• In letter, top U.S. general tells Chinese counterpart open to meeting
• Ransomware attack on China’s biggest bank disrupts US Treasury market
• US, China reach “understandings“ on climate ahead of COP28 talks -Kerry
• How scary is China? | Leaders
• Taiwan, facing Chinese pressure, to stress importance of peace at APEC summit
• Explainer: What is China’s Singles Day, and how is it celebrated?

In letter, top U.S. general tells Chinese counterpart open to meeting

https://reuters.com/article/usa-china-military-brown/in-letter-top-u-s-general-tells-chinese-counterpart-open-to-meeting-idUSKBN3250W0

The U.S. military's top general expressed optimism on Friday for a potential improvement in military-to-military ties with China and sent an introductory letter to his Chinese counterpart saying he was open to meeting.

Air Force General Charles Q. Brown, who took over as chairman of the Joint Chiefs of Staff just over a month ago, also said he did not believe that Chinese President Xi Jinping necessarily wanted to take Taiwan by force, while not ruling out the possibility.

The remarks by Brown during a trip to Japan came ahead of expected talks next week between Xi and U.S. President Joe Biden as they seek to stabilise tense relations.

Pentagon officials say a restoration of military ties, largely severed by Beijing, is crucial to preventing a miscalculation from spiralling into conflict.

"I think there's an opportunity and ... as the President potentially meets with Xi next week, we're getting indications that there is some interest," Brown told a small group of reporters in Tokyo. "If the opportunity presents itself, I will definitely engage."

Brown did not specify to whom he sent the introductory letter. But China's General Liu Zhenli is the Chief of the Joint Staff Department of the Central Military Commission (CMC), the military body responsible for China's combat operations and planning.

Brown said he sent a standard introductory letter that explained, "I'm in the position and willing to open a line of communication."

U.S. officials have cautioned that even with some restoration of military communications, forging truly functional dialogue between the two sides could take time.

Some analysts say China seeks ambiguity in defence relations to constrain what Beijing sees as U.S. military provocations in the region.

Washington and Beijing are at loggerheads over everything from the future of democratically ruled Taiwan to territorial claims in the South China Sea. Diplomatic relations are still recovering after the U.S. downed an alleged Chinese spy balloon in February.

Brown appeared to downplay Xi's enthusiasm for a potential invasion of Taiwan, in part given the military difficulty of such an operation. CIA Director William Burns has said Xi has instructed his country's armed forces to be ready to invade by 2027.

"I do think that Xi Jinping doesn't necessarily want to take Taiwan by force. He will try to use other ways to do this," Brown told a small group of reporters in Tokyo. "I also believe that taking Taiwan by force and doing a major amphibious operation is not an easy feat."

Brown, a former commander of the U.S. Air Force in the Asia-Pacific region, has met People's Liberation Army (PLA) officials in the past, including the People's Liberation Army Air Force's northern theatre commander in 2019 during a visit to Seoul.

Liu has emerged as the top contender to replace China's country's defence minister, General Li Shangfu, who was dismissed from his position last month. Reuters reported in September that Li was under investigation over suspected corruption related to equipment procurement and development.

Brown acknowledged corruption in the Chinese military when asked about Li's removal, and broader issues in the PLA, but also noted "alignment with Xi Jinping and his thinking as he continues to consolidate power".

Li was sanctioned by the U.S. in 2018 for an arms deal he secured with Russia in an earlier role. China had demanded the sanctions - which include a visa ban and prohibitions on conducting U.S. financial transactions - be lifted.

Liu, 59, is not under Western sanctions.

Any decision to improve military-to-military ties - frozen by Beijing when then-U.S. House Speaker Nancy Pelosi visited Taipei in August 2022 - would be made by Xi, who has the ultimate say in all important policies and appointments.

Xi is also commander in chief of the armed forces and chairman of the CMC, China's top defence decision-making body, on which Liu already sits.

Ransomware attack on China’s biggest bank disrupts US Treasury market

https://www.theguardian.com/technology/2023/nov/10/ransomware-attack-on-china-biggest-bank-disrupts-us-treasury-market

The Industrial and Commercial Bank of China’s US arm was hit by a ransomware attack that disrupted trades in the US Treasury market on Thursday, the latest in a string of victims ransom-demanding hackers have claimed this year.

