• Chinese manufacturers in Mexico tread on thin ice amid threat of more US barriers
• US-China military talks address potential for accidental conflicts in Indo-Pacific
• Giorgio Armani bags made by exploited Chinese workers near Milan, Italian police say
• Google slaps Chinese developers with lawsuit in New York for conducting ‘pig-butchering’ scams via its Play Store
• ‘Crucial’ for US, China to work together, Treasury chief Yellen tells Vice-Premier He Lifeng
• EU follows US move to assess China’s dominance of legacy chips
• China carefully scrutinizes U.S. envoy’s ... chopstick skills?
• Chinese firms lag behind US peers in AI development ‘by two years’, Alibaba chairman Joe Tsai says
• South China Sea: Beijing, Hanoi try to navigate differences as territorial disputes ripple
• Russia’s Lavrov, who will visit China soon, calls peace plan for Ukraine ‘reasonable’
• Hong Kong customs arrests 2 for allegedly smuggling pedigree pets worth HK$210,000 from mainland China
• China bride price experiment promotes women living with future husbands to test compatibility before cash changes hands
• South China Sea: Beijing could do more to ease tension and build trust with neighbours, experts say
• Despite lifting Australia wine tariffs, China’s market offers no lifeline for global industry
• US Treasury Secretary Yellen, in China, calls for level-playing field for US workers and firms
• Taiwan earthquake, Kobe Bryant’s lookalike in China, Singapore’s 34-year-old grandma: SCMP’s 7 highlights of the week
• US-Philippine military drills along South China Sea risk Beijing’s ire: ‘that’s their problem’
• China trade delegation chief raises US restrictions at Washington meeting
• China will use AI to disrupt elections in the US, South Korea and India, Microsoft warns
• Chinese cities spark outcry with ban on joss paper sales and ‘feudal superstitions’ for Ching Ming Festival
• China’s central bank sees resolve for stable yuan, stimulus tested as Fed holds firm on rates

Chinese manufacturers in Mexico tread on thin ice amid threat of more US barriers

https://www.scmp.com/news/china/article/3257955/chinese-manufacturers-mexico-tread-thin-ice-amid-threat-more-us-barriers?utm_source=rss_feed

Mexico, often perceived in China as a remote and dangerous place, has also become a gold rush destination for Chinese companies looking to serve both the local market and the US. As they learn to adapt to a new environment, Washington policymakers are wary. The once and possibly future US president, Donald Trump, is threatening to slap tariffs on products coming from Mexico, including electric vehicles, to block China. In the second of , the South China Morning Post looks at how Chinese companies are trying to avoid becoming lightning rods for America’s election year rhetoric.

“Keep a low profile.” Such was the advice often repeated by Chinese embassy officials in Mexico to Chinese-funded factories in the country in recent weeks.

The factories, however, do not need to be reminded. Warnings from the other side of Mexico’s northern border are more evident than ever, with the latest threat coming from former US president Donald Trump, the presumptive Republican nominee in this year’s election.

“China now is building a couple of massive plants where they’re going to build the cars in Mexico and they think that they’re going to sell those cars into the United States with no tax at the border,” Trump said at a campaign rally in Ohio in mid-March. “We are going to put a 100 per cent tariff on every car that comes across the lot.”

In Monterrey, an industrial city 140 miles (225km) south of the border, many Chinese firms increasingly feel like they are treading on thin ice: some ventured to Mexico because of worsening Sino-US economic relations, so the last thing they want is to be on a US watch list. But this may be only wishful thinking amid the soaring political discourse that saturates all channels in the US election season.

Still, this rhetoric has yet to scare off Chinese firms from coming to Mexico, especially as overcapacity at home spurs efforts to expand. While some believe strict regulatory compliance will spare them from becoming political victims, others fear more barriers may be on the way.

So far, the Trump-proclaimed “big monster car manufacturing plants” built by the Chinese in Mexico have yet to happen. Electric vehicle giant BYD has been evaluating the feasibility of building a facility in the country, indicating that it would aim for the Mexican market instead of the US, according to Mexican officials familiar with the plan. But it is possible the plant could be used as a springboard to the north in the future, they added.

BYD did not respond to requests for comment.

Growing rapidly in recent years, Chinese EV manufacturers have been able to drive down costs, helping China surpass Japan to become the world’s largest car exporter last year. But thanks to the additional 25 per cent tariffs imposed during the Trump administration, the US has largely kept Chinese EVs at bay.

And now Washington fears that Chinese cars may be able to come over the southern border with zero tariffs under the United States-Mexico-Canada Agreement (USMCA), devastating its automotive industry – a bedrock of the US manufacturing ecosystem.

China urged to alter approach as Mexico shifts trade posts, raises tariffs

“The introduction of cheap Chinese autos – which are so inexpensive because they are backed with the power and funding of the Chinese government – to the American market could end up being an extinction-level event for the US auto sector,” the Alliance for American Manufacturing, an advocacy group, said in a report in February.

While such a scenario is still hypothetical, an increasing amount of Chinese investment in Mexico – and especially in Monterrey – is flowing to factories serving as upstream manufacturers of parts such as suspension components, all looking to supply big names like Tesla.

The US carmaker owned by billionaire Elon Musk announced its plan to build a “Gigafactory” in the Monterrey area last year, though it has yet to break ground. But many Chinese car parts suppliers there have already put their facilities into operation, currently supplying Tesla factories in Austin, Texas, and Fremont, California.

“One thing is politics, and everyone is talking about it. The other one is like, when companies come set up as a Mexican manufacturing facility here, hiring Mexican employees and complying with the rule of origin, they can definitely supply to the US market free of taxes,” said Emmanuel Loo, undersecretary of investment of the Ministry of Economy in Nuevo Leon, where Monterrey is the capital.

Under the USMCA, which replaced the North American Free Trade Agreement (Nafta) in 2020, as long as 75 per cent of auto content – including key parts – are made in North America, the products can qualify for rule of origin to export to the US.

Since the fourth quarter of 2021, 30 per cent of all foreign companies investing in Nuevo Leon have been from China, compared to 55 per cent from the US during the same period, Loo said.

“We didn’t used to have that many Chinese companies. We once had a lot of Koreans, Japanese and Europeans. Now China has become the strong No 2 investor in Monterrey,” Loo said.

In value terms, Chinese investment in the state is still in its infancy, as small suppliers rather than big international brands constituted the majority. According to official statistics, in the first three quarters of 2023, the top sources of foreign direct investment in Nuevo Leon were Argentina at US$1.39 billion, the Netherlands at US$557 million and the US at US$401 million, while that from China was only US$34.8 million.

