• China’s exports to US endure steepest plunge in nearly 30 years
• China’s economy to take time to regain its mojo: 7 takeaways from December’s trade, inflation data
• US House passes finance bills bolstering Taiwan and squeezing China ahead of island’s presidential election
• China’s meddling in Taiwan election presages year of misinformation threats
• Xi Jinping is struggling to stamp out graft in the PLA | China
• China brokers Myanmar ceasefire, urges junta and rebel militia to ‘exercise maximum restraint’
• As Papua New Guinea vows a ‘return to normalcy’ after deadly riots and looting, will chaos mar its US, China ties?
• China’s military lab AI connects to commercial large language models for the first time to learn more about humans
• Taiwan prepares to elect a president and legislature in what’s seen as a test of control with China
• China doesn’t want to see ‘difficult situation’ with Canada continue, Wang Yi says
• China Aoyuan wins Hong Kong court’s approval to proceed with restructuring more than US$4 billion of offshore debt, loans
• China delivery rider stabbed to death by security guard for unauthorised entry highlights plight of low-income workers
• China report lists top 5 global risks, with US responsible for most of them
• China to lead global oil demand growth in 2024 to fuel economic revival, as consumption heads for predicted 2027 peak
• China’s veteran climate envoy Xie Zhenhua steps down, as career diplomat Liu Zhenmin takes helm
• The US relationship with China faces a test as Taiwan elects a new leader
• ‘Cunning and manipulative’: China firm relocates to remote area forcing employees to resign, avoiding compensation payouts
• China looms over Taiwan’s fateful election
• US$3 billion top Asia fund bets on Tencent again despite China gaming rules, favours Samsung over TSMC in chip market
• China trade: exports end 2023 with 2.3% rise in December, but global slowdown looms
• For US to counter China effectively, Pentagon must reform, warns first-of-its-kind report
• China urged to stay consistent with policies to prevent confusion, ensure private-sector growth
• Cheerful China ride-hailing driver who sings to passengers, gifts them cuddly toys melts hearts on social media
• Myanmar conflict: China unlikely to ‘pull the carpet’ on junta and accept resistance group’s olive branch
• China’s weak inflation a red alert to avoid Japanification as consumer prices fall again in December
• Chinese gene therapy ‘clinically cured’ patient with blood disorder thalassaemia, researchers say

China’s exports to US endure steepest plunge in nearly 30 years

https://www.scmp.com/news/china/article/3248292/chinas-exports-us-endure-steepest-plunge-nearly-30-years?utm_source=rss_feed

China’s exports to the United States suffered their deepest decline in 2023 in almost three decades, as Washington’s efforts at reshoring and “friendshoring” supply chains create diversions.

Total shipments from China to the US last year fell by 13.1 per cent compared to a year earlier, to US$500.3 billion, according to China customs data released on Friday.

It is the biggest slump since the agency’s records began in 1995 – more than the declines experienced either during the global financial crisis of 2008-09 or the start of the US-China trade war in 2018-19.

Still, analysts said, the dramatic drop – partly due to a high base in 2022 when US importers front-loaded inventory amid Covid-19 supply chain disruptions – does not prove a real reduction in the US reliance on “Made in China”.

Rather, they contended, it indicates a lengthening of the global supply chains, in which China remains an important part.

According to US data, China is also set to lose its position as the top exporter to the US for the first time in 17 years.

From January to November in 2023, total US imports for consumption – those have physically cleared customs – from China were US$388 billion, outpaced by Mexico and even Canada, according to the US International Trade Commission.

China’s share of US imports also fell to 13.7 per cent in the first 11 months of 2023, its lowest level since 2004, based on South China Morning Post calculations of the data. That share peaked at 21.6 per cent in 2017, before the trade war began; it was 16.3 per cent for 2022.

Geopolitical frictions between the world’s two largest economies, along with the tariffs that have been in place since the Donald Trump administration, are key factors behind the decline, said Steven Altman, senior research scholar and director of the DHL Initiative on Globalization at the New York University Stern School of Business.

Washington has stepped up efforts on “derisking” its supply chains since the end of the Covid-19 pandemic. US multinational corporations have also been hedging their bets by adopting a “China plus one” strategy, which seeks diversification for manufacturers by reducing reliance on China as a production base.

“It is important to note that the share of the rest of the world’s imports coming from China has remained pretty steady while the share of US imports coming from China plummeted. That indicates that the decline was due primarily to US-China tensions, not a general drop in China’s competitiveness as an exporting country,” Altman said.

Still, experts said, direct trade flow fails to tell the developing complexity of supply chains, as more components made in China take detours via Southeast Asia and Mexico – where final products are assembled – before arriving in the US, making it hard to track in detail.

“The boom in foreign investment in Mexico, and other emerging markets in South-east Asia and Latin America, suggests that these Chinese exports are also responding to the establishment of new supply chains further afield,” said Nick Marro, the lead analyst for global trade at the Economist Intelligence Unit.

And these non-China supply chains are still heavy consumers of Chinese raw materials, intermediate inputs and capital goods, he said.

“As a result, what it looks like we’re seeing is an elongation of supply chains, rather than a successful effort to push China out of global production networks,” Marro said.

“For as long as China remains a cost-competitive place to do business – assisted by its vast and sophisticated production and logistics networks, which in turn reflect significant government support over the past few decades for the Chinese export machine – the country will remain an important part of the global trade landscape, including in regards to US importers,” he added.

Particularly affected by the passage of the Uygur Forced Labor Prevention Act, China accounted for 21 per cent of US apparel imports in the first 11 months of 2023, marking a new low for the past decade, according to Sheng Lu, associate professor at the University of Delaware’s department of fashion and apparel studies.

Chinese firm fights ‘guilty until proven innocent’ US forced labour law

The US law, which went into effect in June 2022, effectively bans imports of products with any input from China’s far-west Xinjiang region, which produces 80 per cent of the cotton in the country.

Even though fewer finished garments are coming from China, US fashion companies say that China will continue to play a critical role as a textile raw material supplier since no immediate practical alternatives are available, Lu said.

“In other words, because textile manufacturing relies heavily on capital and technology, building textile production capacity outside China will be considerably longer and more challenging than finished garments,” he said.

Still, he added, 2024 could pose greater challenges for China’s textile and apparel exporters to the US market, as Congress considers banning the “de minimis” trade rule – which allows companies to ship packages worth less than US$800 into the US without paying duties and fees – from applying to Chinese companies. Such a move, Lu noted, would especially affect Chinese e-commerce businesses.

“The election-year politics could also bring new political instability to bilateral trade relations,” Lu said.

China’s economy to take time to regain its mojo: 7 takeaways from December’s trade, inflation data

https://www.scmp.com/economy/economic-indicators/article/3248259/chinas-economy-take-time-regain-its-mojo-7-takeaways-decembers-trade-inflation-data?utm_source=rss_feed

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China’s exports rose by 2.3 per cent from a year earlier in December to US$303.6 billion.

This was better than the expected 2.1 per cent increase predicted by Chinese data provider Wind, and follows a rise of 0.5 per cent in November.

Analysts said the increase in December was helped by a low base from 2022.

“The moderate improvement in the export growth reading was partly driven by a slightly lower base, which was distorted by the Covid-led disruptions a year ago, while exports of motor vehicles remained robust in December,” said analysts at Nomura.

Analysts at Capital Economics said China’s export values rose year on year at the fastest rate since April.

Overall in 2023, China’s exports fell by 4.6 per cent to US$3.38 trillion, year on year, below Wind’s prediction of a 1.8 per cent increase.

China’s imports rose by 0.2 per cent in December from a year earlier to US$228.2 billion, bouncing back from a drop of 0.6 per cent in November.

But the reading was lower than the 0.3 per cent increase predicted by Wind.

Analysts at Nomura said import growth remained “sluggish” in December, with the weakness driven by the processing trade, pointing to multinational corporations withdrawing investment and earnings and moving factories out of China.

China’s exports end 2023 with 2.3% rise in December, but global slowdown looms

“In volume terms, imports appear to have been broadly unchanged in December following a pullback the previous month,” said analysts at Capital Economics.

“But it's too early to conclude that last year’s rebound, initially due to reopening effects and subsequently thanks to policy stimulus, has already run its course.”

Overall in 2023, China’s imports declined by 5.5 per cent to US$2.56 trillion last year, below expectations set by Wind for an increase of 1.8 per cent.

In December, China’s total trade surplus was US$75.3 billion, up from US$68.3 billion in November.

“China’s trade surplus grew in December as exports rose more than imports. This brings 2023 to a good finish as it is the first time in the year that both exports and imports recorded gains on a year-earlier basis,” said analysts at Moody’s Analytics.

Overall last year, China’s total trade declined by 5 per cent to US$5.94 trillion, year on year.

China’s shipments to the United States declined by 6.89 per cent year on year in December, having grown for the first time in 16 months in November.

Exports to the European Union fell by 1.93 per cent in December, narrowing from a fall of 14.51 per cent in November.

China’s exports to the Association of Southeast Asian Nations dropped by 6.14 per cent from a year earlier in December, up from a fall of 7.07 per cent in November.

Of its major trading partners, trade with Russia grew the fastest at 26.3 per cent year on year in 2023. Exports to Russia surged by 46.9 per cent, while imports from Russia grew by 12.7 per cent.

“In December, exports by region continued to show divergence. Overall, China’s trading partners are becoming more diversified,” said analysts at HSBC.

China’s consumer price index (CPI) fell by 0.3 per cent year on year in December. The reading was the same as the 0.3 per cent drop estimated by Wind, after it had dipped by 0.5 per cent in November.

Food was a major driver for the change in December, said analysts at Nomura, while they also pointed to non-food price inflation inching up.

Analysts at HSBC agreed the “main drag of headline CPI continued to stem from the weak food prices”, pointing particularly to pork prices.

“The rebound in the year-on-year CPI reading was due to a sequential rise in some major components, as CPI inflation rebounded to 0.1 per cent month on month in December from minus 0.5 per cent in November,” said the analysts at Nomura.

“Following the much weaker-than-expected reading for November, the latest December figure suggests economic momentum remained weak and that the latest economic dip is ongoing.”

Overall last year, the annual CPI reading stood at a 13-year low of 0.2 per cent.

China’s producer price index (PPI), which measures costs for goods at the factory gate, fell for the 15th consecutive month in December after dropping by 2.7 per cent year on year.

This was lower than the estimated dip of 2.6 per cent polled by Wind, after the gauge had fallen by 3 per cent in the previous month.

Weak inflation: a red alert for China to avoid Japanification

The moderate uptick in December was largely driven by a lower base from last year, said analysts at Nomura.

“The continued weakness in PPI inflation in December is largely due to lacklustre domestic demand and the continued downturn in global energy prices,” they said.

In terms of trade, analysts at Moody’s Analytics expect China’s exports growth in the opening six months of the year to be capped as high borrowing costs keep global demand soft.

“As borrowing costs ease, trade should benefit. Meanwhile, the domestic economy will take its time to fully regain their mojo,” they said.

HSBC trade economist Shanella Rajanayagam expects global trade to rise moderately in 2024 at 1.8 per cent year on year from an estimated minus 0.7 per cent in 2023.

“On China’s import demand, we expect the government to remain supportive to further unleash investment and consumption demand. We expect a soft landing for the property market which could further enhance consumer confidence,” said analysts at HSBC.

In terms of inflation, Nomura expects China’s CPI inflation to remain low at 0.6 per cent in 2024, with the gauge expected to fall back to minus 0.8 per cent year on year in January.

They expect PPI inflation to rise to minus 2.4 per cent in January due to rising crude oil prices.

“Chinese New Year effects mean that inflation will be volatile in the near-term. But over the course of this year, we think that food and energy price deflation will continue to ease, while the ongoing cyclical recovery in economic activity will underpin a slight rise in core inflation,” said analysts at Capital Economics.

“That said, weak global growth and continued overinvestment in China means that deflation risks will continue to hang over its economy for some time.”

US House passes finance bills bolstering Taiwan and squeezing China ahead of island’s presidential election

https://www.scmp.com/news/china/article/3248296/us-house-passes-finance-bills-bolstering-taiwan-and-squeezing-china-ahead-islands-presidential?utm_source=rss_feed

The US House of Representatives advanced three bipartisan finance bills concerning Taiwan and mainland China on Friday, bringing legislation meant to bolster American support for the self-ruled island closer to becoming law.

The first of the three, sponsored by California Republican Young Kim, supports including Taiwan as a member of the International Monetary Fund.

The second, introduced by Oklahoma Republican Frank Lucas, directs regulators to exclude the People’s Republic of China from banking organisations if the US president notifies Congress of threats to Taiwan arising from Beijing’s actions.

The third, sponsored by Pennsylvania Republican Dan Meuser, requires the US Treasury to push Beijing for greater transparency in its exchange rates at the IMF.

The first two bills passed the Republican-controlled House by voice vote, and Meuser’s bill passed 379-1. Now the bills must pass the full Democratic-controlled Senate before heading to President Joe Biden to be signed into law.

Washington in recent months and years has increasingly backed Taiwan’s participation in international organisations while raising concerns about Beijing’s active role in them.

Friday’s developments came just ahead of Taiwan’s pivotal presidential election on Saturday in which the ruling Democratic Progressive Party faces a strong challenge from the more conservative and Beijing-friendly Kuomintang.

Speaking on the House floor on Wednesday, Kim urged colleagues to vote in favour of her bill to “send the Taiwanese people a strong message of solidarity and support for their democracy”.

Why does Taiwan matter so much to both mainland China and the US?

Beijing sees Taiwan as part of China to be reunited by force if necessary. Most countries, including the US, do not recognise Taiwan as an independent state, but Washington is opposed to any attempt to take the self-governed island by force and is committed to supplying it with weapons.

