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An Arbitrage Opportunity for Trading RMB: Turning 70,000 Yuan to 120,000 Yuan

China’s recent efforts to internationalize its currency Renminbi (RMB) have backfired. Countries such as Russia, Brazil, etc. have received RMB from trading with China and then heavily sold RMB on the offshore RMB market, causing the RMB price to keep falling.

Twitter account “@AsiaFinance” recently tweeted about an arbitrage opportunity in trading RMB: First, sell a little over 70,000 yuan of RMB to buy US$10,000. Second, exchange the US$10,000 for 1.5 million Russian Ruble on the black market. Third, exchange the 1.5 million Ruble, at the official exchange rate, for 127,300 Yuan RMB. Then you have turned 70,000 yuan to over 120,000 yuan.

Source: Twitter “@AsiaFinance” account, July 7, 2023

Two Chinese Tech Giants Hit with Heavy Fines

Radio France Internationale (RFI) recently reported that Chinese regulators on Friday slapped hefty fines on Alipay and Tenpay, owned by digital giants Ant Financial Services Group and Tencent. The China Securities Regulatory Commission announced that it would fine Ant Group and its subsidiaries RMB 7.123 billion yuan (around US$986.4 million), and fine its competitor Tenpay nearly RMB 3 billion yuan (around US$415 million). The two private groups dominate China’s payment system and have significant weight in the Chinese financial system. They are not subject to banking supervision and have thus long been thorns in the eyes of the authorities. China’s central bank, the People’s Bank of China, declaring in a statement following the action that the financial business rectification of large platform companies has now been completed.

The government’s crackdown on tech has cost the dynamic industry billions of dollars in market value over more than two years. Alibaba, the e-commerce giant that owns Ant Financial, became the first company targeted by authorities in late 2020 following public comments by Alibaba co-founder Jack Ma that angered the Chinese leadership. Ant Financial Services’ IPO, which was originally regarded as the largest fundraising in history (US$34 billion), was called off at the last minute. Later, the Chinese government started a tough crackdown on digital platforms across the industry including Tencent, Didi (aka Chinese Uber) and all private online education companies, particularly on issues such as personal data collection and protection, anti-competitive behavior, and raising funds abroad.

Source: RFI, July 8, 2023
https://rfi.my/9iAQ

China Put University Faculty Under Tight Scrutiny

The Chinese Ministry of Education has launched a campaign to enforce ideological conformity among university teachers. Ever since Xi Jinping took office, education has been focused on cultivating talent supportive of socialism, and universities are now required to offer courses on ideological and political theory, including “Xi Jinping Thought.” The ministry’s recent notice calls for a “self-examination and self-correction” campaign, targeting teachers of these courses to investigate their past academic experiences for any “inappropriate remarks or behaviors.” However, teachers have found templates on Chinese websites to help them complete their self-examination reports.

This campaign has prompted major universities across China to initiate a concentrated learning and education movement to evaluate teachers’ professional ethics. Specifically, teachers of ideological and political theory courses are being scrutinized for their past beliefs, political discipline, academic integrity, and ideological morality. Those deemed to have “crossed the bottom line” in these aspects face removal from their teaching positions through job transfers, dismissals, or resignations. Universities are expected to complete preliminary investigations by mid-July and propose plans to address problematic teachers.

Since Xi Jinping’s call for the “Seven Don’t Mentions” at universities, an increasing number of Chinese professors have faced consequences for discussing topics like universal values, press freedom, and civil society in their classrooms. Several professors from prominent institutions have been affected, leading to a culture of suppressing dissent. Apart from dismissals, outspoken and progressive teachers also face various other forms of retaliation. For instance, Guo Yuhua, a professor at Tsinghua University known for her work on China’s underprivileged communities, was detained by customs officials when she tried to travel to Hong Kong. Guo Yuhua had criticized and exposed policies related to rural areas and grassroots governance in China and publicly withdrew from the Communist Party in 2014.