ICBC Financial Services, the US unit of China’s largest commercial lender by assets, said it was investigating the attack that disrupted some of its systems, and making progress toward recovering from it.

China’s foreign ministry said on Friday the lender was striving to minimise risk impact and losses after the attack.

“ICBC has been closely monitoring the matter and has done its best in emergency response and supervisory communication,” the ministry spokesperson Wang Wenbin said.

Wang added that businesses remained normal at ICBC head office and other branches and subsidiaries across the globe.

Hackers lock up a victim organisation’s systems in such attacks and demand ransom for unlocking it, often also stealing sensitive data for extortion.

Several ransomware experts and analysts said an aggressive cybercrime gang named Lockbit was believed to be behind the hack, although the gang’s dark website where it typically posts names of its victims did not mention ICBC as a victim as of Thursday evening. Lockbit did not respond to a request for comment sent via a contact address posted on its site.

“We don’t often see a bank this large get hit with this disruptive of a ransomware attack,” said Allan Liska, a ransomware expert at the cybersecurity company Recorded Future.

Liska, who also believes Lockbit was behind the hack, said ransomware gangs may not name and shame their victims when they are negotiating with them.

“This attack continues a trend of increasing brazenness by ransomware groups,” he said. “With no fear of repercussions, ransomware groups feel no target is off limits.”

US authorities have struggled to curb a rash of cybercrime, chiefly ransomware attacks, which hit hundreds of companies in almost every industry each year. Only last week US officials said they were working on curtailing the funding routes of ransomware gangs by improving information-sharing on such criminals across a 40-country alliance.

The ICBC did not comment on whether Lockbit was behind the hack. It is common for targets to refrain from publicly disclosing the names of cybercrime gangs.

Since Lockbit was discovered in 2020, the group has hit 1,700 US organisations, according to the US Cybersecurity and Infrastructure Security Agency. Last month it threatened Boeing with a leak of sensitive data.

A Cisa spokesperson referred questions about the ICBC hack to the US Treasury department.

While market sources said the impact of the hack appeared to be limited, it signalled how vulnerable systems at large organisations such as the bank continue to be. Thursday’s incident is likely to raise questions over market participants’ cybersecurity controls and draw regulatory scrutiny.

ICBC said it had successfully cleared Treasury trades executed on Wednesday and repurchase agreements (repo) financing trades done on Thursday.

“In general, the event had a limited impact on the market,” said Scott Skyrm, the executive vice-president for fixed income and repo at the broker-dealer Curvature Securities.

Some market participants said trades going through ICBC were not settled because of the attack and affected market liquidity. It was not clear whether this contributed to the weak outcome of a 30-year bond auction on Thursday.

US, China reach “understandings“ on climate ahead of COP28 talks -Kerry

https://reuters.com/article/climate-un-usa-china/us-china-reach-understandings-on-climate-ahead-of-cop28-talks-kerry-idUSKBN3250AL

The United States and China have reached "understandings and agreements" on climate issues that will help ensure progress is made at the COP28 talks starting late this month in Dubai, U.S. climate envoy John Kerry said on Friday.

Kerry met with his Chinese counterpart Xie Zhenhua at Sunnylands, California, this week for four days of talks he described as tough and serious.

"We had a few moments where, as in any negotiation, you think it's all despair," Kerry said at the Bloomberg New Economy Forum in Singapore. "We did come up with some very solid understandings and agreements which will help the COP and will also put us both in a place where we can help the world by focusing on more renewables and other kinds of things," he said.

Common ground between the world's two top economies and biggest greenhouse gas emitters is considered a crucial part of any consensus at COP28, which is expected to focus on issues like climate finance and more ambitious energy transition goals.

Kerry said details of the agreements between the two would be released soon.

One important agreement reached on climate loss and damage would allow any country to contribute to a fund to support the regions most vulnerable to climate impacts, Kerry said.

