US-Japan-Philippines summit, China's Russian ties, and Xi's meeting with former Taiwan leader Ma Ying-jeou
+ Olaf Scholz's China visit
Welcome back to What’s Happening in China, your weekly update on the latest news and developments from the country.
Every month, I share a free edition of the newsletter, and this is it.
Whether you are a businessperson, investor, government official, academic, media outlet, or general reader, if you want to stay up-to-date on the latest developments in and related to China, I encourage you to subscribe.
Let’s jump into it.
THROUGH THE LENS
IN FOCUS
Dialogue de sourds
These days, only about 700 American students are studying at Chinese universities, down from a peak of close to 25,000 a decade ago, while there are nearly 300,000 Chinese students at U.S. schools.
Some young Americans are discouraged from investing their time in China by what they see as diminishing economic opportunities and strained relations between Washington and Beijing.
Whatever the reason for the imbalance, U.S. officials and scholars bemoan the lost opportunities for young people to experience life in China and gain insight into a formidable American adversary.
And officials from both countries agree that more should be done to encourage the student exchanges, at a time when Beijing and Washington can hardly agree on anything else.
Read: Far fewer young Americans now want to study in China, something both countries are trying to fix
XINJIANG
Authorities in Xinjiang Continue to Stifle Ramadan, Secularize Islam
China Digital Times
Muslims around the world celebrated Eid-al-Fitr this week, marking the end of the holy month of Ramadan. The month is normally observed through daily fasting, prayer, and community service, but in Xinjiang, many of these traditions were stifled by authorities, as was the case in previous years. Accounts from various parts of the region reveal the CCP’s increasingly successful efforts to secularize Islam while rendering Uyghur Muslims into caricatures for external propaganda.
David Rennie, author of The Economist’s Chaguan column, spent the final days of Ramadan in Xinjiang, where he observed, “Several times ordinary Uyghurs signalled that this has been a distressing Ramadan, during which it was risky to be caught fasting.” In Urumqi, he described several tense encounters with locals who indicated that practices related to fasting had been banned […]
POLITICS & SOCIETY
China Initiates New Round of Graft Inspections on State Bodies, Financial Institutions
Caixin
China is launching another series of sweeping disciplinary inspections covering nearly three dozen key government departments and state-owned financial institutions.
The third round of routine inspections, following the previous one in 2021, will target 34 bodies including central government ministries, the central bank, the Shanghai and Shenzhen stock exchanges, the biggest state-owned banks and insurers as well as policy lenders, according to a list published by the Xinhua News Agency Monday.
Announcing the inspections, Li Xi, China’s top anti-graft official, urged his teams to thoroughly study and implement the regulations on disciplinary inspections to promote high-quality development, defuse risks and push forward deepening reforms.
In Depth: How China’s Revision of Supervision Law Would Expand Legislative Oversight Powers
Caixin
China is expanding lawmakers’ supervisory powers over local authorities as the country’s top legislative body has initiated the first revision to the country’s Supervision Law.
Specifically, the central government proposed increasing the capacity and rigor of national and local people’s congress standing committees (PCSC) in reviewing local regulations. Legal scholars said the move is aimed at keeping improper local policies from unduly restricting civil rights and freedoms.
China’s Youth Are Giving Up on Saving for Retirement
The New York Times
China wants young people to put money away for retirement. Tao Swift, an unemployed 30-year-old, is not interested in hearing it.
“Retire with a pension?” he asked. “I don’t hold much hope that I can definitely get my hands on it.”
Mr. Tao, who lives in the southern city of Chengdu, is not alone in thinking this way. On social media forums and among friends, young people are questioning whether to save for old age. Some are opting out, citing the shortage of jobs, low pay and their ambivalence about the future.
Their skepticism betrays the enormous challenge for China’s leaders. Over less than three decades, the country has changed from a young society to an aging one. Seven straight years of plummeting births are pushing up the day when there will be fewer people working than retirees.
The fast-changing demographic profile is putting tremendous strain on China’s existing underfunded pension system. An average retirement age of 54, among the lowest in the world, has made this stress more acute.
The Rise of Prenuptial Agreements in China
The World of Chinese
A growing number of young people in China share the same sentiments as Mei and are signing prenuptial agreements with their partners. Over a decade ago, in 2010, just 10 percent of people polled by China Youth Daily said they could accept a prenuptial agreement. But a survey of 2,396 unmarried people published by NetEase’s Data Blog column in November last year revealed over 50 percent intended to sign one. On social media platforms, thousands of users have shared their experiences with the agreements, along with tips on how to write them, and even template agreements for couples to download.
Media Freedoms Report 2023: ‘Masks Off, Barriers Remain’
Foreign Correspondents' Club of China
The Foreign Correspondents’ Club of China’s latest working conditions report “Masks Off, Barriers Remain” describes another challenging year for international media in 2023. Difficulties persisted in spite of an improved reporting environment due to the end of China’s tough “COVID Zero” policy and related restrictions on movement, restoring reporters’ ability to move around the country relatively freely.
A vast majority of FCCC members welcomed China’s reopening, with 81% saying conditions had improved somewhat in 2023, compared to the pandemic period. However, the return of mobility has also meant more correspondents dealing with the type of heavy-handed responses to independent reporting in the field that long predated the pandemic.
HONG KONG & MACAO
Reporters Without Borders rep. denied entry to HK, NGO says
HKFP
A representative for Reporters Without Borders (RSF) has been denied entry to Hong Kong, the French free expression NGO has said, after she was detained, searched and questioned for six hours at the airport on Wednesday.
“This action by the Hong Kong authorities, unprecedented for RSF, marks a new decline in the already poor press freedom climate in the territory,” it said in a statement following the incident.
Taipei-based Advocacy Officer Aleksandra Bielakowska was searched three times, and questioned by immigration officials, for six hours at the city’s international airport, it said. She was then deported.
5 years' jail for Portuguese national in HK over 'demonising China'
HKFP
A Portuguese national has been sentenced to five years in prison for conspiring to incite secession under the Beijing-imposed national security law, after a judge ruled that he had “demonised China” in social media posts which advocated independence for the city.