China also opposes Taiwan’s participation in international institutions. Taiwan has not yet requested membership in the IMF, which does not recognise it as an independent state.

Kim’s bill, the Taiwan Non-Discrimination Act of 2023, would require the US Treasury to actively support Taiwan’s admission into the IMF, employment for Taiwanese nationals at the body and Taipei’s participation in the fund’s monitoring of the self-ruled island.

“IMF membership for Taiwan would also unlock the potential for membership in other international financial institutions, such as the World Bank and Inter-American Development Bank,” stated a congressional report from December.

Ever since Beijing began to set out ambitious timelines for the People’s Liberation Army’s modernisation, Washington has speculated that an attack on Taiwan may be imminent.

If a US president were to determine there was a threat from Beijing to “the security or the social or economic system of the people on Taiwan and any danger to the interests of the United States”, Lucas’s Protect Taiwan Act would make it US policy to exclude China from the Group of 20 and bodies like the Bank for International Settlements and the International Organisation of Securities Commissions.

Speaking in support of Lucas’ bill, House Financial Services Committee chairman Patrick McHenry, a North Carolina Republican, said it would make China a “pariah in key organisations devoted to ensuring global economic stability”.

If the US effort succeeds, China would face exclusions similar to Russia after its invasion of Ukraine.

Washington has increasingly accused Beijing of not being transparent about its exchange-rate policies.

US and Taiwan to keep pressing for Taipei’s inclusion in World Health Assembly

Meuser’s China Exchange Rate Transparency Act of 2023 would require the Treasury to push the IMF to publish any significant divergences between Chinese exchange-rate policies and those of other major economies.

It would also require the Treasury to urge IMF members to more seriously consider China’s performance as a “responsible stakeholder” when considering increases to its shareholding at the fund.

“China has promised to maintain orderly exchange-rate arrangements without manipulation,” Meuser said on Wednesday. “It is our job to hold them to that promise and to ensure they do not continue to exploit the system to their advantage.”

In framing its recommendations, the bill cited a 2022 assessment by the Treasury, which notes that China has provided “very limited transparency regarding key features of its exchange-rate mechanism” and calls the country an “outlier among major economies”.

The same report, along with a more recent Treasury assessment from November, refrains from naming any country as a foreign-exchange manipulator – a designation the Treasury previously gave China.

China’s meddling in Taiwan election presages year of misinformation threats

https://www.washingtonpost.com/technology/2024/01/12/taiwan-election-china-misinformation/2024-01-10T22:53:24.150Z

A sophisticated Chinese Communist Party effort to tip Saturday’s election in Taiwan may establish a template for interfering elsewhere ahead of a wave of critical global elections, analysts in multiple countries said.

The close contest between the ruling Democratic Progressive Party (DPP) and the more mainland-friendly Kuomintang (KMT) is the first major vote in a year that also features electoral battles in Indonesia, Pakistan, Mexico, Russia and the United States.

In addition, the European Union will host elections for its Parliament, which could affect the direction that the 27-member bloc takes on key policies such as migration, while British Prime Minister Rishi Sunak has said he will call elections later this year, as the country’s ruling Conservative Party grapples with an economy tipping toward a recession.

And India will hold nationwide elections for the lower house of Parliament, a test for Prime Minister Narendra Modi and his Hindu nationalist Bharatiya Janata Party. A Washington Post investigation last year revealed how the BJP and affiliated nationalist groups have used social media to cement their grip on the electorate.

In total, more than half the world’s population lives in countries holding elections in 2024 — creating an unprecedented test of the systems that governments, tech companies and researchers have built to defend democracies from disinformation.

While the Chinese government is the biggest power interfering in Taiwan, which Beijing views as part of its territory, it is just one of multiple nations likely to meddle in elections elsewhere this year, especially in the United States, experts said. China, for example, has been ramping up U.S. information operations and triggered multiple takedowns of fake accounts at Facebook, while Russia is trying to dissuade European countries from supporting Ukraine.

The rise in election interference comes as tools for disguising where messages originate are getting better, while the major social media platforms are cutting back on rules and enforcement. Meanwhile, few nations called out for interference in the past have been punished, beyond sanctions against some Russian officials and executives.

The Taiwan election is “the canary in the coal mine,” said Katie Harbath, a former public policy official at Meta, owner of Facebook and Instagram. It’s “a sense of what we might see throughout the rest of this year.”

Propaganda war

Taiwan has long been a proving ground for mainland propaganda campaigns. Some researchers have described it as the most contested information space in the world, against the backdrop of worsening military tensions.

The Chinese Communist Party (CCP) sees its work on propaganda aimed at the islanders as a core responsibility — one that ordinary Chinese citizens, including those who have emigrated, may be called upon to help carry out, according to Anne-Marie Brady, a professor and Taiwan specialist at New Zealand’s University of Canterbury.

At the same time, the CCP has been less direct as the election approaches, wary of overdoing it, experts note.

“There’s a real potential for it to backfire,” said Alexander Dukalskis, author of “Making the World Safe for Dictatorship.” “People don’t want to be bullied and intimidated into being told how to vote.”

Instead, the Chinese government has used proxies, such as Taiwan’s business elite who earn money from trade with the mainland, inviting them on subsidized tours of their large neighbor. Local Taiwanese officials, now under investigation by local prosecutors, are also targets.

And rather than push their own messages, the propagandists have been encouraged to amplify authentic local disputes and divisions, said Tim Niven, head of research at Taiwan’s Doublethink Lab.

Propagandists have also been quick followers of local news, putting together clips from the most incendiary comments on talk shows and giving misleading summaries.

Generative artificial intelligence and other new tools are helping, Niven said.

Fake news videos, with AI-generated hosts and voice-overs, have circulated on YouTube, Instagram and X, according to a Taiwanese national security official’s accounts to local media in Taipei.

Representatives for Meta and X did not immediately respond to requests for comment late Thursday.

YouTube spokesman Javier Hernandez said the company has removed a number of channels violating its content rules ahead of the Taiwan vote.

“We have teams dedicated to combating coordinated influence operations and are working around the clock as we approach the Taiwanese elections,” he said.

Just last year, such attempts were far less sophisticated. But the technology has gotten much better in a short time, notably in the ability to create AI-generated images or clone voices, said analyst Libby Lange of the misinformation tracking company Graphika.

“It’s just such a leap forward in scary ways from where we were before,” Lange said. “If everything could be fake … there’s really no sense of ground truth.”

Multipronged attack

All of those tactics — the use of AI and local allies, issues and news — are hard to combat, and all can be replicated around the globe.

In a campaign exposed by Graphika last month, an account known on various social media platforms as Agitate Taiwan posted short videos on TikTok and YouTube that criticized candidates and policies of parties other than the KMT, which antagonizes the mainland less. Those videos were simultaneously posted by some 800 Facebook accounts to various Taiwanese Facebook groups, including those devoted to nonpolitical topics.

Graphika could not determine whether the Agitate Taiwan accounts on YouTube and TikTok were part of the campaign or if they belonged to a genuine user whose content was repurposed by the operation. The YouTube channel has been suspended, according to Graphika, but TikTok left the account up because it could not determine whether it was inauthentic, according to a company representative, who spoke on the condition of anonymity because of the risk of retaliation from parties spreading disinformation.

In another example, a spurious biography of Taiwan’s current president has gone everywhere in a blitz over the past few days, noted Lange. “The Secret History of Tsai Ing-wen” was sent by WeChat accounts in direct messages, and its content has appeared on every platform, according to analyst Ari Ben Am of Telemetry Data Labs. Some accounts on Facebook posted an electronic version of the book over and over.

The use of multiple platforms means that an effective defense needs coordination across those platforms and roughly similar policies. But the number of platforms used in the United States and other countries has increased, while X and Facebook have lost dominance. Foreign agents and homegrown conspiracy theorists often start on lightly moderated platforms such at 4chan and Telegram, sowing seeds that viewers can replant on more mainstream platforms.

Representatives for 4chan and Telegram did not immediately respond to requests for comment late Thursday.

For their part, Meta and Google have reversed policies against election-rigging falsehoods and stopped punishing the politicians who spread them. X has reinstated a slew of far-right accounts, gutted a program designed to verify high-profile users and failed to stop an influx of hate speech and misinformation.

Coordination is more challenging than ever, especially connecting with the diminished enforcement staff at X, according to a half-dozen people who teamed with them in the past.

The biggest problem in Taiwan is the one that affects the political landscape in the United States and elsewhere: The issue of foreign interference has become politicized. The KMT has tended to play down the severity of the problem, while the ruling Democratic Progressive Party has continued to point it out.

“Being able to talk about interference when the CCP is demonizing the DPP and promoting the KMT, it gets politicized,” said New Zealand’s Brady.

In the United States, a similar story is playing out as many Republicans reject any accusation of Russian interference, even after federal indictments of Russian spies and contractors who operated networks of bogus social media accounts.

Even when Chinese fakes are betrayed by technical means, “whether you believe it or not depends on your leanings,” Niven said.

Analyzing more than 10,000 YouTube videos on a few channels since June, Johns Hopkins School of Advanced International Studies researcher Martin Wendiggensen found that “the DPP is almost always described negatively and mentioned in negative contexts (corruption, incompetence, stagnation) while the reverse is true for the KMT.”

The channels are owned by wealthy Taiwanese business executives who generate most of their money on the mainland, Wendiggensen said.

Brady and other analysts said that the local government and civic fact-checking groups have been doing a good job calling out the interference as much as possible and educating the public. But CCP efforts could make the difference in the close election, they caution.

As with Russia’s approach in past U.S. elections, the main message — that the DPP is recklessly pursuing independence and risking war — does not have to convince a majority to succeed. Rather, it just has to cause division, “uncertainty and anxiety in society,” Brady said. “When people are afraid, they don’t want to take risks.”

Moreover, Taiwan is not like the United States, where tech giants are “going to have all the pressure in the world to get [U.S. elections] right,” said Rose Jackson, the director of the Democracy and Tech Initiative at the Atlantic Council. “They do not have pressure to invest the resources to get the rest of the world right.”

Even in the United States, those companies can’t catch all the coordinated, inauthentic surges of propaganda, and the fallbacks are getting harder to find.

For example, some social networks have said that the U.S. government has stopped warning them about foreign disinformation campaigns on their platforms, reversing a years-long strategy to fight international meddling in American politics.

The shift came as a federal judge limited the Biden administration’s communications with tech platforms, following a lawsuit that alleged that the White House’s coordination with industry to remove falsehoods about covid-19 and 2020 election amounted to unlawful censorship. That case, Missouri v. Biden, is now before the U.S. Supreme Court, which has paused lower court restrictions while it reviews the matter.

Meanwhile, disinformation researchers are reevaluating their efforts to track online falsehoods and alert tech companies amid an ongoing investigation by House Republicans, who are demanding documents and testimony from scholars about their interactions with tech companies and government, accusing them of colluding with the Biden administration to stifle American users’ voices online.

“It can both be true that companies are doing a lot to prepare, and it can also be true that just the sheer number of elections happening this year was going to test even the best-resourced of teams,” said Harbath, who is now the global affairs officer at Duco, a technology consulting firm. “Everyone’s trying to navigate all of these new variables that didn’t exist.”

Xi Jinping is struggling to stamp out graft in the PLA | China

https://www.economist.com/china/2024/01/11/xi-jinping-is-struggling-to-stamp-out-graft-in-the-pla

Most online commentators in China support Russia’s invasion of Ukraine. At the same time they criticise Russia’s failure to achieve a swift victory. They accuse the West of prolonging the conflict by supporting Ukraine’s army, but also fault Russia for its military weakness. Corruption has crippled its fighting ability, they often conclude, despite all its spending in recent years on better kit. It is taboo in China to cast aspersions on the war-readiness of the People’s Liberation Army (PLA). But amid reports that it is also struggling with graft as it splurges on new weaponry, there may be good reason for it, too, to worry.

China gives little detail of corruption in its armed forces, beyond—occasionally—highlighting a few egregious cases. It has offered no explanation for a purge of generals that began months ago and is widely believed to involve dishonest dealings. On January 10th a three-day annual meeting in Beijing of anti-corruption chiefs ended as usual with no public mention of military matters, such as the ousting last year of the defence minister, General Li Shangfu. He has not been seen in public since August (it was not until December that his successor, Admiral Dong Jun, was named). Yet this appears to be the biggest graft-related shake-up in the PLA in years.

In the past, the country’s leader, Xi Jinping, has openly fretted about the impact of corruption on the PLA’s combat skills. “When I see materials reflecting these issues, I feel deep disgust and often can’t help but slam the table,” he said in 2014 during his first big campaign against officers on the take. “These problems have reached a point where they must be resolved urgently,” he went on. “If the army is corrupt, it can’t fight.” In 2018 the Communist Party declared a “crushing victory” in its war against graft in all domains. But it was far from total: the campaign remains “grim and complex”, Mr Xi said at the just-concluded gathering in the capital. That has been a common official refrain since the purported triumph was achieved.

Within the PLA the war has reignited. According to Bloomberg, an American news service, the purge has toppled more than a dozen senior military officials in the past six months. They mainly belonged to the PLA Rocket Force, which is responsible for the country’s arsenal of land-based conventional and strategic missiles, and the Equipment Development Department, which procures and tests weaponry. Quoting unspecified people familiar with assessments by American spooks, Bloomberg says corruption in the Rocket Force and defence industries “is so extensive that US officials now believe Xi is less likely to contemplate major military action in the coming years than would otherwise have been the case”.

If so, that may be good news for Taiwan, which will hold presidential and legislative elections on January 13th. Tensions may rise should the presidential front-runner, Lai Ching-te, win. He is viewed by China, which claims the island, as a staunch believer in Taiwan’s perpetual separation from the mainland. But come what may, American officials believe that Mr Xi has ordered the Chinese armed forces to be capable of invading Taiwan by 2027, the centenary of the PLA’s founding.

