• Leaving China, long-time EU trade group chief says investors remain keen, but with more reservations
• China holds citizen on spying charges after she did ‘admin’ work for US company
• China is opening up visa-free rules for Europe and Asia. Why have Japan and the UK not made the cut?
• China warns nationals holidaying in Bali to mind safety risks after ‘accidents involving Chinese tourists’
• China’s stock market has little to fear from Trump presidency – unlike the US
• Chinese tourists visiting popular island resort Hainan caught out by return ticket shortages amid Lunar New Year travel rush
• China’s Wang Yi to champion ‘equal and orderly multipolar world’ at Munich Security Conference
• South China Sea: Philippines committed to code of conduct, says tensions not about US-China rivalry
• US$30 million China wedding goes ahead in palatial house where bride wears 100 gold bangles, despite official push to end wasteful culture
• Young Chinese, fed up with family pressure, opt out of Lunar New Year
• Chinese team tests lung treatment that may be first to reverse damage from chronic disease affecting 700 million people
• China truck firm transports tonnes of snow from north to south for special needs children to have fun, melts hearts
• Chinese property developer CIFI to offload Australian assets at a loss in bid to inject cash as credit dries up
• China-Australia relations: Treasury Wine readies to ship Penfolds, Icon bottles once Beijing lifts import tariffs
• US-China tech war: Dutch chip tool giant ASML says geopolitics, new export curbs remain risks
• Japan slips to the world’s fourth-largest economy, behind the US, China and now Germany
• In battered Chinese stocks, traders favour ‘lottery ticket’ trade
• Genetics journal retracts 17 papers from China due to human rights concerns
• Woman in China beaten by husband for refusing sex kills him by crushing neck, suffocation gets 3 and a half years jail
• China’s Lunar New Year fireworks: even a beloved tradition can’t ignore public safety
• Beijing condemns Taiwan after two Chinese fishers die in speedboat crash
• China’s foreign firms grapple with upward mobility in post-Covid era as state-owned peers rise
• China seeks revision of anti-money-laundering law to address risks related to cryptocurrencies and other virtual assets
• US still seeks delayed Pacific islands funds amid China’s lobbying push in region: senior diplomat

Leaving China, long-time EU trade group chief says investors remain keen, but with more reservations

https://www.scmp.com/news/china/article/3252119/leaving-china-long-time-eu-trade-group-chief-says-investors-remain-keen-more-reservations?utm_source=rss_feed

Multinational companies remain willing to invest in China, but worsening overcapacity in the manufacturing sector, Beijing’s push for self-reliance and lack of candour of top leadership have eroded its allure, according to one of the most influential and outspoken foreign business leaders in the country.

“It’s something where the size of the market matters big time,” Joerg Wuttke, president emeritus of the European Union Chamber of Commerce in China, said during an interview with the South China Morning Post in Washington.

The US capital is where the 65-year-old will settle with his family starting in July, when he will step down as chief representative of German chemical giant BASF in Beijing – a role he has held since 1997. The views he expressed in the interview only represent his position in the EU chamber.

“It has been the most amazing journey,” the German executive spoke of his four decades in China, witnessing the country’s emergence from the dark days of the Cultural Revolution and growing to become the world’s second-largest economy.

Wuttke, who grew up in a small village in southwest Germany, said his interest in China was first triggered by the stark contrast in the perceptions of the country within his family: his father was a strong reader of Confucius, while his older brother used to wave Mao Zedong’s “little red book”.

“I think China was just the ultimate prize. Somehow I managed to get there. I fell in love with the country, the food, the people, and ever since then, I’ve been hooked,” he said. “I was privileged to basically witness the whole story of growing with a marketplace. Of course, now it is a market which has a lot of challenges and unknown factors.”

Representing the European business community in China for the past two decades, Wuttke co-founded the German Chamber of Commerce in 1999 and the EU chamber in 2000, both of which he chaired for years.

The best time for foreign business access to China – both the market and Beijing’s top leadership – was after the World Trade Organization accession in 2001, when reform-minded Zhu Rongji was premier, and before the 2008 Beijing Olympics, Wuttke recalled.

EU’s plans for tougher China stance risk coming off the rails

Zhu’s five-year tenure, starting in 1998, was defined by efforts to liberalise the country’s economic system: bolstering the private sector, trimming government bureaucracies and revamping the inefficient state sector through massive lay-offs and factory closures.

While those challenges played out, Wuttke said, investors from overseas had “incredible access to the top leadership”, who met with foreign chief executives “left, right and centre”.

In the past decade, he added, such candid interactions have been largely reduced to staged engagement: foreign dignitaries refrain from speaking up in order not to touch on difficult topics and Chinese leadership resort to political language.

The Covid-19 pandemic further exacerbated the trend. A strong critic of Beijing’s zero-Covid policy, which Beijing started to ease in December 2022, Wuttke said it has been the best example of how ideology is trumping the economy in China.

In contrast, local government officials in China have remained very engaging with foreign investors, since job creation and tax gain are always their top priorities, Wuttke said.

“There is a real disconnection between local governments embracing [foreign companies] and basically Beijing is riding a more self-reliant storyline. Sometimes I really hate to tell them ‘sorry, I would like to do this, but Beijing says no’.”

In the absence of a sustained post-pandemic recovery exacerbated by a property market downturn and heightening geopolitical tensions, swooning Chinese stock markets and investor outflows have prompted Beijing to launch a charm offensive to woo foreign capital back.

In January, Chinese Premier Li Qiang told the World Economic Forum in Davos that the country is committed to creating “favourable conditions” for foreign companies, including a total lift of restriction on foreign investment in the manufacturing sector.

“We hear the good words, but at the same time, we are businesspeople, we are looking at issues on the ground. Access doesn’t really get better,” Wuttke said.

China’s economy hit target with 5.2% growth in 2023, Premier Li tells Davos

In the third quarter of 2023, direct investment liabilities – a broad measure of foreign direct investment (FDI) that includes foreign companies’ retained earnings in China – ran a deficit of US$11.8 billion, the first since the government started collecting such data in 1998.

One reason for the FDI decline is overcapacity, Wuttke said. At China’s annual tone-setting central economic work conference in December, top leaders in Beijing acknowledged that “overcapacity in some industries” was one of the major economic challenges to tackle in 2024.

“There’s a lot of overcapacity in China. And so where would you invest? You might just invest more in capacities which are already plagued and hampered by overcapacity,” Wuttke noted.

“And then people make products but make no money. And that’s why a lot of money is leaving China.”

Still, the Chinese market remains attractive for foreign businesses, due to the sheer size of its market and technology gains – especially the green energy sector, in which foreign businesses can learn, compete and close the gap, he said.

Despite China’s slump, economists still expect it to remain the world’s second-largest economy for the foreseeable future, though fewer believe it will surpass the US to become No 1 any time soon, as many had before the downturn in domestic markets.

Rising geopolitical tensions have added to Beijing’s headaches. The European Union has adopted a de-risking approach toward China since last year, prioritising the screening of outbound investments and imposing export controls.

An even bigger casualty has been the Comprehensive Agreement on Investment – a long-negotiated deal meant to give European firms greater access to China’s market. Though agreement had been reached, it needed approval by the European Parliament, which froze consideration since 2021 after Beijing imposed sanctions on some parliament members and European entities in retaliation for similar EU action over alleged human rights abuses in Xinjiang, accusations that Beijing denies.

BASF to divest from China joint ventures over Xinjiang abuse claims

The issue remains potent: just last week, BASF announced it was divesting from two joint ventures in Xinjiang, following reports that its business partners were involved in human rights abuses.

Wuttke said while decoupling is untenable, the EU’s de-risking policy – to limit dependency on China – is “essential”.

“But these are anomalies in our trade and investment, single-digit items, not the majority of things,” he said.

As he prepares to bid farewell to the country he first arrived in 1982, it is not yet time for retirement; rather, he is ready to share his China experience when his new life begins in Washington.

“I’m going to leave China in July. But China’s not going to leave me. I will be continuously advising on China.”

China holds citizen on spying charges after she did ‘admin’ work for US company

https://www.theguardian.com/world/2024/feb/15/china-holds-citizen-on-spying-charges-after-she-did-admin-work-for-us-company

China has detained one of its citizens on spying charges after she did some work for a US company, in a case that experts say highlights the potential risks of working for foreign businesses.

Emily Chen, 50, disappeared after flying into Nanjing Lukou international airport in December on a visit from Doha, where she lives.

According to her husband, US citizen Mark Lent, Chen messaged her family to say that she had landed but she then did not emerge from the airport. Four days later, her son received a letter from the national security bureau in Dalian, a city more than 570 miles away, saying that she had been detained on 30 December on suspicion of illegally providing state secrets to overseas parties – a charge that carries a maximum penalty of 10 years, or longer for more serious cases.

Few details have been given about the specific reasons for Chen’s detention. Reached by the Guardian, Dalian’s national security bureau declined to comment. But Lent, a photography teacher who married Chen in China in 2016, said Chen had only one connection to Dalian: last year, she spent four months helping a US logistics company open an office there.

Chen “would never, ever spy on her own country”, said Lent, who is now trying to raise money for his wife’s legal fees and for their family’s living costs. He has not been able to contact her since she was taken into detention. “My wife was just an innocent bystander.”

Chen’s son, a Chinese citizen from a previous relationship, was barred from leaving the country last week when he attempted to board a flight in Shanghai.

Between January and April 2023, Chen worked on a freelance basis for Safe Ports, a US logistics company which describes itself as “a global leader in supply chain management”. Lucy Duncan, Safe Ports’ founder and CEO, said the company was looking to open an office in Dalian to expand its business, offering green technology solutions to seaports. Duncan described Chen’s work for the company as “purely administrative”, including tasks such as looking for an office space. “She did a beautiful job,” Duncan said, adding, “I have no idea as to why she has been detained”.

Safe Ports ultimately decided not to proceed with the project in Dalian, in part because Chen took a full-time job with a French energy company in Doha. Duncan also concluded that the deteriorating environment for foreigners meant that “it is impossible to do business in China”.

There has been no official confirmation that Chen’s detention is linked to her work for Safe Ports. But Dalian, a port city in northern China, is home to an important naval base, which would make any inquiries regarding ports in that area a sensitive matter. That is particularly the case under the Chinese Communist party’s military-civil fusion strategy, which aims to leverage civilian infrastructure to support military development.

Safe Ports has previously worked with the US department of defence, for example helping to supply troops in Afghanistan. This association may have drawn attention from the Chinese authorities.

Last year, China expanded its counter-espionage law, broadening the definition of espionage to cover any “documents, data, materials or items related to national security”. However, Chen is under investigation for spying offences that were already part of China’s criminal code.

Steve Tsang, the director of the China Institute at the School of Oriental and African Studies in London, said the vagueness of charges added to concerns about alleged spying cases. “Whether it is fair or not, [such cases] are going to make a lot of Chinese think twice about working for foreign companies.”

Chen is being held under a type of detention known as residential surveillance at a designated location, or RSDL. RSDL allows the authorities to hold an individual for up to six months without access to a lawyer, their family, or the opportunity to appeal. They are often held in solitary confinement. UN human rights experts describe it “as form of enforced disappearance” which “puts individuals at heightened risk of torture, inhuman or degrading treatment or punishment”.

Chen is not known to have been formally charged with any offence, as is common in RSDL cases.

Peter Dahlin, the director of Safeguard Defenders, an NGO that has researched RSDL, said its use “tends to mean that the police considers it a more difficult case, that it concerns espionage or national security crimes, or that the person is being persecuted on political grounds”.

Lent said the US embassy had refused to help him, on the grounds that his wife was not a US citizen. A spokesperson for the US embassy said they had “nothing to share” about the case.

Lent now believes that “nothing short of a miracle will save us”. He said he has asked lawyer in China to request a photograph of Chen to prove that she is safe, but to no avail. “It’s not like I’m trying to break her out, because I don’t even know where she is.”