District Court Judge Ernest Lin said Joseph John, also known as Wong Kin-chung, had “distorted history” while managing social media accounts for the UK-based Hong Kong Independence Party.
Stagnant Rents Draw Mainland Retailers to Hong Kong
Caixin
More Chinese mainland food and beverage and lifestyle brands are setting up shop in Hong Kong, as the city’s retail rents are expected to maintain low single-digit growth in the near term, according to a new report.
Many popular Chinese F&B chains including tea and coffee brands Hey Tea, Nayuki and Manner Coffee, as well as barbecue restaurant Xia Laotaitai, noodle chain Hefu-Noodle and spicy sauerkraut fish specialist Tai Er are expanding their outlets in the financial hub, according to a report published Wednesday by commercial real estate services firm Cushman & Wakefield.
Sky’s not the limit for Hong Kong’s plastics ban, with policy to cover city’s airlines and all outbound flights
SCMP
Hong Kong’s ban on throwaway plastics will cover meals served by local airlines and all other flights leaving the city once the policy comes into force later this month, environmental authorities have said.
The Environmental Protection Department said on Friday that meals offered by city flag carrier Cathay Pacific Airways and its budget arm HK Express, as well as Hong Kong Airlines and Greater Bay Airlines, would fall under the policy’s dine-in restrictions.
The first stage of the ban will take effect on April 22 and prohibits styrofoam products and throwaway plastic utensils, including straws and swizzle sticks. Plastic cups and containers will no longer be available for customers eating at restaurants.
Kenneth Cheng Kin, an assistant director with the department, stressed its officers would not penalise businesses that breached the ban during a six-month grace period.
Authorities confirmed to the Post that the restrictions would also apply to flights operated by international airlines flying out of the city.
“The government has not granted any exemptions,” a department spokesman said. “The practices applying to airlines and other businesses are the same.
“Those meals produced by foreign companies in Hong Kong will also be regulated by the new law as [their flights originate] within the city.”
TAIWAN
No problem that can’t be talked through, President Xi Jinping tells Taiwan’s Ma Ying-jeou in historic Beijing talks
SCMP
There is “no problem that cannot be talked through”, President Xi Jinping told Ma Ying-jeou in Beijing on Wednesday, in historic talks marking the first time the top mainland leadership had received a serving or former president of Taiwan.
War “would be unbearable”, responded Ma, who is close to wrapping up an 11-day “journey of peace” on the mainland following a landmark visit just over a year ago.
The pair last met in Singapore in November 2015, when Ma was in office, in the first cross-strait summit since the two sides split in 1949 following a civil war. The highlight of that meeting was an 80-second handshake ahead of closed-door talks.
In opening remarks made in the presence of the press on Wednesday, both Xi and Ma sought to strike a conciliatory tone despite prolonged cross-strait tensions.
Referring to his guest as “Mister Ma”, Xi said: “Compatriots on the two sides are both Chinese. There is no grudge that cannot be resolved. No problem that cannot be talked through. And there are no forces that can separate us.”
Xi said differences in political systems could not change the fact that the two sides were one country. “Foreign interference” cannot stop the historic trend of a “family reunion”, he said, calling on both sides to seek “peaceful reunification”.
Ma responded with a message of peace, addressing the mainland leader as “General Secretary Xi” – in a reference to his title as leader of the ruling Communist Party.
‘Wolf warrior’ diplomacy loses its bite in the Czech Republic
Taipei Times
Last month, an incident involving a Chinese diplomat tailing the car of vice president-elect Hsiao Bi-khim (蕭美琴) in Prague, drew public attention to the People’s Republic of China’s (PRC) operations to undermine Taiwan overseas.
The trip was not Hsiao’s first visit to the Central European country. It was meant to be low-key, a chance to meet with local academics and politicians, until her police escort noticed a car was tailing her through the Czech capital.
The driver ran red lights, almost causing an accident at an intersection. When confronted by authorities, he presented a diplomatic passport issued by the PRC, according to the Czech Internet news site Seznam Zpravy. The driver, who works for the Chinese embassy’s military department, denied allegations he was tailing Hsiao
TSMC gets $6.6 billion in chipmaking cash from Biden while pledging to build a third Arizona plant
Yahoo Finance
The Biden administration said Monday it plans to send up to $6.6 billion in federal grants to the Taiwan Semiconductor Manufacturing Company (TSM) as the chipmaking giant promises a $25 billion Arizona expansion that will bring a third TSMC fabrication plant to that state.
The deal, the second major US chipmaking grant announcement of the last three weeks, is part of President Joe Biden's effort to restart advanced semiconductor manufacturing in the US.
Beijing sanctions 2 more US defence firms over arms sales to Taiwan, violation of ‘one-China principle’
SCMP
Beijing on Thursday announced fresh sanctions against two American defence industry firms over selling arms to Taiwan, accusing Washington of continuing to “undermine its sovereignty”.
China’s foreign ministry said it would freeze mainland assets held by General Atomics Aeronautical Systems, a manufacturer of unmanned aerial systems, and General Dynamics Land Systems, which specialises in the design and production of tracked and wheeled military equipment.
The senior management of the two firms will also be barred from entering the country.
YouTube co-founder Steve Chen on connecting Taiwan with Silicon Valley
Rest of World
Steve Chen on the strengths and weaknesses of Taiwan in cultivating tech startups.
WORLD
Ties with US and Japan will ‘change dynamic’ in South China Sea, Philippines president says
The Guardian
A cooperation agreement by the Philippines, the United States and Japan will change the dynamic in the South China Sea and the region, the Philippine president has said, while seeking to assure China it was not a target.
“I think the trilateral agreement is extremely important,” Ferdinand Marcos Jr told a press conference in Washington on Friday, a day after meeting President Joe Biden and the Japanese prime minister, Fumio Kishida, in the nations’ first trilateral summit.