He is not expected to relax in that effort. State media suggest that a milestone will be reached this year with sea trials of China’s third aircraft-carrier, the Fujian—the country’s largest such vessel as well as the first one entirely of Chinese design. But if Mr Xi believes that corruption is truly rife in the PLA, he may think twice about sending it on such a hugely ambitious mission, especially given the difficulties faced by Russia’s army. It had a lot more fighting experience than China’s when it invaded Ukraine. China has not fought a war since a brief one with Vietnam in 1979.

Ready, aim, fired

In a war with Taiwan, the Rocket Force would play a big role, both in mounting missile attacks against the island and in trying to keep America at bay. The recent purge began in July with the replacement of its commander, General Li Yuchao, his number two, General Liu Guangbin, and the force’s political commissar, General Xu Zhongbo. A former deputy commander of the force, General Zhang Zhenzhong, was also dismissed. In December nine senior officers were expelled from the country’s rubber-stamp legislature, the National People’s Congress. They included Generals Li and Zhang as well as three others linked to the Rocket Force.

The reasons are obscure. It is widely speculated that possible wrongdoing has included the leaking of secrets about the force as well as corruption. Bloomberg, citing the American intelligence, says graft in the Rocket Force has led to missiles being filled with water instead of fuel and the malfunctioning of lids covering missile silos in western China.

When Mr Xi took power in 2012, the armed forces were rife with corruption. Senior military posts were being sold for hefty sums. They were worth it: holders could rake in money, such as by taking bribes from military contractors or doing deals with private businesses involving PLA land. Mr Xi was ferocious in his attacks on the PLA’s corrupt “tigers”. Dozens of generals were purged, among them two retired ones who had served as the most senior uniformed officials in the army, Guo Boxiong and Xu Caihou. Mr Guo is now serving a life sentence. Xu died of cancer before a trial could get under way. It is striking that, after so much effort by Mr Xi to clean up the PLA, high-level graft persists.

Mr Xi’s shake-up of the armed forces has included raising the status of its anti-corruption agency. In 2016 the PLA’s graft-busters began copying the way their civilian counterparts operate by sending teams into military units to look for corruption. Mr Xi has also stepped up political education among the troops, hoping that earnest study of Xi Jinping Thought on Strengthening the Military, as his teachings are officially known, would help improve their behaviour. Stay absolutely loyal to Mr Xi and the party is the essence of soldiers’ frequent study sessions. (Whether these time-consuming classes get in the way of training men to fight is something Mr Xi appears not to question.)

There is little sign that recent ill-discipline involves any direct challenge to his leadership. With his round-up of generals a decade ago, Mr Xi seems to have stifled potential opposition to his rule from within the armed forces. Many of those officers appeared to have been singled out because of their loyalty to his predecessors, whom he viewed as rivals.

But Mr Xi is still troubled by what he sees as potential threats to his rule. In his speech at the anti-graft meeting, he said that “breaking free from the historical cycle” should be viewed as a “strategic goal”. This was a reference to one of his preoccupations: the fall of great empires as a result of rot. “Throughout history, many armies with remarkable military achievements ultimately fell victim to corruption and were brought down. This must serve as a warning,” said a screed on Mr Xi’s military thinking that was published last year on the defence ministry’s website. It is clear that some officers are not studying their textbooks hard enough. ■

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China brokers Myanmar ceasefire, urges junta and rebel militia to ‘exercise maximum restraint’

https://www.scmp.com/news/china/diplomacy/article/3248278/china-brokers-myanmar-ceasefire-urges-junta-and-rebel-militia-exercise-maximum-restraint?utm_source=rss_feed

Beijing announced on Friday that it had mediated a formal ceasefire in northern Myanmar, in China’s latest show of influence in the war-ridden neighbouring country.

The ceasefire agreement between the Myanmar junta and a coalition of ethnic militias was reached after a series of meetings in Kunming, the Chinese foreign ministry said. The city is the capital of China’s southwestern Yunnan province bordering Myanmar.

Ministry spokeswoman Mao Ning said representatives of Myanmar’s military government and the Ta’ang National Liberation Army (TNLA), the Arakan Army and the Myanmar National Democratic Alliance Army took part in the negotiations over Tuesday and Wednesday. The rebel groups are together also known as the Three Brotherhood Alliance.

“The two sides agreed to an immediate ceasefire, … to disengage military personnel, to resolve relevant disputes and claims through peaceful negotiations, to commit themselves not to jeopardise the safety of the people in the Chinese border and personnel in the Chinese projects in Myanmar,” Mao said.

Mao urged the two sides to “earnestly implement the ceasefire agreement reached, exercise maximum restraint, continue to resolve the issues through dialogue and consultation, and jointly promote progress in the peace process in northern Myanmar”.

China, meanwhile, would “continue to provide support and assistance within its capacity and to play a constructive role in this regard”.

Myanmese news portal The Irrawaddy quoted a source as saying the peace deal took effect on Thursday night.

An anonymous TNLA leader told Reuters that the latest talks – the third round since December – were facilitated by Deng Xijun, China’s special envoy for Asian affairs.

“From the [alliance’s] side, the agreement is to refrain from offensive attacks on enemy camps or towns. From the military side, the agreement is not to engage in attacks through air strikes, bombardment, or heavy weapons,” the leader, who declined to be named due to the sensitivity of the issue, told Reuters.

How long the ceasefire holds remains to be seen. The first round of China-brokered talks in early December resulted in a truce that lasted just days. As violence broke out again, the rebel coalition seized several regions in Myanmar’s northern border state of Shan.

This included a major trade zone near the town of Muse, which handles about 90 per cent of Myanmar’s cross-border trade with China.

A second round of talks fell apart in late December. The ethnic militias then ramped up their offensive and took control of Laukkai, capital of Shan’s self-administered Kokang special autonomous zone, prompting the Chinese embassy to issue an evacuation advisory for its nationals.

Beijing maintains close ties with both the junta and ethnic groups in the north, and has been cautious to prevent a spillover of the conflict, which could also put its substantial infrastructure investment in Myanmar at risk.

Several of these projects are located in Shan state, where the Three Brotherhood Alliance has made major territorial gains since launching its operation against the military government in October.

China and Myanmar vow to maintain border security as rebels claim victory

According to ISP-Myanmar, a non-governmental think tank, the alliance had full control over at least six Chinese project locations and partial control over another seven as of late December.

China is also deeply concerned about the stability and security fallout as fighting rages just across the border. Last week, at least five people in the Yunnan border town of Nansan were wounded by stray artillery shells, drawing a formal protest from Beijing as well as a pledge to safeguard the lives and property of its citizens.

Days later, Chinese foreign vice-minister Sun Weidong visited Myanmar, where he discussed border security with junta leader Min Aung Hlaing.

As Papua New Guinea vows a ‘return to normalcy’ after deadly riots and looting, will chaos mar its US, China ties?

https://www.scmp.com/week-asia/politics/article/3248274/papua-new-guinea-vows-return-normalcy-after-deadly-riots-and-looting-will-chaos-mar-its-us-china?utm_source=rss_feed

Days after a police walkout over pay in Papua New Guinea triggered deadly violence and looting, Prime Minister James Marape appears to have regained control of a dangerous situation.

The leader on Thursday imposed a two-week state of emergency with the army supporting police, vowing to bring to justice the culprits for the chaos. On Friday, he ruled out a curfew but imposed limits on “large” group gatherings in the capital, Port Moresby.

According to a Reuters report, 20 people were killed. But once the ashes of torched buildings and shops are picked through, there are fears the death toll will rise.

Marape was due in Davos, Switzerland, this weekend to speak to a gathering of global leaders and businesspeople. Instead, he is firmly grounded at home, dousing an unpredictable domestic crisis.

Here’s what we know so far, as Papua New Guinea faces its greatest unrest in a generation.

Following an apparent computer “glitch”, civil servants – including the nation’s overstretched and underpaid police – found an extra US$100 tax had been deducted from their pay cheques.

By Wednesday, police and other civil servants staged a wildcat strike in protest. Some among the national police command stood down and flash mobs spurred into action by the lack of police – and revved up by social media – began looting and burning buildings across Port Moresby.

Shopkeepers, including Chinese business owners, shot back as protesters even attacked the prime minister’s office in a night of bloody chaos, which spread to some towns across the island.

To quell the snowballing violence, the prime minister declared a two-week state of emergency in the capital on Thursday evening. But with shops incinerated, a food and fuel crunch looms – meaning security services are on high alert to prevent more looting.

Marape, 52, came to power in 2019 for greater democracy and to build a proud “Black Christian Nation”.

He has been a lawmaker since 2007 and says his political journey is inspired by his youthful lessons for peace in the clan-violence torn New Guinea Highlands, where the Huli national ethnic majority dominate.

A devout Seventh-day Adventist and Huli, he has tried to walk the tightrope between eastern and western powers, signing defence deals with the West and engaging mainland China, Taiwan and Japan to help bolster the economy of his nation of 10 million people.

The security crisis appears to be turning into a political one.

Former prime minister Peter O’Neill has called for Marape to resign, and six MPs have left his coalition, with questions about his longevity arising, even though he has a “supermajority” of MPs.

Marape has suspended three other key heads of departments – as well as the police commissioner – pending a probe into how the rioting started. He has also put 1,000 soldiers on standby to keep the peace and insists he is focused on the country “returning to normalcy”.

Why US defence deal with PNG may ‘set China further back’ in the Pacific

“We have 104 members – the biggest ever assembly of coalition in our nation’s history,” Marape told reporters on Friday. “For me to lose even 10, even 20 [coalition members], I can live with that.”

The army will be working with police on patrols for the next two weeks to ensure stability, and further security measures are expected over coming days.

Papua New Guinea’s police force is notoriously underfunded and private security is the largest employer on the island, indicating the unstable concoction of politics, gang culture and poverty Marape must contend with over the coming days.

Both the United States and China will be watching Papua New Guinea’s descent into chaos closely, experts say.

Marape has balanced security deals with Washington and Canberra, while signing investment deals with Beijing, whose nationals run multiple businesses in Port Moresby.

While violence is commonplace in the nation’s highlands, there has not been a political crisis of this magnitude since the late 1990s. Yet across the Pacific, violent flare-ups were seen recently in the Solomon Islands, where its Chinatown was burned in 2021. Vanuatu has also seen ethnic tensions with Chinese over ownership of shops in the capital of Port Vila.

PNG ‘keeps’ China for the economy; US, Australia for security: PM

While Papua New Guinea is resource-rich, around 40 per cent of its people live in poverty, with high rates of violence especially aimed at women and girls. Wider unrest is likely to damage the economy and leave the most vulnerable exposed to gang violence.

But more urgently, the destruction and looting of grocery stores in Port Moresby has increased food insecurity, with supplies forecast to be running low over the weekend and early next week.

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China’s military lab AI connects to commercial large language models for the first time to learn more about humans

https://www.scmp.com/news/china/science/article/3248050/chinas-military-lab-ai-connects-commercial-large-language-models-first-time-learn-more-about-humans?utm_source=rss_feed

Chinese scientists are teaching an experimental military artificial intelligence (AI) more about facing unpredictable human enemies with the help of ChatGPT-like technologies.

According to scientists involved in the project, a research laboratory with the People’s Liberation Army’s (PLA) Strategic Support Force, which oversees the Chinese military’s space, cyber, intelligence and electronic warfare, has forged a physical link between its AI system and Baidu’s Ernie and iFlyTek’s Spark, which are large language models similar to ChatGPT.

The military AI can convert vast amounts of sensor data and information reported by frontline units into descriptive language or images and relay them to the commercial models. After they confirm they understand, the military AI automatically generates prompts for deeper exchange on various tasks such as combat simulations. The entire process is completely free of human involvement.

Meanwhile, one computer scientist has voiced concerns over the move, saying that unless it is handled carefully, it could lead to a situation similar to that depicted in the .

The project was detailed in a peer-reviewed paper published in December 2023 in the Chinese academic journal, Command Control & Simulation. In the paper, project scientist Sun Yifeng and his team from the PLA’s Information Engineering University wrote that both humans and machines could benefit from the project.

“The simulation results assist human decision-making ... and can be used to refine the machine’s combat knowledge reserve and further improve the machine’s combat cognition level,” they wrote.

This is the first time the Chinese military has publicly confirmed its use of commercial large language models. For security reasons, military information facilities are generally not directly connected to civilian networks. Sun’s team did not give details in the paper of the link between the two systems, but stressed that this work was preliminary and for research purposes.

Sun and his colleagues said their goal was to make military AI more “humanlike”, better understanding the intentions of commanders at all levels and more adept at communicating with humans.

Most existing military AI is based on traditional war gaming systems. Although their abilities have progressed rapidly, they often feel more like a machine than a living being to users.

And when facing cunning and unpredictable human enemies, machines can be deceived. However, commercial large language models, which have studied almost all aspects of society, including literary works, news reports and historical documents, may help military AI gain a deeper understanding of people.

In the paper, Sun’s team discussed one of their experiments that simulated a US military invasion of Libya in 2011. The military AI provided information about the weapons and deployment of both armies to Ernie. After several rounds of dialogue, Ernie successfully predicted the next move of the US military.

Sun’s team claimed that such predictions could compensate for human weaknesses. “As the highest form of life, humans are not perfect in cognition and often have persistent beliefs, also known as biases,” Sun’s team wrote in the paper. “This can lead to situations of overestimating or underestimating threats on the battlefield. Machine-assisted human situational awareness has become an important development direction.”

Sun’s team also said there were still some issues in the communication between military and commercial models, as the latter were not specifically developed for warfare. For instance, Ernie’s forecasts are sometimes vague, giving only a broad outline of attack strategies without the specifics that military commanders need.