US-Mexico-Canada trade deal signed after political breakthrough

But the number may be underestimated. Some Chinese companies have used their overseas subsidiary to invest in Mexico to avoid being labelled as “Chinese investment” in the official record, according to factory managers and experts.

Therefore, from 2018 to 2023, in Mexico the actual figure for Chinese foreign direct investment – which traces the original source of transactions back to the country – should be about US$10 billion, compared with the US$2.3 billion total from Mexico’s Secretariat of Economy, according to Enrique Dussel-Peters, a professor at the National Autonomous University of Mexico.

In Nuevo Leon, there have been some Chinese companies coming and setting up facilities without notifying the local government, Loo said.

“For some of them, we only found out when, for example, the labour secretary went there for inspections,” Loo added.

Beyond these precautions, many Chinese factory managers said they believe that strict compliance with the USMCA will eventually save them.

“From the business perspective, we cannot be just scared away. The Chinese can always find a way out,” said Chen Yi, an administration director at Hengli Mexico. Originally from Jiangsu province, Hengli is a hydraulic component supplier to engine equipment manufacturers like Caterpillar, and its plant in Monterrey is expected to begin operations this year.

“As long as we comply with all the requirements under the USMCA and obtain the rule of origin certificate, and be ready for inspections and review at all times,” Chen said.

But Jorge Guajardo, former Mexican ambassador to China and currently a partner at Dentons Global Advisors, said the US could easily use non-tariff barriers to make it harder for Chinese-funded companies to prove they meet the rule of origin.

During USMCA negotiations, the US added a chapter in which US labour groups can request inspections at foreign plants in Mexico when labour rights violations are suspected.

“So far, it has been used more as harassment than an actual implementation. And my guess is they are going to start targeting Chinese-owned companies in Mexico,” Guajardo said.

This echoes the experience of a Chinese factory manager in Monterrey, whose company’s products are undergoing anti-dumping and anti-subsidy investigation by the US.

“If the United States really wants to target a certain company, the USMCA would not be able to protect you at all,” the manager said on condition of anonymity.

Officials in US President Joe Biden’s administration are already on high alert regarding Chinese investments in Mexico. In December, Treasury Secretary Janet Yellen visited Mexico to strengthen cooperation on security and financial issues, with the two sides agreeing to establish a mechanism to monitor and screen foreign investments in the country.

But some Mexican officials and trade experts say no one in the country knows how to implement such an investment screening.

Kenneth Smith-Ramos, a partner at Mexican international consulting firm Agon and the country’s former chief negotiator for USMCA, said the Mexican government would balk at a practice that it would see as discriminating against foreign firms.

“There is an open investment environment [in Mexico],” Smith-Ramos said in March, adding that excluding Chinese participation under USMCA is hard to implement or justify based on current international trading rules.

“How do you not get onto a slippery slope where other countries start discriminating against North American products just by virtue of being North American, and by claiming that they can be a danger to national security of other export markets that are important to North America?” he said.

Still, US pressure on the Mexican government can never be overlooked owing to the leverage that Washington has. Around 85 per cent of Mexico’s exports go to the US, and Mexico overtook China last year to become America’s top source of imports.

“We are just too dependent on America as a partner,” said Victor Gonzalez, a senior adviser for China-Latin America legal affairs at Beijing-based law firm PC Woo & Zhonglun Wende.

For the economic relationship between China and Mexico, it is never truly bilateral but always trilateral, as the US is always in the equation, he added.

“It’s just a matter of time that it becomes political and the economic aspect will become secondary,” Gonzalez said.

With ‘made-by-China’ under US pressure, Mexico’s trade probes spark concerns

Nevertheless, the US’s dependence on lower-cost products made in Mexico and the inability of local industry to provide all the necessary elements of the supply chain presented an opportunity for Beijing, said Eduardo Tzili-Apango, professor of China studies at Mexico’s Metropolitan Autonomous University.

He stressed that trade relations between Mexicans and Chinese have always been contentious, as many sectors such as footwear, textiles and toys have suffered from Chinese competition since the country became a member of the World Trade Organization in 2001.

But as Mexico was unable to advance in more technology-intensive sectors, such as electronic components, inevitably it became dependent on the Chinese supply chain.

“In order to … export more to the North American market, we have to import more from China,” Tzili-Apango said.

For Simon Zhao, who came to Mexico from China 14 years ago and later founded Solarever, a Mexican solar panel manufacturer now expanding business scope to EV and batteries, industrial inputs from the Chinese supply chain are irreplaceable for his industry.

“Of course we need suppliers from China. As a leader in Mexico for the renewable energy sector, if we want to grow better, we need to cooperate internationally, including with China, the US and Europe,” Zhao said.

Despite policy uncertainties, for many Chinese manufacturers that have already set foot in Mexico, there is almost no way back.

“We have bought land and built factories. Of course we are worried. But now we can only move forward,” said Eric Liu, general manager at Sunon, an office furniture producer in Mexico. The company, originally from Zhejiang province, was convinced by its US clients to move to Mexico in 2021, and invested US$70 million in its Monterrey factory that went into operation two years later.

China’s 17-year run as top source of US imports ends as Mexico rises

Compared to the automobile sector, the furniture industry involves fewer technical barriers, and thus has attracted little US attention. But higher costs – from labour, logistics and local procurement in order to comply with the rule of origin under the USMCA – have yet to justify the move, Liu said.

As of the end of last year, Sunon’s general operation costs in Mexico were 38 per cent higher than in China, compared with the 25 per cent US tariffs imposed on furniture imports directly from China.

“If Trump gets elected again and elevates tariffs on Chinese imports, producing in Mexico would make more sense,” Liu said.

The former president, however, could be an “even bigger disruptive element” for the economic dynamic between China and Mexico, said Tzili-Apango.

“If Trump wins, one of the biggest political pressures on Mexico might be renegotiating USMCA with the condition that we reduce our trade relations with China,” he said.

“And that would be very harmful to our economy.”

Additional reporting by Igor Patrick

US-China military talks address potential for accidental conflicts in Indo-Pacific

https://www.scmp.com/news/china/military/article/3258046/us-china-military-talks-address-potential-accidental-conflicts-indo-pacific?utm_source=rss_feed

US and Chinese military officials have met in Hawaii to discuss ways to avoid accidental clashes in the contentious Indo-Pacific region – their first face-to-face gathering since the leaders of both countries agreed in November to resume direct military communications.

Held in Honolulu, the meeting of the Military Maritime Consultative Agreement Working Group took place on Wednesday and Thursday. The US was represented by officers from the Indo-Pacific Command, Pacific Fleet and Pacific Air Forces.