“It is going to change the dynamic, the dynamic that we see in the region, in Asean in Asia, around the South China Sea,” Marcos said, referring to the Association of Southeast Asian Nations.
The three leaders expressed “serious concerns” about China’s “dangerous and aggressive behaviour” in the South China Sea, a conduit for more than $3tn of annual ship-borne commerce, with various maritime disputes between China and other countries.
Still, Marcos said the summit was “not against any country” but had focused on deepening economic and security relations between Manila, Washington and Tokyo.
In US meeting, Philippines says it will assert South China Sea rights
Reuters
The Philippines is determined to assert its sovereign rights in the South China Sea, its foreign secretary said on Friday at a meeting with U.S. allies to show support for Manila over an increasingly fraught standoff with China in the strategic waterway.
Speaking at the U.S. State Department, Enrique Manalo accused China of "escalation of its harassment" of the Philippines, while U.S. Defense Secretary Lloyd Austin said Washington stood with Manila against what he described as "coercion."
Beijing condemns US-Japan-Philippines summit, summons envoys
DW
China on Friday criticized the United States, Japan and the Philippines after US President Joe Biden this week vowed to defend the Philippines from any attack in the South China Sea.
Meanwhile, Beijing has also summoned Japanese and Philippine diplomats to express dissatisfaction over comments that arose during a summit in Washington of the leaders of the United States, Japan and Philippines, China's foreign ministry said on Friday.
‘Subdue the enemy without fighting’: how China’s powerful water cannon will change the game in South China Sea
SCMP
The world’s first “smart” water cannon, controlled by artificial intelligence (AI), has been developed by researchers in central China – and it could take the non-lethal weapon to new heights.
Beijing increasingly sees the weapons as vital to bolstering its hold over the disputed waters while also lowering the odds of armed clashes.
The use of water cannons in South China Sea disputes is likely to increase in frequency and intensity, potentially changing the rules of the game in this sensitive region, according to some Chinese coastguard researchers.
A water cannon is a device driven by a high-pressure water pump to generate a strong, high-speed jet. A powerful water cannon can attack targets over 100 metres (328 feet) away, generating a pressure of more than 1.2 megapascals. An adult male facing that head-on could be subjected to an impact force of nearly nine tonnes, equivalent to being stepped on by an African elephant.
In recent months, the Philippine navy has frequently been hit by water cannons during stand-offs with Chinese coastguard vessels. In one notable incident last month, a cockpit windscreen was shattered, injuring several personnel.
Yellen on China: Talks over the country’s overcapacity
Reuters
The last day of U.S. Secretary Janet Yellen's trip to China coincided with the strongest retort yet from Beijing officials over her claims that China is flooding global markets with cheap goods, particularly in the new green industries.
As Yellen laid out plans to formalise dialogue with China over excess industrial capacity in electric vehicles (EVs), solar panels and batteries, saying Washington would not accept U.S. industry being "decimated", the Chinese finance ministry issued a statement saying it had already "fully responded" to her concerns.
Commerce Minister Wang Wentao, at a roundtable meeting with Chinese EV makers in Paris on Monday, said U.S. and European assertions of excess capacity were groundless, adding China's rise in these industries was driven by innovation and complete supply chain systems, among other factors.
China's latest response, analysts say, centres on the idea that its production system is simply more competitive, a sharp change in tone from only a month ago when officials including Premier Li Qiang sounded their own warnings on overcapacity.
The strong pushback from Beijing contrasts with the generally warm interactions between Yellen and Chinese officials during her trip, leaving the two largest economies further apart on the hottest dispute in global trade, which could add to tensions.
"They cannot win the race, so they try to slow it down," said Li Yong, chief researcher at D&C Think, a Chinese think tank, referring to the West's rhetoric on overcapacity.
Exclusive: US airlines, unions urge Biden administration not to approve more China flights
Reuters
Major U.S. airlines and aviation unions on Thursday urged the Biden administration to pause approvals of additional flights between China and the United States, citing ongoing "anti-competitive policies of the Chinese government."
In February, the U.S. Transportation Department said Chinese passenger airlines could boost weekly round-trip U.S. flights to 50 starting on March 31, up from the current 35, about a third of pre-pandemic levels. U.S. carriers were authorized as well to fly 50 flights per week but are currently not using all those flights.
Airlines for America, a trade group whose members include American Airlines, Delta Air Lines and United Airlines, and unions in a letter to the Transportation and State departments cited the "advantage Chinese airlines receive by continuing to access Russian airspace, while U.S. carriers stopped flying through Russian airspace at the start of Russia’s invasion of Ukraine in March 2022."
China Tells Telecom Carriers to Phase Out Foreign Chips in Blow to Intel, AMD
WSJ
China’s push to replace foreign technology is now focused on cutting American chip makers out of the country’s telecommunications systems.
Officials earlier this year directed the nation’s largest telecom carriers to phase out foreign processors that are core to their networks by 2027, a move that would hit American chip giants Intel and Advanced Micro Devices, people familiar with the matter said.
The deadline given by China’s Ministry of Industry and Information Technology aims to accelerate efforts by Beijing to halt the use of such core chips in its telecom infrastructure. The regulator ordered state-owned mobile operators to inspect their networks for the prevalence of non-Chinese semiconductors and draft timelines to replace them, the people said.
US Faces Pushback by Netherlands, Japan on More China Chip Export Bans
Bloomberg
US attempts to press the Netherlands and Japan into further curbing Chinese access to semiconductor technology suffered a setback this week, with both nations seeking time for existing limits to take hold — and to see who triumphs in the US presidential election.
The US is urging allies to tighten maintenance for banned gear in China, an effort that includes pushing the Dutch government to stop ASML Holding NV from servicing and repairing restricted chipmaking equipment procured by Chinese companies before the current sales ban. US officials also want Japanese firms to limit exports of some high-end chemicals for chip production.
But both nations are resisting those additional steps, wanting more time to evaluate the impact of export bans on high-end chip-making equipment, according to people familiar with the matter. Another factor is uncertainty about the outcome of the US election in November, according to the people, who described the private discussions on condition of anonymity.