Much of the focus on China at COP28 will be on its ongoing programme to build more coal-fired power plants, and Beijing's reluctance to commit to a concrete target to cut fossil fuel use as it tries to guarantee energy security and economic growth.

China envoy Xie told diplomats in September that phasing out fossil fuels was "unrealistic" while key technologies like energy storage remained immature.

Kerry, when asked if he expected any compromise on coal from China, said: "You wait and see."

China now has 360 gigawatts of coal-fired power capacity in its project construction pipeline, he said, but "they're trying very hard to move away."

Right now, "it is irresponsible to be funding a coal-fired power plant anywhere in the world," he said.

How scary is China? | Leaders

https://www.economist.com/leaders/2023/11/09/how-scary-is-china

When Joe Biden meets Xi Jinping in San Francisco next week, the stakes will be high. Fighting in the Middle East threatens to become another theatre for great-power rivalry, with America backing Israel, and China (along with Russia) deepening links to Iran. In the South China Sea, China is harassing Philippine ships and flying its planes dangerously close to American ones. Next year will test Sino-American relations even more. In January a candidate despised by Beijing may win Taiwan’s presidential election. For most of the year, the race for the White House will be a cacophony of China-bashing.

America’s anti-China fervour is partly an overcorrection for its previous complacency about the economic, military and ideological threat the autocratic giant poses. The danger from China is real, and there are many areas where Mr Biden’s administration should stand up to its Communist rulers. But there is also a risk that America’s view of Chinese power slides into caricature, triggering confrontations and, at worst, an avoidable conflict. Even without war, that rush would incur huge economic costs, split America from its allies and undermine the values that make it strong. Instead, America needs a sober assessment not just of China’s strengths, but also of its weaknesses.

What are those weaknesses? Among the least understood are its military shortcomings, which we describe in a special report on the People’s Liberation Army (pla). After decades of modernisation, it is formidable—terrifying, even. With 2m personnel and an annual budget of $225bn, it has the world’s biggest army and navy and a vast missile force. By 2030 it could have 1,000 nuclear warheads. Mr Xi has ordered it to be capable of invading Taiwan by 2027, say America’s spies. And the pla projects force more widely, too. It intimidates China’s neighbours in the South China Sea and skirmishes with India. It has a base in Africa and is seeking one in the Middle East.

Yet look more closely and the problems leap out. Drilled for decades on Soviet and then Russian military dogma, the PLA is trying to absorb the lessons from Ukraine and to co-ordinate “joint” operations between services, which would be key to any successful invasion of Taiwan. Recruitment is hard. Despite the efforts of films such as “Wolf Warrior” to glamorise dreary military careers with mediocre pay, the pla struggles to hire skilled people, from fighter pilots to engineers. It has almost no experience of combat—Mr Xi calls this “the peace disease”. Its most deadly engagement in the past four decades or so was massacring its own citizens around Tiananmen Square in 1989.

Although China has made technological leaps, from hypersonic missiles to stealth fighters, its military-industrial complex trails behind in areas such as engines for aircraft and ships, and still relies on some foreign parts. American embargoes on semiconductors and components could make it harder to catch up with the global technological frontier. Despite Mr Xi’s endless purges, corruption appears to be pervasive. It may explain why General Li Shangfu was sacked as China’s defence minister this year after only a few months in the job.

China’s military frailties exist alongside its better-known economic ones. A property crunch and the Communist Party’s growing hostility towards the private sector and foreign capital are impeding growth. China’s gdp will increase by 5.4% this year and by only 3.5% in 2028, says the imf. Investment by multinational firms into China turned negative in the third quarter, for the first time since records began in 1998. China’s $18trn economy is big. But despite its much larger population, its gdp is unlikely to exceed America’s by much or at all by mid-century.

Behind China’s military and economic weaknesses lies a third, and deeper problem: Mr Xi’s dominance of an authoritarian system that no longer allows serious internal policy debate. Decision-making is deteriorating as a result. Economic technocrats have been sidelined by loyalists. By one estimate, pla troops spend a quarter of their time on political education, poring over such inspiring works as “Xi Jinping Thought on Strengthening the Military”. Mr Xi’s ideology is that the party, led by him, should command all things, always.