According to Colonel Ian Francis of the Indo-Pacific Command, who led the US delegation, the talks concerned airspace and maritime operations.

“The United States will continue to operate safely and professionally in the Indo­-Pacific wherever international law allows, and we take this responsibility seriously,” he said in a statement issued on Friday.

He added that “open, direct, and clear communications” with the Chinese military, formally known as the People’s Liberation Army – as well as “with all other military forces in the region – is of utmost importance to avoid accidents and miscommunication”.

According to the statement, both sides also reviewed “safety-related events” over the last few years.

The US has accused China of “coercive and risky operational behaviour” against US assets acting lawfully in international airspace over the East and South China seas.

In October, the Pentagon released declassified images and videos showing Chinese fighter jets discharging chaff and shooting flares while approaching US aircraft at high speeds.

Over 180 ‘coercive and risky’ PLA incidents against US since 2021: Pentagon

According to the statement, both sides also reviewed “safety-related events” over the last few years.

The US has accused China of “coercive and risky operational behaviour” against US assets acting lawfully in international airspace over the East and South China seas.

In October, the Pentagon released declassified images and videos showing Chinese fighter jets discharging chaff and shooting flares while approaching US aircraft at high speeds.

Beijing suspended all military dialogue with Washington in August 2022 after then US House Speaker Nancy Pelosi visited Taiwan. But a breakthrough came in November when Chinese President Xi Jinping and US President Joe Biden agreed to ease tensions and manage disagreements responsibly.

As part of the top-level efforts to stabilise relations, Xi and Biden also spoke this week ahead of US Treasury Secretary Janet Yellen’s five-day trip to China, which began on Thursday.

Giorgio Armani bags made by exploited Chinese workers near Milan, Italian police say

https://www.scmp.com/news/world/europe/article/3258049/giorgio-armani-bags-made-exploited-chinese-workers-near-milan-italian-police-say?utm_source=rss_feed

Exploited Chinese workers employed in Italy by an unauthorised subcontractor made handbags and accessories for the Giorgio Armani fashion house in a series of supply chain abuses that the in-house production company failed to properly monitor, Italian police said Friday.

The fashion house denied wrongdoing by GA Operations, which produces apparel, accessories and home decor for the Giorgio Armani Group brands.

“The company has always had control and prevention measures in place to minimise abuses in the supply chain,’’ the Armani statement said. “GA Operations will collaborate with the utmost transparency with the competent bodies to clarify its position on the matter.”

According to police, GA Operations hired a subcontractor, which in turn hired unauthorised Chinese subcontractors that employed workers under the table, some of whom were in Italy illegally. They allegedly disregarded health and safety regulations as well as rules governing working hours, breaks and days off.

Police said it was part of a system of caporalato, the illegal intermediation and exploitation of workers most often associated with the agricultural sector. Four Chinese factory owners face a separate criminal investigation for their role.

GA Operations, meanwhile, is not under investigation, but has been placed under judicial administration for up to a year as part of a procedure to ensure legal operations, said Carabinieri Lieutenant Colonel Loris Baldassarre.

A diagram released by police indicated that the Chinese subcontractor was paid €93 (US$100) for a handbag that the fashion house sold for around €1,800 euros (around US$1,950).

The authorised subcontractor, acting as the middleman but without real production capabilities, was paid €250 for the same bag, pocketing €157 for each bag, police said.

Italy to terminate China belt and road agreement, ending G7 involvement

“The system allows for maximising profits [in which] the Chinese factory actually produces the products, lowering labour costs by resorting to off-the-books and illegal workers,” police said in a statement.

A video released by carabinieri shows a workshop where leather goods were being made, with two beds with blankets in an adjacent office. A second-floor dormitory, reached through a gated stairway, had a set of bunk beds and another bed strewn with clothes and blankets.

Cooking pots were piled in a filthy bathroom alongside a broken sink and a pot with water containing what appears to be eel. A makeshift kitchen included a gas burner next to a wall splattered with food.

Dirty dishes and uneaten food were piled on the sink. Cardboard was taped over windows.

The finding is part of a wider investigation into the fashion supply chain operating in the Milan and Bergamo provinces, which placed bag and accessory maker Alviero Martini Spa under judicial administration in January, Baldassarre said.

In the more recent case, police investigated four illegally operating factories with unhealthy working conditions and a series of safety violations, including illegal dormitories with “sanitary and hygienic conditions below the ethical minimum”.

The factories were ordered closed, and the four Chinese owners facing a separate criminal investigation were handed fines and administrative sanctions totalling €145,000.

Google slaps Chinese developers with lawsuit in New York for conducting ‘pig-butchering’ scams via its Play Store

https://www.scmp.com/tech/blockchain/article/3258034/google-slaps-chinese-developers-lawsuit-new-york-conducting-pig-butchering-scams-its-play-store?utm_source=rss_feed

US technology giant Google has slapped two Chinese developers with a lawsuit in New York federal court, accusing them of defrauding about 100,000 people through fake cryptocurrency investment apps on the company’s Play Store.

According to the Google lawsuit that was filed on Thursday, Yunfeng Sun in Shenzhen and Hongnam Cheung in Hong Kong ran what is known as a “pig-butchering” scam since 2019 that involved uploading 87 bogus apps – purported to be cryptocurrency exchanges and other investment platforms – on Play Store to ensnare unwitting users in the US and Canada.

The fraudsters’ scheme also involved initially developing a friendship or romantic relationship with the victims, and then persuading them to make investments through the apps they operate, the lawsuit said.

The fraudulent apps ran by the two Chinese developers “affected consumers across the globe” and resulted in “substantial financial losses” to Google users, the US tech giant said in its lawsuit.

While Google had made efforts to remove those apps, the company said the two defendants managed to create more apps using “new aliases and infrastructure”, and by making “repeated material misrepresentations” regarding their identity and activities.

Google’s lawsuit shows the continued rise of pig-butchering scams around the world, which have duped tens of thousands of victims into making fraudulent investments online.

After victims make several cryptocurrency investments through fake sites, they discover that any request to make a withdrawal or cash out their investment is denied, according to a recent FBI warning in the US. The scammers even request additional investments, taxes or fees for the victims to obtain their money. Once the victims’ funds are exhausted, the scammer cuts off contact and vanishes with the money.

In Asia, these fraudsters have became more prevalent since the Covid-19 pandemic. A large number of scammer from mainland China, for example, operate out of compounds in Southeast Asia and try to swindle people worldwide with fake investment schemes.