ASML and the Dutch trade ministry declined to comment. Japan’s Ministry of Economy, Trade and Industry said it was in touch with international export control authorities, but declined to comment on “diplomatic exchanges.” The US Commerce Department didn’t immediately comment.
Chinese leader Xi meets with Russia's Lavrov in show of support against Western democracies
AP
Chinese leader Xi Jinping met with Russian Foreign Minister Sergey Lavrov Tuesday in a sign of mutual support and shared opposition to Western democracies amid Moscow’s invasion of Ukraine.
“We would like to express our highest appreciation and admiration for the successes that you have achieved over the years and, above all, over the last decade under your leadership,” Lavrov told Xi, according to Russian media.
“We are sincerely pleased with these successes, since these are the successes of friends, although not everyone in the world shares this attitude and are trying in every possible way to restrain the development of China — in fact just like the development of Russia,” Lavrov said.
Russia and China Warn NATO To Stay out of Asia
Newsweek
Moscow and Beijing's top diplomats on Tuesday accused NATO of seeking ways to enter the Asia Pacific and warned the trans-Atlantic alliance against "stretching its hands to our common home."
At the press conference following his meeting with Chinese counterpart Wang Yi, Russian Foreign Minister Sergey Lavrov also said the two had mooted a "new security architecture in Eurasia as Euro-Atlantic mechanisms continue to decay and destroy themselves," Russia's state-owned TASS news outlet reported.
US says China is supplying missile and drone engines to Russia
Financial Times
The US has accused China of providing Russia with cruise missile and drone engines and machine tools for ballistic missiles, as it urges Europe to step up diplomatic and economic pressure on Beijing to stop the sales.
In disclosing previously classified intelligence, senior US officials said Chinese and Russian groups were working to jointly produce drones inside Russia. They said China had also supplied 90 per cent of chips imported by Russia last year which were being used to make tanks, missiles and aircraft.
The officials added China was also helping Russia to improve its satellite and other space-based capabilities to help prosecute its war in Ukraine, and Beijing was also providing satellite imagery.
Dennis Wilder, a former top China military analyst at the CIA, said the disclosure “far exceeds previous estimates and shows a concerted programme by China’s leaders” to help Moscow prosecute the war in Ukraine.
U.S. Blacklists Six More Chinese Firms for Acquiring AI Chips for Military and Drones for Russia
Caixin
The United States has added six Chinese companies to an export blacklist accusing them of seeking to acquire AI chips for China’s military or helping to procure drones for use by Russia.
The companies were among 11 additions from China and Russia to the U.S. Commerce Department’s Entity List. Inclusion on the list requires American exporters to obtain a license before shipping goods or technology to the companies and such licenses are likely to be denied.
China won't accept 'criticism or pressure' over Russian ties
HKFP
China vowed Wednesday it would not accept “criticism or pressure” over its ties with Russia, after Washington warned that it will hold Beijing responsible if Moscow makes gains in Ukraine.
Deputy Secretary of State Kurt Campbell said Tuesday that Washington would “not sit by and say everything is fine” after Beijing renewed pledges of cooperation with Moscow during a visit by Russia’s top diplomat.
In response, foreign ministry spokesperson Mao Ning insisted that “China and Russia have the right to engage in normal economic and trade cooperation”.
China Urges US To Play 'Constructive Role' In Middle East
Barron's
China urged the United States to play "a constructive role" in the Middle East on Friday after its top diplomat Wang Yi spoke with his US counterpart Antony Blinken over the phone.
Blinken used the call to ask Beijing to use its influence to dissuade Iran from striking Israel, the State Department said. Concerns of retaliation by Tehran have grown after an Israeli strike on April 1 levelled an Iranian diplomatic building in Damascus.
On Friday China confirmed the call had taken place, saying Wang "expressed China's strong condemnation of the attack" while emphasising the "inviolable" right to security of diplomatic institutions and the need to respect the sovereignty of Iran and Syria.
The West urges China to intervene with Iran amid fears of a direct attack on Israel
CNBC
Western diplomats have mounted pressure on China to prevent Iran from escalating tensions in the Middle East with a direct retaliatory strike against Israel.
U.S. Secretary of State Antony Blinken earlier this week spoke with Chinese Foreign Minister Wang Yi and other counterparts in Turkey and Saudi Arabia amid rising fears of retaliation by Tehran against Israel.
Blinken asked the foreign ministers to “make clear that escalation is not in anyone’s interest, and that countries should urge Iran not to escalate,” U.S. State Department spokesperson Matthew Miller said Thursday.
“We have also engaged with European allies and partners over the past few days and urged them as well to send a clear message to Iran that escalation is not in Iran’s interest, it’s not in the region’s interest, and it’s not in the world’s interest.”
China Says Wang Yi Condemned Iran Embassy Attack in Blinken Call
Bloomberg
China said its top diplomat used a call with Secretary of State Antony Blinken to condemn an attack on Iran’s embassy in Syria.
Wang Yi raised the issue with Blinken on Thursday, Foreign Ministry spokeswoman Mao Ning said Friday at a regular press briefing in Beijing.
Mao avoided a question about what else was discussed.
What to expect from Olaf Scholz's China visit
DW
German Chancellor Olaf Scholz leaves for China on Saturday for a three-day diplomatic visit that includes meetings with Chinese leader Xi Jinping.
Accompanied by a high-level business delegation, the German leader is expected to address grievances over the trade deficit between the EU common market and the world's second-largest economy.
Scholz is also expected to question China's ties with Russia amid the Ukraine war and Beijing's aggressiveness toward Taiwan — a self-ruled island China claims as its own.
Scholz is scheduled to meet Xi and Chinese Premier Li Qiang in Beijing on Tuesday, the last day of his trip. This is Scholz's second trip to China as chancellor — he completed his first visit in November 2022.
Why Germany’s Scholz is bowing to the Chinese dragon
Politico
With the next national election just over a year away, the leader of Europe’s sputtering economic engine is running out of time to conjure a miracle and reverse his government’s calamitous standing with the German population.