In response, the team experimented with multi-modal communication methods. One such approach involved military AI creating a detailed military map, which was then given to iFlyTek’s Spark for deeper analysis. Researchers found that this illustrative approach significantly improved the performance of the large language models, enabling them to produce analysis reports and predictions that met practical application requirements.

Sun acknowledged in the paper that what his team disclosed was only the tip of the iceberg of this ambitious project. Some important experiments, such as how military and commercial models can learn from past failures and mutually acquire new knowledge and skills, remain shrouded in secrecy.

China, US agree on AI risks, but can they see past military tech rivalry?

China is not the only country conducting such research. Many generals from various US military branches have publicly expressed interest in ChatGPT and similar technologies and tasked corresponding military research institutions and defence contractors to explore the possible applications of generative AI in US military operations, such as intelligence analysis, psychological warfare, drone control and communication code decryption.

But a Beijing-based computer scientist warned that while the military application of AI was inevitable, it warranted extreme caution.

The present generation of large language models was more powerful and sophisticated than ever, posing potential risks if given unrestricted access to military networks and confidential equipment knowledge, said the scientist who requested not to be named due to the sensitivity of the issue.

“We must tread carefully. Otherwise, the scenario depicted in the Terminator movies may really come true,” he said.

Taiwan prepares to elect a president and legislature in what’s seen as a test of control with China

https://apnews.com/article/taiwan-president-election-china-democracy-f9f4234946b04f48cfdf77da6c520ec7Staff prepare materials for polling booth in New Taipei, Taiwan on Friday, Jan. 12, 2024 ahead of the presidential election on Saturday. (AP Photo/Louise Delmotte)

2024-01-12T07:22:59Z

TAIPEI, Taiwan (AP) — Taiwan is preparing to elect a president and legislature Saturday in what many see as a test of control with China, which claims the self-governing island republic as its own territory to be unified with force if necessary. The presidential race is tight, and both China and Taiwan’s key ally, the U.S., are weighing in on political and economic issues they hope will sway voters.

The election pits Vice President Lai Ching-te, representing the Democratic Progressive Party, against Hou Yu-ih of the main opposition Nationalist Party, and former mayor of the capital Taipei, Ko Wen-je of the Taiwan People’s Party.

The U.S. strongly backs Taiwan against China’s military threats and the Biden administration plans to send an unofficial delegation comprised of former senior officials to the island shortly after the polls. That move could upset efforts to repair ties between Beijing and Washington that plunged in recent years over trade, COVID-19, Washington’s support for Taiwan and Russia’s invasion of Ukraine, which China has refused to condemn at the United Nations.

Along with the tensions with China, much in the Taiwan election hinges on domestic issues, particularly over an economy that was estimated to have only grown by 1.4% last year. That partly reflects inevitable cycles in demand for computer chips and other exports from the high-tech, heavily trade-dependent manufacturing base, and a slowing of the Chinese economy. But longer-term challenges such as housing affordability, a yawning gap between the rich and poor, and unemployment are especially prominent.

Candidates will make their final appeals Friday with campaigning to end at midnight. The candidate with the most votes wins, with no runoff. The legislative races are for districts and at-large seats.

While dinner table issues gather the most attention, China remains the one subject that can be ignored but not avoided. The two sides have no official relations but are linked by trade and investment. with an estimated 1 million Taiwanese spending at least part of the year on the mainland for work, study or recreation. Meanwhile, China has continued flying fighter planes and sailing warships near the island to put teeth behind its pledge to blockade, intimidate or invade.

Those threats were thrown into stark relief in 2022, when Beijing fired missiles over the island and conducted what was seen as a practice run of a possible future blockade of the Taiwan Strait after then-U.S. House Speaker Nancy Pelosi visited Taiwan. Chinese President Xi Jinping, at his most recent meeting with President Joe Biden in November, called Taiwan the “most sensitive issue” in U.S.-Chinese relations.

Washington is bound by law to provide Taiwan with the means to defend itself and consider all threats to the island as matters of “grave concern,” while remaining ambiguous on whether it would use military forces. Over recent years, the U.S. has stepped up support for Taiwan as Beijing ratchets up military and diplomatic pressure on the island, although the wars in Ukraine and Gaza have drawn down what U.S. military industries can provide to customers and allies.

The U.S. government insists the differences between Beijing and Taipei be resolved peacefully and opposes any unilateral change to their status quo. While Chinese leaders and state propaganda proclaim unification is inevitable and will be achieved at any cost, Taiwanese have consistently voted in favor of maintaining their de facto political independence.

Lai is considered the front-runner in the race, but Hou trails closely. While the Nationalists formally support unification with China, they say they want to do so on their own terms, a somewhat abstract concept given the Communist Party’s demand for total power, but which some consider as a useful workaround to avoid outright conflict.

Beijing has labeled Lai a “Taiwan independence element,” an appellation he has not repudiated and which carries little or no stigma in Taiwan. Lai, however, has pledged to continue current President Tsai Ing-wen’s policy that Taiwan is already independent and needs to make no declaration of independence that could spark a military attack from China.

While running third in most surveys, the TPP’s Ko said during a news conference Friday he would aim to strike a balance between Taiwan and the U.S. that would not upset relations with China.

“The U.S. is the most powerful country in the world and Taiwan’s most important ally,” he said. “So no matter who is elected, the relationship between Taiwan and the U.S. will not change.”

Ko said he is the only “acceptable” candidate for both Washington and Beijing, adding that while there’s nothing Taiwan could do to please both China and the U.S., it is important for the island to refrain from “behavior that is intolerable to either side.”

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Follow AP’s Asia-Pacific coverage at https://apnews.com/hub/asia-pacific

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China doesn’t want to see ‘difficult situation’ with Canada continue, Wang Yi says

https://www.scmp.com/news/china/diplomacy/article/3248180/china-doesnt-want-see-difficult-situation-canada-continue-wang-yi-says?utm_source=rss_feed

Chinese Foreign Minister Wang Yi said Beijing was open to maintaining contact and dialogue with Canada and did not want to see the “current difficult situation” continue.

In a phone call with his Canadian counterpart Melanie Joly on Thursday, Wang said the two countries shared many common interests and did not have any historical disputes or “real conflicts of interest”.

“The fundamental reason why China-Canada relations have reached a low point in recent years is the serious deviation of Canada’s perception of China,” he said, according to a Chinese foreign ministry readout.

“We hope Canada can interpret China’s domestic and foreign policies objectively, rationally and correctly.”

China’s ties with Canada have soured in recent years, in part due to the 2018 tit-for-tat arrests of a Huawei Technologies executive in Vancouver on fraud charges at the request of the US, and two Canadians living in China who were accused of espionage.

Canada accused China of engaging in “hostage diplomacy” before a deal was eventually reached with US prosecutors that saw all three people released in 2021.

Relations were further strained over accusations of Chinese meddling in Canadian elections and the attempted intimidation of lawmakers that resulted in the expulsion of a Chinese diplomat last year. China has repeatedly denied claims of interference.

During Thursday’s call, Wang stressed that the current state of bilateral relations was not caused by China but added that Beijing must firmly safeguard its sovereignty, security and development interests.

Noting that China and Canada have different social systems and ideologies, Wang called for both sides to “respect each other, engage in dialogue on an equal footing, enhance trust and dispel doubts”.

Both countries should also resist the politicisation of economic issues and create a fair and non-discriminatory environment for firms, he said.

Ahead of the closely watched Taiwanese presidential election on Saturday, the Chinese diplomat also urged Canada not to send “any wrong signals to the ‘Taiwan independence’ separatist forces”.

According to China’s foreign ministry, Joly said healthy and stable relations were in the fundamental interests of both countries, and that Canada was willing to bring relations back on the right track “with a more open, practical and constructive attitude”.

Canada was willing to strengthen communication with China, promote personnel exchanges, and deepen economic and trade cooperation, she said.

A Canadian statement said the two leaders exchanged views on a wide range of global and regional issues during the call, including Russia’s war in Ukraine, the Israel-Gaza conflict, and challenges in the Indo-Pacific region.

It said Joly had highlighted Canada’s “pragmatic diplomacy” amid an international security crisis while reiterating that Ottawa would continue to uphold its interests and values.

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China Aoyuan wins Hong Kong court’s approval to proceed with restructuring more than US$4 billion of offshore debt, loans

https://www.scmp.com/business/article/3248200/china-aoyuan-wins-hong-kong-courts-approval-proceed-restructuring-more-us4-billion-offshore-debt?utm_source=rss_feed

Property developer China Aoyuan Group said it has secured approval from a Hong Kong court to proceed with a restructuring involving more than US$4 billion of offshore debts and many loan facilities with lenders after almost a year of negotiations with creditors. The stock surged 12 per cent.

The consent from the local court came on January 11, the developer said in a stock exchange filing on Friday. This came in addition to similar sanctions granted by courts in Cayman Islands and British Virgin Islands in December, given that some of its foreign-currency debts were sold by its units incorporated in those jurisdictions.

The sanction by the courts “is a major milestone towards the implementation of the holistic restructuring of the group’s material indebtedness,” chairman Guo Zi Wen said in the filing. The debt plan will protect the interests of all stakeholders and allow the firm to deliver its projects on schedule, he added.

Aoyuan became the latest debt-laden Chinese home builder to win a reprieve from creditors in China’s property market shakeout, joining struggling peers like Sunac China and Kaisa Group in staving off liquidation. Chinese developers defaulted on more than US$100 billion of bonds since China’s “three red lines” policy in mid-2020 crippled weak borrowers while the ensuing Covid-19 pandemic plunged sales.

Guangzhou-based China Aoyuan officially defaulted on US$1.1 billion of notes in January 2022, triggering cross defaults in its borrowings. The group had 242 billion yuan (US$33.8 billion) of total liabilities on June 30, including the equivalent of about 73 billion yuan of bank borrowings and 34.4 billion yuan of bonds, according to its accounts.

Developer of Hong Kong micro flats Jiayuan gets closer to liquidation

The developer has proposed to issue US$500 million of seven-year bonds, US$1.6 billion of perpetual securities, US$143 million of zero-coupon five-year bonds, and new shares worth about HK$943 million (US$120 million) to repay its offshore creditors, according to its debt exchange proposal.

The developer has had to sell assets to replenish its coffers. Last February, it sold its 29.9 per cent stake in Aoyuan Healthy Life Group, a Hong Kong-listed property services company, for HK$256 million.

Evergrande rejects claims on past losses after changes to its accounting method

Its shares rose 12 per cent to HK$0.213 at 3pm local time in Hong Kong. The stock has slumped 35 per cent over the past 12 months. Trading resumed last September after the firm belatedly published its 2022 accounts in July.

China Aoyuan said losses narrowed 17.6 per cent to 2.89 billion yuan in the six months to June 30, while revenue rose by about a quarter to almost 11 billion yuan. It had 259 ongoing projects with a gross floor area of about 28.2 million square metres.

“The real estate market is expected to be stable and the industry will eventually enter a new stage of stable and healthy development as the central government has set the adjustment and optimisation to the real estate policies,” the company said in the interim report to shareholders in September.

“In the future, the group will continue to concentrate on the Guangdong-Hong Kong-Macau Greater Bay Area with focus on the nature of real estate, open up the source and regulate the flow, and improve the quality of products and services,” it said.

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China delivery rider stabbed to death by security guard for unauthorised entry highlights plight of low-income workers

https://www.scmp.com/news/people-culture/trending-china/article/3247227/china-delivery-rider-stabbed-death-security-guard-unauthorised-entry-highlights-plight-low-income?utm_source=rss_feed

A delivery rider in China who tragically died after a security guard stabbed him while both were working has put the struggles faced by the country’s low-wage earners in the spotlight.

On an evening in December last year, delivery driver Li Yuekai, 32, was confronted by security guard Zhao Li at the entrance of the Zhonghai International Yilicheng community in Qingdao, Shandong province in northern China.

Surveillance footage captures Li pacing near the entrance, with his white electric delivery bike parked nearby, when Zhao, in his blue security uniform, leaves the security booth and approaches him.

After a brief conversation, Zhao draws a knife from his belt and stabs Li in the chest.

Despite Li’s attempts to retreat, Zhao continues his assault, inflicting multiple wounds on Li’s chest, waist, back, and face, until Li falls to the ground and his assailant is restrained by several bystanders.

A community office staff member said the conflict stemmed primarily from policies regarding delivery riders entering the complex.

Despite the luxurious surroundings, security guards working in high-end residential complexes earn a modest salary of 3,700 yuan (US$520) a month, yet they face a 50 yuan fine for every unauthorised entry.

Delivery drivers are also under pressure and are penalised for late deliveries.

One delivery driver described the Yilicheng community as a “nightmare place” because it is a sprawling location with many buildings, which means it is very difficult to make deliveries on time.

The driver added that being allowed to drive into the complex “could cut the delivery time in half.”

As for Li, he was highly educated with a degree in psychology from Australia, and had only been in the job for six days.

His ageing parents, who work in a restaurant and as a cleaner, earn just over 7,000 yuan a month, but managed to raise more than one million yuan for Li’s education in Australia.

Li was also a skilled furniture maker and aspired to have his own business, his friends speculated that he turned to delivery work due to financial constraints.

The tragedy prompted one online observer to express deep sorrow.

“A family invests over a million yuan in their son’s education, only for him to face unpromising job prospects, leading to this tragedy. No parent can endure such a fate.”

Others criticised the security guard: “Is it normal for security guards to carry knives on duty? No reasonable person would stab someone several times in a minute over a 50 yuan fine. Being from a ‘lower class’ is neither a justification nor an excuse.”

While a third said: “This story leaves me with mixed feelings. Delivery drivers and security guards shouldn’t be at odds. Striving this way is unrealistic and only leads to conflict.”