Source: Radio Free Asia, July 7, 2023
https://www.rfa.org/cantonese/news/teacher-07072023015818.html

Chinese Police Forced German-Chinese to Provide Information on Overseas Protesters

A recent investigation by German news outlet Correctiv has uncovered the case of a young German-Chinese man who was pressured by Chinese authorities to provide information about Chinese-Germans critical of the Chinese government. The man, identified as Alex, was interrogated by police upon his arrival in China and was shown photos of himself participating in anti-government protests in Germany. After hours of questioning, Alex provided fake names of two protesters he knew. Correctiv has verified his account through conversations and evidence such as photos and chat records.

German security agencies are currently investigating the incident. If confirmed, this incident will further strain the already tense relations between Germany and China. Ulrich Lechte, a spokesperson for the Free Democratic Party parliamentary group, and Jürgen Hardt, the deputy chairman of the parliamentary foreign affairs committee, have called on the German Foreign Ministry to issue travel warnings for China in response to this incident.

The German Foreign Ministry has stated that German citizens of Chinese descent have consular protection rights, and they are unaware of any Chinese refusal to recognize the German citizenship of ethnic Chinese Germans. The ministry acknowledged previous cases where China did not fully comply with its international obligations when dealing with ethnic Chinese who obtained foreign citizenship.

This incident adds to the list of instances where Chinese authorities have pressured Chinese citizens or ethnic Chinese living abroad. In a previous investigation, it was revealed that the Chinese government exerts strict control over Chinese students studying in Germany, particularly those receiving scholarships from the China Scholarship Council. These students are required to sign agreements promising not to engage in activities detrimental to China’s interests and regularly report to the Chinese embassy. Several Chinese students expressed fears of government surveillance and harsh reactions from the Chinese consulate if they participated in protests in Germany.

The German Foreign Ministry has not indicated whether travel warnings for China will be updated in light of this incident.

Source: Deutsche Welle, July 8, 2023
https://p.dw.com/p/4TcNi

Vietnamese Government Orders Removal of Chinese TV Series due to Nine-Dash Line Dispute

The live-action movie “Barbie” has been banned in Vietnam due to a disagreement over the depiction of the “nine-dash line” map, which China uses to define its territorial claim in the South China Sea. Vietnam and other Southeast Asian countries do not recognize this line. In addition, the Vietnamese government ordered Netflix and the local telecommunications company FPT to remove the Chinese TV series “Flight To You” from their platforms as it also featured scenes with the disputed map.

The Vietnamese Ministry of Culture’s Film Bureau claimed that although FPT had blurred the “nine-dash line” map in the TV series, it still contained “inappropriate content” that violated Vietnamese national sovereignty and film laws. The investigation identified specific episodes of the series, stating that they included unacceptable visuals, dialogues, and subtitles related to the disputed map.

The Vietnamese Film Bureau sent a letter to FPT, pointing out that despite blurring the map, the TV series had other unacceptable plot points and scenes that were deemed unsuitable for broadcast in Vietnam. Netflix and FPT were given 24 hours from July 10 to remove the series and submit a written report to the Film Bureau by July 12.

According to a Taiwan Central News Agency report, Netflix and FPT have already taken down the entire series in Vietnam. The series remains available in other regions. The report also mentions previous instances where the “nine-dash line” map caused controversies, such as its appearance on the official website of a South Korean concert in Hanoi and the ban of the Hollywood film “Uncharted” in Vietnam.

The Permanent Court of Arbitration ruled at The Hague in 2016 that China’s claim to the “nine-dash line” lacked a legal basis and is not valid under international law.

Source: Central News Agency (Taiwan), July 11, 2023
https://www.cna.com.tw/news/acn/202307110080.aspx

Wang Yi’s Comments on China’s Foreign Relations Law

China passed the “Law of the People’s Republic of China on Foreign Relations” on June 28, 2023. Wang Yi, China’s number one official in charge of foreign affairs, holding the titles of Chinese Communist Party’s (CCP’s) Politburo member, Director of CCP Central Committee’s Foreign Affairs Work Committee, and State Council member, published a lengthy report on People’s Daily to praise the significance of the law.