China is opening up visa-free rules for Europe and Asia. Why have Japan and the UK not made the cut?

https://www.scmp.com/news/china/diplomacy/article/3251442/china-opening-visa-free-rules-europe-and-asia-why-have-japan-and-uk-not-made-cut?utm_source=rss_feed

In a move last year that surprised many, China made short visits visa-free for five European nations and Malaysia for a year starting December 1.

The departure from China’s usually strict entry requirements was expanded last month to cover Irish and Swiss nationals, after France, Germany, Italy, the Netherlands and Spain in the first round.

In Southeast Asia, China has recently also signed mutual visa waiver agreements with Singapore and Thailand, after earlier reinstating a 15-day unilateral visa-free rule for Singapore and Brunei nationals that had been suspended during the Covid years.

Beijing has described the relaxations as designed to help “China’s high-quality development and high-standard opening up”, and said it will seek to open up more visa-free travel and expand reciprocal visa exemption deals.

However, its policy appears to be selective, with economic powerhouses Japan and Britain yet to be included in the scheme.

Japanese passport holders enjoyed 15-day visa-free stays under the same pre-pandemic scheme as Singapore and Brunei, but have yet to see the policy resume.

Britain also missed out, despite China’s post-Covid travel policy covering nearly all of Europe’s major economies.

Observers said while Beijing might be trying to shed the isolationist image of three years of strict pandemic-related border controls, visa-free arrangements are also seen as a litmus test for diplomatic relations.

Josef Gregory Mahoney, a professor of politics and international relations at Shanghai’s East China Normal University, said Beijing’s apparent difference of attitude when it came to visa policies for Britain and Japan showed it was mindful of geopolitical considerations.

“While many European governments have followed the US too closely on issues like de-risking and various anti-China narratives, in fact it’s possible that China-EU relations are not irretrievably broken,” Mahoney said, arguing that ties could “still improve despite serious setbacks in recent years”.

EU slows China de-risking plans in face of member state resistance

Beijing would like to improve ties through people-to-people exchanges that might help “deconstruct the demonising narratives” against China in Western media, he added.

“Many in Europe are suspicious of US hegemony, they don’t like the EU’s prospects if divorced from Russian energy and the Chinese market, so there’s still a chance to encourage a return to better relations.”

The world’s No 2 economy is trying to court foreign investors and tourists while it struggles with weakened consumer demand and patchy post-Covid recovery.

“Without a doubt more visits would … improve China’s economic recovery and ability to attract [foreign direct investment] and new business development,” Mahoney said.

However, Japan and the United Kingdom were more clearly aligned with the US and this was a source of frustration for Beijing, according to Mahoney, who said: “It seems rather clear that the UK and Japan are committed to Washington’s attempts to contain and suppress Chinese development, but this is less so in Europe.”

Japan, which has historical and territorial disputes with China, has stepped up joint military drills in the region with treaty ally the United States. Tokyo has in recent years also voiced concerns about being caught up in the crossfire should Beijing choose to attack Taiwan, which it sees as part of China to be reunited by force if necessary and holds up as a “red line” in international relations.

China promises ‘heavy price’ for blocking reunification as US, Japan hold drills

A pro-Taiwan politician has been named as Japan’s new defence minister, after a serving government official was reportedly deputed to act as its de facto defence attaché in Taiwan last year.

When William Lai Ching-te, slammed by Beijing as a “troublemaker”, won Taiwan’s presidential vote last month, Tokyo hailed the island as “an extremely crucial partner”. In 2020 when Tsai Ing-wen won her second term, Tokyo said Taiwan was an “important partner”.

Beijing’s reactions to the waste water release from Japan’s stricken Fukushima nuclear plant and a reported leak there have added to the friction.

London has also sparred with Beijing over Taiwan. In November, Beijing told London to stop trying to “enhance” ties with Taipei after it signed a new trade agreement with the island and held high-profile meetings with Taiwanese officials.

Neither Japan nor the UK recognises self-governed Taiwan as independent or has formal diplomatic ties with it.

UK-China relations have also been strained over issues such as alleged human rights violations in Xinjiang and a national security crackdown in Hong Kong, a former British colony.

But while the UK has never had a visa-free agreement with China, Japan did so until just a few years ago.

Lu Xiang, a research fellow in US studies at the Chinese Academy of Social Sciences, said a reciprocal visa-free regime with Japan was still possible, despite the geopolitical tensions.

Negotiations on resuming the visa-free policy may face some “twists and turns”, he said, but it was still possible to expect “some achievement soon”.

Alfred Wu, an associate professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy, said even though Beijing’s visa-waiver policy was politically driven, Japan’s economic importance was too big to ignore.

Japanese investment in China in 2021 was nearly five times larger than the other way round, creating a strong market for Japanese business travel to the country. Japan was also China’s second-largest trading partner as an individual country in the same year.

In a positive signal from China, its foreign ministry confirmed late last month that Beijing aimed to “intensively look into” a resumption of the visa-free arrangement for Japanese visitors.

“We hope that Japan can work with us in the same direction to make cross-border travel between our two countries easier,” spokesman Wang Wenbin said.

The British Chamber of Commerce in China said Beijing’s move to introduce visa-free entries for several countries “had resonated with members, with many calling for the UK’s inclusion at our annual ‘British Business in China: Sentiment Survey’ launches across the country in January”

“We hope this can be facilitated to encourage more people-to-people exchanges in turn creating a better climate for trade and investment,” it said.

China warns nationals holidaying in Bali to mind safety risks after ‘accidents involving Chinese tourists’

https://www.scmp.com/news/china/article/3252110/china-warns-nationals-holidaying-bali-mind-safety-risks-after-accidents-involving-chinese-tourists?utm_source=rss_feed

China has issued a special warning to its nationals visiting Bali, after multiple “traffic accidents and drownings” involving Chinese tourists in the Indonesian resort island.

The consulate-general in Balinese capital Denpasar on Thursday cautioned Chinese holidaymakers against riding a motorcycle without a licence, and urged them to be careful when driving on narrow roads on Bali and the neighbouring island of Nusa Penida.

In a post on its official WeChat social media account, the consulate reminded visitors that Bali followed right-hand drive, “which is opposite to [the practice] in China, and some roads in Ubud, Kintamani, Nusa Penida, and other places have narrow roads or complicated road conditions”.

The jungles of Ubud and the volcanoes of Kintamani are popular tourist destinations in Bali.

The consulate in its original post also expressed sorrow over “multiple injuries and deaths of Chinese tourists” in accidents on Bali and in Komodo National Park “during the Spring Festival”, the Chinese name for the long Lunar New Year holiday.

But it deleted the line about deaths and injuries about two hours later, saying only that there had been “traffic and drowning accidents”.

The consulate has not responded to the Post’s inquiries on the details of the accidents and the reason for deleting the lines.

Bali with its visa-on-arrival facilities is a favoured destination for Chinese passport-holders looking to spend a warm Lunar New Year holiday during what is China’s largest festival and travel season.

But deadly accidents often occur in its mountainous reaches, and the consulate regularly issues safety warnings ahead of long Chinese holidays. However, the latest special warning came on what was the seventh day of the Year of the Dragon.

The consulate’s WeChat post also reminded travellers to be mindful of safety when playing water sports and avoid going into rough seas with powerful waves.

Tourists should “purchase adequate insurance ahead of the trip as international medical fees in Bali are relatively expensive”, it added.

Bali is known for its beaches. Now its tourism trade is betting on other things

Frequent motor accidents are a cause for concern among international visitors to Bali, and drownings are also occasionally reported from the tropical island known for its water and adventure sports like surfing, rafting and scuba diving.

Recent fatalities include Chinese online influencer Huang Xiaofeng, also known as Johnny, who was found dead after being swept away by a massive wave last November.

The 34-year-old had gone swimming at Batu Belig beach in Bali’s North Kuta District, according to Chinese media outlet Hongxing News.

On February 7, ahead of the Lunar New Year, the consulate also issued a statement warning tourists against driving or renting scooters illegally, and urging them to beware of the risks when driving in hilly areas.

As many as 2.5 million Chinese tourists visited Bali each year before the Covid-19 pandemic. Visa-free travel might also be in the offing, with Indonesia late last year pledging waivers for 20 countries, including China and the United States, as it looks to revive its tourism and economy.

China’s stock market has little to fear from Trump presidency – unlike the US

https://www.scmp.com/comment/opinion/united-states/article/3252018/chinas-stock-market-has-little-fear-trump-presidency-unlike-us?utm_source=rss_feed

Equity investors in China have plenty of reasons to worry, so many that it is unclear what the most important factor is in the rout that has wiped some US$7 trillion off the market value of shares in mainland China and Hong Kong since the early 2021 peak.

The longer the slump persists – speculation that Beijing is readying more forceful measures to prop up the stock market sparked a rally but have been met with scepticism – the more uncertainty there is over the principal driver of the sell-off.

During the past month, more attention has been paid to tensions between the United States and China. In a report published on February 2, Goldman Sachs said one of the most frequently asked questions from its clients in Beijing and Shanghai – who are mostly mutual funds, private equity funds and asset managers – was what a Donald Trump victory in the US presidential election in November would mean for China.

This is not surprising, given Trump’s threat to revoke “most favoured nation” trade status for China and impose a flat 60 per cent tariff on all Chinese imports. According to Bloomberg, that would slash the proportion of US imports coming from China – the largest US trade partner in the past two decades – to almost zero, inflicting the most damage on China’s electronics and textile industries.

True to form, Trump boasted last month that the reason Chinese stocks were falling was because he won the Iowa caucuses by a wide margin, strengthening his grip on the Republican Party and reinforcing the perception among some pundits that he is the favourite to win the election.

Currency traders are starting to price in US political risk. A measure of the cost to hedge the offshore yuan that covers the election – the spread, or gap, between nine-month implied volatility in the offshore yuan and its six-month equivalent – has shot up to its highest level since 2017 relative to comparable periods, according to Bloomberg data.

Should all this be taken as a sign that the prospect of a second Trump term is undermining sentiment towards China? This would be a gross misreading of the determinants of Chinese asset prices. It is domestic, not external, factors that are at play.

If markets were worried about Trump’s return to the White House, the benchmark S&P 500 index would not have hit a record high last week. The overriding factor behind the plunge in Chinese stocks is the loss of confidence in Beijing’s management of the economy. While the exact cause of this “trust deficit”, as Goldman Sachs calls it, is the subject of intense debate, and the best way to restore confidence remains unclear, the problems are incontestably home-grown.

In Bank of America’s latest global fund manager survey, published on Tuesday, 33 per cent of respondents said more aggressive fiscal support for the property market would convince them to increase their exposure to Chinese equities. However, 22 per cent said a “structural underweight” position in Chinese stocks was the correct allocation. Tellingly, only 14 per cent said an easing in US-China tensions would encourage them to increase their allocation to China.

Moreover, Trump does not have a monopoly on the strong-on-China stance. US President Joe Biden kept in place the tariffs imposed by his predecessor and showed his hawkish side on China early on in his presidency. While Republicans and Democrats agree on little, both compete over who can be tougher on China.

Chinese stocks fared well under Trump, keeping pace with the S&P 500 and posting gains between 2017 and 2020. An online survey of Chinese citizens carried out by the Grandview Institution, a Beijing-based think tank, revealed that 60 per cent of respondents wanted Trump to win the election.

The reason, it appears, had little to do with his policies and was instead based on the assumption that a second Trump term would plunge the US into chaos, potentially benefiting China.

What is clear is that Trump poses a far bigger threat to US democracy, the rule of law and the credibility of American economic policy, including the autonomy of the US Federal Reserve, the world’s most important central bank.

Why are business and national security sectors silent on Trump 2.0?