How Chinese forced to run online scams in Cambodia can pay with their lives

Google claimed in its lawsuit that the two Chinese app developers would send “wayward” text messages to victims as a way to “strike up a conversation”. After exchanging initial messages with the victims, the defendants “shifted the conversations to other messaging platforms such as WhatsApp”.

They would also publish videos online that promoted the fraudulent investment apps, according to the lawsuit. After victims deposited money into the apps that purported to offer high returns, these bogus platforms would prevent them from withdrawing money through various schemes.

Sun and Cheung’s apps, including one named TionRT that passed itself off as a cryptocurrency exchange, caused financial losses that ranged from US$100 to tens of thousands of dollars per individual victim, Google said.

Google also alleged that it “suffered economic damages” of more than US$75,000 in investigating their scheme, according to the lawsuit.

Beijing has recently ramped up its crackdown on pig-butchering operations in Asia. In 2023, Myanmar authorities handed more than 44,000 suspected online scammers to their Chinese counterparts in a joint law-enforcement action, China’s state broadcaster CCTV said in a report in January.

Another 807 suspects were arrested in Myanmar last month, including 455 Burmese nationals and 354 Chinese nationals, the state-run Xinhua news agency reported earlier this month.

‘Crucial’ for US, China to work together, Treasury chief Yellen tells Vice-Premier He Lifeng

https://www.scmp.com/news/china/diplomacy/article/3258033/crucial-us-china-work-together-treasury-chief-yellen-tells-vice-premier-he-lifeng?utm_source=rss_feed

US Treasury Secretary Janet Yellen kicked off two days of talks with Chinese Vice-Premier He Lifeng on Friday, stressing that it was “crucial” for Washington and Beijing to work together on global challenges.

The meetings aimed for “frank and substantive conversations” on the bilateral economic relationship, Yellen wrote in a brief post on X, formerly Twitter, following the first round of talks in China’s southern mega city of Guangzhou.

“It is crucial that the two largest economies in the world seek progress on global challenges and closely communicate on areas of concern,” she said.

In remarks ahead of the talks, Yellen stressed the importance of communication, saying that the three meetings she had had with He in less than a year were a “clear representation” of that.

“I believe we have taken up the challenge from our leaders to put the US-China relationship on a more solid footing,” she said, according to the US Treasury Department.

“As I have said, the United States seeks a healthy economic relationship with China that benefits both sides.”

Yellen arrived in Guangzhou on Thursday for the first leg of a week-long trip to China aimed at managing trade relations between the world’s two largest economies.

According to the Treasury Department, she told He that it was key for the United States and China to work on global issues such as climate change and debt distress in emerging markets and developing economies.

The two countries should also closely communicate on issues of concern such as overcapacity and “national security-related economic actions”.

“It is what the world and our citizens expect of us,” she said.

He, one of Chinese President Xi Jinping’s top aides, is believed to hold significant influence over China’s financial and economic affairs after being confirmed last year as the office director of a commission to manage China’s economy.

Before their closed-door talks began, China’s new “economic tsar” told Yellen that their main task would be to have “further in-depth discussions on important issues to China, the US, and the global economic and financial fields”, according to Chinese state broadcaster CCTV.

The meetings would seek to “provide appropriate responses to some key concerns in China-US economic relations”, he added.

The talks are expected to continue on Saturday.

Current affairs: sparks fly between China, US over EVs before Janet Yellen visit

Earlier on Friday, Yellen held a round-table discussion with economists to discuss challenges and opportunities in the Chinese economy. She also similarly stressed the importance of stable economic ties with China at a separate gathering of the US business community.

“The United States will pursue a healthy economic relationship with China. We will seek to cooperate with China on global challenges,” she told an event organised by the American Chamber of Commerce in Guangzhou, the capital of Guangdong province.

But Washington would also “deploy our economic tools when needed and in a narrowly targeted manner to protect our national security and that of our allies”, she said, according to the Treasury Department.

Yellen said that she intended to communicate Washington’s commitment to healthy economic relations with Beijing during her visit while also raising concerns over issues like China’s production overcapacity and “unfair economic practices”.

China, she said, had imposed barriers to access for foreign firms and taken “coercive actions against American companies”.

“Put simply, the US-China bilateral economic relationship is among the most important in the world. Responsibly managing it is essential,” she said.

Yellen had started her day with a meeting with Guangdong governor Wang Weizhong, where they discussed the industrial outlook for the province, a manufacturing powerhouse, and emphasised that healthy US-China economic ties could bring significant benefits for both.

The second leg of her trip will take Yellen later on Saturday to Beijing, where she will meet other high-ranking Chinese officials, including Premier Li Qiang, Finance Minister Lan Foan, former vice-premier and economic tsar Liu He and central bank governor Pan Gongsheng.

Yellen, widely seen as one of the most dovish members of the Biden administration, has years of experience in negotiating with Chinese officials.

This is her second visit to China in less than 10 months. Her previous trip last July during high US-China tensions helped to restart dialogue and launch bilateral working groups on economic and financial policy.

This time, her visit comes amid thawing relations as the two world powers seek to ease tensions and strengthen communication.

It also comes days after Xi and his US counterpart Joe Biden held a phone call covering a wide range of issues, including US tech curbs and Chinese trade barriers.

US Secretary of State Antony Blinken is also expected to travel to China “in the coming weeks”, with defence chief Lloyd Austin to “soon” hold talks with his Chinese counterpart Dong Jun, according to the White House.

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EU follows US move to assess China’s dominance of legacy chips

https://www.scmp.com/news/china/diplomacy/article/3258026/eu-follows-us-move-assess-chinas-dominance-legacy-chips?utm_source=rss_feed

Amid swirling concerns about China’s dominance of the global market for legacy semiconductors, the European Union and United States are working together to formulate a response.

In the Belgian tech hub of Leuven on Friday, top EU officials said they had launched a survey of businesses on the topic, matching an American initiative that kicked off late last year, and which drew a stern rebuke from Beijing.

“We will do a voluntary survey that we will coordinate [with the US] so that we are addressing some of the same issues in order to be able to compare notes,” the bloc’s competition chief Margrethe Vestager said after the sixth edition of the EU-US Trade and Technology Council (TTC) concluded.

The EU will assess the “trustworthiness” of legacy chips, and the survey could help build a picture of how China’s huge production capacity in the sector could affect European markets.

Increasingly frozen out of Western markets for advanced chips, Beijing is ramping up its production of legacy models that power everyday items ranging from cars to televisions. The chips are also commonly used in the production of most critical goods from planes and medical devices to factory machinery. The disruption in their supply during the pandemic upended global manufacturing.