China report lists top 5 global risks, with US responsible for most of them

https://www.scmp.com/news/china/diplomacy/article/3248173/china-report-lists-top-5-global-risks-us-responsible-most-them?utm_source=rss_feed

Hi-tech constraints, geopolitical moves and supply chain actions by the US, as well as its presidential election, are likely to pose “prominent risks” to the world this year, a leading think tank affiliated with China’s top intelligence agency has warned.

In a report released on Tuesday, the China Institutes of Contemporary International Relations (CICIR) said global development and security would continue to face various risks and challenges, “with uncertainties and instabilities becoming intertwined”.

According to the influential research institution, which comes under the Ministry of State Security, two of its identified top five risks to world peace and stability are directly attributed to the US, which is also a target for blame in the remainder.

The report landed with Washington and Beijing still locking horns over a wide spectrum of differences, from the Taiwan Strait through the South China Sea to human rights issues, along with trade, sanctions and semiconductors.

Nevertheless, since the November summit between US President Joe Biden and his Chinese counterpart Xi Jinping, the two powers have been bidding to stabilise relations from their most confrontational point in their 45 years of official ties.

Beijing hits out over Washington’s plan to send unofficial delegation to Taiwan

According to the CICIR, one of the main risks for 2024 is “an intelligence gap” that has been created by a few countries, particularly the US, which “views intelligence superiority as a key variable in consolidating its hegemony”.

The report pointed to US export controls and sanctions against China’s chip design companies and its access to artificial intelligence chips.

“If countries prioritise their individual security needs over common security and develop incompatible and incomprehensible military intelligence systems, the risk of rapid escalation of conflicts and crises among major powers … may intensify.”

The authors pointed out that US troops could be increasingly capable of destroying all of their opponents’ forces simultaneously in the age of military intelligence.

“The higher the likelihood of achieving this, the more likely both sides are to consider firing the first shot in conflicts during times of crisis,” they said.

Washington and Beijing agreed during the Xi-Biden summit in San Francisco two months ago to improve AI safety through China-US government talks.

The report identifies 2024 as a “crucial” year for the global governance of artificial intelligence, calling for more dialogue, consensus and mechanisms to regulate military applications of the technology.

US controls on chip-making lithography machines emerged as a focal point in a phone call between Chinese Commerce Minister Wang Wentao and his American counterpart Gina Raimondo on Thursday.

In a commentary on Wednesday, the official People’s Daily warned that the US would end up “trapping itself” in its efforts to isolate the Chinese market from the global semiconductor ecosystem.

“The US restrictions on China’s scientific and technological innovation will only strengthen China’s determination to achieve a high level of scientific and technological self-reliance and self-improvement,” the article said.

The CICIR also sounded the alarm about the potential impact on the rest of the world of “ongoing political polarisation” in the US, where the “unprecedented” controversies surrounding the 2024 presidential election could exacerbate social tensions.

China raises ‘serious concerns’ over US chip-making curbs, supply chain probe

Sharp bipartisan disparities and political battles over budgets, appropriations and debt ceilings in the US heightened “the likelihood of an economic and financial crisis caused by political strife in 2024”, the report warned.

The authors also underscored the greater risks of the “politicisation” of US foreign policy in response to its domestic electoral pressures, adding that this could affect global stability.

A similar warning was contained in a 94-page report issued last Friday by the Institute of International Studies at Fudan University in Shanghai, which suggested that the US presidential race – as well as Saturday’s election in Taiwan – could affect Beijing-Washington relations this year.

“The direction of China-US relations in 2024 remains highly uncertain,” it said.

Washington watchful of ‘unpredictable’ Beijing response to Taiwan election

In its assessment of the third major risk looming over the next 12 months, the CICIR report predicts higher odds of “systemic” problems facing the world economy, given the weak recovery.

One reason for the negative outlook is the “weaponisation” of economic issues by the US, Europe and other Western countries, which have prioritised national security when shoring up their supply chains, according to the report.

The authors cited Washington’s push for “nearshoring” and “friendshoring” – a move to bring trade closer to home as well as within its sphere of traditional allies – along with the US-EU Trade and Technology Council and the Indo-Pacific Framework for Prosperity as notable examples.

How China is adapting to the US ‘reshoring’ its manufacturing and supply chains

The next prominent risk on the report’s list is faced by global governance, which could become fragmented in 2024, because of the larger challenges caused by a wide range of actions, according to the authors.

These included Washington’s policy of “extended nuclear deterrence” in the Asia-Pacific region, the Aukus security alliance between the US, Britain and Australia, and the various “small blocs” established by Washington and its allies, the report said.

The authors rounded out their assessment of the year ahead with an analysis of the Russia-Ukraine war, as well as the Gaza conflict, which they predict will drag on in 2024.

The report forecasted “a huge test of capacity and determination” for Moscow, Kyiv and the US-led Western countries, with a “Ukraine fatigue” likely to emerge, with both sides finding it “difficult to maintain the existing intensity of the conflict for a long time”.

China, Russia vow to boost Brics influence, slam West’s ‘confrontational policy’

The report also observed that Kyiv was likely to increase its attacks within Russian territory in a bid to disrupt its larger neighbour’s presidential election in March.

“The Russia-Ukraine conflict and the Gaza conflict may not be the last crises, but they are likely to be triggers for many long-frozen regional conflicts and geopolitical contradictions. ‘Black swan’ and ‘grey rhino’ events may emerge frequently,” it said.

The authors expect China to “focus on its affairs” this year, with an emphasis on developing trade and security ties with neighbouring countries and the surrounding region.

China to lead global oil demand growth in 2024 to fuel economic revival, as consumption heads for predicted 2027 peak

https://www.scmp.com/business/article/3248236/china-lead-global-oil-demand-growth-2024-fuel-economic-revival-consumption-heads-predicted-2027-peak?utm_source=rss_feed

China is expected to be the top consumer of oil and account for more than a quarter of new oil demand globally in 2024 to feed a growing economy, even as the deadline for peaking its fossil fuel use to accomplish its climate goals fast approaches, according to energy experts.

China’s oil demand is expected to rise by around 530,000 barrels a day in 2024, according to a report by Wood Mackenzie on Thursday. Meanwhile, global oil demand is expected to increase by 2 million barrels a day to 103.5 million, with China, emerging markets in Asia and the US driving the growth.

“Much of the growth [in oil demand] will be coming in the second half of the year,” Alan Gelder, senior vice-president of research at Wood Mackenzie, said in the report. “This will be fuelled by improving economic growth and lower interest rates.”

The forecast comes after China’s crude oil imports hit an all-time high in 2023, rising 11 per cent year on year to 563.99 million metric tonnes, equivalent to 11.28 million barrels per day, according to data from the General Administration of Customs on Friday.

Increasing domestic passenger transport, including road and air traffic, drove the growth after China ended its three years of zero-Covid policies.

According to data from the Ministry of Transport, highway passenger traffic increased by 43.6 per cent year on year from January to November 2023. Meanwhile, as of the end of last year, international passenger flights have returned to 4,782 flights per week, about 62.8 per cent of the pre-Covid level, according to the Civil Aviation Administration of China last week.

Due to rapid expansion of renewable energy capacity under the country’s dual-carbon goals to peak national greenhouse gas emissions by the end of this decade and reach net-zero emissions by 2060, oil consumption is entering its final stage of growth, according to a December report by oil giant China Petroleum and Chemical Corporation, known as Sinopec.

China’s world-leading green hydrogen project faces slow ramp up

China’s oil demand is expected to peak before 2027 at around 800 million tonnes per year, or about 16 million barrels a day, according to Sinopec. Then oil consumption is expected to quickly decline, after three to five years at a plateau period, falling to 280 million tonnes per year by 2060, Sinopec forecast, adding that rapid adoption of electric vehicles will be largely responsible for the change in direction.

Optimism among climate and energy experts over China’s energy transition is growing, according to a joint survey published in November by the Centre for Research on Energy and Clean Air and the International Society for Energy Transition Studies.

More than 70 per cent of the surveyed experts believe that China can achieve its goal of peak carbon emissions before 2030, while 21 per cent believe that China will hit peak emissions before 2025 or that emissions have already peaked, an increase from the previous year’s percentage in both cases, according to the survey.

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China’s veteran climate envoy Xie Zhenhua steps down, as career diplomat Liu Zhenmin takes helm

https://www.scmp.com/news/china/politics/article/3248260/chinas-veteran-climate-envoy-xie-zhenhua-steps-down-career-diplomat-liu-zhenmin-takes-helm?utm_source=rss_feed

China has appointed former vice foreign minister Liu Zhenmin as the country’s special climate envoy, replacing Xie Zhenhua who has stepped down due to health reasons.

The Ministry of Ecology and Environment confirmed the transition in a statement on Friday.

The announcement came after media reports that Xie would step down in December, following the Cop28 talks in Dubai.

Is this really the end of the fossil-fuel era? Cop28 hails a historic transition

The 74-year-old, the country’s long-serving special climate envoy, bade farewell to his career of environmental protection and climate diplomacy on Friday, when Xie and his US counterpart John Kerry held a video meeting for the working group of the two countries.

Officials from both sides discussed areas of cooperation, including “energy transition, methane, circular economy, low-carbon provinces/states and cities”, the ministry said.

Xie was appointed as China’s first special climate envoy in 2021, the same year Kerry was appointed as America’s special presidential envoy for climate.

Asia at risk as Cop28 deal falls ‘far short’ of acceptable fossil fuel phase-out

A native of the city of Tianjin, Xie graduated from Tsinghua University and started his career working for various government agencies responsible for environmental affairs. He served in roles at the State Environmental Protection Administration and the National Development and Reform Commission.

In 2007, Xie attended Cop13 in Bali as China’s lead climate negotiator. In 2015, he was appointed as China’s special climate change representative.

Last February, Xie received an award from the Nobel Sustainability Trust Foundation for his contribution in tackling the global crisis and promoting sustainable development.

Xie’s successor, Liu, 68, attended Cop28 in Dubai as the Chinese delegation’s senior adviser. The veteran diplomat is also experienced in climate diplomacy.

A Shanxi native, Liu holds a master’s degree in law from Peking University and began his diplomatic career in 1982.

Liu served as China’s vice foreign minister from 2013 to 2017 in charge of Asian affairs, border and maritime issues. He has been involved in multiple international negotiations, including climate change talks for both the Kyoto Protocol and the Paris Agreement.

The career diplomat served as undersecretary-general for the United Nations Department of Economic and Social Affairs from 2017 to 2022.

2023 confirmed as hottest year ever, as world nears critical 1.5 degree limit

In that role, he was responsible for advising the UN secretary general on development-related issues, including climate change, and for guiding UN secretariat support for the follow-up processes of the 2030 Agenda for Sustainable Development, according to his profile on the UN website.

Liu also previously served as the foreign ministry’s assistant minister, and as China’s deputy permanent representative to the UN.

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The US relationship with China faces a test as Taiwan elects a new leader

https://apnews.com/article/taiwan-election-president-china-857b0d4acb40a53884fac51cef1fdaadFILE - Taiwan's Vice President Lai Ching-te, also known as William Lai, speaks in Taipei, Taiwan, April 12, 2023. On Saturday, Jan. 13, 2024, the island of 23 million people will choose a new president to replace Tsai Ing-wen, who has served the limit of two terms. The election has drawn high attention because Beijing is opposed to front-runner Lai Ching-te, the candidate from the governing Democratic Progressive Party, which is known for its pro-independence learnings. This has raised concerns that a Lai win could trigger a military response from the mainland.(AP Photo/Chiang Ying-ying, File)

2024-01-12T05:56:07Z

WASHINGTON (AP) — Washington’s relationship with Beijing will face its biggest test since the leaders of the two countries met in November, as the United States seeks to keep the Taiwan Straits calm after Taiwanese v oters select a new president this weekend.

At stake is the peace and stability of the 110-mile-wide (177-kilometer-wide) strip of water between the Chinese mainland and the self-governed island. Any armed conflict could put Washington head-to-head against Beijing and disrupt the global economy.

China fears that a victory in Saturday’s election by the front-runner would be a step toward independence and has suggested to Taiwan’s voters that they could be choosing between peace and war.

Washington is prepared to work with both Taipei and Beijing to avoid miscalculations and an escalation in tensions, regardless of which presidential candidate wins, officials and observers say.

A senior White House official said the U.S. will keep channels of communication open with China and will stay in close contact with Taiwan to “reinforce both our support for Taiwan’s democratic processes and also our strong commitment to peace, stability and the status quo.” The official spoke to reporters on Thursday on the condition of anonymity to discuss the plans.

President Joe Biden plans to send an unofficial delegation of former senior officials to the island shortly after the election. The U.S. has no formal ties with Taiwan and sending an official delegation would enrage Beijing, which considers the island Chinese territory.

Anticipating a “period of higher tensions” ahead, the official said the U.S. is preparing for different reactions from Beijing, depending on the election results, that may range from no response to military actions.

On Saturday, the island of 23 million people will choose a new president to replace Tsai Ing-wen, who has served the limit of two terms. The election has drawn high attention because Beijing is opposed to front-runner Lai Ching-te, the candidate from the governing Democratic Progressive Party, which is known for its pro-independence learnings. This has raised concerns that a Lai win could trigger a military response from the mainland.

Beijing has vowed to unify with Taiwan, by force if necessary. Any military action could draw in the United States, which provides Taiwan with military hardware and technology under a security pact.

Washington, while not taking sides on Taiwan’s sovereignty, opposes any unilateral change to the status quo by either side. It has shown no official preference for any candidate.

