to the U.S. following Nixon’s visit to China.

Scholar Kathleen Buckingham published a research paper in 2013 outlining three phases of the CCP’s “Panda Diplomacy.”

  • The first phase, during Mao Zedong’s era, involved gifting giant pandas purely for political purposes.
  • In the second phase, under Deng Xiaoping, panda diplomacy aligned with economic reforms, with China adopting a capitalistic model to generate revenue by leasing the pandas.
  • In The third phase, starting in 2008, the leasing model has leaned towards countries with free trade agreements and technology transfer agreements with the CCP. For instance, Australia, France, and Canada have received pandas after agreeing to sell nuclear technology and uranium to China. Scotland received a pair of pandas in 2011 as part of an agreement to share offshore drilling technology and supply salmon to China. In 2013, the Netherlands received pandas as they agreed to provide advanced medical services.

To attract attention and as a means of leverage, the CCP now requires foreign heads of state to personally request pandas before deciding whether to lease them.

The CCP has also been recalling pandas as a punitive tool. In 2010, two days after Beijing warned President Obama not to meet the Dalai Lama, China called back the first batch of panda cubs born in the Atlanta Zoo and the Washington National Zoo. Amid the tensions over the U.S.-China trade war in 2019, Beijing retrieved pandas “Bai Yun” and her cub and “Little Gift” from the San Diego Zoo. This year, due to the Netherlands’ adherence to U.S. restrictions on the sale of advanced semiconductor processing equipment to China, Beijing recalled the three-year-old panda “Fan Xing” from a Dutch zoo.

Source: Epoch Times, October 10, 2023
https://www.epochtimes.com/gb/23/10/10/n14091930.htm

Briefings | | |   @CS Geo-Strategic Trend US-China Relations

Taliban Official Visits Beijing for “Belt Road Initiative” Conference

The Afghan embassy announced that Taliban Deputy Commerce Minister Haji Nooruddin Azizi had arrived in Beijing on October 17, to attend China’s “Belt Road Initiative” forum. Azizi’s visit will include discussions about inviting “major investors” to Afghanistan, road construction plans through the Wakhan Corridor, and negotiations for a large copper mine in eastern Afghanistan. This marks one of the highest-profile international invitations extended to the Taliban since the organization’s takeover of Afghanistan in 2021.

Despite the international community’s lack of formal recognition of the Taliban since its takeover of Afghanistan, Beijing has sought official relations with the group. Beijing is motivated in part by Afghanistan’s significant mineral resources. Last month, China’s Ambassador to Afghanistan presented credentials to the Taliban’s acting Prime Minister. Meanwhile, many other countries have avoided formal recognition of the Taliban, retaining their previous ambassadors or chargé d’affaires in Afghanistan so as to avoid the need to submit official credentials to the organization.

Source: Epoch Times, October 18, 2023
https://www.epochtimes.com/gb/23/10/18/n14097697.htm

Briefings | | |   Geo-Strategic Trend

Xi Jinping Announces Eight-Point Action Plan for Belt for Road

Beijing held the Third Belt and Road Forum for International Cooperation on October 18. Xi Jinping gave a keynote address, announcing an eight-point action plan for China’s development of the “Belt and Road” Initiative:

  1. Construct a three-dimensional interconnected network for the “Belt and Road.” China will accelerate the high-quality development of the China-Europe Railway Express, participate in the construction of the Trans-Caspian International Transport Route, organize the China-Europe Railway Express International Cooperation Forum, and work with all parties to establish a new Eurasian logistics corridor supported by direct rail and road. China will actively promote the integrated development of “Silk Road Ocean Shipping,” expedite the construction of new land-sea transportation channels and the Air Silk Road.
  2. Support the development of an open world economy. China will establish “Silk Road e-commerce” cooperation pilot zones, sign free trade treaties and investment protection treaties with more countries, comprehensively remove foreign investment access restrictions in the manufacturing sector, and actively align with international high-standard economic and trade rules. China will deepen cross-border trade in services and high-level openness for investment, expand market access for digital products, and reform in areas such as state-owned enterprises, the digital economy, intellectual property, and government procurement. China will also host a “Global Digital Trade Expo” annually. In the next five years (2024-2028), China’s total imports and exports of goods and services are expected to surpass $32 trillion and $5 trillion US dollars, respectively.
  3. Promote practical cooperation. China will coordinate the promotion of landmark projects and “small but beautiful” livelihood projects. The China Development Bank and the Export-Import Bank of China will each establish 350 billion RMB financing windows, while the Silk Road Fund will inject an additional 80 billion RMB. These initiatives will support co-building the “Belt and Road” projects in a market-oriented and commercial way. During this summit, the Entrepreneur Conference reached 97.2 billion US dollars in project cooperation agreements. China will also implement 1,000 small livelihood assistance projects, promote vocational education cooperation with foreign countries through the “Luban Workshops” (master-craftsman workshops), and enhance security guarantees for co-building “Belt and Road” projects and personnel.
  4. Promote green development. China will continue to deepen cooperation with other countries in areas such as green infrastructure, green energy, and green transportation. They will support the “Belt and Road” Green Development International Alliance, continue to host the “Belt and Road” Green Innovation Conference, establish a photovoltaic industry dialogue and exchange mechanism, and a green low-carbon expert network. They will implement the “Belt and Road” Green Investment Principles and provide training for 100,000 people from partner countries by 2030.
  5. Advance technological innovation. China will continue to implement the “Belt and Road” Science and Technology Innovation Action Plan, hold the first “Belt and Road” Science and Technology Exchange Conference, expand the joint laboratories established with various parties to 100 in the next five years, support short-term work by young scientists from various countries in China, and propose a global initiative on the governance of artificial intelligence (AI) during this summit. China is willing to strengthen exchanges and dialogue with all countries to promote the healthy, orderly, and secure development of global AI.
  6. Support people-to-people exchange. China will host the “Liangzhu Forum” to deepen cultural dialogues with the “Belt and Road” participating countries. In addition to the Silk Road International Theater, Art Festival, museums, art galleries, and library alliances already established, China will create a Silk Road Tourist City Alliance. China will continue the “Silk Road” Chinese Government Scholarship Program.
  7. Build a clean (non-corruptive) “Belt and Road.” China, together with its partners, will release the “Effectiveness and Prospects of Clean Construction of the ‘Belt and Road'” and introduce “High-Level Principles for Clean Construction of the ‘Belt and Road'” during this summit. China will establish an assessment system on “Belt and Road” enterprises’ “clean” (non-corruptive) compliance and cooperate with international organizations in research and training on clean training.
  8. Improve the international cooperation mechanism for the “Belt and Road.” China will strengthen the construction of multilateral cooperation platforms in various fields such as energy, taxation, finance, green development, disaster reduction, anti-corruption, think tanks, media, culture, and more with countries co-building the “Belt and Road.” They will continue to hold the “Belt and Road” International Cooperation Summit Forum and establish a summit forum secretariat.

Source: Website of China’s Ministry of Foreign Affairs, October 18, 2023
https://www.fmprc.gov.cn/zyxw/202310/t20231018_11162839.shtml

Briefings | | |   Economy/Resources Geo-Strategic Trend

Huawei May Have Breached U.S. Chip Ban with Purchases From ASML

Huawei launched its new Mate 60 Pro smartphone in September, using what appears to a 7nm processor in the phone. The processor, called the Kirin 9000S, was apparently manufactured by China’s SMIC foundry (although SMIC denies producing the chip). The launch came after the U.S. enacted high-tech sanctions on China, attempting to restrict trade that would give China access to high-end computer chips.

Huawei likely acquired key equipment from Dutch firm ASML enabling production of the 7nm chips. According to one estimate, China’s purchases from ASML over the past two years may have exceeded 120 DUV lithography machines, exceeding the capacity of Taiwanese rival chip foundry TSMC. With 120 DUV systems but no extreme ultraviolet lithography (EUV) system, SMIC would be able to approximate a 7nm process via multiple exposures, albeit with 50% lower yields than would be possible with the use of EUV. Still, this could enable production of between 50,000 and 60,000 7nm wafers monthly, critical for Huawei’s smartphone business and China’s drive to achieve “chip independence.”

Before the U.S.’s broader chip sanctions were in place, Huawei acquired significant DUV capacity from ASML, accounting for 18-25% of ASML’s sales. ASML’s recent sales to Huawei may be in violation of the current U.S. trade sanctions. Although Huawei has made progress in the direction of self-sufficiency, it still has a long way to go before achieving fully self-reliance in semiconductor manufacturing.

Huawei’s large DUV stockpile, combined with the nationalist buzz in Chinese media regarding the Mate 60 Pro, could drive sales to 70 million units despite high costs. This would represent a major win for China. Even if ASML’s DUV sales are blocked, Huawei has gained breathing room to advance domestic production within China. Acquiring EUV systems would be an even bigger win for Huawei.

Source: United Daily News (Taiwan), October 16, 2023
https://udn.com/news/story/7333/7508081

Briefings | | |   Geo-Strategic Trend

China’s 2022 Marriage Registrations below Seven Million, Marking New Low

China’s Ministry of Civil Affairs released its 2022 report showing that only 6.835 million legal marriages were registered last year. This represents a 10.6% drop from 2021 and the first year in recent history with fewer than 7 million marriages.

A Yicai report linked the sharp decline in marriages to (1) people delaying their first marriages, (2) a smaller population of marriage-aged people, (3) changes in mindset among the marriage-aged population, and (4) the impact of the COVID-19 pandemic.

Statistics show that marriages in China fell below 10 million in 2019, below 9 million in 2020, below 8 million in 2021, and now below 7 million in 2022. The trend of decline in marriages has continued for 9 years following the peak of 13.469 million marriages registered in 2013.