Although a deepening US-China rift is a given if Trump returns to the White House, it is the transatlantic alliance that would suffer the most. Trump’s mind-bogglingly reckless invitation to Russia to attack Nato members that do not spend enough on defence is a taste of things to come if he is elected president again.

Some prominent corporate leaders and investors might claim Trump’s bark is worse than his bite. Not only is this an egregious misreading of a man who is under indictment – in addition to seeking to overturn the 2020 election, Trump is campaigning on a pledge to dismantle the civil service and replace it with loyalists – it reveals a dangerous level of complacency about the US election.

In the Bank of America survey, the election did not even figure among the top four “tail risks” in markets. China, by contrast, barely made it into the top six. There is no reason Wall Street should be fretting about China, given that its problems do not pose a systemic threat to the global economy. The US election, on the other hand, is hugely consequential.

Trump might hold little sway over China’s markets, but the chance that he will win the election poses a grave threat to the US and the rest of the world.

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Chinese tourists visiting popular island resort Hainan caught out by return ticket shortages amid Lunar New Year travel rush

https://www.scmp.com/news/china/politics/article/3252098/chinese-tourists-visiting-popular-island-resort-hainan-caught-out-return-ticket-shortages-amid-lunar?utm_source=rss_feed

Visitors to Hainan, one of China’s most popular tourist destinations, have been left stranded after a mixture of bad luck or bad planning left them struggling to get off the tropical island in time to get back home before the main Lunar New Year holiday ends on Saturday.

The country’s biggest holiday period is well known for the mass movement of people, but some of those affected said they had turned up on a whim and decided to see how they liked the island before heading back.

“My decision to holiday in Hainan was not well planned. I found return tickets are more expensive than I expected, so I decided to wait a bit for a cheaper price,” one tourist wrote on the social media platform Weibo.

“This is my first time on a road trip to Hainan … I did not think that buying a return ticket would be a big problem,” another user said on the lifestyle platform Xiaohongshu. “But now I have learned my lesson.”

The province experienced a significant surge in passenger traffic during the holiday, with an overall year-over-year gain of more than 30 per cent, provincial authorities said.

The influx of visitors means return plane tickets are in short supply, authorities said, forcing travellers to pay high prices for business class flights – usually 10,000 yuan (US$1,400) or above, more than five times the cost of an economy class flight at other times of the year.

Visitors to China’s tourist spots spike during Lunar New Year

The authorities said the passenger outflow will reach a peak between Thursday and Saturday and demand for tickets will remain high until Monday. Airlines also advised passengers to avoid the airport at the main resort city of Sanya and look for flights from other airports, such as the provincial capital Haikou or Boao.

It is not clear how many people have found themselves stranded, but there were no reports of widespread disruptions to flights.

Local media reports said the country’s civil aviation authority had agreed to increase Hainan’s flight capacity and was speaking to airlines about their plans. Meanwhile, Sanya airport is working with airlines to introduce widebody planes that can carry more passengers.

The situation is similar for other forms of travel. There is no direct road link or high-speed railway, and tickets for the main rail route off the island, Zhanjiang in Guangdong province – a five-hour journey – are sold out until the end of February.

Meanwhile, the authorities in Haikou said a record 38,900 vehicles were carried across the strait dividing the island from the Chinese mainland on Wednesday with 19,600 more scheduled for Thursday. Meanwhile, a total of 179,000 people made the journey on Wednesday.

The port authorities are working to lay on extra services to allow more cars to take the ferry on Friday and Saturday.

Visitors at other times of the year generally do need to buy return ferry tickets in advance and Yang Wanxing, who arrived in Hainan on Saturday after taking his electric vehicle on the ferry, admitted he was one of those travellers who had not realised demand would be so high at present.

He said he was extremely worried that he would not go back to Chengdu in Sichuan in time to start work on Friday and even if he did get a ferry ticket on Thursday, he would still face a 1,700km (1,055-mile) drive home.

“I have been trying to grab a ferry ticket to the mainland since Wednesday, but it did not work out,” he said. “There are too many people trying to get the tickets, my chances of getting it are low.”

Part of Yang’s problem is that ferries are only allowed to carry 18 electric vehicles, 10 per cent of the total number of berths, at a time due to safety concerns following a series of battery fires.

China opens up Hainan to more kinds of visa-free travel

Another 26-year-old visitor from Zhengzhou in Henan province, who gave her name as Fei, described her journey back home as “an escape from Hainan”.

“The most difficult part is departing the island,” she said. “As long as you arrive on the mainland, you can always get back no matter where your destination is, south or north.”

On Wednesday she got a ferry to Xuwen as a foot passenger, before setting out for home via bus and train. She said she had decided to leave her car on the island, and would either return to pick it up at a later date or pay a towing company to bring it to her home 2,000km to the north.

Other stranded travellers were forced to adopt more creative methods to get home – echoing the experience of visitors who found themselves stuck on the island during a sudden Covid lockdown in the summer of 2022.

By Tuesday afternoon, the hashtag “Sanya flights” had attracted more than 18.4 million views on social media platforms, with Xiaohongshu sharing tips, such as looking for international flights that included a transit in China.

One Shanghai resident named Stephanie told users of the platform that she had spent 2,500 yuan on a flight to Seoul that included a stopover in her home city and was going to cancel the second leg of the trip after she landed there.

Some visitors complained that the ticket shortage had ruined their experience of the island and vowed never to return.

“A flight from Haikou to Kuala Lumpur only costs around one or two thousand yuan, even less than the flight from Haikou to other major mainland cities,” wrote another Xiaohongshu user.

“Why would I consider visiting Hainan during the holiday again when everything from hotels to food is expensive here, instead of going to Southeast Asian countries?”

But some internet users were less than sympathetic, saying those who had not planned their journeys properly had only themselves to blame.

“Their experience has nothing to do with Sanya or even the Hainan government. It is their own fault,” wrote one Weibo user. “If they had checked and booked flight tickets before the trip, they would not have found themselves trapped in such an arduous situation.”

“Demand affects supply,” another wrote. “How can these people be so careless not to buy return tickets when deciding on their trips?”

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China’s Wang Yi to champion ‘equal and orderly multipolar world’ at Munich Security Conference

https://www.scmp.com/news/china/diplomacy/article/3252075/chinas-wang-yi-champion-equal-and-orderly-multipolar-world-munich-security-conference?utm_source=rss_feed

China’s top diplomat Wang Yi will head to Europe to attend an annual security conference in Munich and visit Spain and France, the Chinese foreign ministry said on Thursday.

According to the ministry, Wang will attend the Munich Security Conference, which runs from February 16 to 18, and will deliver a speech at the China seminar during the conference to explain “China’s propositions on building a community with a shared future for mankind and advocating an equal and orderly multipolar world”.

“At present, major changes in the world are accelerating and the world has entered a new period of turbulence and transformation,” the ministry said in a statement.

Ex-Chinese defence minister’s absence from Lunar New Year list sparks questions

The international security policy conference, which marks its 60th edition this year, is held annually at the Hotel Bayerischer Hof in Munich. Sometimes called the “Davos for defence”, the conference is attended by defence and security officials from around the globe. China has frequently sent high-level representatives to the event, according to the foreign ministry.

This year’s conference is likely to address the wars in Ukraine and the Middle East.

Government officials from Russia and Iran were not invited to the conference amid escalating conflicts in the Gaza Strip and Red Sea as well as the Russian invasion of Ukraine, which will soon enter its third year.

US Secretary of State Antony Blinken will lead the US delegation to Munich after visiting Albania.

Wang attended the conference last year and met Blinken on the sidelines of the event. During their talks, the pair discussed the alleged Chinese surveillance balloon that was spotted in US airspace in February of last year.

Wang is also likely to meet British foreign secretary and former prime minister David Cameron for the first time since the latter took the role in November, according to a report from The Guardian.

Benjamin Barton, associate professor at the University of Nottingham’s Malaysia campus, said Wang’s participation was part of the ongoing process of thawing ties between China and the West, as there was growing recognition in Beijing that it could not continue “ostracising itself from the West”.

“I would imagine that many of the discussions that will take place between Wang Yi and his Western counterparts will focus on forging ahead with this desire to rekindle the relationship with an eye on the bigger picture of the world’s current security dilemmas,” Barton said.

“The aim would appear to be to get to the point where both sides are seeking to advance a common perception of how to move forward towards maintaining global stability at a time when different interlinked conflicts are unfolding simultaneously.”

Barton added that the West will want to know more about where China stands on the war in the Ukraine – given its ties with Moscow – its indirect role in the war and its post-conflict vision of Ukraine, as well as other conflicts in the Indo-Pacific, the Middle East and Africa.

“Gaza, the Red Sea, Taiwan, the South China Sea and hotspot situations on the African continent are bound to come up. There seems to be an emphasis at this year’s event on cybersecurity too,” he said.

Wang will also visit Spain and France following the Munich conference to mark China’s 50th and 60th anniversary of the diplomatic relations with the two countries respectively.

It is the first time in six years a Chinese foreign minister will visit Spain. The Chinese foreign ministry noted that Spain was an “important country in the EU and a comprehensive strategic partner of China” and said the visit would mark “the beginning of a new 50-year relationship” between the two countries.

During his first visit to France this year, Wang will hold bilateral meetings and co-chair a new round of the China-France Strategic Dialogue with Emmanuel Bonne, French President Emmanuel Macron’s top diplomatic adviser.

“China hopes to work with France to further deepen strategic communication, consolidate political mutual trust, [and] advance practical cooperation … to jointly steer China-Europe relations towards sound and steady growth, and contribute to global peace, stability, development and progress,” the foreign ministry said.

South China Sea: Philippines committed to code of conduct, says tensions not about US-China rivalry

https://www.scmp.com/news/asia/southeast-asia/article/3252069/south-china-sea-philippines-committed-code-conduct-says-tensions-not-about-us-china-rivalry?utm_source=rss_feed

The Philippines is firmly committed to negotiations for a code of conduct between China and Southeast Asian countries to avert confrontations in the South China Sea, its foreign minister said on Thursday.

Foreign Secretary Enrique Manalo also said tensions in the South China Sea were not all about a rivalry between superpowers the United States and China, and the Philippines, and others, had legitimate rights and interests to uphold.

Such view will “not help in an honest understanding of the situation,” he told reporters.

“It obscures good judgment, actions that are clearly illegal in international law and against the UN charter are sometimes rationalised under the pretext of this rivalry.”

He also voiced concern about regional tensions over nearby Taiwan and urged all parties to remain in direct contact.

The idea of a code of conduct was hatched more than two decades ago, but parties only committed to begin the process in 2017. Little progress has been made, however, with negotiations on the contents of the code yet to move forward.

Filipino bishops urge Manila to ‘defend what is ours’ in South China Sea

The issue is highly sensitive, with China’s neighbours keen to base the code on international law, which Beijing has repeatedly been accused of disregarding in asserting its claim to sovereignty over 90 per cent of the South China Sea, despite that being dismissed by an international arbitration court.

“We are concerned about developments in our exclusive economic zone (EEZ),” Manalo said.

The Philippines and neighbour China have been at loggerheads this past year over maritime territory, with Manila accusing Beijing of repeatedly committing aggressive acts inside its EEZ. China has chided the Philippines for encroaching on what it says is its territory.

The row has intensified at a time when the Philippines has ramped up defence engagements with the United States, including expanding access to its bases and a series of military exercises and patrols at sea, vexing Beijing.

Manalo said a high-level “2+2” meeting of the defence and foreign ministers of the Philippines and United States was planned and dates not yet been finalised.

US$30 million China wedding goes ahead in palatial house where bride wears 100 gold bangles, despite official push to end wasteful culture

https://www.scmp.com/news/people-culture/trending-china/article/3251069/us30-million-china-wedding-goes-ahead-palatial-house-where-bride-wears-100-gold-bangles-despite?utm_source=rss_feed

A lavish wedding in China that cost 210 million yuan (US$30 million) has created a buzz on mainland social media, arousing a mixture of envy and admiration.