Personalised rule is bad for China—and perilous for the world. Lacking sound advice, Mr Xi might miscalculate, as Vladimir Putin did on Ukraine. However, he may be deterred by the knowledge that if he invades Taiwan but fails to conquer it, he could lose power. One thing is clear: despite periodic and welcome bouts of constructive diplomacy, such as recently resumed ministerial contacts with America, Mr Xi’s commitment to undermining liberal values globally will not diminish.

How should America respond? Judiciously. Trying to cripple China’s economy by isolating it could cut global gdp by 7%, reckons the imf. Closing America’s borders to Chinese talent would count as self-sabotage. Any excessively hawkish policy risks dividing America’s network of alliances. Worst of all, too rapid an American military escalation could provoke a disastrous war if Mr Xi mistakes it for the prelude to American aggression, or worries that unifying Taiwan with the mainland—peacefully or by force—will only grow harder should he continue to bide his time.

From complacency to confrontation to calibration

Instead, America needs to calibrate its China policy for the long run. Regarding the economy, that means openness, not isolation. The Economist supports limited controls on exports of technology with possible military applications, but not the broad embrace of tariffs and industrial policy that began under President Donald Trump and has continued under Mr Biden. To maintain its economic and technological edge, America should stay open for business—unlike China.

Militarily, America should seek deterrence but not domination. The Biden administration has rightly sold more arms to Taiwan, built up forces in Asia and renewed defence alliances there. But America should avoid a nuclear arms race or being seen to support formal independence for Taiwan. Dealing with China requires a realistic view of its capabilities. The good news is that its weaknesses and Mr Xi’s mistakes give the West time to counter the threat it poses.■

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Taiwan, facing Chinese pressure, to stress importance of peace at APEC summit

https://reuters.com/article/apec-usa-taiwan/taiwan-facing-chinese-pressure-to-stress-importance-of-peace-at-apec-summit-idUSKBN32505G

Taiwan will stress the importance of peace in the region at next week's APEC summit, President Tsai Ing-wen said on Friday, one of the few international bodies both Taiwan and China are members of and where their officials meet.

The 21-member Asia-Pacific Economic Cooperation (APEC) forum will meet in San Francisco for the 30th APEC summit, the first hosted by the United States since 2011.

Chinese-claimed and democratically ruled Taiwan, which takes part in APEC as "Chinese Taipei" and does not send its president to summits, has faced increased military pressure from Beijing including two rounds of major war games over the past year and a half.

Tsai told reporters at the presidential office that the first message she wanted her representative to APEC, chip giant TSMC (2330.TW), founder Morris Chang, to send at the summit was that Taiwan was dedicated to promoting regional peace and prosperity.

"At a time when the world is facing various challenges, we must work together to reduce conflicts in the region and jointly create a peaceful and stable environment for regional economic development," she said.

"Taiwan is a reliable, safe, and trustworthy partner in the international community," Tsai added.

Chang, speaking after Tsai, said he believed no APEC member would oppose peace, prosperity and development.

Neither the president nor Chang, representing Tsai for the sixth time at an APEC summit, took questions.

APEC has traditionally been one the few forums where China and Taiwan talk, even if just in passing for pleasantries.

China has not formally confirmed President Xi Jinping's attendance at this year's summit.

Chang, 92, had a brief chat with Xi at last year's APEC summit in Bangkok, a rare high-level interaction.

China cut off a formal talks mechanism with Taiwan after Tsai first won office in 2016, believing her to be a separatist. Tsai says only Taiwan's people can decide the island's future and strongly rejects China's sovereignty claims.

While Chang is now retired from TSMC, he remains influential as the elder statesman of Taiwan's chip industry.

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Explainer: What is China’s Singles Day, and how is it celebrated?

https://reuters.com/article/holidayshopping-singles-day/explainer-what-is-chinas-singles-day-and-how-is-it-celebrated-idUSKBN325001

Black Friday? No. Cyber Monday? Nope. Prime Day? Absolutely not. The world's biggest shopping event happens in China each year - and it's called Singles Day.