The survey results will be available in the summer, with Vestager adding that they were basing their approach on the Japanese model of economic security. Researchers from the Stimson Centre have described the model as aimed at “securing the stability and safety of its people and society from attempts by major powers to achieve their political objective”.

“You find these existential or essential chips everywhere. So what criteria should they fulfil in order to be fit for purpose and safe to put in all these different appliances?” Vestager said.

EU and US seek trade and tech alignments that might survive Trump’s return

At a press conference in Leuven, US Commerce Secretary Gina Raimondo said Washington was looking for “evidence of any kind of market distortion” in the sphere of legacy chips.

“We know that based on China’s own reporting, about 60 per cent of all new ‘legacy chips’ coming into the market in the next handful of years will be produced by China. And we know there’s a massive subsidisation of that industry on behalf of the Chinese government, which could lead to huge market distortion, and so that’s why we’re focused on it,” Raimondo said.

The final meeting of the TTC before elections in both the EU and US aimed to lock in progress on multiple fronts to make it harder for future political leaders to abandon the council.

The TTC was launched in 2021 and is broadly seen as a way for the West to compete with China in setting standards for technologies that will power the global economy of the future.

But a string of top level cabinet members fell short of delivering concrete deals on items such as critical minerals collaboration and on solving trade disputes dating back to the administration of former US president Donald Trump.

‘Legacy chips’ emerge as new front in US-China semiconductor battle

The TTC emerged as an important platform for coordinating on sanctions and export controls against Russia after its invasion of Ukraine in February 2022. On countering China, however, returns have been more modest.

A joint statement published after Friday’s event contained just three mentions of China, though it had multiple references to the challenges posed by “non-market economies” – shorthand for Beijing, whose economic policies frustrate governments on both sides of the Atlantic.

“There has been a build-up of global economic pressure through extensive non-market policies and practices,” the statement read.

EU sources said its member states were not “enthusiastic” about singling out Beijing in the document, earlier drafts of which had more references to the world’s second biggest economy.

During closed-door plenary sessions over the course of the two day meeting, US officials put China at the top of every statement and inserted it prominently into each debate, according to people present.

The Europeans, however, were less energised by the topic and preferred to avoid targeting specific countries in discussions.

Two of the mentions of China in the statement were related to concerns over market access for firms that make medical devices. Brussels has been pushing without success for Beijing to open its lucrative procurement market for these devices to European firms.

An EU investigation on China under its new international procurement instrument could land as early as next week, sources said.

“There is no reciprocity here. De facto the Chinese market is closed for European producers,” Vestager said, adding that it was important for the bloc to have the international procurement instruments as they were “built on the idea of reciprocity”.

The third mention was in relation to “China’s ability to effectively employ foreign information manipulation and interference” in the Western Balkans, where the EU and US are working with local partners to coordinate on these threats.

The forum took place at the Belgian city of Leuven, one of the EU’s major innovation hubs. On Thursday evening, EU and US officials toured the Interuniversity Microelectronics Centre, a nerve centre for European chip technology, which has cut China out of its research partnerships in recent months.

The sides agreed to coordinate on developing standards for 6G technology, quantum computing and artificial intelligence, with a view to ensuring China does not set the rules.

On less advanced technology, they said they would “explore ways to jointly support our [solar] photovoltaic manufacturing capacity and to diversify and de-risk this supply chain”.

On economic security – a hot-button issue for China policy in both Brussels and Washington – they agreed to swap notes on their respective outbound investment screening programmes, which have proved challenging to implement.

“When the EU and US are aligned, it’s a powerful force. There’s a certain weight that comes with having a shared position, whether that’s dealing with China or any other challenge,” said US Secretary of State Antony Blinken after the TTC meeting.

However, with both the EU and US heading into an election period that could significantly rearrange the existing political orders, many are doubtful the council has generated the momentum to survive.

China carefully scrutinizes U.S. envoy’s ... chopstick skills?

https://www.washingtonpost.com/world/2024/04/05/janet-yellen-china-chopsticks/2024-04-05T07:47:58.778Z

U.S. Treasury Secretary Janet L. Yellen landed in China this week with a raft of thorny issues to tackle. But it wasn’t her trade policy or stance on the poor state U.S.-China relations that caught the attention of the Chinese public.

“Watching Yellen use chopsticks, it’s clear she’s a chopsticks master. She definitely eats Chinese food on a regular basis,” one user wrote on the microblog Weibo after news outlets posted a seven-second video clip of Yellen wielding said utensils at a Cantonese restaurant in the southern Chinese city of Guangzhou on Thursday night.

“U.S. Treasury Secretary Yellen chooses authentic Cantonese cuisine and uses chopsticks well,” read one headline from state broadcaster China Central Television.

Chinese social media platforms on Friday were awash with details of Yellen’s first meal in China during a week-long visit aimed at improving U.S.-China ties and addressing what Washington sees as unfair Chinese trade practices. Hashtags related to Yellen’s dining choices drew almost 10 million views on Weibo.

The breathless state media coverage of her dining choices or dexterity with chopsticks reflects an effort by Beijing to cast Yellen’s visit in a positive light, especially to an increasingly anti-American Chinese public. It underlines how Beijing sees Yellen as perhaps its best hope for improving trade ties with Washington and helping its own ailing economy.

“Overall, Yellen’s visit to China sends a positive signal regarding the economic and trade relations between the two countries,” the state-run Global Times concluded in an editorial on Thursday. On Friday, Yellen met with the Guangdong governor, Wang Weizhong, and said the United States is not seeking to “decouple” or cut itself off from the Chinese economy.

In a separate meeting with the American Chamber of Commerce, she said she would speak to Chinese officials this week about unfair trade practices against U.S. businesses. Before the trip, Yellen also said she would raise her concerns that overproduction in China is leading to a glut of exports, especially in electric vehicles and other clean technology.

Details in Chinese media reports include that Yellen ate at a storied restaurant in Guangzhou frequented by the likes of Chinese modernist writer Lu Xun. She was served a menu of more than a dozen dishes, including roast goose and barbecued pork, shrimp dumplings, iced sweet and sour pork and egg tarts.

“What she ordered was very representative of Cantonese dishes,” a staffer at the Tao Tao Ju restaurant told Guangzhou Daily News.

While the restaurant had arranged a private room for Yellen, her team requested that partitions be taken down so she could eat alongside other patrons, those reports noted — a detail that was confirmed by a Treasury official.