“The Ye Family’s Wedding Feast” took place in Putian, Fujian province, southeastern China at the beginning of February, according to news outlet, toutiao.com.

The extravagant celebration was held in the ballroom of the groom’s family’s palatial marble house.

From the ceiling hung a pair of wood dragons and a phoenix, while small bridges and pavilions in the traditional Chinese style, along with red lanterns, decorated the residence for the nuptials.

The family even drained their enormous fish pond a year before so it could be used as the location to erect a stage for the grand wedding, according to reports.

Viral online pictures show the bride wearing a necklace adorned with about 100 gold bangles which are so heavy she is bent forward slightly, clearly weighed down.

The wedding organiser arranged for 50 female usherettes, strikingly dressed in red, and dancing troupes to perform ancient dances such as zhi ci qing lu.

Guests at the feast were served the most expensive food such as king crab, lobster, shark fin soup, edible bird’s nests, and Australian abalone. Each table was allocated a bottle of the high-end Chinese liquor, Kweichow Moutai, the bill for which was 1.5 million yuan (US$210,000).

One of the guests, who shared a video clip of the nuptials on Douyin, said: “I feel like I had travelled through time to attend a wealthy noble family’s wedding in an ancient era.”

A board on the stage displayed the groom’s name as Ye Dingfeng and his bride as Yang Hanying.

It is believed the groom is the son of Ye Guochun, the chairman of China’s leading gold jewellery retailer Lao Feng Xiang.

Yang is said to be the daughter of a manager who works for the brand in a northern province. The company has not denied the speculation.

“It has broadened my horizon. Poverty limits my imagination,” one online observer said.

“Compared to this magnificent wedding, any novelist describing extravagant weddings will find they are too conservative,” said another.

The Fujian wedding was held as authorities across the country called on the public to boycott extravagant events.

Many local governments are advocating frugality and are holding group weddings for dozens or even hundreds of couples.

Young Chinese, fed up with family pressure, opt out of Lunar New Year

https://www.washingtonpost.com/world/2024/02/15/china-lunar-new-year-youth/2024-02-14T03:09:16.718Z

This Lunar New Year holiday season, China’s leaders are worried the kids aren’t all right.

The ruling Communist Party already has its hands full with young Chinese who prefer to “lie flat” in the face of a slumping economy, “let it rot” rather than join the job-seeking rat race or “run” abroad to escape eroding personal freedoms.

Now, the passive resistance of millennials and Gen Z has spread to the annual tradition of celebrating the Lunar New Year with family. Many young Chinese are choosing to “duanqin” — literally meaning to “cut off relatives,” or shun interactions with one’s extended family — rather than go home for the week-long holiday that runs through this weekend.

Bella is one of those who chose not to go home for the holidays, often the only time Chinese workers get enough time off to make the trek back to their hometowns for days of feasting and familial duty. This year, an estimated record 9 billion trips — involving millions of people on planes, trains and cars — have taken place over the Lunar New Year period.

The 26-year-old jazz band manager and art therapy consultant was not one of them. Bella, who spoke on the condition that only her English first name be used to talk about sensitive relationships, decided she no longer felt guilty about skipping the long journey from the green hills of Zhejiang province in southeast China — where she lives in a community for digital nomads — to her freezing hometown on the border with Russia.

“I could feel the third-degree of traditional morality,” she said about the pressure in past years to go back. But after one too many “toxic” exchanges with her parents, Bella didn’t even bother with an excuse this year.

Instead, she welcomed in the Year of the Dragon by feasting and painting dragons at a gathering organized by a friend, whose (much more easygoing) parents were visiting. The next few days were bliss: a hike through bamboo forests, meditating by a river, dancing in her underwear on a hillside, chilling in a cafe playing her drum.

“Here in the community, I have enough freedom. If I want to be with everyone, then I can. If I want to spend time alone, then I can. But at home, that freedom disappears,” she said.

Bella is not alone in thinking the annual pilgrimage home is more trouble than it’s worth. A growing number of recent graduates, already stressed by the pressure of finding a job and building a career, are choosing to skip out entirely on family reunions and focus on travel and having fun with friends.

Many are fed up with outmoded holiday traditions and crushing family expectations. They chafe at the excess of grand banquets and lavish gift-giving and loathe the intense pressure to settle down and have children.

If all home has to offer is endless clashes with relatives over money, marriage and lifestyle, they ask, then why bother?

Heated conversations with pushy relatives are hardly unique to China, but the country’s powerful leader, Xi Jinping, has made traditional notions of family and childbirth a political priority as he seeks to avoid a looming demographic crisis.

Today, faced with a rapidly shrinking population worsened by decades of limiting most families to one child, the Communist Party leadership has been promoting patriarchal gender roles in hopes of a baby boom — hopes heightened this year by zodiac beliefs about dragon babies being extra auspicious.

Many young people in the country fear internal family strife is especially intense because the jarring speed of economic development created a massive generation gap.

“China used 30 years to go through a process of economic development that took 200 years in the West, but Chinese people’s spiritual world hasn’t developed that quickly,” said Comyn Wu, a 21-year-old college student studying advertising in Changsha, Hunan province. “I feel like my ideas and those of my parents are separated by a dynasty.”

Wu doesn’t expect he will change his mind and return in future years to his small hometown on the banks of the Xiang River, even though it is only an hour’s drive south of where he is studying, because for him the holiday is, at its core, meaningless “feudal rubbish.”

If it wasn’t for the economic slowdown, he reckons more friends would follow his example, but some can’t find jobs, so they rely on their parents for income. “When the economic situation permits, a lot more people will want to spend the holiday alone or with friends who provide emotional support,” he said.

Urbanization, unpleasant interactions with relatives and a generation of people glued to smartphones have all contributed to fraying family bonds becoming an “objective fact,” said Hu Xiaowu, a sociologist at Nanjing University.

Young professionals trying to support themselves are often stressed and kept busy by “involution,” Hu said, using a popular term for putting in huge effort without seeing any real results. “Involution means less free time,” he said. “Without free time, it’s hard to keep up relations.”

State media has responded to the rising popularity of self-estrangement with some sympathy and a lot of cajoling, telling Gen Z to suck it up and stop being scrooges.

“It can’t hurt to be more understanding of young people,” the state-run Fujian Daily newspaper wrote beneath a cartoon of a young woman running away from a barrage of questions as she attempts to destroy a megaphone.

“As for the youngsters,” the article says, “instead of shirking reality by ‘cutting off relatives,’ it would be better to actively communicate and mend the generational estrangement to maintain family ties.”

In a sign of official unease, a video game called “Epic Showdown: New Year Reunion” was taken offline days after it proved a surprise hit. It used an artificial intelligence-powered chatbot to mimic exchanges with aunts and uncles that often escalated into intense probing about dating and offspring.

The developers blamed “technical problems” but hinted at dissatisfaction from authorities. “We won’t forget our original aspirations to bring everyone warm and high-quality visits over the New Year,” the company said in a statement that used a Communist Party slogan.

Official propaganda has used the festivities as a chance to underscore Confucian beliefs about an orderly family being the bedrock of a stable and prosperous society.

The importance of being a dedicated husband, son, wife and daughter was front and center in this year’s Spring Festival Gala, a variety show put on by the state broadcaster and used as a kind of celebratory wallpaper in most Chinese households over the holidays.

This year, it included schmaltzy comedy skits extolling the virtues of putting in work to maintain a happy nuclear family. In one sketch, an emotionally stilted dad couldn’t work out how to openly praise his teenage son, despite being secretly very proud of him. Every time he tried, the attempt at kindness turns into admonishment.

At the last minute, when the son is about to leave, he has a breakthrough. “Son,” the actor intones, “you really are Mom and Dad’s pride.”

To tear-jerking music, he gives his kid a thumbs-up.

But a made-for-television happy ending isn’t so easy for everyone. For Lily Zhang, family criticism of her “rebellious” lifestyle became too much last year. Her parents — who don’t know she is gay — responded to her failed graduate school application by pressuring her to see a matchmaker and get married. When she refused, they stopped supporting her financially.

She decided to block all of her relatives and is spending the holiday with her girlfriend in the countryside of southwest Yunnan province. It’s not easy to pay back student loans as a freelance writer, but the couple’s rented village home is cheap and they save money by growing their own vegetables.

“I thought I could do everything: make money at work, be on good terms with my parents and grandparents, make us into a normal family, but I realized I wasn’t taking care of myself,” she said. “I think cutting off bad relationships is necessary to survive.”

Chinese team tests lung treatment that may be first to reverse damage from chronic disease affecting 700 million people

https://www.scmp.com/news/china/science/article/3252047/chinese-team-tests-lung-treatment-may-be-first-reverse-damage-chronic-disease-affecting-700-million?utm_source=rss_feed

Chinese scientists are conducting trials on a new treatment that could become the first therapy in the world to reverse and repair the damage caused by a severe lung disease.

Chronic obstructive pulmonary disease (COPD), which is primarily caused by smoking and household pollution, obstructs airflow and causes breathing problems in about 700 million people globally.

It is the third leading cause of death in the world, however there is no treatment to repair lung cells damaged by the condition, as current therapies only address symptoms.

“As a result, patients with COPD usually show persistent declines” in their ability to diffuse gases such as carbon monoxide in the lungs, the team wrote in a paper published in the peer-reviewed journal Science Translational Medicine on Wednesday.

But through preclinical studies in mice and monkeys, the team and other scientists have found that resident progenitor lung cells – capable of differentiating into multiple types of lung cells – had a “capacity for regeneration”.

Healthy progenitor cells are often deficient in patients with COPD, however even those with the most severe stages of the disease still have healthy cells that can be isolated and used in personalised treatments.

These cells could be used as a “Band-Aid” for the lungs which could repair tissues in the airways and even deeper into the alveoli, the paper said.

“Stem cell and progenitor cell-based regenerative medicine may be the biggest, if not the only, hope to cure COPD,” Zuo Wei, study author and a professor at the Tongji University School of Medicine, said during a presentation at the European Respiratory Society International Congress last year.

In a phase 1 clinical trial of their treatment, the team collected healthy progenitor lung cells, called P63+, from the patients’ lungs via a bronchoscopy. The cells were then cultured in a lab for three to five weeks to make millions of cell clones.

Once the cells had multiplied, they were transplanted back into the patients via another bronchoscopy. A final evaluation of the patients was conducted six months after treatment.

The 17 patients with varying stages of COPD who received the treatment had no serious adverse side effects, and those that did occur were primarily a result of the bronchoscopy procedure, the team wrote.

New Chinese drug shows record treatment success against deadly lung cancer type

The scientists also did not observe any signs of tumour formation in the patients six months after transplant.

When evaluating the lung’s ability to diffuse carbon monoxide – which is used as a lung function test for COPD – the scientists found that the study group had improved diffusion capacity compared to the baseline and control patients.

During a six-minute walking test, the study group was able to walk around 30 metres further after the treatment, which was a “clinically meaningful improvement in exercise capacity,” the paper said.

Surveys of the trial participants also suggested “that most patients in the intervention group had an improved quality of life after treatment,” the team wrote.

“We found that P63+ progenitor cell transplantation not only improved the lung function of patients with COPD, but also relieved their symptoms, such as shortness of breath, loss of exercise ability and persistent coughing,” Zuo said.

The improvement in gas diffusion capacity and walking distance in the treated patients supports “further clinical studies of P63+ progenitor cells for the treatment of COPD” Melissa Norton, senior editor of the journal, said in an editor’s summary of the paper.

‘Their symptoms will become worse’: climate change threat to lung patients

The authors said the first phase of the clinical trial proved their treatment was “safe and well tolerated”, but it was limited to a small sample size comprising only men, so it was not suitable to determine efficacy yet.

