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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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700,000 Chinese Villages Owe 900 Billion Yuan in Debt

China Newsweek Magazine published an article stating that “small villages with big debts” have become a problem that cannot be ignored. A survey by China’s Ministry of Agriculture and Rural Affairs Development found that, as of the first half of 2019, China’s 700,000 administrative villages have accumulated a total of 900 billion yuan (US$123 billion) in debt. Average debt has reached 1.3 million yuan per village.

Source: China Newsweekly, September 8, 2023
http://www.heb.chinanews.com.cn/zgxwzk/20230908438999.shtml

Briefings | | |   @CS Economy/Resources Government/Politics

Chinese Scholar: China Is Facing The Worst External Environment in 40 Years

Wang Wen, Executive Director of Chongyang Institute for Financial Studies, Renmin University of China, published an article stating that China is facing the worst external environment in 40 years.

Wang listed three points regarding the international environment:

  1. China’s annual and quarterly economic growth rate became lower than that of the United States, which has not been seen for more than four decades.
  2. There are signs that production and supply chains are moving out of China, also not seen for more than four decades.
  3. The United States has coordinated a political consensus and comprehensive action among Western countries regarding the “China threat,” also not seen for more than four decades.

Wang gave a few strategic prescriptions for easing China’s situation (a nice way of implying that the authorities have made strategically poor decisions):

  1. Reflect on the long-term, difficult, and complex nature of the rise (of China) as a great power. {Editor’s Notes: The author is suggesting that China has not reached the great power that it wants to achieve; it still needs time to continue building up its power.}
  2. Objectively face the basic fact that the U.S., though it will decline, has not yet declined too much.
  3. Objectively face the basic fact that China, though it will surpass the U.S., has not yet surpassed it.
  4. Chinese society needs to mentally prepare for the worst and most dire scenarios to occur.

Source: Sohu, August 27, 2023
https://www.sohu.com/a/715303788_120094090

Briefings | | |   @CS Government/Politics US-China Relations

China’s Plan to Criminalize ‘Hurting National Sentiment’ Draws Widespread Criticism Online

There has been overwhelming criticism online regarding China’s proposed revisions to its Public Security Administration Punishments Law. The revisions would penalize acts that “damage the spirit of the Chinese nation and hurt the feelings of the Chinese people.”

The draft revisions, introduced in late August, add several new punishable acts. They do not precisely define what constitutes “damaging the spirit of the Chinese nation.” The proposed revisions prescribe detention of 5-10 days or fines of 1000-3000 yuan for wearing, forcing others to wear, producing, or spreading items or remarks that have such a damaging effect to the national spirit. Harsher penalties apply in severe cases.

After China’s state media reported on the draft law, Chinese social media erupted with skepticism. Opinion leaders called on netizens to lobby the National People’s Congress opposing the legislation.

Shanghai Fudan University professor Qu Weiguo said there is currently no legal definition of “the spirit of the Chinese nation.” He worried that hastily writing such a law without clear boundaries could lead to confusion in enforcement, abuse of related charges, and vulgarization of the “spirit.” Qu questioned how the law could determine whether the “feelings of the Chinese nation” were hurt, since the subject is the entire nation rather than individual citizens. He said authorities should be prudent about codifying such crimes, which require solid evidence. Vague definitions could enable rampant abuse, with serious judicial consequences.

Source: Central News Agency (Taiwan), September 5, 2023
https://www.cna.com.tw/news/acn/202309050404.aspx

Briefings | | |   Government/Politics

China Declines Japan’s Proposed Mechanism to Assess Treated Nuclear Water

According to information obtained by Kyodo News, the Japanese government proposed that China join an IAEA international mechanism for objectively analyzing and assessing monitoring results related to radioactive material in seawater samples taken offshore from the Japanese Fukushima nuclear plant. Beijing declined to follow Japan’s suggestion. This highlights China’s uncompromising opposition to Japan’s release of treated nuclear waste water into the sea, making it difficult for Japan to enter science-based dialogue.

The international mechanism will compare and analyze monitoring results conducted separately by the Japanese government and the IAEA on seawater near Fukushima. Research institutions selected by an IAEA to participate in the organization include entities from the U.S., France, Switzerland, and South Korea. To ensure objectivity, Japan is not part of the mechanism.

According to sources familiar with Japan-China relations, Japan has repeatedly urged China through diplomatic channels to join the international mechanism, enabling China to make scientific judgments. China, questioning the mechanism’s effectiveness and independence, did not accept the proposal.

Regarding the treated water, Japan proposed that China and Japan establish a consultation mechanism composed of experts and officials from both countries. China has not yet responded to this proposal.

Source: Kyodo News, September 5, 2023
https://china.kyodonews.net/news/2023/09/28ac08ec5e50.html

Briefings | | |   Geo-Strategic Trend

Chinese Hackers Infiltrate German Corporate and Private Networks to Attack Government Agencies

The German Federal Office for the Protection of the Constitution issued a warning that Chinese hacking groups APT15 and APT31 are targeting German small and medium-sized enterprises and home networks, using the hacked networks to hide their identities when attacking German national and government institutions.

The agency’s cyber briefing report on Thursday said that the hacking groups successfully breached the German Federal Agency for Cartography and Geodesy (BKG) two years ago. The BKG is responsible for creating detailed maps and assessing satellite imagery. The report outlined how the hacking groups exploit security vulnerabilities to gain control of terminals, networks and devices in homes and small businesses.