Biden, when meeting with Chinese President Xi Jinping in November in California, stressed the importance of peace and stability in the Taiwan Straits. Xi pressed Biden to support China’s peaceful reunification with the island and told him “the Taiwan question remains the most important and most sensitive issue in China-U.S. relations.”

No matter who wins Saturday’s election, Washington will engage with the new Taiwanese government to strengthen ties and focus on deterring military aggression from Beijing, lawmakers and observers have said.

“The U.S. will exchange notes with Taiwan to preserve stability and for Taiwan to be resilient going forward,” said Bonnie Glaser, managing director of the Indo-Pacific program at the German Marshall Fund.

“Regardless of who wins, the American people will stand with the people of Taiwan and the vibrant, beautiful democracy of Taiwan,” Rep. Raja Krishnamoorthi of Illinois said Wednesday at a discussion hosted by Politico. “And that’s on a bipartisan basis.” He is the ranking Democrat on a House select committee regarding strategic competition between the U.S. and the Chinese Communist Party.

Republican Rep. Andy Barr of Kentucky said at the same discussion that the U.S. and all of Taiwan’s political parties believe in deterrence. “We will work with whoever wins this election to reestablish and strengthen that deterrence,” Barr said.

The overwhelming support among Taiwanese for maintaining the status quo means U.S. policy would largely stay the course regardless of who wins the election, said Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies.

“No one wants to provoke a war, and the current situation is minimally acceptable to almost everyone, whether in Taiwan, mainland China, or the United States,” Kennedy said.

All of Taiwan’s presidential candidates have come to see a solid relationship with the U.S. as strong deterrence against a hostile takeover of the island by Beijing, said Rorry Daniels, managing director of the New York-based Asia Society Policy Institute.

If elected, Lai is unlikely to rock the boat by taking drastic steps toward statehood, as his party has proved to be prudent and pragmatic under Tsai, observers say.

“Tsai has built a positive image in Washington,” said John Dotson of the Washington-based think tank Global Taiwan Institute. “She’s turned out to be very moderate in office.”

While Tsai has infuriated Beijing by refusing to acknowledge Taiwan as part of China, she also has refrained from moving toward declaring independence. Lai would be expected to follow in her footsteps. Washington would likely see a Lai presidency as a “third Tsai term,” Dotson said.

But a Lai win could trigger angry responses from Beijing, including military exercises near the island. Experts say Beijing likely would be restrained because it is eager to protect the U.S.-China relationship, especially after the Biden-Xi meeting in November.

The challenge for Taipei and for Washington would be to manage Beijing’s anxiety that Taiwan could be “creeping into independence,” said Daniels of the Asia Society Policy Institute.

Lai is closely trailed by Hou Yu-ih, the candidate from the opposition Kuomintang party. Beijing is accused of waging an influence campaign in favor of Hou, whose party sees Taiwan as part of China, although not necessarily under Beijing’s rule. Yet a Kuomintang victory would not upend U.S. policy, given that popular opinion on the island overwhelmingly favors the status quo, observers say.

Should Hou be elected, Washington, which has a history of working with the Kuomintang, would be prepared to engage with him to continue strengthening U.S-.Taiwan relations, and any easing in cross-strait tensions that would come with his election could allow the U.S. to focus on other issues, said Brian Hart, a fellow of the China Power Project at the Center for Strategic and International Studies.

A warmer cross-strait relationship could bring new complexities to U.S.-China relations. “There will be more to coordinate,” Daniels said. But as Beijing would likely put pressure on a Kuomintang government to move toward reunification, Washington could help Hou manage that pressure, she said.

The third candidate, Ko Wen-je of the newly minted Taiwan People’s Party, could be the biggest challenge for Washington if he were to be elected. His party has yet to be tested and build a relationship with Washington, but observers note that Ko has expressed interest in working with the U.S.

“The Biden administration has gone out of its way to have no preference,” Hart said. “There’s an opportunity regardless who wins. The U.S. is truly not trying to weigh in on this.”

“From the U.S. perspective, what we want Taiwan to do at a higher degree is to invest in its defense, to deter China’s aggression,” Hart said.

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‘Cunning and manipulative’: China firm relocates to remote area forcing employees to resign, avoiding compensation payouts

https://www.scmp.com/news/people-culture/trending-china/article/3247213/cunning-and-manipulative-china-firm-relocates-remote-area-forcing-employees-resign-avoiding?utm_source=rss_feed

A company in China that relocated from a downtown business district to a remote mountainous area allegedly did so knowing employees would have to resign instead of being laid off and paid compensation.

The situation came to light through a former employee, surnamed Chang, who exposed the Xian-based advertising company in central China’s Shaanxi province.

He described the new location in the Qinling Mountains as extremely remote, requiring a two-hour, one-way commute, with limited access to public transport.

“My colleagues without vehicles had to rely on a bus that ran every three hours and then walk another three kilometres through mountainous paths to reach the office,” Chang said.

A taxi from the nearest railway station costs 50 to 60 yuan (US$8) and the company refused to provide commuting subsidies, he added.

Chang also highlighted the poor quality and unsafe working conditions at the site, which lacked proper amenities.

He said female employees had to use public toilets in the nearest village, which was a “long walk” away.

He was also concerned about the safety of employees on the commute back home in the dark, given the number of stray dogs in the area that would follow people.

Faced with these dire conditions, 14 of more than 20 employees signed resignation agreements after unsuccessful protests.

However, just four days after they left, they discovered that the company had moved back to the city centre and was actively hiring new staff.

The employees suspected the company had intentionally created the harsh conditions to force them to resign, but company representative, Zhang, refuted the claims, arguing that the move was a temporary measure to reduce costs.

“The Central Business District rent was high, and the new office was being renovated. We were operating a homestay, so we temporarily moved there for a week,” he said.

He said legal action against the employees was being considered for tarnishing the company’s reputation and causing potential business losses.

Employees refuted Zhang’s claim the move was only intended to be for a week.

“We were told the period of working in the mountains could be very long, possibly until next year. If it was just a week, who could not have endured the working conditions,” one employee said.

The incident has garnered significant online support for the employees, with many criticising the company’s tactics.

“The employer is cunning and manipulative. Bosses being like this is truly dangerous,” commented one.

One online observer put the onus on the employees to deal with the situation, suggesting: “If I were in their place, I’d just rent a house in the mountains. It’s cheap, and I wouldn’t leave without proper compensation.”

While another advised: “A labour contract specifies the work location. Moving from the original office constitutes breach of contract. Employees could opt for forced resignation and seek compensation.’

China looms over Taiwan’s fateful election

https://www.washingtonpost.com/world/2024/01/12/china-taiwan-election-xi-jinping-united-states/2024-01-10T16:55:19.460Z

You’re reading an excerpt from the Today’s WorldView newsletter. Sign up to get the rest free, including news from around the globe and interesting ideas and opinions to know, sent to your inbox every weekday.

It was supposed to be a fateful handshake. In 2015, Chinese President Xi Jinping met Taiwan’s then-president, Ma Ying-jeou, in Singapore for the first face-to-face meeting between leaders of the two countries since 1949 — when China’s Communists completed their victory over the rival nationalist Kuomintang, or KMT. The latter faction fled and entrenched itself in the island of Taiwan.

Ever since, Beijing has viewed Taiwan as part of its territory, though the island remained defiantly self-governing and its government later transitioned from a nationalist military dictatorship to a vibrant, multiparty democracy. Taiwan still styles itself as the Republic of China, tethered to a mainland its political elites fled but never forsook. In the early years of the new century, talk of warming relations and even potential reunification was rife. Ma, a KMT leader motivated by deepening economic partnerships with China, was keen on mending fences with the mainland.

“What confronts us is the need to use understanding to get rid of conflict and to look forward to prosperity,” Ma said at the summit. “We need to announce to the world that we want to consolidate ties across the strait.”

Xi was almost poetic. “There’s no force that can separate us, because we are brothers who are still connected by our flesh even if our bones are broken,” he said. “We are a family — blood is thicker than water. Today we are sitting together so that our tragic history won’t repeat itself.”

4 ways China is trying to interfere in Taiwan’s presidential election

Far from being a harbinger of things to come, that meeting seems a snapshot of a vanished era. In the years since, Xi has led China down an all-the-more ruthless, authoritarian path, tightening his grip on power while quashing the political freedoms of semiautonomous Hong Kong. His rhetoric toward Taiwan has been far from cuddly — in speeches, he casts unification with the mainland as an inevitability that could take place through force of arms, if need be.

Ma, meanwhile, is a diminished figure. His party has been out of power for the past eight years, sidelined by the rival Democratic Progressive Party, which is more hostile toward Beijing and wary of falling beneath its umbrella. On the eve of a major national election in Taiwan, Ma was reportedly disinvited to the final major election rally of KMT presidential candidate Hou Yu-ih, after stoking controversy via media appearances during which he held open the door for unification with China and suggested Taiwanese voters should trust Xi on cross-strait relations.

Ma’s comments were unwelcome for a KMT presidential candidate eager to dispel the widely held view that their party is China’s favored faction in Taiwan. “The timing is very unfortunate for the Hou campaign,” Ma Chun-wei of Tamkang University in Taipei told Singapore’s Straits Times. “If Ma had said what he said two months ago, people might have moved on from it by now. But to say these things just a few days before the election will likely cost the party crucial median voters.”

As it is, Hou is facing an uphill battle against the DPP’s candidate, Lai Ching-te, as well as an upstart third-party challenge from Ko Wen-je of the center-left Taiwan People’s Party. Domestic concerns weigh heavily on the ballot, but China remains the elephant in the room at a time when polls show an increasing desire for separation from China among ordinary Taiwanese and a stronger embrace of a distinct Taiwanese identity.

Taiwan’s election explained: What’s at stake, and how will China react?

Xi’s coercive measures and saber rattling have contributed to the hardening rift. “This election cannot change the basic fact that, if unification were a company, it would have lost its market and would be on the brink of insolvency,” wrote David Sacks of the Council on Foreign Relations. “Taiwan is dedicated to continuing to embed itself in the West, a process that is inimical to China’s interests.”

The presidential candidates are not seeking to rock the boat. They favor the maintenance of the delicate status quo that defines Taiwan’s relationship with China and the world. But the candidates differ on how to preserve Taiwan’s standing as a democratic state that, while unrecognized by the vast majority of the international community, is still wholly free from Beijing.

“In particular, do deep cross-strait economic ties and business links protect Taiwan from Chinese aggression, or make it more vulnerable?” my colleague Meaghan Tobin explained. “Hou and the KMT say that keeping up business links across the strait is the key to holding off Beijing, while Lai and the DPP are convinced that’s a slippery slope toward integration with China on every level.”

Chinese officials have branded Lai a “destroyer of peace” and sent strong signals that another DPP term in power heightens the prospect of escalation. Meanwhile, in Washington, lawmakers are rallying around Taiwan more than ever before.

“Taiwan stands as a vibrant democracy and a shining beacon of freedom and the rule of law in the Indo-Pacific,” Rep. Ami Bera (D-Calif.) said in an email. “The United States remains steadfast in support of the people of Taiwan and our shared commitment to democratic values and the rule of law.”

Beijing, though, sees this glowing rhetoric and deepening U.S. engagement with Taiwan as part of a greater threat.

“No Communist leader is likely to be generous with Taiwan’s democracy, any more than Taipei’s leadership is likely to trust Beijing to allow the island’s society to flourish as it does today,” the Atlantic’s Michael Schuman wrote. “The Communist Party has all too clearly shown its intentions toward liberal societies. Thus, the more democracy entrenches itself in Taiwan, the more intractable the cross-strait conflict becomes, and the more urgently Washington must prepare for the worst.”

US$3 billion top Asia fund bets on Tencent again despite China gaming rules, favours Samsung over TSMC in chip market

https://www.scmp.com/business/china-business/article/3248169/us3-billion-top-asia-fund-bets-tencent-again-despite-china-gaming-rules-favours-samsung-over-tsmc?utm_source=rss_feed

A fund that outperformed most of its peers has added Tencent Holdings back to its portfolio recently, betting on the gaming company’s attractive valuation despite further industry curbs by the Chinese government.

Federated Hermes Asia Ex-Japan Equity Fund, which beat 83 per cent of its peers for the past three years, made the purchase in the new year, even after China released a draft rule on gaming restrictions in December. The investment reflects the fund’s optimism over the nation’s beaten-down market, where valuations are “absolutely incredible”, said Jonathan Pines, who manages the US$3.1 billion fund.

“We are buying it now because of its very cheap value,” he said in an interview Wednesday, referring to Tencent’s shares. Pines’ fund sold most of its shares in Tencent as well as in Taiwan Semiconductor Manufacturing Company (TSMC) about a year ago.

Tencent yielded its position as Asia’s second-most valuable company after China’s new rules on online gaming erased US$53 billion off its market value in 2023, capping a third year of losses. The shares trade at less than 16 times forward earnings, or about half the 10-year average, making them attractive, Pines said.

ByteDance confirms talks with Tencent, other buyers for video game operations

While China currently is not the preferred investment destination for many, a combination of ultra-cheap valuations and low allocations outweighs the risks of investing in the nation’s stocks, according to Pines.

“We think the risks of investing in China are worth taking because the stocks are so cheap,” he said.

The fund, which is also overweight on South Korea, prefers Samsung Electronics to TSMC in the Asia semiconductor space.

China to curb excess spending on video games in blow for world’s biggest market

TSMC is due for a cyclical downturn, and its shares trade at nearly five times book value, while Samsung’s earnings are poised to recover, Pines said, adding that the Korean company’s position in the memory chip sector makes it a better place to be for now.

While Korea’s largest company this week reported a steeper-than-expected 35 per cent drop in operating income, reflecting weak demand for consumer electronics globally, Pines said the results would not prevent him from being positive on its earnings trajectory. “Things are going to improve from here,” he said.