Scholz's three-day visit to the Middle Kingdom, which begins Saturday, will be both his longest and most important foreign trip since he assumed office in late 2021. For the chancellor, beset by record-low approval ratings and a fractious coalition, the tour is an opportunity not to just prove he has global standing, but to show voters he'll do whatever it takes to preserve Germany, Inc. — Zeitgeist be damned.
European defence groups warn over reliance on Chinese cotton used in gunpowder
Financial Times
European defence contractors have warned that reliance on Chinese cotton used in gunpowder for ammunition threatens their ability to expand output as western countries race to bolster Ukraine’s overstretched military.
Cotton linters, a byproduct and a primary ingredient needed to produce nitrocellulose, are used in artillery shells and other explosives.
Demand for ammunition has soared with Ukraine consuming shells at high rates in its war against Russia. But defence contractors have struggled to scale up output because of supply chain constraints of various inputs, including nitrocellulose, also known as “guncotton”.
Leading arms producers, including Sweden’s Saab and Germany’s Rheinmetall, warned that Europe was overly dependent on linters from China, which accounts for just under half of the global trade.
Armin Papperger, chief executive of Rheinmetall, a leading ammunition producer, told the Financial Times that Europe relied on China for “more than 70 per cent” of its cotton linters.
China protests Europe’s new wind-turbine probe and report alleging ‘distortions in the economy’
SCMP
Beijing has voiced strong opposition to the European Commission’s plan to investigate Chinese wind turbines over state subsidies and has decried a report from Brussels alleging “distortions in the economy” – developments expected to further strain two-way ties but not deter China in the long run.
The European Commission’s executive vice-president, Margrethe Vestager, said during a speech in the United States on Tuesday that her agency, an operating body for the 27-member European Union, plans to conduct an investigation into subsidies offered for wind turbines in China, according to the commission website.
On Wednesday, the commission’s director for trade defence, Martin Lukas, said via LinkedIn that his agency had published an updated report on “significant state-induced distortions in the economy” in China.
A Chinese Ministry of Commerce official met Lukas the same day in Brussels to rebut both the planned probe and the report, China’s official Xinhua News Agency said.
Sweden expels Chinese journalist over national security fears
Reuters
Swedish authorities have ordered the expulsion of a Chinese journalist, saying she could pose a serious threat to national security, a lawyer representing the woman said on Monday.
The 57-year-old Chinese woman has lived in the country for almost 20 years and denied all the accusations, lawyer Leutrim Kadriu told Reuters.
Kadriu did not name the woman or say whether she had already left. He said he could not go into details on the charges as they concerned national security and were officially confidential.
"The security police have argued that it can be assumed that my client may pose a serious security threat. This assessment has been agreed by the Migration Agency, the Migration Court and the government," the lawyer said.
The Migration Agency declined to comment.
Public broadcaster SVT did not give details of the charges, but said, without identifying its sources, that the woman had published articles on her website and had received payments linked to the reporting from the Chinese embassy in Stockholm.
She had also hosted Chinese authorities and business delegations on visits to Sweden and sought to arrange meetings with Swedish officials, SVT said.
Chinese fashion app Temu could face strict new EU content rules
Politico
Online platforms with over 45 million users in the EU must carry out detailed external audits and risk assessments about their platforms and measures they take to limit the spread of illegal content like dangerous toys or fake luxury bags. Fines can go up to 6 percent of their global turnover.
The European Commission has to formally designate such very large online platforms, giving the companies four months to prepare for the strict rules. The European Commission did not immediately reply to a request for comment about whether it will designate Temu.
Temu said in a statement to POLITICO that it would “cooperate fully” with the designation.
“We are aware of Temu’s recent statement of having more than 45 million monthly active users in the EU,” said Johannes Bahrke, a Commission spokesperson. “We are in contact with the platform in view of a possible designation in the future.”
China Investment in Australia Sinks as Companies Favor Belt and Road
Bloomberg
Investment into Australia by Chinese private and state-owned companies tumbled in 2023 to the second-lowest level in 18 years, according to a report from KPMG and the University of Sydney.
The analysis estimated that direct investment slid 37% to $892 million from the previous year. In contrast, China’s global outbound investment jumped in 2023, driven by projects in countries participating in President Xi Jinping’s Belt and Road Initiative.
China now a rival rather than boon for South Korean exporters, warns minister
Financial Times
South Korea’s economy needs to adapt urgently to rising competition from China, the country’s finance minister has warned, as its biggest exporters battle for market share in sectors ranging from chips to shipbuilding and display panels.
Choi Sang-mok said in an interview that South Korea had gone from being a beneficiary of Chinese growth to an economic rival and that his country needed to diversify its export-led economy.
“Our economic relationship with China has changed — rather than being a beneficiary of China’s export boom, a rivalry has emerged over the past 10 years,” Choi told the Financial Times ahead of South Korea’s parliamentary election on Wednesday.
Indonesia May Be Wasting Its Ties With China and Climate Partnership Full Potentials
Unfortunately, Prabowo may have wasted his recent visit. Rather than developing a true, deeper partnership with China on climate issues, the visit was a photo-op and a mere leverage chip that Prabowo could use against the West. At best, the visit could be seen as ensuring the continuity of Indonesia’s nickel supplies to China amid domestic and international criticisms.
Energy policies in Indonesia are closely linked to the economic and political interests of elites, who control nearly all fossil fuel interests – and Prabowo is a member of the elites.
$1.7 Billion Cambodian Canal Project Draws Increasing Scrutiny
The Diplomat
The governments of Vietnam and the United States are calling for greater transparency over a $1.7-billion canal project that is being built by a Chinese state-owned firm in southern Cambodia.
The 180-kilometer-long Techo Funan Canal, which is scheduled to begin construction later this year, will connect the country’s capital Phnom Penh to the coastal province of Kep, lowing the cost of shipping goods between the capital and the country’s only deep-sea port at Sihanoukville and reducing its reliance on Vietnamese ports. China’s state-owned China Bridge and Road Corporation landed the deal to develop the canal during last year’s Belt and Road Forum in Beijing.