To address this, the team is conducting an ongoing phase 2 clinical trial with a larger study group and follow-up time that looks at more indicators of lung function.

China truck firm transports tonnes of snow from north to south for special needs children to have fun, melts hearts

https://www.scmp.com/news/people-culture/trending-china/article/3251058/china-truck-firm-transports-tonnes-snow-north-south-special-needs-children-have-fun-melts-hearts?utm_source=rss_feed

A company in China spent 200,000 yuan (US$28,000) transporting snow from the north to the south for children with special needs, warming the hearts on mainland social media.

Beijing Truck Home Information Technology, a truck service platform for commercial vehicles in northern China, gifted three truckloads of snow to the children of Guangzhou Xingzhi Chengzhang School.

Carrying 80 cubic metres of snow, the fleet spent four days driving 3,300km from the city of Harbin in Heilongjiang province in northeastern China to Guangdong in the southeastern part of the country.

In the viral video, a group of people is seen shovelling snow into the trucks, then the fleet attaches banners with the message, “Let’s have a snow fight? Please wait for me, my friends in the south”, on the trucks.

“We’re giving the snow to a special school in the south, giving a chance for children to experience the fun of snow fighting and making snowmen,” an employee said.

“It’s unprecedented,” a worker shovelling snow said.

“I haven’t seen any case of transporting snow to the south,” another said.

The company came up with the idea when they were planning to test their new models of cold-chain trucks on a long-haul journey.

“Although the snow melts quickly, we do hope it will bring little moments of happiness to the children,” another employee said.

The fleet set off on January 28, driving on motorways that passed through the provinces of Jilin, Henan, Hubei, and Jiangxi, and finally arriving at the school on the evening of January 31.

The company took a photo of the children waving to the fleet across a fence as they arrived, and the next morning, the children, their parents, and the teachers had fun with the snow.

A teacher, surnamed Xiao, said that many of their children with conditions such as autism or who have intellectual or learning disabilities are often unable to travel to Harbin.

“For many of the children, it was the first time they had seen snow. They had a great time,” Xiao said.

The story has touched many people on mainland social media platforms.

“What the fleet transported was not snow, but love,” said one online observer.

“The snow may be cold, but everyone’s heart has completely melted,” another said.

Heartwarming stories of people helping children with special needs are often shared on mainland social media.

One such story was about a mother in eastern China who resigned from her job and sold her home to set up a school for her autistic son and hundreds of other children with the same condition.

Another was about a teacher who dedicated his retirement and life savings creating a free education system for disabled students in a school in Hebei province in northern China.

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Chinese property developer CIFI to offload Australian assets at a loss in bid to inject cash as credit dries up

https://www.scmp.com/business/article/3252030/chinese-property-developer-cifi-offload-australian-assets-loss-bid-inject-cash-credit-dries?utm_source=rss_feed

CIFI Holdings has agreed to sell a 60 per cent stake in 16 parcels of land in Sydney to an Australian company for A$66.3 million (US$42.9 million), booking an estimated loss of A$11.1 million in the process, the distressed Chinese developer said.

This is the third time in two months that CIFI Holdings has revealed a plan to dispose of its assets at a loss, as the developer continued to restructure its debt.

Zerlina Zeng, analyst at CreditSights, said the divestment of the Sydney project showed the developer’s willingness to sell assets at a loss to replenish liquidity, but it was way too early to conclude that CIFI has the willingness and ability to work out a debt restructuring plan with creditors.

“We expect CIFI’s liquidity condition to remain strained in 2024 with contracting contracted sales, limited new funding from banks and the onshore bond markets, and difficulties in disposing its China investment/residential property assets amid a prolonged property downturn,” Zeng said.

The company said in its stock exchange filing that it had been actively exploring opportunities for offshore asset disposal to ease the group’s offshore liquidity pressure and to finance its business operation.

“Due to the interest rate hikes and the rise in construction costs in Australia, the financing costs and development costs of the property are expected to increase. The directors consider that the CIFI disposal allows the group to prevent incurring the said extra costs and further tightening the offshore liquidity, and capture the good opportunity to sell the interest in the property under the prevailing property market in Sydney.”

Chinese developer CIFI dumps assets to keep lights on amid darkening credit outlook

Despite the loss, the Shanghai-headquartered developer said the transaction “is not expected to have immediate material impact on the financial position of the group”. It also said the properties did not generate any profits in 2022 and 2023.

The asset comprises of 16 adjacent plots of land on Berry Road, Holdsworth Avenue and River Road in St Leonards, a Sydney suburb about a 10-minute drive from the city’s central business district.

SH South St Leonards, a company incorporated in Australia, agreed to buy the parcels of land subject to official approval, CIFI Holdings said.

In December, CIFI Holdings said it raised 436 million yuan (US$61 million) by selling its 49 per cent stake in Tianjin Chuangda Real Estate Development, suffering a loss of 28 million yuan.

In the same month, CIFI subsidiary Liaochen Xuyin sold a majority stake in its Dezhou residential project in Shandong province at a loss of 215 million yuan.

CIFI’s woes began in late 2022, when it defaulted on a US$318 million offshore bond and terminated debt restructuring talks to creditors.

In March last year, CIFI said it was looking to sell its prime assets in Shanghai, including its headquarters, after a state-guaranteed 1.5 billion yuan bond issue failed to materialise.

To solve the liquidity crisis, CIFI chairman Lin Zhong and his family have put up five luxury homes for sale in Hong Kong’s Southern district, even as the city’s property market continued to slide.

In its delayed earnings release, the company said it had swung to a 9 billion yuan loss in the first half of 2023 from a profit of 1.9 billion yuan in the year ago period. Its annual loss was 13 billion yuan in 2022. But the company’s long-term liabilities shrank to 34.8 billion yuan by the end of June, from 41.3 billion yuan at the end of 2022, while its working capital dropped to 30.6 billion yuan from 49 billion yuan in the same period, indicating balance-sheet downsizing.

China-Australia relations: Treasury Wine readies to ship Penfolds, Icon bottles once Beijing lifts import tariffs

https://www.scmp.com/economy/global-economy/article/3252025/china-australia-relations-treasury-wine-readies-ship-penfolds-icon-bottles-once-beijing-lifts-import?utm_source=rss_feed

Treasury Wine Estates is planning to reallocate a portion of its Penfolds Bin and Icon wines from other global markets to China once Beijing lifts crippling tariffs on Australian exports.

China remains the single greatest opportunity for the company should the country reopen its doors to Australia, CEO Tim Ford said during an investor call on Thursday for the company’s first-half report.

The Chinese market accounted for about 30 per cent of Treasury’s earnings before the implementation of levies in March 2021.

Beijing is conducting a review into the tariffs on Australian wine, and it is widely expected that the levies will be removed next month.

Treasury said last year that the company could quickly ramp up exports of bottles priced in the A$30 (US$19) to A$40 range, including Penfolds Max’s, should the duties end.

Penfolds Bin and Icon wines are priced at between A$60 to A$1,000.

“We’re confident that China does remain an attractive luxury wine market for our brands and a significant growth opportunity for Penfolds over the long term,” Ford said.

“If we get back in and re-establish Australian wine, that’s a re-establishment for the next decade and beyond.”

Australia’s wine trade with China was worth more than A$1 billion in 2018-19 and 2019-20 before the tariffs, which were implemented amid deteriorating ties between the nations. Some levies were as high as 218 per cent.

Treasury reported an 11 per cent decrease in net income for the first half on Thursday, driven by a decline in its Americas and Premium brands.

“We expect a decision, and therefore a path forward, by the end of March,” Ford added.

“We are both well prepared and well placed to re-establish our Australian country-of-origin portfolio in China,” he said, adding that China presented a “significant growth opportunity” for Treasury’s higher-priced Penfolds division.

Critics score Penfolds’ first made-in-China wine, priced at US$100 a bottle

Melbourne-based Treasury, whose brands range from Wolf Blass and Lindeman’s to Beringer and DAOU, has continued to ship wine made outside Australia to China and said it has more than 120 staff there.

Treasury produces wine mainly in Australia but also in the United States, New Zealand, France and Italy.

Additional reporting by Reuters

US-China tech war: Dutch chip tool giant ASML says geopolitics, new export curbs remain risks

https://www.scmp.com/tech/tech-war/article/3252010/us-china-tech-war-dutch-chip-tool-giant-asml-says-geopolitics-new-export-curbs-remain-risks?utm_source=rss_feed

ASML, the largest supplier of equipment to computer chip makers, said on Wednesday that geopolitical tensions and any expansion of a US-led campaign to restrict its exports to China remain business risks.

In its annual report published on Wednesday, the Dutch company flagged the growing list of restrictions imposed by the United States, mostly with the assent of the Dutch government.

Those include Dutch licensing requirements for most of ASML’s advanced product lines, as well as a unilateral move by the US in October 2023 to restrict exports of older equipment to unspecified Chinese plants.

“The list of Chinese entities impacted by export control restrictions has increased since 2022,” the company wrote.

“The list of restricted customers and the scope of the restrictions are subject to change.”

In January, it said it expects US and Dutch export curbs to reduce sales of its mid-range immersion deep ultraviolet (DUV) product lines to China by about 10 per cent to 15 per cent this year, after they hit record levels in 2023.

Following a US-led campaign to slow Beijing’s technological and military advances, ASML has been restricted from selling its most advanced extreme ultraviolet (EUV) lithography tool line in China since 2019 and has never sold an EUV tool there.

For its part the Chinese government has been subsidising domestic chip-making in a bid for self-sufficiency, as it is a huge importer of chips for its own market and for its manufacturing industries.

ASML dominates the market for lithography systems, machines used to help create circuitry in one key step of the chip-making process.

In 2023, while many chip makers were slowing orders amid an industry slump, mainland China passed South Korea to become ASML’s second-largest market, representing 26.3 per cent of sales, with Taiwan remaining its largest at 29.3 per cent.

ASML noted that its list of competitors is growing beyond traditional rivalries with Canon and Nikon of Japan in its older core business, and non-lithography US firms Applied Materials and KLA.

“We also face competition from new competitors with substantial financial resources, as well as from competitors driven by the ambition of self-sufficiency in the geopolitical context.”

Shanghai Micro Electronics Equipment is China’s best known maker of lithography machines.

Japan slips to the world’s fourth-largest economy, behind the US, China and now Germany

https://www.scmp.com/news/asia/east-asia/article/3251996/japan-slips-worlds-fourth-largest-economy-behind-us-china-and-now-germany?utm_source=rss_feed

Japan has slipped to the world’s fourth-largest economy as government data released Thursday showed it fell behind the size of Germany’s in 2023.

The numbers highlight how the Japanese economy has gradually lost its competitiveness and productivity while the population shrinks as Japanese people age and have fewer children, analysts say.

Japan fell from the second-ranked economy behind the US to the third-largest in 2010 as China’s economy grew. The International Monetary Fund had forecast Japan’s fall to fourth.

The comparisons among nations’ economies look at nominal GDP, which doesn’t reflect some different national conditions, and is in dollar terms.

Japan’s nominal GDP totalled US$4.2 trillion last year, or about 591 trillion yen. Germany’s, announced last month, was US$4.4 trillion, or US$4.5 trillion, depending on the currency conversion.

For the latest October-December quarter, the Japanese economy shrank at an annual rate of 0.4 per cent, and minus 0.1 per cent from the previous quarter, according to Cabinet Office data on real GDP. For the year, real GDP grew 1.9 per cent from the previous year.

Rate cuts, China recovery to boost Hong Kong stocks in dragon year: Paul Chan

Real gross domestic product is a measure of the value of a nation’s products and services. The annual rate measures what would have happened if the quarterly rate lasted a year.

Both Japan and Germany built their economies through strong small and medium-size businesses with solid productivity. In contrast to Japan, Germany has shown a solid economic foundation on the back of a strong euro and inflation. The weak yen also works as a minus for Japan.