Wang stated that the law represents Xi Jinping’s ideas on conducting foreign affairs, as well as the work of the CCP’s leadership on the matter. He also suggested that law offers a weapon for China to better fight against foreign forces.

Wang stated the following:

“(1) The enactment of the law on foreign relations is a major achievement in implementing Xi Jinping Diplomatic Thought in the form of law.”

“(2) The enactment of the law on foreign relations is an important measure to strengthen the centralized and unified leadership of the CCP Central Committee on foreign affairs.”

“(6) The enactment of the law on foreign relations address an urgent need to safeguard national sovereignty, security, and development interests. At present, China’s development has entered a period of the coexistence of strategic opportunities and risks and challenges, with increased uncertainties and unpredictable factors. In the face of serious challenges, we must maintain strategic determination, know and meet the difficulties, dare to fight, and be good at fighting. This includes the use of the weapon of laws and continuous enrichment and improvement of the legal “toolbox” for foreign affairs struggle, and full use of the law as a “stabilizer” for international order. The enactment of the foreign relations law, the clearly opposing of all hegemony and superpower politics, the opposing of any unilateralism, protectionism, bullying, and foreign interference, sanctions, sabotage and other acts against our country, and the clear enactment of legal provisions on countermeasures and restrictions will have preventive, warning, and deterrent effect, offering our country the legal basis to exercise anti-sanctions and anti-interference, and offering us legal means to safeguard national interests and maintain world peace.”

Source: People’s Daily, June 29, 2023
http://politics.people.com.cn/n1/2023/0629/c1001-40023485.html

China State Media Uniformly Talked About People in Western Countries Not Having Enough Food to Eat

A Chinese netizen found that China’s state media collectively reported that people in Western countries do not have enough food. He concluded that “the official media’s intensive spreading of news that foreigners don’t have enough to eat is to tell you that hard times are coming (to you).” (Editor’s note: The Chinese Communist Party’s (CCP’s) logic is to tell Chinese people that people in other countries are in a horrible state and therefore, when hardship comes to the Chinese, they can justify or accept it since they are no worse off than those foreigners.)

The netizen gathered screenshots of several CCP controlled media around June 30:

  • Xinhua News Agency said, “One in every seven Brits didn’t have enough to eat last year;”
  • People’s Daily claimed, “Australia’s low-income families face severe cost-of-living pressure;”
  • China Daily claimed, “Homeless people in New York shelters hits record high of over 100,000;”
  • Xinmin Evening News, a media owned by Shanghai government, claimed, “One fifth of the German population is at risk of poverty;”
  • The Global Times reported, “Japanese media: Inflation soars, Japanese elderly can’t afford to eat fish.”

Source: Aboluo website, July 3, 2023
https://www.aboluowang.com/2023/0703/1922399.html

Global Times: China Announced Gallium and Germanium Export Controls

Global Times recently reported that China’s Ministry of Commerce and the General Administration of Customs announced the implementation of export controls on items related to gallium and germanium. This has aroused great concern, and some worry that rare earths could be the next target. The Goldman Sachs Group predicted that the West may need to invest more than US$25 billion to rival the supply of rare earths from China. China’s rare earth production accounts for 90 percent of the world’s total refined production. As extremely important scarce strategic resources, gallium and germanium are widely used in cutting-edge technology fields such as satellite communications, solar cells, semiconductors and artificial intelligence. At present, these two rare metals are listed as 35 key minerals by the United States and 61 key raw materials by the European Union. Chinese Foreign Ministry spokesperson said that items related to gallium and germanium have obvious military and civilian dual-purpose uses. And it is a common international practice to implement export controls on items related to gallium and germanium. China announced the measure just before U.S. Treasury Secretary Yellen’s visit to China. Some media outlets said that China’s move was intended to send a signal to the U.S. – China is demonstrating it won’t let repression go, China can fight back.

Source: Global Times, July 7, 2023
https://world.huanqiu.com/article/4Dbx4VTZ5Va