The Guangzhou-based Yangcheng Evening News also ran a profile of Yellen’s enthusiasm for food, including a Yunnan restaurant she visited last year where she ate mushrooms that could have hallucinogenic properties if not cooked properly. (A mushroom casserole was also on the menu at Tao Tao Ju.)

“Official public opinion is quietly changing,” popular commentator and former journalist Zhang Feng wrote in an essay on WeChat. Zhang noted that the soft coverage of Yellen’s familiarity and appreciation of Chinese food — which some commentators attributed to her time in San Francisco — was reminiscent of how Chinese media reported on the visits of foreign leaders in the past.

In 2011, a surprise stop at a Beijing eatery by then-Vice President Joe Biden was also closely reported: He ordered noodles, steamed dumplings and cold appetizers such as smashed cucumbers.

Still, years of worsening ties, as well as official comments and state media coverage demonizing the United States, have had an impact on Chinese public opinion. Under reports of Yellen’s dinner choices, internet users ridiculed the coverage, asking why there was nothing more substantial to report on.

“How about instead of focusing so much on what Yellen eats, you focus on how they plan to make things difficult for China,” one said.

Vic Chiang and Pei Lin Wu in Taipei contributed to this report.

Chinese firms lag behind US peers in AI development ‘by two years’, Alibaba chairman Joe Tsai says

https://www.scmp.com/tech/big-tech/article/3258002/chinese-firms-lag-behind-us-peers-ai-development-two-years-alibaba-chairman-joe-tsai-says?utm_source=rss_feed

China is trailing the United States in the global race to lead artificial intelligence (AI) development by two years, according to Alibaba Group Holding co-founder and chairman Joe Tsai, as mainland companies continue to struggle with technology restrictions imposed by Washington.

“China is somewhat behind, obviously,” Tsai said, citing how ChatGPT creator OpenAI has leapfrogged the rest of the tech industry in AI innovation, in a podcast interview published on Wednesday with Nicolai Tangen, chief executive of Norges Bank Investment Management – the branch of Norway’s central bank that is responsible for managing the world’s largest sovereign wealth fund.

Tsai pointed out that China’s tech companies are “possibly two years behind” the top AI firms in the US. He said US export restrictions that bar Chinese companies’ access to advanced semiconductors, such as the highly sought-after graphics processing units (GPUs) from Nvidia, have “definitely affected” tech firms on the mainland, including Alibaba. Hangzhou-based Alibaba owns the South China Morning Post.

“We’ve actually publicly communicated [that] it did affect our cloud business and our ability to offer high-end computing services to our customers,” he said. “So it is an issue in the short run, and probably the medium run.”

E-commerce giant Alibaba last November cancelled the spin-off of its Cloud Intelligence Group, asserting that the plan “may not achieve the intended effect of shareholder value enhancement” because of the uncertainties brought about by expanded US export restrictions on advanced chips.

The Biden administration last week updated sweeping export controls it implemented in October, making it harder for the mainland to have access to advanced AI processors, semiconductor-manufacturing equipment and even laptop computers built with those chips, according to a Reuters report. The revised rules took effect on April 4.

The candid assessment made by Tsai in the interview reflects the concerns of China’s broader technology industry on how these tightened export controls are dampening local AI innovation, making the country less competitive in this important field.

Tsai indicated that Chinese tech firms are continuing to look for ways to mitigate the impact of these restrictions, including sourcing advanced processors from other suppliers and stocking up on available chips in the market.

Updated US chip controls raise demand in China for Nvidia’s graphics card

Chinese internet search giant Baidu, for example, last year ordered AI chips from Huawei Technologies, according to a Post report in November that cited two people familiar with the matter.

“I think in the next year or 18 months, the training on large language models (LLMs) can still go ahead, given the inventory that people have,” Tsai said. LLMs are the technology used to train ChatGPT and similar generative AI systems.

“There’s more high [performance] computing that’s required for training, as opposed to the applications, what people call inference,” he said. “So on the inference side, there are multiple options. You don’t need to have as high-power and high-end chips as the latest model from Nvidia.”

He predicted that “China will develop its own ability to make these high-end GPUs” over the long term.

Beijing urges breakthroughs in chips and quantum computing to command future

“AI is essential,” Tsai said. “Having a good large language model developed in-house is very, very important because it helps our cloud business.”

Tsai, who took over as Alibaba’s chairman last September, said at an event in October that it was the goal of Alibaba Cloud, which remains mainland China’s leading cloud infrastructure services provider, to turn AI into a huge productivity tool, “especially for small and medium-sized enterprises”.

He said 80 per cent of China’s technology companies and half of companies involved in LLM development run on Alibaba Cloud.

Cloud computing technology enables companies to distribute over the internet a range of software and other digital resources as an on-demand service, just like electricity from a power grid. These resources are stored and managed inside data centres.

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South China Sea: Beijing, Hanoi try to navigate differences as territorial disputes ripple

https://www.scmp.com/news/china/diplomacy/article/3257985/south-china-sea-beijing-hanoi-try-navigate-differences-territorial-disputes-ripple?utm_source=rss_feed

China and Vietnam were treading lightly on maritime issues during Vietnamese Foreign Minister Bui Thanh Son’s latest visit to Beijing, with the two sides reaffirming their commitment to a 20-year-old conduct agreement and promising to bolster trade ties.

The talks between Son and Chinese Foreign Minister Wang Yi came amid elevated tensions in the South China Sea, including the revival of the two countries’ territorial dispute in the Gulf of Tonkin and between Chinese and Philippine vessels in the region. It also came after the sudden departure of Vietnam’s president, Vo Van Thuong.

Xi tells Vietnam it is a ‘diplomatic priority’ as he seeks to strengthen ties

At the meeting on Thursday, Wang reiterated that China considers Vietnam a priority diplomatic partner and wants to work with Vietnam to “jointly promote the solid development of the China-Vietnam community with a shared future”.

China and Vietnam should “properly manage differences, accelerate maritime cooperation and consultation on the South China Sea Code of Conduct, and resolve conflicts and differences through win-win cooperation”, Wang said, according to a statement from his ministry.

The code of conduct will be based on the Declaration on the Conduct of Parties in the East Sea/South China Sea, which was signed between China and regional states at a 2002 Asean summit in Cambodia. The terms included commitments on encouraged and restrained behaviours in the waters.

In a veiled shot at the United States, Wang also stressed that the neighbouring states should be “wary of creating camp confrontations in the region” and “cobbling together various ‘small circles’ to undermine regional peace and stability”.

US ship’s Vietnam port call ‘positive’ commitment to peace in South China Sea

The Vietnamese Communist Party’s mouthpiece, Nhan Dan, similarly reported that the two sides “underlined the importance of seriously implementing the agreements and common perceptions reached between the two parties and countries’ leaders on properly controlling and settling differences”.