The latest data reflect the realities of a weakening Japan and will likely result in Japan’s commanding a lesser presence in the world, said Tetsuji Okazaki, professor of economics at the University of Tokyo.

“Several years ago, Japan boasted a powerful auto sector, for instance. But with the advent of electric vehicles, even that advantage is shaken,” he said.

The gap between developed countries and emerging nations is shrinking, with India certain to overtake Japan in nominal GDP in a few years, Okazaki said.

To solve the country’s labour shortage problem, immigration is one option. But Japan has been relatively unaccepting of foreign labour, except as temporary guests, prompting criticism about the lack of diversity and discrimination.

Another option is robotics, which has been playing out gradually but not enough to the nation’s chronic laboyur shortage.

Japan was historically touted as “an economic miracle,” rising from the ashes of World War II to become the second largest economy, only after the US, and kept that going through the 1970s and 1980s.

The entrepreneurs behind companies that rose from humble beginnings, like Soichiro Honda of Honda Motor Co and Konosuke Matsushita of Panasonic Corp, personified the hard work behind Japan Inc.

Made In Japan earned a reputation as cheap yet offering quality, and some products became coveted around the world. Those may now be the good old days.

Many factors have yet to play out, Okazaki said.

“But when looking ahead to the next couple of decades, the outlook for Japan is dim,” he said.

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In battered Chinese stocks, traders favour ‘lottery ticket’ trade

https://www.scmp.com/business/banking-finance/article/3252006/battered-chinese-stocks-traders-favour-lottery-ticket-trade?utm_source=rss_feed

In the wreckage of China’s stock-market meltdown, Wall Street traders are making long-shot bets that officials in Beijing can stoke a recovery.

Investors are finding moments to snap up options tied to US-listed exchange-traded funds that track Chinese equities, which have been whipsawed by Covid lockdowns, regulatory pressure and a property crisis. It’s evidence that some traders – who have seen shares from Beijing to Hong Kong slump 60 per cent from a 2021 peak – want exposure to the stocks, just in case the government eventually succeeds in stoking a rebound.

“It’s simply buying cheap lottery tickets with a potentially big payout,” said Charlie McElligott, managing director at Nomura Securities International. The worse Chinese stocks have got, “the more attractive it becomes from a risk-reward perspective.”

With Chinese leaders keen to stop the stock-market sell-off, the bets in ETF options are proof that investors are taking notice. Even if most traders are too shy to buy the equities outright, options offer a way to maximise profits while minimising potential losses.

Plus, US-based ETFs are trading as some local financial markets close for the Lunar New Year holiday.

Call options volume – which typically indicates investor interest in bullish wagers on an asset – spiked last week to the highest in more than a year for the US$4.2 billion iShares China Large-Cap ETF, known as FXI. Similar trends emerged across the US$20 billion market of US-listed ETFs focused on China in recent weeks, driven at least partly by traders who fear missing out on any potential recovery.

Upticks in options activity have been spurred on as President Xi Jinping’s government pushed curbs on short-selling domestically, opted for state buying of shares in the nation’s largest banks and even replaced the head of the nation’s securities regulator. The government also said it was buying up shares in locally listed ETFs.

Chinese fervour for overseas stocks is breaking ETF trading

While call options volume has slipped back amid the holiday lull, traders are still on the lookout for the next catalyst for shares to swing – even if overall sentiment among investors remains sour. At times, Beijing’s stimulus vows have produced short bursts of market gains. FXI shot 4.4 per cent higher last week amid the latest round of measures – though it’s still down 5.7 per cent so far this year.

Buying has increased most in shorter-term contracts as risks, such as the US presidential election, linger further out on the horizon. Among the 10 contracts for FXI with the largest open interest, nine are calls expiring in February and March that allow the holders to buy shares between US$22 and US$30.

Evercore ISI, for example, recommended clients buy call options for FXI that expire March 28 to take advantage of Chinese equities’ low valuations. That gives traders a way to bet on more stimulus between now and March, when Beijing is set to hold its National People’s Congress meeting. Goldman Sachs has also touted option trades on Chinese assets.

Rate cuts, China recovery to boost Hong Kong stocks in dragon year: Paul Chan

“Call options, which are by no means expensive on a volatility basis, are an excellent way to play this theme,” said Julian Emanuel, senior managing director of equities, derivatives and quantitative strategy at Evercore. “Limited risk, theoretically unlimited reward.”

Memories of tense US-Sino relations under former President Donald Trump, however, are discouraging bets with time horizons closer to the US presidential election.

In another closely tracked metric, the FXI’s one-month put-versus-call skew inverted several times in recent weeks, with options betting on a rally costing more than bearish contracts. To Ling Zhou, head of equity derivatives strategy at TD Cowen, that is an indication that traders have been using options to catch a rebound.

Investors want Beijing to do more to keep the US$380 billion stock rally going

He expects traders to be prepared for significant swings in Chinese equities in the year ahead, pointing out that the cost of one-year options on FXI is trading at 10-year highs compared to those of the SPDR S&P 500 ETF Trust, an ETF that tracks the S&P 500.

“Buying call options is a way to gain exposure without committing a significant amount of capital,” said Malcolm Dorson, head of emerging-market strategy at Global X Management.

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Genetics journal retracts 17 papers from China due to human rights concerns

https://www.theguardian.com/world/2024/feb/15/china-retracts-papers-molecular-genetics-genomic-medicine

A genetics journal from a leading scientific publisher has retracted 17 papers from China, in what is thought to be the biggest mass retraction of academic research due to concerns about human rights.

The articles were published in Molecular Genetics & Genomic Medicine (MGGM), a genetics journal published by the US academic publishing company Wiley. The papers were retracted on 12 February after an agreement between the journal’s editor in chief, Suzanne Hart, and the publishing company. In a review process that took over two years, investigators found “inconsistencies” between the research and the consent documentation provided by researchers.

The papers by different scientists are all based on research that draws on DNA samples collected from populations in China. In several cases, the researchers used samples from populations deemed by experts and human rights campaigners to be vulnerable to exploitation and oppression in China, leading to concerns that they would not be able to freely consent to such samples being taken.

Several of the researchers are associated with public security authorities in China, a fact that “voids any notion of free informed consent”, said Yves Moreau, a professor of engineering at the University of Leuven, in Belgium, who focuses on DNA analysis. Moreau first raised concerns about the papers with Hart, MGGM’s editor-in-chief, in March 2021.

One retracted paper studies the DNA of Tibetans in Lhasa, the capital of Tibet, using blood samples collected from 120 individuals. The article stated that “all individuals provided written informed consent” and that work was approved by the Fudan University ethics committee.

But the retraction notice published on Monday stated that an ethical review “uncovered inconsistencies between the consent documentation and the research reported; the documentation was not sufficiently detailed to resolve the concerns raised”.

Xie Jianhui, the corresponding author on the study, is from the department of forensic medicine at Fudan University in Shanghai. Xie did not respond to a request for comment, but the retraction notice states that Xie and his co-authors did not agree with the retraction.

Several of Xie’s co-authors are affiliated with the public security authorities in China, including the Tibetan public security authorities. Tibet is considered to be one of the most closely surveilled and tightly monitored regions in China. In Human Rights Watch’s most recent annual report, the campaign group said that the authorities “enforce severe restrictions on freedoms of religion, expression, movement, and assembly”.

Another of the retracted studies used blood samples from 340 Uyghur individuals in Kashgar, a city in Xinjiang, to study the genetic links between them and Uyghurs from other regions. The scientists said the data would be a resource for “forensic DNA and population genetics”.

The retracted papers were all published between 2019 and 2021. In 2021, after Moreau raised concerns about the papers in MGGM, eight of the journal’s 25 editors resigned. The journal’s editor in chief, Hart, has remained in her post. Hart and MGGM did not respond to a request for comment.

MGGM is considered by some to be a mid-ranking genetics publication. It has an impact factor of 2.473, which puts it roughly in the top 40% of journals. It is considered to be a relatively easy forum for publication, which may have been a draw for Chinese researchers looking to publish in English-language journals, said David Curtis, a professor of genetics at University College London. Curtis resigned from his position as editor-in-chief of Annals of Human Genetics, another Wiley journal, after the publisher vetoed a call to consider boycotting Chinese science because of ethical concerns, including those relating to DNA collection.

MGGM states that its scope is human, molecular and medical genetics. It primarily publishes studies on the medical applications of genetics, such as a recent paper on genetic disorders linked to hearing loss. The sudden pivot towards publishing forensic genetics research from China came as other forensic genetics journals started facing more scrutiny for publishing research based on DNA samples from vulnerable minorities in China, said Moreau. He argues that may have pushed more controversial research towards mid-ranking journals such as MGGM that do not specialise in forensic genetics.

On its information page, MGGM states that it “does not consider studies involving forensic genetic analysis”. That caveat was added in 2023, after an editorial review of the journal’s aims.

In recent years there has been a growing scrutiny on research that uses DNA or other biometric data from individuals in China, particularly those from vulnerable populations. In 2023, Elsevier, a Dutch academic publisher, retracted an article based on blood and saliva samples from Uyghur and Kazakh people living in Xinjiang, a region in north-west China where there are also widespread reports of human rights abuses.

The Wiley retractions come days before a Chinese government deadline requiring universities to submit lists of all academic articles retracted in the past three years. According to an analysis by Nature, nearly 14,000 retraction notices were published last year, of which three-quarters involved a Chinese co-author.

A spokesperson for Wiley said: “We are continuing to learn from this case, and collaboration with international colleagues is valuable in developing our policies.

“Investigations that involve multiple papers, stakeholders and institutions require significant effort, and often involve lag time in coordinating and analysing information across all involved, as well as translation of materials. We recognise that this takes a significant amount of time but always aim to act as swiftly as possible.”

In recent years, China has outstripped the EU and the US in terms of total research output, and the impact of its research is also catching up with output from the US.

Woman in China beaten by husband for refusing sex kills him by crushing neck, suffocation gets 3 and a half years jail

https://www.scmp.com/news/people-culture/trending-china/article/3250947/woman-china-beaten-husband-refusing-sex-kills-him-crushing-neck-suffocation-gets-3-and-half-years?utm_source=rss_feed

A woman in China has been jailed for three and a half years for accidentally killing her husband in an act of self-defense after he attacked her because she would not have sex with him.

Zhang Ying, not her real name, from Shandong province in eastern China, was convicted of negligent homicide by a local court, Toutiao News reported.

The incident happened on March 4, 2022 when her husband, Zhang Bin, demanded intercourse. Although the couple had been married for 24 years, their relationship had not been good for some time, so Zhang Ying refused.

The man became enraged, hit his wife repeatedly, and pulled her by the hair. To protect herself, she fought back. During the violence, they fell onto the bed.

Zhang Ying said she used her elbow to hit him in the neck and head. Details of the time of death were not clear but Zhang Bin’s sister found him dead the next morning.

“I immediately called the police,” she said.

During the investigation, the sister said Zhang Ying claimed she was not at home that night, so she believed her brother had died of natural causes.

His family suggested conducting an autopsy, but Zhang Ying and her daughter were against the idea.

“She [the daughter] knelt and begged me not to have an autopsy for her father because she wanted to keep his body complete,” the deceased man’s sister said. But the autopsy went ahead.

On May 10 Zhang Ying was summoned by the local police. She told them she had pressed her husband’s neck for a few minutes, and walked away from him as soon as he released her hair from his hands.

The autopsy report revealed that Zhang Bin was pressed on the neck, mouth, and nose, and died from suffocation, leading to Zhang Ying being found guilty of negligent homicide.

The story has divided opinions on mainland social media. At the time of writing, the Weibo news video had attracted 2,137 comments.

“She clearly acted in self-defence,” one person said.

“What if it was premeditated murder? Nobody knows what really happened except her,” said another.