While the Cambodian government says that the project is intended to benefit the country’s economy by making it less dependent on its eastern neighbor — Prime Minister Hun Manet has described the project as a way of “breathing through our own nose” — the environmental and security implications of the project have drawn scrutiny, particularly next door in Vietnam.
[…]
Vietnamese sources have also expressed more explicit worries about the security implications of the canal, which would allow navy ships to travel inland from the Gulf of Thailand. Much of this concern centers on the fact that the canal is being built by a Chinese firm, and that it will spill into the ocean not far from the Ream Naval Base, where the Chinese government has sponsored extensive renovation works.
In a commentary published last month by Vietnam’s People’s Public Security Political, and quoted by Bloomberg, said that the Funan Techo Canal “is not simply a socio-economic development project but also has great military value and has a strong impact on the defense and security situation of the entire region.”
For this reason, too, the project has attracted the attention of the U.S. government, which has been alarmed about the possible Chinese presence at Ream, despite the Cambodian government’s continued denials.
The Chinese émigrés leaving the pressures of home for laid back Chiang Mai
The Guardian
Xiong is part of a burgeoning trend of Chinese people – particularly millennials – who feel that the country that was supposed to be the powerhouse of the 21st century has little to offer them personally in social, intellectual and spiritual terms. In recent years, an economic downturn and lingering trauma from the isolation of China’s draconian zero-Covid regime has pushed people who would otherwise be seen as the country’s success stories to emigrate.
BUSINESS, ECONOMY & FINANCE
Fitch Cuts China Outlook to Negative on Steady Rise in Debt
Bloomberg
Fitch Ratings revised China’s outlook to negative from stable, saying the government is likely to pile on debt as it seeks to pull the economy out of a real estate-driven slowdown.
Growing uncertainty about the outlook for the world’s second-biggest economy, amid Beijing’s drive to make growth less dependent on housing, is putting the country’s public finances under strain, Fitch said on Wednesday. “Fiscal policy is increasingly likely to play an important role in supporting growth in the coming years which could keep debt on a steady upward trend.”
China’s government rapidly pushed back, saying the rating company failed to reflect the role of fiscal policy in shoring up growth, which helps to stabilize debt burdens. Financial markets were unfazed, with China’s 10-year sovereign bond yield little changed at around 2.29%, and the yuan also steady. Fitch’s action matched a similar one by Moody’s Investors Service in December.
China's March exports and imports shrink, miss forecasts by big margins
Reuters
China's exports contracted sharply in March while imports unexpectedly shrank, undershooting forecasts by big margins, highlighting the stiff task facing policymakers as they try to bolster a shaky economic recovery.
The dour data represented a setback for the world's second-largest economy after a generally better-than-expected start to the year. China has struggled to mount a sustainable post-COVID bounce, burdened by a protracted property crisis, mounting local government debts and weak private-sector spending.
Exports from China slumped 7.5% year-on-year last month by value, customs data showed on Friday, the biggest fall since August last year and compared with a 2.3% decline forecast in a Reuters poll of economists. They had risen 7.1% in the January-February period.
The data was released after mainland Chinese stock markets had closed, but Hong Kong's major indexes extended losses to more than 2%.
"Despite a larger-than-expected year-on-year fall in export values, export volumes edged up to record highs", analysts at Capital Economics said, suggesting Chinese exporters are continuing to slash prices to maintain sales amid stubbornly weak domestic demand.
China Wages Snap Three-Quarter Slide, Signaling Upturn in Labor
Bloomberg
Wages offered to new hires in China snapped three quarters of decline in the first three months of this year, suggesting an improvement in the labor market that could boost consumer spending in the world’s second-largest economy.
Average monthly salaries offered by companies to new recruits in 38 key Chinese cities rose 2.2% from a year before to 10,323 yuan ($1,426), according to data from online recruitment platform Zhaopin Ltd. compiled by Bloomberg. That was the first increase recorded since the start of 2023.
Separately, a survey of Shanghai residents published by the Shanghai University of Finance and Economics found employment conditions improved in the first quarter of the year, following two quarters in which conditions worsened.
A strengthening in wages and labor demand could go some way to boosting consumer spending. A weak job market is a key reason for low consumer confidence in China, Larry Hu, head of China economics at Macquarie Group said in a note last week.
Spending Over China’s Tomb-Sweeping Festival Exceeds Pre-Pandemic Level
Caixin
Domestic travel and spending during China’s Tomb-Sweeping festival topped pre-pandemic levels, a sign that consumption may be recovering in the world’s second-largest economy.
Total tourism spending over the three-day holiday rose 12.7% from 2019 on a comparable basis to 53.95 billion yuan ($7.5 billion), according to data from the Ministry of Culture and Tourism.
BYD Got €3.4 Billion Chinese Aid to Dominate EVs, Study Says
Bloomberg
China’s BYD Co. received at least €3.4 billion ($3.7 billion) in direct government subsidies as part of Beijing’s push to dominate electric vehicles and other clean technologies, according to a new study.
Aid for China’s leading EV maker jumped from €220 million in 2020 to €2.1 billion only two years later, Germany’s Kiel Institute for the World Economy said Wednesday. BYD also is benefiting from support for local battery manufacturers and rebates for buyers of its cars, according to the report, which comes as the European Union investigates allegedly unfair aid for China’s EV sector.
China’s Auto Exports Set Monthly Record in March
Caixin
China’s passenger vehicle exports jumped 39% year-on-year in March to 406,000 units, setting a monthly record, according to an industry group Tuesday .
Of the exported vehicles, around 120,000 were new-energy vehicles (NEVs), data published by the China Passenger Car Association (CPCA) showed. NEV exports in March increased 70.9% compared with a year ago, it said.
The month’s top three exporters were BYD Co. Ltd., Tesla Inc.’s China unit and SAIC Motor Corp. Ltd., according to the CPCA.
