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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 Commentaries: “Exposing the Three Major Political Deficits of the U.S.”

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For “Humanitarian Reasons,” China Doesn’t Block Philippine Resupply of Grounded Warship in Disputed Waters

On August 7, China blocked two Philippine supply vessels from unloading supplies at the Second Thomas Shoal in the South China Sea. China blocked the supply vessels by firing water cannons at them. The vessels were supposed to deliver supplies to soldiers stationed on a Philippine warship BRP Sierra Madra that has been grounded at the atoll since 1999. Both China and the Philippines claim sovereignty over the Spratly Island area where the Second Thomas Shoal is located.

On August 22, the Philippines sent resupply ships to the shoal again. This time, China didn’t stop them.

Following the event, Xinhua published a statement by the Spokesman of Chinese Coast Guard Bureau: “On August 22, two Philippine supply vessels and two [Philippine] marine police vessels entered the waters adjacent to the Second Thomas Island in the Spratly Islands area without the permission from the Chinese Government. In accordance with the law, the Chinese Marine Police gave the Philippine vessels a stern warning, followed them throughout their entire journey, and effectively restrained them. At the same time, in view of the fact that the Philippine vessels were not carrying large-scale building materials, the Chinese Marine Police made a temporary special arrangement for humanitarian reasons, allowing the Philippine vessels to transport food and other living necessities to the military vessels stranded on the beach. China has indisputable sovereignty over the Spratly Islands and their adjacent waters, including the Second Thomas Island. China firmly opposes the Philippines using the excuse of “resupply” to deliver illegal building materials to the illegally-grounded warship. The Chinese Maritime Police will continue to protect China’s rights and carry out law-enforcement activities in the waters under China’s jurisdiction in accordance with the law.”

Source: Xinhua, August 22, 2023
http://www.news.cn/world/2023-08/22/c_1129816942.htm

Briefings | | |   @CS Geo-Strategic Trend

China’s Weaponization of Mekong River Dams to Pressure Downstream Countries

For the past decade, the Mekong River has had abnormal water pattern: high flows during the dry season and low flows during the rainy season. This is caused by the upstream Chinese dams, which release water for power generation during the dry season and retain water during the rainy season.

The Mekong River has a total length of more than 4,800 kilometers (~3000 miles) in its main branch. Its 2,139-kilometer (1330 mile) upper section in China is known as the Lancang River. After flowing out of China, the Mekong River flows through five countries in Southeast Asia – Myanmar, Laos, Thailand, Cambodia, and Vietnam. It is a lifeline supporting 65 million people.

By the end of December 2020, the Chinese Communist Party (CCP) had built 12 giant dams on the main branch of the Lancang River, with eight more under construction. In addition, there are 85 dams on hundreds of tributaries to the Lancang River.

On January 1, 2019, China put four newly-constructed dams into operation. As a result, the Lower Mekong has experienced a severe drought starting that year and lasting for more than four years (through the present).

The year 2020 was the driest year for the Mekong on record. Although upstream Chinese reservoirs had sufficient water during the rainy season, some of the Mekong River beds downstream were dry and cracked.

China’s use of dams to exert pressure on downstream countries has been going on since at least 2016. In March of that year, the Mekong River’s water volume was reduced, and Vietnam’s rice region suffered a severe drought, with seawater back filling the river bed. The CCP then took the “generous” step of releasing water for “disaster relief.” A week later, China’s then-Premier Li Keqiang hosted the Lancang-Mekong Cooperation Meeting in Sanya, Hainan. The five thirsty downstream countries signed the Lancang-Mekong Agreement, signing on to Chinese investment, loans, and a special fund to promote China’s Belt Road Initiative in Southeast Asia.

Source: Epoch Times, August 10, 2023
https://www.epochtimes.com/gb/23/8/10/n14051766.htm

Briefings | | |   @CS Economy/Resources Geo-Strategic Trend

Chinese Author: Chinese Insurance Industry is a Time Bomb

Lao Man (老蛮) is a Chinese writer who publishes on economic topics. He recently published an article warning that Chinese insurance companies are another time bomb that may explode soon.