Domestic violence and sexual abuse in marriages regularly cause public outrage in China.

In July 2022, an associate professor in southern China was demoted and banned from teaching after the university confirmed his wife’s claims that he had abused her more than 1,000 times.

In November 2011, a man in southwestern China was arrested for allegedly burning his wife to death.

The All-China Women’s Federation, a women’s rights organisation closely associated with the government, found in 2021 that 30 per cent of married women in China had experienced domestic violence.

Another 2021 study found that 77.6 per cent of 223 prisoners in jail for assault or murder had committed the crime in a domestic dispute.

China’s Lunar New Year fireworks: even a beloved tradition can’t ignore public safety

https://www.scmp.com/comment/opinion/asia/article/3251833/chinas-lunar-new-year-fireworks-even-beloved-tradition-cant-ignore-public-safety?utm_source=rss_feed

When I was in kindergarten, there was no holiday I looked forward to more than the Lunar New Year. And, out of all the traditions, lighting fireworks was my favourite.

What a sight that was! At least a dozen different types of fireworks set the night sky ablaze. One bloomed in four different colours, another spelled out “happy new year”, and my favourite one, shaped like a small plane, flew off tree branches and followed people around.

The entire neighbourhood would get together for this one night of fun, turning it into a large social gathering. At midnight, before we went to bed, we would hang a string of firecrackers outside our window and set it off to crackle loudly for at least five minutes, the last ritual to get rid of the bad luck in the past year.

As I got older, I began to see the other side of this tradition. I realised how difficult it was to clean the layers of debris the next day – the city cleaners would still be sweeping the streets a week into the new year; how the pollutants lingered in the air, smelling of sulphur; how annoying it was to be woken up at midnight, and sometimes again at 3am or 4am, by the sudden sound of firecrackers.

The Chinese government noticed it, too. Starting from the 1990s, cities across China began banning fireworks to curb pollution and ensure public safety.

The ban tightened and relaxed over the years. As of today, most cities restrict fireworks to certain areas, usually far away from the city centre. For example, this new year, Beijing has banned all fireworks within the fifth ring road.

Every year, there’s a public debate about lifting the ban. One of the most frequently cited arguments is, “It doesn’t feel like the new year without fireworks”.

But it’s not just the banning of fireworks that has made the new year feel less entertaining. There are a number of reasons.

In the past, we seldom had large family gatherings, treats and new clothes until the Lunar New Year. It was a grand annual celebration that people looked forward to the entire year, and everyone partied hard.

Now, with improved transport and communication links, most don’t have to wait until the new year to get together with their family, making it less special.

Furthermore, traditional celebrations have become less common. Today, many people spend the new year holiday eating good food, watching TV or bickering with relatives. But when I was young, my parents would take me to Buddhist temples to make offerings, and the entire street would be filled with stalls that made candied animals, balloons and other toys. These festivals are rare today and they are always packed.

Denied even fireworks, it’s understandable that many people feel nostalgic.

However, those who call for lifting the ban should acknowledge the risks in lighting fireworks, as well as others’ right to dislike them. A simple search on Google uncovers many news articles of children throwing firecrackers in the sewage system and causing an explosion, or accidentally setting off fires.

Just last month, Chinese media reported that two boys playing with fireworks in Hunan province set 13 electric bikes and a building interior on fire, causing damage estimated at 40,000 yuan (US$5,500).

And, last Friday, Tianjin police detained two men after they lit fireworks in a restricted area and threw them at the police.

When it comes to regulating fireworks, a blanket ban does not work, because it’s difficult to enforce and there will always be people ignoring it.

Hong Kong police arrest boy, 15, in fireworks bust on Lunar New Year’s Eve

But local governments can have more detailed policies to balance all sides. China’s Regulation on the Safety Administration of Fireworks and Firecrackers already has strict standards on the production and sale of fireworks, and dictates that local governments can restrict the time, places and types of fireworks.

Local officials should address people’s concerns, regulating fireworks to be lit within reasonable hours and avoiding densely populated areas, away from hospitals, homes for the elderly and schools. There should be more public awareness campaigns about fireworks safety, ensuring children do not use them without adult supervision. Areas where fireworks are allowed should be equipped with firefighting equipment or located close to fire stations.

Traditions should only be celebrated when the public concerns of pollution, noise and safety are addressed, otherwise they become an excuse to create chaos.

Beijing condemns Taiwan after two Chinese fishers die in speedboat crash

https://www.theguardian.com/world/2024/feb/14/beijing-condemns-taiwan-after-two-chinese-fishers-die-in-speedboat-crash

Beijing has condemned Taiwanese authorities after two Chinesefishers drowned while being chased by Taiwan’s coastguard off the coast of the Kinmen archipelago.

The Chinese speedboat was carrying four people when it capsized on Wednesday, throwing all onboard into the water, Chinese and Taiwanese authorities said.

“The malignant incident severely harmed the feelings of compatriots on both sides of the Taiwan Strait,” Zhu Fenglian, a spokesperson for China’s Taiwan affairs office, said in a statement.

Taiwan’s coastguard said the speedboat had “illegally [entered] Taiwanese waters”, CNA news agency reported.

The coastguard “immediately requested that the boat submit to an inspection, but it resisted and capsized as it sped away”, CNA said.

Beijing has urged the Taiwanese authorities to immediately investigate the incident, Zhu added.

CNA said all four were rescued from the water and sent to hospital.

“Two were pronounced dead after efforts to resuscitate them failed,” the coastguard said. “The other two are in stable condition and have been brought to Kinmen for further investigation by prosecutors.”

The Kinmen islands are controlled by Taiwan but lie within sight of China’s coast.

China claims democratic Taiwan as its own, although it has no sovereignty over the territory of 23 million people and its adjacent islands.

The incident comes against a backdrop of high tensions across the Taiwan Strait.

Taiwan’s presidential election, held in January, was won by the ruling Democratic Progressive party’s Lai Ching-te, whom Beijing regards as a “separatist”.

Xi Jinping, China’s president, has ceaselessly called for the reunification of Taiwan with China, which split nearly 75 years ago at the end of a civil war in 1949.

China’s foreign firms grapple with upward mobility in post-Covid era as state-owned peers rise

https://www.scmp.com/economy/china-economy/article/3251950/chinas-foreign-firms-grapple-upward-mobility-post-covid-era-state-owned-peers-rise?utm_source=rss_feed

There are blunt indicators that the golden age of foreign-invested firms in China has lost its shine, if not come to an end, with the ecosystem appearing more like a gilded cage of restricted growth. And breaking free of imposed confines looks to be as challenging as ever.

Foreign businesses have watched their share in the Chinese economy – as well as their relevance and profitability – dwindle in recent years.

They’ve gone from being an indispensable part of China’s development boom – bringing in outside technologies and management know-how – to what appears to be an increasingly inconsequential sector on the periphery of China’s economy.

Among those that already have an established presence in China, not too many found themselves riding the tailwinds of last year’s 5.2 per cent growth of the world’s second-biggest economy.

In a revealing sign of the uneven recovery, industrial output among foreign entities in the country grew in 2023 by a meagre 1.4 per cent, year on year, underperforming the 5 per cent growth reported among state-owned enterprises (SOEs).

China’s three-legged race to fend off the 4 D’s of an economic apocalypse

And many of those concentrated in more economically dynamic coastal regions have even endured negative growth. In Shanghai, which boasts the biggest cluster of foreign companies’ headquarters in China, foreign industrial output slumped by 5.4 per cent in all of 2023 while that of SOEs grew by 5.3 per cent. In the southern manufacturing powerhouse of Guangdong from January to November, foreign manufacturing contracted by 1.7 per cent, compared with SOE growth of 7.3 per cent.

Signs of the imbalance could be seen before the pandemic, as geopolitical strife and trade disputes started to take hold. In 2018, foreign manufacturer output expanded by 4.8 per cent, compared with 6.2 per cent among SOEs, and it marked the first time foreign firms trailed SOEs in that regard since 2013.

The year 2021 was the only exception, as foreign output recovered slightly faster than SOE output, against a low comparison base in 2020, when the pandemic snarled up business and production.

Nowadays, a large swathe of foreign businesses have become relative laggards in China’s economic recovery compared with state-owned peers, which have grown more competitive while foreign firms have become more vulnerable to Beijing’s tightening grip on national security.

Thus, with questions swirling in the murky business climate, foreign firms are left wondering not only how much more they might become marginalised or eased out by the expanding state sector, but – more fundamentally – whether a more inward-facing China still needs or welcomes their investments.

“Foreign businesses being outpaced by SOEs could be due to the yawningly different policy effects brought to bear on SOEs and foreign ones. Some policies could benefit SOEs to the detriment of others,” said Zhu Tian, a professor of economics at the China Europe International Business School (CEIBS) in Shanghai.

“Foreign companies are more susceptible to market fluctuations and cycles, and there is also the factor of flagging confidence … Foreign and private firms growing slower than SOEs goes against market-economy norms,” Zhu said, adding that China’s private economy also faced a similar squeeze when the share of the state sector crept upward in recent years.

Small- to medium-sized foreign enterprises, in particular, have seen their growth taper off in the past year amid the nation’s bumpy economic recovery and geopolitical complications.

A third of China’s small firms financially unwell, affecting 180 million: survey

Trend Micro, a mid-sized cybersecurity company based in the US, decided in November to shed its China operations, making at least 70 researchers redundant at its research centre in Nanjing, Jiangsu province, according to local media.

“We were told to go, as sales had dropped when big companies and government bodies preferred domestic products and antivirus software, as seen in procurement notices,” one professed employee said on Weibo, including what appeared to be a termination letter.

Another said: “The business wasn’t holding out much hope.”

Jiangsu, among the largest provincial recipients of direct foreign investments into China, saw foreign industrial output grow by a wafer-thin 0.8 per cent last year, contrasting the 6.4 per cent growth in SOE output.

Despite the upbeat economic growth last year, Beijing is facing the daunting challenge of fostering strong economic growth, creating enough jobs, and addressing low demand and weak expectations that it hasn’t seen in several years.

EU firms want more ‘clarity’ in China’s data regulations, but will they get it?

Jens Eskelund, president of the European Union Chamber of Commerce in China, noted how foreign businesses were profit-motivated and would make investments only when the demand existed. But when it comes to SOEs, “the dynamics would be different”.

“It’s not that foreign companies have stopped investing, but because they don’t see the growth as they saw before, they wonder if they will still search for a bottom, or whether they’ll see stabilisation in 2024,” he said. “Many factors show we are not going to see a significant, rapid rebound.”

SOEs, in contrast, are usually assigned political undertakings to cushion impacts or lead recoveries in key sectors where they operate.

“The imperative to ramp up growth amid the pandemic and in its aftermath, as well as the West’s tech war to corner China, has Beijing betting more on SOEs and the state sector to fend off national security threats and to solidify control,” said Alex Ma, an assistant professor in public administration at Peking University.

The controversial trend in recent years of the “state sector advancing and private economy retreating”, Ma added, has had a strong spillover effect on foreign firms.

Foreign business executives also weighed in with observations.

According to Marco Civardi, CEO of global logistics giant JAS’ China operations, foreign companies in the country have experienced a significantly more challenging and complex business landscape in recent years than before Covid-19.

“There is an ongoing recalibration of strategies that see China as an opportunity. China’s growth has entered a new normal – still high in relative terms, but lower than in the past. Headwinds in consumption, the property market, the stock market and trade aren’t abating,” said Civardi, who is based in Shanghai.

The tepid foreign industrial output growth also reflects the fact that some foreign players are losing out to their rising home-grown challengers.

In China’s fiercely competitive car market, Japanese and German automakers – once key drivers of foreign industrial output in the country – are ceding market share to domestic brands such as BYD.

But even in highly competitive segments, Beijing’s industrial policies are seen tilted toward domestic producers.