BYD Takes the Lead in China NEV Exports with 130% Growth in First Quarter
Caixin
China’s electric car maker BYD Co. Ltd. is stepping up the pace of vehicle exports and overseas production, strengthening its foothold as a global industry leader.
BYD’s export of new energy vehicles (NEVs) — including pure electric, plug-in hybrid and fuel cell vehicles — reached 99,000 vehicles in the first quarter, marking a 130% increase over the same period last year, according to data from the China Association of Automobile Manufacturers (CAAM). Tesla Inc.’s China plant exported 88,000 vehicles during the quarter.
Hebei Provincial Official Appointed to Communist Party’s Top Economic Body
Caixin
Yan Pengcheng, secretary-general of the Hebei provincial Communist Party Committee, has been appointed deputy director at the Office of the Central Financial and Economic Affairs Commission, the top body under the CPC Central Committee in charge of leading and supervising national economic work.
The appointment was made public in a statement released Tuesday by the Central Committee’s International Liaison Department, which named Yan in his new role while announcing his attendance at a symposium hosting visiting members of the Brazilian Workers’ Party in Beijing.
Yan, 51, is the youngest of the four deputy directors at the office of the party’s top economic decision-making body, which is headed by Chinese Vice Premier He Lifeng.
Fallen Everbright Group Chairman Charged With Bribery, Embezzlement
Caixin
Tang Shuangning, a former China Everbright Group Ltd. chairman and calligraphy aficionado who fell under a corruption probe last year, has been charged with taking bribes and embezzling public assets, the country’s top prosecutor announced in a statement Friday.
Over much of his career, including stints at the People’s Bank of China (PBOC) and a now-defunct top banking regulator, Tang abused his power to help people in matters such as getting loans and changing jobs in exchange for “especially large” bribes, the statement said, citing prosecutors in Tangshan, Hebei province.
China Property Crisis Deepens With Vanke in Market Crosshairs
Bloomberg
Concern is intensifying over state-backed China Vanke Co.’s ability to stave off default, defying efforts by authorities to shore up the cash-strapped developer’s finances.
The company’s stocks and bonds tumbled this week, leading an industrywide selloff, after S&P Global Ratings became the third major ratings company to cut the developer to junk territory.
The declines show the struggle officials face as they seek to restore investor confidence in an industry beset by plunging sales, falling property prices and soaring debt costs. Vanke, long considered among China’s most creditworthy property giants, is one of the few to avoid default.
“Vanke is an icon of China’s real estate industry,” said Yu Yingdong, general manager at Shenzhen Cowin Asset Management Ltd. “If a company like this can face such problems, it will only increase concern about the industry’s outlook.”
China's Shimao faces liquidation suit over failure to pay $202 million loan
Reuters
Chinese developer Shimao Group said on Monday China Construction Bank (Asia) had filed a liquidation petition against it in Hong Kong over unpaid debts, a rare case of a state-owned bank taking such legal action in the property downturn.
The petition centres on Shimao's failure to repay loans of HK$1.58 billion ($201.75 million) and contrasts with legal processes against rival firms such as China Evergrande Group and Country Garden for defaulting on their debts that were launched by overseas-based creditors.
Troubled Minsheng Trust Calls In Rivals to Run Its Day-to-Day Business
Caixin
China Minsheng Trust Co. Ltd. has hired two state-backed peers to help manage its daily operations, as the troubled trust company tries to rein in risks stemming from its mounting losses and nonperforming assets.
To improve the effectiveness of company operations, Minsheng Trust has signed an agreement with Citic Trust Co. Ltd. and Huarong International Trust Co. Ltd. to have them provide services for its day-to-day operations and management, according to an announcement on Thursday. The agreement, which came into effect on the same day, doesn’t alter any of Mingsheng Trust’s debt- and trust-related relationships and will continue until the two sides decide to end it, the announcement said.
China shakes wheat market with canceled shipments from U.S., Australia
Nikkei Asia
The global wheat market has been hit by Chinese buyers canceling major shipments, seemingly in an attempt to secure better prices and bolster the country's food security.
Benchmark Chicago wheat futures are trading at about $5.50 per bushel, up slightly from a three-and-a-half-year low marked in mid-March but down about 10% from the beginning of the year.
The U.S. Department of Agriculture last month said 504,000 tonnes of wheat sales to China had been canceled. The figure is equivalent to about half the total U.S. wheat shipments to China in 2022 and the largest cancellation on record going back to 1999.
About 1 million tonnes of Australian wheat exports to China have either been canceled or postponed as well, Reuters reports.
China is the world's largest grain importer. Buyers there have yet to provide a reason for the cancellations.
Although China is facing an economic downturn, the price of food generally suffers less from economic fluctuations than the price of crude oil, copper and other industrial materials.
"Buyers likely are trying to avoid going through with expensive contracts signed in the past, and are repurchasing at lower prices," said Ruan Wei at Japan's Norinchukin Research Institute, echoing a common view among market watchers.
Lianjia, China’s largest real estate brokerage, opens Manner coffee shop in Shanghai outlet to brew up home transactions
SCMP
Lianjia, mainland China’s largest real estate brokerage, has teamed up with coffee chain operator Manner to open a cafe in one of its outlets in Shanghai, launching a crossover marketing campaign to drive transactions amid lack of homebuying interest.
The property agency opened the Manner coffee shop in its Zhongtan Road outlet in northwestern Putuo district last weekend and is inviting other consumer brands to form tie-ups as a way of expanding their customer bases, Lianjia said on its official WeChat social-media account.
At its Zhongtan Road outlet, customers “are able to enjoy coffee and pursue dream homes at the same time”, Lianjia said.
The brokerage will revamp more outlets across the city of Shanghai in the coming months, with the aim of attracting more traffic by serving customers coffee, tea or food in a cosy environment, a Lianjia official said.
TECH & MEDIA
‘Warcraft’ Returns to China as Blizzard and NetEase End Spat
Bloomberg
NetEase Inc. reached a new agreement to distribute games in China for Microsoft Corp.’s Blizzard Entertainment, salvaging a 15-year relationship and reviving titles like World of Warcraft for the world’s biggest gaming market.