The agency advised that companies and individuals should update their security software, take stock of all devices on their networks, replace old equipment that can no longer be updated, and change default passwords on new devices.

The hackers exploit flaws in routers, printers, smart home devices, lights, heaters, solar panels and more, using the hacked hardware to conceal their attacks on German national and political bodies. Once they control these devices, they can launch cyber-attacks against organizations, companies and government institutions while hiding behind private, inconspicuous networks.

Source: Deutsche Welle, September 1, 2023
https://p.dw.com/p/4Vpmo

Briefings | | |   Geo-Strategic Trend

RFA Chinese: China’s Manufacturing Industry Marks Fifth Consecutive Month of Contraction

Radio Free Asia (RFA) Chinese Edition recently reported that, according to the data jointly released by the National Bureau of Statistics of China and the China Federation of Logistics and Purchasing, the Chinese manufacturing PMI in August was 49.7, an increase of 0.4 points from the previous month. This is the fifth consecutive month that the Chinese manufacturing PMI has been below the critical threshold of 50 (the “line of prosperity”), indicating ongoing contraction in Chinese manufacturing.

Among the five sub-indices that make up the manufacturing PMI, the production index was 51.9, the new order index was 50.2, and the supplier delivery time index was 51.6, higher than the critical point of 50. The raw material inventory index was 48.4 and the employment index was 48.0, both below the critical point. The Purchasing Managers Index (PMI) is an internationally accepted macroeconomic monitoring indicator. The number 50 is usually used as the boundary for indicating growth or decline.

In an environment where new export orders continue to contract amid weak global demand, Chinese manufacturers will need to rely on domestic demand to make up for the shortfall. Currently, demand for Chinese real estate and exports continues to be sluggish, and insufficient demand in the economy overall constrain prospects for economic recovery.

In order to stimulate China’s real estate market, the Chinese government has recently introduced a number of measures. The central bank will now guide commercial banks to adjust the interest rates of existing personal housing loans “in an orderly manner” so as to reduce the pressure on residents who are faced with mortgage loan repayments.

Source: RFA Chinese, August 31, 2023
https://www.rfa.org/mandarin/yataibaodao/jingmao/hcm2-08312023103501.html

Briefings | | |   Economy/Resources

UDN: Czech Central Bank Liquidates RMB Bond Holdings

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that the Czech Republic’s central bank announced that it has liquidated all of its RMB bond holdings. People familiar with the matter said that this move was primarily motivated by political factors and risk of Chinese invasion of Taiwan.

The Czech-China relationship had cooled significantly since the beginning of this year. The UDN report cited a Financial Times interview with newly-elected Czechian president Petr Pavel, who said “China and its regime is not a friendly country at this moment, it is not compatible with western democracies in their strategic goals and principles.” Pavel was the first elected European head of state to speak to Taiwanese president Tsai Ing-wen. China’s foreign ministry said that Pavel “ignored China’s repeated attempts to dissuade him” and “persisted in stepping on China’s red line”.

According to the latest data released by the Czech National Bank, as of June 30 this year the Czech central bank no longer had any RMB assets in its investment portfolio. In the foreign exchange reserve currency allocation table, the RMB column is no longer present. Members of the Czech financial regulatory organization confirmed that the possibility of a Chinese attack on Taiwan went into the decision to liquidate RMB positions, as did the “economic and non-economic context” surrounding the Czech-China relationship.

At the end of March 2023, the Chinese currency RMB still accounted for 1.9 percent of the foreign exchange reserves of the Czech National Bank. The Czech Republic has been deepening its ties with Taiwan, including exchange of high-level political visits, direct flights between Taiwan and Prague, and a commitment to co-operate in computer chip development.

Sources:

UDN, September 1, 2023
https://udn.com/news/story/7333/7409636

Financial Times, February 1, 2023
https://www.ft.com/content/df41b4a8-97f0-4e20-9ef4-4a53c0ab8f30

Briefings | | |   Geo-Strategic Trend

Global Times: U.S. Restricts AI Chip Exports to Middle East

China’s Global Times recently published a report on social media regarding new U.S. restrictions that prevent technology companies NVIDIA and AMD from exporting advanced AI chips to the Middle East. Analysts say the restrictions are aimed at preventing Middle Eastern countries from reselling the chips to China.

In a recent regulatory filing for its A100 and H100 chips, NVIDIA disclosed that the Biden administration’s new measures will affect exports of those chips. It’s not clear which specific countries are targeted by the new export controls.

In October of last year, the Biden administration announced its implementation of artificial intelligence (AI) chip export controls targeting China. NVIDIA’s A100 and the H100 were restricted, and AMD’s exports were similarly restricted by the U.S. government. Both companies stated that, although the new control measures will affect the export of some products, they will not have a direct and significant impact on the  companies’ business performance.

On the one hand, the U.S. may be concerned about China’s acquisition of advanced AI chips from Middle Eastern countries, especially considering the close relationship some Middle Eastern countries have with China. On the other hand, the U.S. export controls may not be aimed at curbing AI tech acquisition by China alone; they may also be part of U.S. policy targeting Middle Eastern countries specifically.

Compared with the earlier U.S. measures that targeted exports to China specifically, these latest controls targeting Middle Eastern countries have a less-direct impact on China’s AI industry. According to the Global Times report, however, they still reflect the U.S.’s attempt to stifle China’s semiconductor and AI capabilities.

Source: Global Times, August 31, 2023
https://tinyurl.com/mvuph8k7

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