There was no mention of the recent stand-off between coastguard vessels from China and the Philippines near Second Thomas Shoal, but the report said China and Vietnam did agree to join Asean countries in “promoting negotiations and soon finalising a substantive, efficient and effective code of conduct in the waters” in accordance with relevant laws.

Wang also pledged to strengthen “high-level strategic communication”, and continue expanding cooperation in economic and trade investment, the digital economy, green development, new energy, and production of key minerals.

Also on Thursday, it was announced that the chairman of Vietnam’s National Assembly, Vuong Dinh Hue, will lead a delegation to China for an official visit from April 7-12.

Wang and Son , at the 15th meeting of the Steering Committee for Bilateral Cooperation, which was created when the two countries established their “comprehensive strategic cooperative partnership”.

Thursday’s meeting followed a by Son, which was seen as an effort to assure world leaders that the sudden resignation of Vo, the Vietnamese president, would not be destabilising. Son said Hanoi “wishes [to] and can have good relations with all major powers, thanks to Vietnam’s ‘bamboo diplomacy’”.

Vietnam minister credits ‘bamboo diplomacy’ for good relations with China and US

Vietnamese Communist Party diplomatic chief Le Hoai Trung also last week, meeting Wang and other Chinese officials. The talks were focused on economic cooperation and the friendship shared between the two countries’ ruling communist parties, during which Wang pledged to “intensify high-level exchanges”.

Hanoi has been juggling its relationships with “brother” Beijing and former foe Washington, guided by its strategic “Four Noes” policy: no partaking in military alliances, no siding with one country against another, no foreign military bases in Vietnamese territory, and no use of force in international relations.

Both Chinese President Xi Jinping and US President Joe Biden were guests in Hanoi last year. During his stopover, Xi offered a total of 37 bilateral deals involving railways and telecommunications, while the US upgraded its ties with Vietnam to a comprehensive strategic partnership.

Russia’s Lavrov, who will visit China soon, calls peace plan for Ukraine ‘reasonable’

https://www.scmp.com/news/china/diplomacy/article/3258007/russias-lavrov-who-will-visit-china-soon-calls-peace-plan-ukraine-reasonable?utm_source=rss_feed

Russian Foreign Minister Sergey Lavrov has praised Beijing’s peace plan for Ukraine, a day after it was announced that he will soon visit China.

Lavrov will meet China’s top diplomat Wang Yi to discuss Ukraine, the situation in the Asia-Pacific region and other issues, Russian foreign ministry spokeswoman Maria Zakharova said on Wednesday.

She did not say when the trip would take place.

Li Lifan, an expert on Russia and Central Asia at the Shanghai Academy of Social Sciences, said it was a sensitive time for the US-China-Russia triangle, and Lavrov’s trip could pave the way for a state visit to China by Russian President Vladimir Putin, which could happen in May.

Putin, who was re-elected last month, has reportedly said he would consider going to China for the first overseas trip of his new presidential term.

Meanwhile, in a message congratulating Putin on his re-election, Chinese President Xi Jinping pledged to further deepen the “no limits” partnership with Moscow, defying criticism from the US-led West amid Russia’s invasion of Ukraine.

“China’s ties with Russia are at a high point and these frequent high-level exchanges will further consolidate their strategic ties against the backdrop of the intensifying US-China rivalry,” Li said.

He expected Beijing and Moscow to strengthen cooperation on security, economic and energy issues as well as on regional and international hotspots through platforms such as the Shanghai Cooperation Organisation that the two countries jointly founded.

Ahead of his China visit, Lavrov on Thursday called Beijing’s 12-point peace initiative on the Ukraine war a “reasonable plan”. He dismissed Ukrainian President Volodymyr Zelensky’s plan, which requires Russia to pull back its troops and compensate for its war actions.

“The most important thing for us is that the Chinese document [released in February 2023] is based on an analysis of the reasons for what is happening and the need to eliminate these root causes,” Lavrov told reporters, according to state news agency RIA.

“It is structured in logic from the general to the specific,” he said. “This plan was criticised for being vague … but this is a reasonable plan that the great Chinese civilisation proposed for discussion.”

China’s Ukraine peace plan: what does it say and can it work?

Lavrov’s visit was announced after Tuesday’s phone call between Xi and US President Joe Biden, when they tried to ease tensions over the South China Sea and Taiwan and other hot-button issues including Ukraine and North Korea.

It was also announced on Tuesday that US Secretary of State Antony Blinken will travel to China in the coming weeks, while Treasury Secretary Janet Yellen arrived in China on Wednesday for a week-long visit.

Relations between Beijing and Washington remain at a low point even after high-level exchanges such as these have resumed following the Xi-Biden summit in November.

The growing alignment between Beijing and Moscow also comes at a tense time in China’s dispute with the Philippines over the South China Sea, with Philippine President Ferdinand Marcos Jnr set to meet Biden and Japanese Prime Minister Fumio Kishida in Washington next week.

That summit is expected to include the announcement of joint patrols, and the three countries will also hold a joint naval drill with Australia on Sunday in the South China Sea – moves clearly aimed at Beijing.

Meanwhile, Nato chief Jens Stoltenberg warned on Wednesday that China was “propping up Russia’s war economy”, while North Korea and Iran provided Moscow with missiles, drones and other weapons.

US sanctions on North Korea target individuals and China, Russia-based firms

China, Russia and Iran conducted five-day navy drills last month in the Gulf of Oman amid regional tensions over the Israel-Gaza war and attacks by Tehran-backed Houthi rebels on ships in the Red Sea. Beijing and Moscow have also jointly blocked international efforts at the United Nations to impose further sanctions against Pyongyang.

Li said Beijing and Moscow’s efforts to forge closer ties were clearly aimed at countering the US-led alliances.

“The intense interactions and manoeuvring among China, Russia and other major powers are of vital importance, especially in the lead-up to the US presidential election,” he added.

Hong Kong customs arrests 2 for allegedly smuggling pedigree pets worth HK$210,000 from mainland China

https://www.scmp.com/news/hong-kong/law-and-crime/article/3258021/hong-kong-customs-arrests-2-allegedly-smuggling-pedigree-pets-worth-hk210000-mainland-china?utm_source=rss_feed

Hong Kong customs officers have arrested two people on suspicion of smuggling seven pedigree pets worth HK$210,000 (US$27,000) into the city from mainland China.

Senior Inspector Hong Yan of customs’ syndicate crimes investigation bureau said on Friday two animal-smuggling attempts were discovered in the city’s restricted border area of Sha Tau Kok on March 24 and 26.