China trade: exports end 2023 with 2.3% rise in December, but global slowdown looms

https://www.scmp.com/economy/economic-indicators/article/3248149/china-trade-exports-end-2023-23-rise-december-global-slowdown-looms?utm_source=rss_feed

China’s exports saw another modest uptick in December, underlining its fluctuating recovery in 2023 that could continue into the new year as a potential global slowdown threatens to weigh on trade throughout the next 12 months.

Exports rose by 2.3 per cent from a year earlier last month to US$303.6 billion, according to customs data released on Friday, compared to a rise of 0.5 per cent in November.

The reading beat exceptions from Chinese financial data provider Wind for an increase of 2.1 per cent.

Imports, meanwhile, rose by 0.2 per cent last month from a year earlier to US$228.2 billion, compared to a 0.6 per cent decline in November.

The reading, though, fell short of the expectations from Wind for an increase of 0.3 per cent.

“China’s exports of electric vehicles, lithium-ion batteries and solar cells hit record highs,” said Wang Lingjun, deputy head of the General Administration of Customs.

In December, China’s total trade surplus was US$75.3 billion, compared to US$68.3 billion in November.

Overall last year, China’s total trade declined by 5 per cent to US$5.94 trillion, compared to a year earlier.

Exports in 2023, meanwhile, decline by 4.6 per cent to US$3.38 trillion, year on year, below Wind’s prediction for an increase of 1.8 per cent.

Imports, meanwhile, declined by 5.5 per cent to US$2.56 trillion last year, below Wind’s expectation for an increase of 1.8 per cent.

“Looking ahead to 2024, the complexity, severity and uncertainty of the external environment is increasing. To further promote stable growth in foreign trade, some difficulties should be overcome and more effort is needed,” Wang added.

After abruptly exiting from three years of coronavirus-related restrictions at the start of the year, China’s trade experienced a tumultuous recovery in 2023 due to geopolitical tensions, sluggish domestic demand and a global economic slowdown.

China’s economy holds ‘real potential’ in 2024, think tank predicts 5.3% growth

On Tuesday, the World Bank said the global economy would see its worst half-decade of growth in 30 years between 2020 and 2024, with China’s economic slowdown one of the major risks.

“Global trade growth in 2024 is expected to be only half the average in the decade before the pandemic,” the World Bank said in its Global Economic Prospects report.

The Washington-based international financial institution said feeble external demand would continue to weigh on China’s exports, and slower growth in domestic demand would also hold back its imports in 2024.

More to follow …

For US to counter China effectively, Pentagon must reform, warns first-of-its-kind report

https://www.scmp.com/news/china/article/3248140/us-counter-china-effectively-pentagon-must-reform-warns-first-its-kind-report?utm_source=rss_feed

The sprawling Pentagon, with its lengthy decision-making process, lumbering weapons-building and legacy of over-designing items that private companies can produce for less, is in dire need of reform if Washington wants to counter Beijing’s “pacing challenge”, a senior US defence department official warned on Thursday.

The US on Thursday released its first National Industrial Defence Strategy, acknowledging that a declining industrial base, supply-chain constraints and the outflow of weapons to Ukraine have left America vulnerable as companies supplying the Pentagon face mounting frustration over its lumbering pace.

“We know that it’s not easy always to work with the Department of Defence. Many of you in the audience tell me that regularly,” said Laura Taylor-Kale, the US assistant secretary of defence for industrial base policy, a newly created position.

“Well, we’re here. So what is it that we need in order to move forward? What is it that we need in order to be able to really build the industrial ecosystem that we need, that our warfighters need, in order to meet the pacing threats and current challenges?”

Taylor-Kale said a number of factors had jarred Washington into realising how vulnerable its military logistics system is.

These included the coronavirus pandemic as well as China’s strong position in lithium processing needed for electric vehicles and other green technologies.

Another is Beijing’s recently imposed export restrictions on gallium and germanium, key components in many electronics.

In addition, stockpiled weapons sent to Ukraine to counter Russia’s invasion will take several years to replenish even as the US has lagged in developing highly manoeuvrable hypersonic weapons that Beijing and Moscow have already deployed.

Pentagon must streamline to better counter China in military AI: senior official

“As many of us have analysed the Chinese industrial base, the US’s pacing threat, the main global competitor, it is moving swiftly, building weapons systems in preparation for a possible war with the United States,” said Seth Jones of the Centre for Strategic and International Studies, a Washington-based think tank.

“So the defence industrial base is an essential aspect of deterrence as much as it is for warfighting.”

The report also called on the Pentagon to bolster safeguards against strategic Chinese investments – so-called adversary capital – that threaten to increase US vulnerability. It urged venture-capital injections to jump-start poorly financed defence contractors.

“We’ve highlighted the importance of adversarial capital and the effects that it has on the industrial base, particularly predatory investments in acquisition practices,” Taylor-Kale said.

America’s industrial base consolidated over a generation, the report stated, fuelled by the end of the Cold War, an economic shift of manufacturing to China and other overseas locations and the merging of key companies in the name of efficiency.

The US “will require another generation to modernise”, it warned.

The strategy also recommended that the Pentagon team up with Indo-Pacific allies and partners to counter China, as Washington has done with the North Atlantic Treaty Organisation and others to assist Ukraine.

“We can’t afford to wait. We have seen over the last few years, the importance of why we need resilient supply chains,” said Taylor-Kale.

The importance is not just for “us domestically, but also for our close allies and partners”, she added. “We think that the time for action is now.”

US, China militaries talk for first time in over a year

The 60-page report covered principles and generalities at length and few specifics, Taylor-Kale noted, saying this was partly intentional to offer a broad framework that could be applied later to specific theatres and weapons systems as they evolve.

“We may not know what kind of batteries we need, but we know we’ll need lithium,” she said. “We know critical minerals and strategic materials will continue to be very important.”

The Pentagon also called for production, investment and capacity increases, more stockpiling and greater cooperation with allies, including members of the Aukus alliance, a security pact comprising Australia, Britain and the US.

The idea is to boost weapons production and better integrate weapons systems from artillery and cyber tools to hypersonic weapons.

Working with close allies to make more weapons abroad was imperative, the report stated, and should be pursued by “developing, growing, and sustaining multiple, redundant, production lines across a consortium of like-minded nations”.

Final Pentagon bill features Taiwan, Aukus and counters to China’s influence

The strategy paper also said the US needed to attract more young people into manufacturing as older workers retire, including by removing the stigma that blue- collar work was dirty and unappealing, perhaps by appealing to their patriotism.

“I’d like every kid who loves building Legos [to] think about a job in the defence industry,” said Cynthia Cook, a senior fellow at CSIS and adjunct professor at the Pardee Rand Graduate School in California.

Separately on Thursday, Ely Ratner, US assistant secretary of defence, and Admiral John Aquilino, US Indo-Pacific commander, briefed the Senate Armed Services Committee during a closed-door session in Washington.

“Failure to maintain deterrence against China and North Korea would be catastrophic for American national and economic security,” said Rhode Island Democrat Jack Reed, the committee’s chairman, and Mississippi Republican Roger Wicker, its ranking member, in a joint statement.

“Today’s sobering briefing provided evidence for why bipartisan efforts to tackle these challenges must be a top priority,” they added.

China urged to stay consistent with policies to prevent confusion, ensure private-sector growth

https://www.scmp.com/economy/china-economy/article/3248102/china-urged-stay-consistent-policies-prevent-confusion-ensure-private-sector-growth?utm_source=rss_feed

Advisers and economists have repeatedly underscored the importance of stabilising business expectations in China, as policy inconsistency and disparities between words and action have prevented the dispersal of clouds of doubt casting a shadow on the country’s economic recovery.

As fragile confidence threatens China’s growth prospects, the government must make its messages more transparent and its actions more assertive, analysts said.

“When expectations are weak, the market pays close attention to policy orientation … and whether it can be done,” Ji Min, director of the People’s Bank of China counsellor’s office, said in an article published in the January issue of China Finance magazine.

“The market is more concerned about specific measures, and judges whether they can be executed. Therefore, in addition to improving the transparency of policy details, it is necessary to issue guidance on midterm policies to enhance their predictability.”

Policy consistency has been deemed a key task for the year as Beijing aims to address weak links hampering recovery – particularly the anxieties of the private sector, which has typically served as the foundation for growth and job creation.

Beijing has repeatedly affirmed its support for the private sector since last summer to prevent the economy from sliding off track. Regulatory crackdowns on several industries in recent years, such as internet platform companies and tutoring, was broadly perceived to have created a chilling effect.

Latest China data shows policy pay-off, but no ‘animal spirit’ in private sector

Officials also vowed to deepen anti-corruption crackdowns to regulate behaviour by government officials when dealing with entrepreneurs, and President Xi Jinping declared the punishment of corruption involving collusion between government officials and business as a top priority in an address to a plenary session of the Central Commission for Discipline Inspection on Monday.

Private investment declined by 0.5 per cent, year on year, in the first 11 months of 2023, in contrast with a rise of 6.5 per cent in the state-owned sector.

Xu Tianchen, senior economist at the Economist Intelligence Unit, warned that the lack of consistent policy coordination across bureaucracies has been a major issue and “decisive and drastic action” should be preferred.

“This protracted slump in confidence is unheard of,” he said. “The economy can’t afford successive years of a confidence crisis.”

In the long run, Xu argued that legislative support such as a private enterprise protection law will be more effective than the issuance of individual government documents, which do not often specify the scope or “shelf life” of policies.

“Some government bodies took bold steps to encourage business investment, only to find that their positive effects were nullified by excessive enforcement by others. We sometimes joke that if you offer someone candy and then slap him in his face, he will only remember the slap,” Xu said.

Last month’s tone-setting central economic work conference named “stabilising expectations” as one of its most urgent policy directions, above even growth or employment.

On Sunday, Gao Peiyong, former vice-president of the Chinese Academy of Social Sciences, said at a forum at Peking University that stabilising expectations should be treated as the focal point in implementing economic policies in 2024.

Peng Peng, executive chairman of the Guangdong Society of Reform – a think tank connected to the provincial government – pointed out that financial services remain practically inaccessible to private firms, preventing supportive policies from having real heft. It also means, he said, that persistent problems such as high financing costs and credit rating challenges have not been solved.

Loans are often rejected by banks who have also been downgrading the credit ratings of private enterprises. These banks are following a credit “joint liability” system, wherein if one bank downgrades a credit rating, it triggers a chain reaction as other banks follow suit. This, Peng said, is a double blow to those already grappling with the slowdown in the aftermath of the pandemic.

Another factor diminishing the confidence and future expectations of enterprises is a substantial decline in property valuations.

Some shops in Guangzhou, valued at over 70,000 yuan (US$9,792) per square metre before the pandemic, have recently been appraised at just over 20,000 yuan per square metre. Such drastic reductions in asset valuation are common.

“This widespread panic could lead to businesses being unable to mortgage loans and abandoning production capabilities and assets, seriously hampering prospects for economic recovery and investment confidence,” Peng said.

Cheerful China ride-hailing driver who sings to passengers, gifts them cuddly toys melts hearts on social media

https://www.scmp.com/news/people-culture/trending-china/article/3247248/cheerful-china-ride-hailing-driver-who-sings-passengers-gifts-them-cuddly-toys-melts-hearts-social?utm_source=rss_feed

A happy ride-hailing driver who sings to passengers and gives them cuddly toys has been praised for spreading joy via his random acts of kindness.

In footage from his in-vehicle video that trended on social media, the driver is seen inviting a female passenger to sit in the front of the car, where he immediately initiates conversation.

“Can you just wait there a couple of moments?” The driver asks and reaches over to fetch a blue dolphin stuffed toy from the back seat, handing it to the woman.

“This is a little surprise I like to give to my passengers,” the driver from Changsha in the southern province of Hunan province says.

The woman seems unsure as she looks at the toy and smiles but politely declines the well-intentioned gift.

Undeterred, the cheerful driver reassures her that it is something he does all the time.

“Not only do I give a toy to my passengers, I also sing them a song,” he tells her.

After agreeing to listen to his singing she then takes the soft toy from him.

“What kinds of music do you like?” He asks.

When she answers G-Dragon, he gives her a puzzled look, laughs, and confesses he is not familiar with Korean songs, but offers to sing Mandarin tunes.

He suggests singing a song he knows and invites her to comment on his skills. During his “performance”, the passenger can be seen moving in time to the melody and sometimes singing along with him.

“You sing pretty well,” she tells him and they smile at each other. “Have you ever met a driver like me before?” He asks, to which she replies with a definitive “no”.

The story has warmed hearts on mainland social media, in part because taxi drivers in China are not renowned for being overly friendly.

“The driver is so sweet,” commented one.

“How can I meet such a friendly driver?” asked another.

Nice stories involving drivers and passengers are popular in China.

In September 2023, a boy in rural eastern China who hangs his school bag on his front door to signal to the accommodating bus driver that he is ready to make his 30km ride to school, delighted online observers.

In April 2022, an emotional letter “begging” for good reviews from passengers, written by a nine-year-old girl for her father, a ride-hailing driver in central China, touched the hearts of tens of thousands.

Myanmar conflict: China unlikely to ‘pull the carpet’ on junta and accept resistance group’s olive branch

https://www.scmp.com/week-asia/politics/article/3248068/myanmar-conflict-china-unlikely-pull-carpet-junta-and-accept-resistance-groups-olive-branch?utm_source=rss_feed

The move by Myanmar’s shadow government to escalate its bid to oust the junta by seeking support from China is aimed at capitalising on the military’s inability to protect Chinese interests in the Southeast Asian nation, analysts say.

While the National Unity Government (NUG) is signalling that it can be a reliable partner for China in Myanmar, it is unlikely that Beijing would respond favourably to NUG’s olive branch, according to the analysts.