Age distribution data show that only 15.2% of marriages in 2022 were entered by people 20-24 years old, down 1.3 percentage points from the year before. A health official said that those born in 1990s and 2000s who grew up in cities with more education and job competition are delaying marriage and children.

Source: Radio Free Asia, October 15, 2023
https://www.rfa.org/mandarin/Xinwen/4-10152023113812.html

Briefings | | |   Economy/Resources

Nearly 20% of China’s Population is Over 60

China’s elderly population continues to grow, according to the latest data released by China’s Ministry of Civil Affairs. By the end of 2022, China had 208 million people aged 60 and over, accounting for nearly 20% of the total population. This indicates that the country’s population is rapidly aging. An official Xinhua commentary said that population aging will remain a long-term challenge for China.

In 2021, Chinese people aged 60+ totaled 267 million, making up 18.9% of the population. The 65+ population was 257 million, or 14.2% of the total. The new data for 2022 illustrates the continued rise in China’s proportion of elderly  people.

Demographic data show that the aging trend will likely accelerate in the coming years. During China’s 14th Five-Year Plan period from 2026-2030, the number of elderly aged 60+ is expected to exceed 300 million as the country enters a phase of “moderate aging.” Around 2035, the elderly population will surpass 400 million, a phase of “severe aging.”

Population aging presents economic and social challenges for China in areas like healthcare, pensions, and elder care. An official commentary said it is a “long-term fundamental situation affecting the nation,  which China will need to adapt to through supportive policies and services.”

China will need to prepare for a society that will have over 400 million elderly by 2035. In 2022, China spent over 42 billion yuan (US$5.8 billion) on elderly welfare and over 17 billion yuan (US$2.3 billion) on elderly services.

Source: Central News Agency (Taiwan), October 16, 2023
https://www.cna.com.tw/news/acn/202310160131.aspx

Briefings | | |   Economy/Resources

Nikkei Chinese: Japanese Companies in China Plan to Reduce Investment

Nikkei Chinese Edition recently reported that Japan’s Chamber of Commerce in China announced the results of a survey targeting its member companies, which are Japanese companies stationed in China. Due to China’s slow economic recovery and the intensified confrontation between China and the United States, nearly half of the Japanese companies planned to reduce their investment in China in 2023.

Around 25 percent of the companies surveyed said they planned “no investment,” and 22 percent of them said they would “reduce” investment. Reasons for reduced investment included:

  • “the Tokyo headquarters is worried about investment risks in China,”
  • “demand in China and overseas markets is expected to be sluggish, and it will be difficult to expand sales,” and
  • “cross-border data supervision leads to increased market uncertainty.”

Meanwhile, 14 percent of the surveyed companies said they would increase investment, and two percent said they would increase investment significantly. About 37 percent of the companies stated that this year’s investment amount is “the same as last year.”

Some 66 percent of Japanese manufacturing companies surveyed said that “rising labor costs” were the most significant factor impacting their investment in China. Outside of the manufacturing industry, some 72 percent of surveyed companies said that the most crucial factor is “the impact of the international situation.”

China’s post-COVID economic recovery has been slow. Especially in southern Chinese regions such as Guangdong Province and central Chinese regions such as Hubei Province, where the manufacturing industry is concentrated, none of the surveyed companies felt that the economic situation had “improved.”

Source: Nikkei Chinese, October 13, 2023
https://cn.nikkei.com/politicsaeconomy/investtrade/53737-2023-10-13-08-40-40.html

Briefings | | |   Geo-Strategic Trend

China Imports/Exports Continued Decline in September

Well-known Chinese news site Sina (NASDQ: SINA) recently reported that, according to data released by Chinese General Administration of Customs, China’s September exports totaled US$299.13 billion, down 6.2 percent year-over-year; imports were US$221.42 billion, down 6.2 percent year-over-year. Total import-export value in September was US$520.55 billion, a year-over-year decrease of 6.2 percent.

China’s September trade surplus was US$77.71 billion, down 6 percent year-over-year. Since August of last year, the year-over-year growth rate of China’s exports to the United States has been negative. This past September, China’s exports to the United States recorded a year-over-year decline of 9.3 percent. China’s exports to the EU recorded a year-over-year decrease of 11.6 percent. September exports to ASEAN countries fell by 15.8 percent year-over-year.

Meanwhile, China’s exports to Russia increased by 21 percent year-over-year, a significantly increase over the 16 percent year-over-year figure recorded for the previous month. China’s imports from Russia increased by 8 percent during the same period.

Affected by geopolitical factors, China’s imports of IC chips continued to decline, especially imports from South Korea, Japan, and Taiwan.

Taking into account the downward pressure on external demand for Chinese exports, Sina said to expect that it will take some time before absolute levels of exports are restored to previous levels.

Source: Sina, October 13, 2023
https://stock.finance.sina.com.cn/stock/go.php/vReport_Show/kind/lastest/rptid/750548175594/index.phtml

Briefings | | |   Economy/Resources