With the deal, famed franchises like StarCraft, Diablo, Hearthstone and Overwatch will once again be live for players in China. The Hangzhou-based publishing giant and Microsoft’s Activision Blizzard subsidiary halted a longtime partnership in January of last year after failing to agree on an extension.
Huawei says it will start selling PCs powered by Intel's AI chip
Nikkei Asia
China's Huawei Technologies on Thursday unveiled its first artificial intelligence-powered PC, saying it will be equipped with Intel's latest chipset and run on its in-house operating system.
The announcement comes despite a U.S. clampdown on the company that has sharply restricted its access to advanced American technology.
Dubbed the MateBook X Pro, the new PC will run on the HarmonyOS and use the Pangu Large Language Model developed by Huawei, according to Richard Yu, CEO of Huawei's Consumer Business Group. LLMs are powerful AI algorithms that can be used to generate human-like conversation and images and translate text, among other things.
Huawei Relaunch S7 With Cheaper Prices, Upgraded Specifications
Caixin
Huawei Technologies Co. Ltd. Thursday launched the new version of its Luxeed S7 electric sedan, co-developed with Chinese carmaker Chery Automobile Co. Ltd., after fixing supply and delivery issues.
The new S7 vehicles debuted with a 20,000 yuan reduction on the price tag for three advanced models equipped with LiDAR remote sensing technology and an upgraded battery pack for the entry level model. A top-tier model was added with a maximum driving range of 751 kilometers, taking on Xiaomi’s newly released electric sedan SU7.
Buyers who placed pre-sale orders will get compensation with cash and device add-ons worth 13,000 yuan, Huawei said.
The changes were made in response to China’ increasingly competitive electric vehicle market, according to Richard Yu, chairman of Huawei’s smart car unit. Mass shipment of the vehicle will start as supply and production issues have been resolved, Yu said.
SCIENCE, HEALTH & ENVIRONMENT
China successfully tests maglev trains in vacuum tube, eyeing future speeds of 4,000 kph
ABC News
China's new high-speed train doesn't roll along railways, it flies through tubes.
There are hopes it will one day connect cities and villages across the country, running at speeds of up to 4,000 kilometres per hour.
The magnetic-levitation (or maglev) train can clock speeds of 623 kph in tests — almost 200 kph quicker than the fastest train in service.
It is yet to be rolled out, but in February it went even faster, during a test of technology crucial to the train's high speed.
ARTS & CULTURE
#38: ODD
on the rapper's berserk new album, GRANDSTAND, a jumble of ideas in electronic riffs, looped mantras, and mania
How 'Anatomy of a Fall' Scored a Theatrical Release in China
Variety
Films we are interested in have to meet three criteria. First, they have to appeal to the Chinese audience. Second, they have to be able to pass censorship. And even if a film has the right topic, it must have some additional critical mass, such as festival acclaim, otherwise it can’t work for Chinese theaters. That’s why Cannes is so important. The Oscars come too late to be a decisive factor, but were a nice bonus.
The divide is growing in terms of what appeals to young theatrical audiences in China. Chinese content is getting better and the subject matter of Western films is of diminishing interest.
“Anatomy” has two interesting components. First, it is a whodunnit. These tend to do well in China of late. It is a brain teaser that is exceptionally well crafted and executed. Second, the subject of men and women living together is a hot topic in China, where people are marrying less and later, and where there are many questions about relationships and kids. We’ve noticed that many indie movies that do well in China focus on family.
China Box Office: 'The Boy and the Heron' Huge Five-Day Opening
Variety
Oscar-winning Japanese animation film “The Boy and the Heron” earned a chart-topping $34.9 million between Friday and Sunday at the mainland China box office. Over its full five-day opening run, it took an even more spectacular $73 million.
China was the last major territory to play the Studio Ghibli-produced fantasy in cinemas – it released in its native Japan in July and is imminently headed to streaming in many other territories – but that did not stop Chinese audiences from lapping it up.
While most films release in China on a Friday, “The Boy and the Heron” was given a Wednesday outing in order to capture momentum from the Thursday-to-Saturday Qingming public holiday.
Studio Ghibli exhibit goes to Shanghai as latest hit opens in China
Nikkei Asia
An immersive Studio Ghibli exhibit is coming to Shanghai on Friday, following the release of the animation company's new hit movie "The Boy and the Heron" in mainland China.
The roughly 2,800-sq.-meter exhibit outlines the Japanese studio's history, including works by co-founders Hayao Miyazaki and Isao Takahata. A re-creation of a scene from "Spirited Away" is also included.
The exhibit is a joint project of Beijing Damai Cultural Media Development -- a unit of Chinese tech conglomerate Alibaba Group Holding -- and Tokyo-based Tsukuru. It will run through late October.
"I believe the beautiful values and pursuit of art embodied by Ghibli will resonate with Chinese audiences," Damai President He Mi said Tuesday at a ceremony ahead of the opening to the public.
SPORTS
Asia/Oceania Group I: Impressive China maintain winning streak
Billie Jean King Cup
China, P.R. continued their impressive winning run at the 2024 Billie Jean King Cup by Gainbridge Asia/Oceania Group I event, with their latest win coming against Pacific Oceania.
China's Olympic champion Li Wenwen wins 3 golds at IWF World Cup
CGTN
China's Olympic champion Li Wenwen won three gold medals in the women's +87 kilogram category on her return at the International Weightlifting Federation (IWF) World Cup in Phuket, Thailand on Wednesday.
China seals six golds, three silvers at the World Aquatics Artistic Swimming World Cup 2024 in Beijing
World Aquatics
Kazakhstan, Italy and Israel each secured one gold medal on the third and last day of the World Aquatics Artistic Swimming World Cup 2024 in Beijing here on Sunday as the hosts team China dominated the medal table with six golds and three silvers out of the 11 events on offer.
If you enjoyed this week's edition of What's Happening in China, please like, comment, restack, or share it with friends, family, and colleagues.
See you next week!