Last week, the group released a 10-point document outlining its position on China, stating it is ready to work with Beijing on issues ranging from promoting direct investments in Myanmar to combating cross-border crime.

The NUG, comprising elected lawmakers and parliamentarians ousted by the junta in the February 2021 coup, also declared its support for the one-China principle, which states that Taiwan is an inalienable part of China.

Asean could be ‘caught off guard’ if the Myanmar junta were to collapse

Htwe Htwe Thein, an associate professor at Australia’s Curtin University, described the statement as a wise and timely move by the NUG, as China appeared to be running out of patience with the coup leaders.

“The junta has failed to stabilise the political situation in Myanmar and appears unable or disinterested in tackling the scam centres in the border areas between the two countries,” she said.

During a three-day visit to Myanmar last week, China’s Vice-Foreign Minister Sun Weidong met junta leader Min Aung Hlaing to discuss border stability and recent crackdowns against telecom scams. Many of the scam victims are from China, prompting Chinese police to launch crackdowns against Myanmar-based fraud syndicates.

China’s Minister of Public Security Wang Xiaohong also held a video call last Friday with Myanmar’s Home Affairs Minister Lieutenant-General Yar Pyae to bring up similar concerns.

Jason Tower, Myanmar programme director for the United States Institute of Peace think tank, said that with “China increasingly hedging its bets in Myanmar, the NUG’s statement comes at a pivotal moment”.

“It might be read as a signal from the NUG that China has other, more sustainable options to secure [its] infrastructure in Myanmar,” Tower said, noting that with the ongoing military defeat suffered by the junta in its fight against the insurgent coalition, it was clear the junta is unable to protect its bases and townships.

In late October, the Three Brotherhood Alliance in northern Shan – comprising the Myanmar National Democratic Alliance Army, the Ta’ang National Liberation Army, and the Arakan Army – launched a successful offensive against the junta.

The alliance said last month it had seized 422 bases and seven towns from Myanmar’s army since its October 27 operations. Last Friday, it said it had gained control of Laukkai, a key northern town bordering China.

Could Myanmar’s military be deposed by armed groups fighting across the country?

Hunter Marston, a Southeast Asia researcher at the Australian National University (ANU), said that while it was still uncertain if the junta could recover from its battlefield losses, the NUG had “rightly seized on the moment to try to shift Beijing’s policies at a time when they might be able to influence them”.

Through intelligence that China had gathered from its nationals returning from scam syndicates in Kokang, it was “crystal clear” to Beijing the extent to which Myanmar’s army has relied on criminal activities targeting Chinese nationals to sustain itself, Tower said.

“This has most certainly raised concerns in China,” Tower added, noting that Beijing increasingly viewed its partnership with the junta as “a dangerous and reckless strategy”, especially the risks to infrastructure critical for Chinese energy security.

At the core of this infrastructure is the 793km Myanmar-China gas pipeline, which began operations in 2013, starts in Kyaukpyu city in Myanmar’s Rakhine State and ends in China’s Yunnan region.

The NUG statement also “makes a case to the Chinese side to forgo meaningless talks with the military”, Tower said, and instead deepen partnership with the NUG and other actors fighting the military.

These include the People’s Defence Force, the armed wing of NUG, and Ethnic Armed Organisations (EAOs).

“Unfortunately for the NUG, it is unlikely that China will respond positively to this olive branch,” Tower said, noting that Chinese companies with significant business interests in Myanmar have instead taken advantage of the junta’s weakness and sealed preferential deals.

Last month, Chinese state-owned Citic Group and the junta government signed a supplementary agreement for the Kyaukphyu deep water port in the restive western Rakhine state, where many of the insurgent attacks in recent years happened.

Myanmar scam networks evade Chinese crackdown as battle along border continues

The firm will maintain a 70 per cent stake in the port as agreed by both sides in 2018, which is expected to give China access to the Bay of Bengal as an alternative route for oil imports.

China’s strategy for the Myanmar conflict has been to focus on mediation efforts targeting the powerful EAOs in the north and on the military while ignoring other parties, according to Tower.

While China is motivated by a desire to manage the impact of the conflict such that it is favourable to Beijing’s interests, the strategy could risk dividing the anti-junta resistance, Tower said.

“[It also] helps the junta buy time to perpetrate further atrocities,” he added.

Thailand accused of ‘piggybacking’ Myanmar by leading talks with junta

ANU’s Marston said while the NUG statement was unlikely to weaken Beijing’s support for the junta, it is expected to have a greater effect and fuel debate about “China’s failing Myanmar policy”.

“[Beijing] is likely to continue supporting the junta even as it expands contact with the NUG,” Marston said, adding that Chinese pressure on the junta to negotiate could be instrumental in ending the conflict.

“If Beijing chooses to use its influence, it could swiftly pull the carpet out from under the junta by suspending current investment projects,” Marston added.

China’s weak inflation a red alert to avoid Japanification as consumer prices fall again in December

https://www.scmp.com/economy/economic-indicators/article/3248144/chinas-weak-inflation-red-alert-avoid-japanification-consumer-prices-fall-again-december?utm_source=rss_feed

China’s consumer inflation fell for a third month in a row in December, adding to calls for more government actions to address deflationary risks and avoid repeating Japan’s so-called lost decades of stagnation.

The consumer price index (CPI) fell by 0.3 per cent year on year in December, the National Bureau of Statistics said on Friday, the same as the 0.3 per cent drop estimated by Chinese data provider Wind after dipping by 0.5 per cent in November.

And while the annual CPI reading remained in positive territory at 0.2 per cent, the 13-year low underlined the issues facing Beijing after Japan’s lost decades – commonly known as Japanification – were accompanied by deflation, a property slump and a demographic crisis.

The producer price index (PPI), which measures costs for goods at the factory gate, fell for the 15th consecutive month in December and dropped by 2.7 per cent year on year, lower than the estimated dip of 2.6 per cent polled by Wind after falling by 3 per cent in the previous month.

Beijing’s policymakers have perceived inflation as a constant threat, regularly setting a goal of capping annual consumer price growth at 3 per cent over the past decade.

But economists have argued that the mindset has to change as deflation would create more danger for the Chinese economy, especially at the time when confidence is already low and demand has remained weak.

“[Policymakers should realise] deflation will inflict damage as well,” Wang Tao, chief China economist at UBS, told a forum in Shanghai on Monday. “China should pay more attention to deflation.”

The Swiss bank has forecast that China’s CPI would rise by 0.8 per cent in 2024.

Li Xunlei, chief economist with Zhongtai Securities, said last month that China should consider setting a lower limit of no less than 1 per cent for consumer inflation to raise market expectations.

Beijing is expected to release its inflation and gross domestic product targets, as well as its budget deficit ratio and local bond quota, in the premier’s work report at the National People’s Congress in early March.

Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, said China has shown a similarly large differential between producer and consumer prices like seen in Japan decades ago, and warned that deflation could move into wages and household sectors.

“Japan’s deflation was not just about overcapacity. If there’s no productivity, wages need to come down because there’s no reason to pay workers more if productivity is down,” she said.

“China’s negative wage growth in the final quarter of 2023 is a sign that deflationary pressures may become entrenched.”

Average salaries for new hires in 38 major cities fell by 1.3 per cent year on year to 10,420 yuan (US$1,458) in the fourth quarter, data from online job portal Zhilian Zhaopin showed.

Economist calls for China to stimulate activity with controlled inflation rate

China has suffered three periods of consumer price declines in the past 25 years, two of which coincided with financial crises.

The 22-month fall starting from early 1998 was largely a result of Beijing’s monetary tightening to rein in bad loans, coupled with shrinking external demand following the Asian financial crisis.

The deflation threat returned in 2009, when the global financial crisis hit Chinese exporters.

In 2002, the year after China’s accession to the World Trade Organization, there was a brief deflationary period, when the influx of foreign firms improved productivity and reduced costs.

To address the latest concerns, Beijing has unveiled a series of measures since last summer to support the economy.

But the recovery has not yet solidified as China’s property market is still in distress, its private sector is weak, pressures of job creation remain elevated and price indices are stubbornly low.

The government’s efforts to address low inflation and the sluggish economy have, in turn, fuelled market expectations of further policy easing.

Stronger fiscal spending and monetary loosening is widely seen as a way to boost domestic demand when export prospects face uncertainties, while tackling overcapacity would also alleviate pressure on price levels.

Beijing has taken note of the risks, with the central economic work conference last month acknowledging deflationary pressures for the first time after stating “total social financing and money supply should be in line with economic growth and price targets”.

Larry Hu, chief China economist at Macquarie, said monetary policy could turn more accommodative in the future.

“[The acknowledgement by the central economic work conference] implies more policy rate and reserve requirement ratio cuts to come in the months ahead,” he said.

More to follow ...

Chinese gene therapy ‘clinically cured’ patient with blood disorder thalassaemia, researchers say

https://www.scmp.com/news/china/science/article/3248100/chinese-gene-therapy-clinically-cured-patient-blood-disorder-thalassaemia-researchers-say?utm_source=rss_feed

A Chinese gene-editing pharmaceutical company says it has clinically cured a patient with beta thalassaemia, one of the most common inherited blood disorders, using genetic base-editing technology – a world first.

Shanghai-based CorrectSequence Therapeutics, along with collaborators from Guangxi Medical University, announced on Monday that they had cured an adolescent patient with transfusion-dependent beta thalassaemia.

“To the best of our knowledge, this is the world’s first report of a successful clinical cure of haemoglobinopathy with base-editing technology,” CorrectSequence said in its news release.

What blood does, disorders and diseases, and foods to keep it healthy

The patient, who had been undergoing blood transfusions every two weeks to manage the condition, has not required a transfusion for more than two months since receiving the treatment, the company said.

The patient “has resumed normal life” after receiving the one-time treatment, known as CS-101, CorrectSequence said.

While studies on CS-101 are still pending long term data, Androulla Eleftheriou, executive director of the Thalassaemia International Federation (TIF), said the design of CorrectSequence’s editor “greatly enhances the safety of the approach compared to other advanced therapy application”.

Beta thalassaemia is an inherited recessive blood disorder that results in a person’s blood cells lacking enough haemoglobin, a blood protein that carries oxygen throughout the body.

Without regular treatment, the shortage of oxygen caused by the condition, which is caused by a mutation in the beta-globin gene, can cause fatigue, anaemia, delayed development, jaundice, a swollen abdomen, bone weakness and organ damage.

Patients with the most severe form of the condition – transfusion-dependent beta thalassaemia – rely on regular blood transfusions to help manage their symptoms.

The blood disorder is most common among people in South Asia, the Mediterranean, the Middle East and Africa, according to the Cleveland Clinic.

Thalassaemia is one of the most common hereditary conditions in China, with people in the south at the highest risk for the disease, according to the Northern California Comprehensive Thalassemia Centre.

Thalassaemia is part of a group of disorders called haemoglobinopathies, which includes sickle cell disease known for its abnormal production and structure of haemoglobin.

Haemoglobinopathies are the “most common group of monogenic diseases in the world”, with around 400,000 children born with the disorders each year, according to CorrectSequence.

Know your family medical history: your health could depend on it

The adolescent patient treated using CS-101 had been receiving transfusions twice a month since the age of two, but was able to stop them just two weeks after receiving the treatment in October.

CS-101 is a personalised base-editing treatment that works by editing stem cells. Haematopoietic stem cells – ones that can differentiate into any kind of blood cell – are first collected from the patients.

A base-editing system developed by researchers at ShanghaiTech University is then used to “precisely” edit a gene within the stem cells by altering DNA base pairs, reactivating functional production of fetal haemoglobin, CorrectSequence said.

The edited stem cells are then injected into the patient, enabling them to “continuously produce blood cells with intact haemoglobin and eliminating the need for frequent blood transfusions”, the company said.

CS-101 is not the first gene-editing therapy used to treat haemoglobinopathies.

In November, the world’s first CRISPR-Cas9 gene-editing therapy, Casgevy, was approved in the United Kingdom to treat sickle cell and beta thalassaemia. It was approved by the United States Food and Drug Administration in December.

But the mechanisms behind the two editors work differently.

To carry out its editing process, CRISPR-based therapy relies on creating double-strand breaks in DNA which are then repaired by the cell. However, this can lead to unintended edits, off-target mutations, and unexpected side effects.

CS-101 relies on innovative transformer base-editing technology, which allows editing on individual DNA base pairs without the need for a double-strand break.

“CS-101 does not harbour safety risks such as large DNA fragment deletions, chromosomal rearrangements, or off-target mutations,” CorrectSequence said.

While base editors minimise the risk of double-strand breaks, Eleftheriou noted that they can still occur “inadvertently.”

Compared to CRISPR-based therapies, treatment with CS-101 also enables patients to become transfusion-free sooner, due to the faster recovery rate to normal haemoglobin levels, the company said.

Eleftheriou noted that there are still challenges associated with gene editing therapies for hemoglobinopathies, including potential long term side effects and “the possibility the ‘cure’ may not be permanent.”

However TIF supports “any progress towards a curative approach for thalassaemia and other hemoglobin disorders,” she said.

In China, many patients with transfusion-dependent thalassaemia cannot afford the frequent transfusions, which can cost 100,000 yuan (US$14,000) a year, according to a paper published in the journal Chinese Public Health last October.

On top of the high costs, domestic blood supply shortages mean that some patients cannot receive their blood transfusions on time, according to the paper.

CorrectSequence said clinical applications of innovative gene therapies boost hopes for “one-time treatment, lifetime cure” for patients around the world with severe genetic diseases.

The adolescent patient received the treatment during an investigator-led trial, along with another adult patient who the team said has also been transfusion-free for a month.

The team is preparing further studies to assess the efficacy and safety of their therapy on beta thalassaemia, and are also setting up a trial for patients with sickle cell disease.