He gave the following data (in Billions of Yuan):

  • Year                       Investment Income          Payout       Net
  • 2018                               7,105                          12,298        -5,193
  • 2019                               9,152                          12,984        -3,832
  • 2020                               11,729                        13,907        -2,178
  • 2021                               12,775                        15,609        -2,834
  • 2022                               4,640                          15,485        -10,845
  • 2023 (Jan – Jun)          3,194                          9,151          -5,957

He pointed out that many insurance companies have a cash pool for investment, and that they use their investment returns to cover part of their insurance payouts (with any gap between investment income and insurance payouts being made up by e.g. premiums charged to the insured).

It was a good sign that the gap between the investment income and insurance payouts was shrinking from 2018 to 2020. The gap held steady in 2021, but it shot up dramatically in 2022 and has remained high during the first half of 2023.

The reason is that insurance companies can no longer generate high returns on their investments due to China’s economic downslide. This will inevitably eat into the insurance companies’ cash pools. According to the article, insurers will be forced to take in more customers and use the new customers’ money to pay for the existing customers, essentially running a Ponzi scheme.

Source: China News, August 15, 2023
https://news.creaders.net/china/2023/08/15/2637675.html

Briefings | | |   Economy/Resources

Lianhe Zaobao Criticizes Xi Jinping

Singapore-based Lianhe Zaobao used to maintain good relations with the Chinese Communist Party. Recently, however, it published a commentary that openly criticized Beijing’s policy. Two versions of the commentary were published.

The first version has the author’s name in the title: “Liu Mengxiong: the Problem Is Economic, But the Root Cause is Political.” Liu is a Hong Kong businessman and former member of the National Committee of the Chinese People’s Political Consultative Conference. In the past, he had a pro-Beijing stance. The second version of the article, titled “Commentary: the Problem Is Economic, But the Root Cause Is Political,” indicated the author’s name in a footnote.

In the article, Liu listed economic problems faced by China, praised Deng Xiaoping’s policy of economic reform, and criticized Xi Jinping’s policy (without mentioning Xi’s name explicitly). “The first 30-odd years of reform and opening up were characterized by a steady upward trajectory, but in recent years, [China] has fallen into a downward spiral. If we look at the essence of the phenomenon, we will find that the most fundamental reason for the economic reversal lies in politics.”

The article lists many policies that, in the author’s opinion, have had a negative impact. These include stressing the party’s control over companies, policy on COVID, and the CCP’s hostility against the U.S.

The article ends by calling for political reform and stating that “The economic adversity caused by politics must be treated politically. The question is, does the princeling leader have the sense of historical mission and vision necessary to realize economic marketization, the rule of law, and the democratization of politics through reform of the political system?”

Sources:
1. Lianhe Zaobao, August 21, 2023
https://www.zaobao.com.sg/forum/views/story20230821-1425457
2. Lianhe Zaobao, August 21, 2023
https://www.kzaobao.com/mon/keji/20230821/145204.html

Briefings | | |   Economy/Resources Government/Politics

CCTV and African Media Discuss Future Collaboration

Chinese state newspaper People’s Daily reported that state broadcaster China Central Television (CCTV) signed a cooperation agreement with the African Broadcasting Union (ABU) and several other African media organizations upon Chinese President Xi Jinping’s visit to South Africa. The agreement aims to “strengthen cooperation in content creation and sharing, technological innovation, personnel training, and industry expansion.” It also aims to “promote mutual understanding and people-to-people exchanges between China and Africa.”

As part of the agreement, a “China-Africa Friendship (Season 4)” Chinese film and television program exhibition has been launched. According to People’s Daily, more than 10 high-quality programs will be screened by the mainstream media of South Africa, Zambia, Zimbabwe, and 10 other African countries.

Source: People’s Daily (China), August 22, 2023
http://paper.people.com.cn/rmrb/html/2023-08/22/nw.D110000renmrb_20230822_7-02.htm

Briefings | | |   Geo-Strategic Trend

China’s Anti-Spy Propaganda Irks Parents

The Chinese government has launched a major counter-espionage social media campaign targeting minors. Platforms like Douyin, WeChat and Xiaohongshu are flooded with spy-related videos and cartoons. Some resurrect decades-old materials urging students to monitor their family members. Many Chinese parents worry this propaganda will warp their children’s minds. The messaging portrays everyone as a potential spy – friends, lovers, job recruiters, etc. Clips advise vigilance against honey traps and bribes.