Originally a holiday to celebrate being single, as a counter to Valentine's Day, the event has grown into a weeks-long online shopping festival that peaks on Nov. 11.

The idea for Singles Day had originated at China's Nanjing University back in 1993 and was originally called "Bachelor's Day." On the day, single people treat themselves with gifts and presents, while also organizing social gatherings and parties.

Last year, the total value of goods sold during the shopping bonanza - also known as "Double 11" - totaled 1.15 trillion yuan ($157.97 billion), according to data from consultancy firm Bain.

That is more than four times the $35.3 billion U.S. shoppers spent last year during Cyber Week, the period from Black Friday to Cyber Monday, per data from Adobe Analytics.

Cyber Monday immediately follows Black Friday, which falls on the day after the U.S. Thanksgiving Day holiday, the busiest shopping day of the year in the United States.

But growth has been slowing even as overall sales for Singles Day hit record highs, with last year's 3% rise marking the slowest increase ever. The event has in recent years lost some of its novelty with the rise of other shopping festivals in China, including the midyear "618" sales that are the country's second largest.

Strict COVID-19 curbs in China impacted sales last year, but several industry experts are expecting a rebound, as the economy improves and livestream sales remain robust.

"We're optimistic about growth this year because the recovery seems to be stabilizing and consumption is on a more clear upward trend," said Jacob Cooke, co-founder and CEO of Beijing-based WPIC Marketing + Technologies.

His e-commerce consultancy firm expects sales for the Chinese shopping event to rise in the range between 14% and 18% from last year, which is higher than Adobe's projection for a 5.4% rise in Cyber Week sales.

While Alibaba 9988.HK started "Double 11" in 2009 to win over online shoppers with discounts and promotions, China's major e-commerce platforms now all take part in it.

JD.com (9618.HK) joined in 2012 and PDD Holdings-owned (PDD.O) Pinduoduo has also become a significant player, offering low cost products in competition with Alibaba-owned Tmall and Taobao platforms.

Last year, Chinese shoppers spent more on essentials, supplements, vitamins and pet-care products. Those products are expected to stay in demand this year, along with more lifestyle-focused products such as athletic wear and sports equipment.

"There is enormous demand among Chinese consumers for products and services that improve their lifestyles and facilitate self-expression," Cooke said.

In comparison, U.S. shoppers last year had bought more Pokemon toys, Hot Wheels, TVs, footwear and air fryers during the key Black Friday and Cyber Monday shopping periods, according to Adobe.

From 2014 until 2021, Singles Day had posted growth rates of about 34% annually on average, versus Cyber Week's 17% average gain, according to data from consultancy Bain and from Adobe Analytics.

Several American companies from apparel makers Nike (NKE.N) and Lululemon (LULU.O) to cosmetics firm Estee Lauder (EL.N) and consumer goods giant Procter & Gamble (PG.N) have a big presence on the Tmall marketplace and stand to benefit from the event.

Last year, Apple (AAPL.O), Nike and L'Oreal (OREP.PA) were also among the biggest winners from the event, along with Chinese home appliance makers such as Haier and Midea and sportswear brand Anta.

Nike said in December "Double 11" demand in Greater China grew by mid-teens, outpacing the broader sports industry, with demand from Gen Z consumers for the brand growing by 45% during the shopping period in China on Tmall.

JD.com had noted Apple sold more than 1 billion yuan worth of products in the first minute of the event's final sales period.

However, for this year, several global companies ranging from L'Oreal to Estee Lauder have taken a cautious stance around the spending spree in China during the shopping event.

"The presale period of Tmall and particularly on -- in general, the Singles Day, confirms a softer trend versus a year ago," said Estee Lauder CEO Fabrizio Freda last week, adding that the company was more optimistic about the next part of the Singles Day events in November.

L'Oreal CEO Nicolas Hieronimus on a post earnings call with analysts in October said it was too soon to comment on "Double 11."

"The shy consumers are less shy during the big events, and we have seen that whether it's during Valentine's Day, whether it is 6/18, the market has had its best peaks of growth during this moment," Hieronimus said, adding he had lots of hope for the shopping bonanza.

($1 = 7.2800 Chinese yuan renminbi)

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