Despite Vietnam’s appeal to Chinese manufacturers, some are ‘trapped in losses’

CEIBS’ Zhu said some non-competition issues were also to blame for the waning fortunes of foreign firms.

“Beijing’s measures to tackle overcapacity between 2016 and 2018 benefited SOEs and helped them grow output and profit faster than others, as overcapacity issues were more prevalent among private and foreign manufacturers,” he said.

“Upstream SOEs hiked prices of raw materials and sub-assemblies, which tore into the profits and output of downstream private and foreign ones.”

For years, Beijing has made little headway in addressing perennial issues despite lofty promises, according to various foreign business chambers whose members continue to be beset with issues concerning national- and data-security law compliance, cross-border data flows and market-access hurdles, as well as policy unpredictability and local deviations in law interpretation and enforcement.

Meanwhile, Beijing’s bid to attach self-reliance in the hi-tech realm, coupled with a more inward-looking policymaking tone and emphasis on national security amid heightened geopolitical complexities, have left foreign-business sentiment weak and wary.

“Most American companies continue to view China as a strategic market and have not divested their operations. But it remains to be seen if more pro-business measures at state and local levels may reverse the trend of FDI flows,” said Eric Zheng, president of the American Chamber of Commerce in Shanghai.

For its part, Beijing has stressed the importance of making progress in its campaign to retain and reel in overseas investments, by sending reassurances and engaging in charm offensives to woo and welcome foreigners.

At a press conference earlier this month, Zhu Bing, the chief of foreign-investment administration for the Ministry of Commerce, said that more than 60 per cent of the measures and ratifications promised in a 24-point policy package announced by the State Council in August had been implemented, and that its survey revealed an “overwhelmingly positive” response from foreign firms.

“Foreign companies can also report to us problems they encounter during the delivery of these pro-business measures, and we will report new progress in government procurement, standard setting, investment facilitation and other aspects of concern,” Zhu with the commerce ministry said.

The National Development and Reform Commission, China’s top economic planner, has also vowed to further winnow down the so-called negative list – which outlines areas in which foreign investments are restricted or forbidden – with intentions to remove all access barriers in the manufacturing sector.

Commerce authorities also said the ministry would make better use of an online portal for foreign firms to lodge complaints, especially small and medium-sized enterprises (SMEs) whose struggles and concerns would typically be less heeded.

“Foreign companies are still going to invest in China, particularly big ones with a significant exposure in China,” said Eskelund with the European chamber. “But foreign SMEs are hedging a bit more and considering whether they would be better off diversifying away. A number of SMEs are leaving, and not so many come in.

“The European industry is characterised by a lot of SMEs, and China is missing out on very significant potential if it’s not able to attract them. Working towards making China more attractive to SMEs ought to also be a priority.”

Beijing asks powerhouse planners why private investors are playing hard to get

Pan Yuanyuan, a researcher with the Chinese Academy of Social Sciences’ Institute of World Economy and Politics, said at a seminar in Beijing last year that China should try to accelerate innovation by wooing more foreign SMEs.

“From them, we can seek more cooperation and transfers of technologies. There is great uncertainty as we select and trial new technologies and new business models. We need more foreign SMEs during the process. Big players of tomorrow may also be born from small firms today,” said Pan, calling for more tailor-made policies.

Eskelund said China needed to bring back the “reliability, predictability and stability that pre-Covid China was famous for”.

But messages from Beijing are often perceived as mixed. Fresh attempts at reassurance followed a recent Politburo meeting at which leadership put the onus on politics and party discipline.

“Beijing often leaves the impression that politics is above the economy,” said James Zimmerman, a partner with international law firm Perkins Coie and a former chairman of the American Chamber of Commerce in China.

“No level of indoctrination is going to magically correct the economic slide and build investor confidence so long as the economic plan remains rudderless,” he said. “They need a real, actionable plan that supports market forces.”

China seeks revision of anti-money-laundering law to address risks related to cryptocurrencies and other virtual assets

https://www.scmp.com/tech/policy/article/3251973/china-seeks-revision-anti-money-laundering-law-address-risks-related-cryptocurrencies-and-other?utm_source=rss_feed

China will soon implement revisions to its outdated Anti-Money-Laundering (AML) Law, in a move that legal experts see as a way to address the growing risks associated with virtual assets.

A draft amendment to the existing AML law, which was enacted in 2006 and took effect in 2007, was discussed at a State Council meeting chaired by Chinese Premier Li Qiang, and will be submitted for review by the national legislature, according to a recent report by state-run news agency Xinhua.

While the full text of the draft amendment has not been made public, the specific aim of the proposed revision is to combat money laundering with virtual assets, according to a January 31 report of Chinese digital news media Jiemian, which cited two legal scholars.

Money laundering related to the use of virtual assets is currently the “most urgent and most necessary” issue to tackle at a legal level, said Yan Lixin, executive director at the China Centre for Anti-Money-Laundering Studies at Fudan University in Shanghai, according to the Jiemian report.

Beijing’s latest anti-money-laundering initiative reflects the government’s commitment to keep pace with Web3 developments such as non-fungible tokens and other virtual assets, while keeping steadfast with the country’s draconian ban on cryptocurrency operations including crypto mining and trading.

The proposed AML law amendment, which is expected to be passed next year, will address new types of money-laundering risks, according to the Jiemian report, citing Peking University Law School professor Wang Xin, who is involved in the discussions about the law’s revision.

A senior prosecutor with the Supreme People’s Procuratorate, Zhang Xiaojin, earlier this month vowed to intensify efforts against money laundering and illegal foreign exchange trading crimes. Zhang, who heads the Fourth Procuratorial Office, said that would involve sharpening their focus on prosecuting crimes related to the use of digital currencies to transfer assets abroad.

Chinese authorities have increased their scrutiny of crypto-related money-laundering cases in recent years. In 2022, police in the northern Inner Mongolia Autonomous Region arrested 63 people for laundering 12 billion yuan (US$1.7 billion) using cryptocurrency.

Beijing to draft national Web3 development plan amid strict cryptocurrency ban

Revising China’s AML law to address virtual asset-related risks “makes sense”, as international standards and best practices have evolved “significantly”, said Andrew Fei, a partner at law firm King & Wood Mallesons in Hong Kong.

“China’s AML legislation has not undergone a major revision since it was first enacted more than 17 years ago,” Fei said. “The world is a very different place now. For example, bitcoin was not even invented when China’s AML law first came into effect.”

The Financial Action Task Force (FATF), a Paris-based intergovernmental money-laundering and terrorist-financing watchdog, has already set out detailed recommendations to address virtual assets in the proposed AML law amendment.

While that task force rated the mainland as “largely compliant” with its virtual asset-related AML recommendations, its 2020 assessment report indicated that several criteria do not apply to China because the country has prohibited crypto activities.

Shanghai digital currency tax explainer fans speculation on easing of China’s crypto ban

China should take into account the relevant FATF recommendations in amending the AML law, according to King & Wood Mallesons’ Fei. He suggested that a “possible way to address these risks is for China’s amended AML law to expressly refer to virtual assets and to give authorities additional powers and tools to target the unique issues arising from virtual assets and new technologies”.

“Although virtual currencies and related activities are banned in China, the borderless and decentralised nature of virtual-asset transactions means that these can still have either a direct or indirect impact on China, especially when used for nefarious purposes,” Fei said.

“China’s focus on combating AML risks associated with virtual assets is broadly consistent with the approach taken in, and urgency felt by, other major countries around the world.”

US still seeks delayed Pacific islands funds amid China’s lobbying push in region: senior diplomat

https://www.scmp.com/news/china/article/3251992/us-still-seeks-delayed-pacific-islands-funds-amid-chinas-lobbying-push-region-senior-diplomat?utm_source=rss_feed

A day after a US$95 billion foreign aid package left out economic help promised for the Indo-Pacific as the US tries to blunt China’s sway there, a senior official on Wednesday said the Biden administration stood committed to its partnerships in the strategically vital region.

“At the State Department, the White House, we continue to advocate for the authorisation and appropriation of funds. We feel it’s critically important to continue to work in close concert and in support of the freely associated states”, said Camille Dawson, a deputy assistant secretary at the US State Department, referring to the Marshall Islands, Micronesia and Palau.

Dawson made the remarks in response to a question posed by the Post during a press briefing on the second anniversary of the unveiling of US President Joe Biden’s Indo-Pacific Strategy.

That strategy arguably descends from the Compact of Free Association (Cofa), a pact that for decades has steered US ties with the Marshall Islands, Micronesia and Palau.

Amid growing fears of what some have called Beijing’s coercive influence campaign in the Indo-Pacific region, the agreement is seen as indispensable to Washington’s efforts to maintain its presence in the region, a place where US Secretary of State Antony Blinken once said “our planet’s future will be written”.

The Cofa pact, first signed in 1986, grants the US military access to the land, air and sea of the three Pacific island nations in exchange for financial aid and a legal basis for their citizens to live, work and go to school in the states.

The Cofa programmes for the Marshall Islands and Micronesia lapsed on September 30, while Palau’s is set to end this September.

New deals were negotiated and renewed last year, and Biden has pledged to the three countries US$7.1 billion over 20 years.

‘What’s next’ as China’s Pacific island diplomatic wins mount?

Bipartisan support for the new terms had appeared strong, but the promised funds still await congressional approval. For months, American lawmakers have bickered over federal spending.

On Tuesday, the US Senate passed a US$95 billion emergency aid package for Ukraine, Israel and Taiwan but kept Cofa out of it, despite a plea last week from the presidents of the Marshall Islands, Micronesia and Palau.

In a letter to various Senate leaders dated February 6, the three said their countries effectively expanded American defences across an area “larger than the 48 contiguous United States, stretching from west of Hawaii to the Philippines and Indonesia”.

Washington has based missiles and early-warning radar systems in Palau, the letter continued. It invoked a description by former US Joint Chiefs of Staff chairman General Martin Dempsey of one facility on the Marshall Islands as the world’s premier range for intercontinental ballistic missile testing and military space operations.

Furthermore, the Cofa pact made it possible for the US to conduct military exercises in Micronesia, the letter added.

While the Pacific leaders called the funding delay understandable, they said “it has generated uncertainty among our peoples”.

“As much [as] they identify with and appreciate the United States, which formerly governed our islands, this has resulted in undesirable opportunities for economic exploitation by competitive political actors active in the Pacific”, they said of public unease and hinting at Beijing’s lobbying in the region.

The economies of the three island nations heavily depend on American subsidies, which account for roughly 40 per cent of Micronesia’s annual revenue. For the Marshall Islands, US funding makes up about 70 per cent of its GDP.

Palau has struggled economically since 2018, when China stopped sending its tourists over the country’s recognition of Taiwan, which Beijing sees as part of China to be reunited by force if necessary. The coronavirus pandemic also exacted a toll.

‘Nations can look elsewhere’: Micronesia ex-leader urges US to keep funds pledge

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.

“Palau is stuck. If the funding isn’t approved and quickly, Palau may have to make cuts, including to pensions, as well as borrow, leaving it even more vulnerable to internal instability and outside influence,” wrote Cleo Paskal of the Foundation for Defence of Democracies, a Washington think tank, in a recent op-ed.

The US was on the “brink of a making a massive strategic blunder if it fails to continue funding a little-known but critically important agreement”, added Charles Edel and Kathryn Paik of the Centre for Strategic and International Studies, another Washington think tank, in a separate write-up last month.

Steve Marshall of US Pacific Forces in Hawaii portrayed the situation confronting the three nations as a “slow motion train wreck happening in the western Pacific” in a post last week on social media platform LinkedIn.

Calling the delay a “self-inflicted wound” allowed by Congress, Marshall said a failure to fund Cofa would “result in crippling our ability to project power, defend allies, and protect the homeland, as well as betray a group of people we have long considered part of our family”.

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