On July 1st, a revised Counter-Espionage Law took effect. The law was heavily publicized. One 2017 cartoon now recirculating tells students to watch their family for suspicious behavior on weekends and to report their behavior to authorities.

Some parents have privately expressed alarm over the counter-espionage program, saying that it promotes suspicion, destroys trust and relationships, and harms children’s mental health. In an interview by Radio Free Asia, a schoolteacher reported that one student’s parent had said that the campaign brainwashes kids to see even their relatives as hostile, stirring family conflicts. Another parent was reminded of the reporting and antagonism between people seen during China’s Cultural Revolution. The teacher added that the mentality of self-protection risks spawning new social problems.

Source: Radio Free Asia, August 17, 2023
https://www.rfa.org/mandarin/yataibaodao/kejiaowen/gt2-08172023072815.html

Briefings | | |   Government/Politics

China’s Office Vacancies Soar Amid Slowing Economy

China’s economy is showing signs of weakness as business activity slows. According to Chinese media reports, office vacancy rates in major cities have hit multi-year highs in Q2 2023, indicating weak demand. In Beijing the citywide vacancy rate reached 18.3%, the highest level in 13 years. Many of China’s other megacities saw similarly high vacancy rates. Vacancies in Shenzhen and Shanghai were 20.3% and 18.7%, respectively.

Caijing magazine reported that international real estate firm Savills found vacancy rates in Beijing at 13-year highs. Industry sources said the office rental market is struggling with widespread price reductions in 2023. Client demand has dropped significantly, with only 2-3 prospective tenants per month compared with an earlier rate of 2-3 per week.

Negative net absorption of 53,000 sqm in Beijing in Q2 shows a continuous tenant exodus. With weaker demand, rents are falling across major markets. According to Savills, average Beijing office rents dropped 1.5% quarter-over-quarter, now largely back to 2012 levels.

Other top Chinese cities had similar trends. Shanghai, Guangzhou and Shenzhen saw Grade A office vacancy rates of 18.7%, 17.5% and 20.3% respectively in Q2 per Colliers data. Cushman & Wakefield data shows vacancy rates in Beijing, Shanghai, Guangzhou and Shenzhen increased year-to-date, now at 16.9%, 18.6%, 18% and 24.5%, respectively.

The rise in vacancies stems from oversupply amid weaker than expected demand growth, signaling China’s economic downturn.

Source: Central News Agency (Taiwan), August 21, 2023
https://www.cna.com.tw/news/acn/202308210197.aspx

Briefings | | |   Economy/Resources

HKET: Poll Shows 2/3 of U.S. Residents Support Increasing Tariffs on Chinese Goods

Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported on a new Reuters-Ipsos poll of U.S. residents showing that about two-thirds of respondents support increased tariffs on Chinese goods. A similar proportion of respondents agreed that Washington should do more to deal with the military threat posed to the U.S. by China.

About half of respondents supported providing military equipment to Taiwan, but only 38 percent supported sending U.S. troops to defend Taiwan if China were to uses force against Taiwan. In terms of U.S.-China relations, 75 percent of respondents held a negative view of China, and about 65 percent believe that the Chinese government is trying to influence the upcoming 2024 U.S. election.

The Reuters-Ipsos poll gathered opinions from more than 1,000 adults across the U.S., including 443 Democrats and 346 Republicans.

Bipartisan concern over relations with China may explain Republican presidential candidates’ increasingly hardline stance on the topic. Many candidates have called for the U.S. to terminate normal trade relations with China. Although President Biden has sought to stabilize the embittered U.S.-China rivalry through high-level diplomatic visits, he has also called the Chinese economy a “time bomb” and has criticized Chinese President Xi Jinping by name at several recent fundraisers.

Source: HKET, August 16, 2023
https://china.hket.com/article/3593364

Briefings | | |   US-China Relations