Hong said officers seized six kittens and one puppy hidden in travel bags allegedly carried by the two suspects – a 60-year-old man and a 61-year-old woman.

He said the suspects were intercepted after they cycled across into the Hong Kong side of Chung Ying Street, which straddled the city and the mainland in Sha Tau Kok.

According to the Customs and Excise Department, the puppy was a bichon frise, while the kittens comprised a Maine coon, two British shorthairs and three ragdolls.

“The kittens and the puppy are aged between two and 2½ months. An initial examination by a government vet indicated all the animals are in good health,” Hong said.

He said each animal could be sold for around HK$30,000 in Hong Kong and the estimated value of the pets was about HK$210,000.

The two suspects were detained on suspicion of importing animals without a permit – an offence punishable by up to a year in jail and a HK$50,000 fine under the Rabies Regulation.

The pair had been released on bail pending further investigation, according to the department.

Because of the similarity in the smuggling tactics in both cases, Hong said the two suspects could have been paid by the same syndicate to bring the animals into the city.

A source familiar with the case said customs officers were investigating whether the seized animals were smuggled from the mainland for online buyers in Hong Kong.

In December, customs officers arrested two people and seized three kittens and two puppies worth a combined HK$220,000 in an operation in the restricted border area.

Authorities detected at least three high-profile cross-border smuggling cases involving puppies and kittens in 2022.

Hong Kong customs arrests suspected smugglers of pricey pets

Customs and police officers confiscated 75 pedigree kittens and puppies valued at HK$1.2 million in total as smugglers attempted to bring them into the mainland in October 2022.

A source at the time said the pets were destined for the Shekou area of Shenzhen for breeding.

Two months earlier, police seized 84 kittens and 42 puppies found inside 46 crates on a speedboat from the mainland in the city’s northwestern Ha Pak Lai coastal area in Lau Fau Shan.

Hong Kong’s largest seizure of pets was made in another joint anti-smuggling operation by police and customs in May that year.

Officers found 101 kittens and 35 puppies, shipped from the mainland, on board a speedboat intercepted in northwestern waters near Sha Chau.

A man, 30, on the vessel was arrested on suspicion of importing unmanifested cargo, animal cruelty and endangering the safety of others at sea.

China bride price experiment promotes women living with future husbands to test compatibility before cash changes hands

https://www.scmp.com/news/people-culture/trending-china/article/3256597/china-bride-price-experiment-promotes-women-living-future-husbands-test-compatibility-cash-changes?utm_source=rss_feed

As China continues to clamp down on the payment of excessive bride prices and dowries, the authorities in one province are employing unique measures.

In February, Chongyi county in the eastern province of Jiangxi introduced a policy offering financial support across 10 areas of society, and one of them included helping to cover bride prices not exceeding 39,000 yuan (US$5,400).

The new approach has sparked an intense debate in the country and prompted doubts that the “experiment” would work.

One woman, Yu Fei, who had already been through a divorce and had two children, decided to live with her current husband before receiving the bride price.

In her village of Lingang, the average bride price – a sum of money traditionally paid by a man to the bride’s family – is between 700,000 and 800,000 yuan (US$97,000 to US$110,000), far higher than most places in China.

Hu Mingliang, a local village official, said that a gender imbalance had fuelled fierce competition in the marriage market, inflating the size of the payment.

A sought-after young woman with multiple suitors may find themselves involved in a bidding market, which in some cases can see the bride price reaching hundreds of thousands of yuan, possibly even topping one million yuan (US$140,000).

Yu said that inflation-inducing competition is not limited to the groom’s side, as bride’s families also participate in this rivalry to “save face”.

“Some parents think that if that woman got a bride price of 680,000 yuan (US$94,000), my daughter must get 720,000 yuan,’” Yu told the Shanghai Observer.

Yu’s decision did not remove the bride price from the equation, partly because she had two sons.

Although her ex-husband provided financial support, the potential costs of her sons’ future weddings remained a significant concern, especially if Yu did not receive a bride price that could help cover these expenses.

Yu hopes that by accepting a lower bride price, she will help set a precedent to lower expectations.

“Lv Yichen and I are both in our thirties and looking for a partner with whom to share our lives. Before we married, I told him that a bride price of 120,000 yuan (US$16,600) would be enough.

“We decided to live together first to test our compatibility, and if things worked out, he would then pay the bride price,” said Yu.

Onlineobservers are dubious that the culture shift will spread.

“She is remarried with two children, but still asking for ‘only’ 120,000 yuan as a bride price? My goodness!” one person said.

“It’s terrifying that 120,000 yuan is considered low,” added another.

A third person said: “Paying the bride price only if compatible? Is this ‘cash on delivery’? This is becoming increasingly absurd!

“Why not adopt an installment payment plan over three years, with a small payment made every day? That way, neither side is at a disadvantage. It’s becoming more ridiculous!”

South China Sea: Beijing could do more to ease tension and build trust with neighbours, experts say

https://www.scmp.com/news/china/diplomacy/article/3257927/south-china-sea-beijing-could-do-more-ease-tension-and-build-trust-neighbours-say-experts?utm_source=rss_feed

China can do more to ease tension in the South China Sea by offering “public good” and enhancing cooperation with neighbouring countries, say experts who recently attended the Boao Forum for Asia.

They also said it was imperative that China and members of the Association of Southeast Asian Nations (Asean) build trust as they strive to resolve disputes – that they “will be living with for a long time” – in the busy waterway.

Meanwhile, Stephen Orlins, president of the National Committee on United States–China Relations who also attended the forum, said he saw two futures in the disputed waterway: one unstable and dangerous and the other more prosperous.

In the first scenario, countries in the region continue to unilaterally advance their economic and security interests, he said.

“In the second future, countries in the region do the hard work of diplomacy to develop mechanisms to peacefully address disagreements, and jointly benefit from the South China Sea,” he said.

“I’m committed to working towards the second future – not because it’s in the interests of one country, but because it benefits all,” Orlins said.

China and the Philippines have recently been entangled in disputes in the South China Sea, including repeated run-ins between their maritime law-enforcement units. They have both accused each other of being provocative and warned that an accident will fuel tension, or even trigger military conflict.

The recent Boao Forum has been billed as China’s equivalent to the World Economic Forum at Davos.

Speaking at a sub-forum, Wu Shicun, founding president of China’s National Institute for South China Sea Studies in Hainan, said cooperation was the only way out of the dilemma since there was unlikely to be a quick fix to the problem.

“The South China Sea issue involves territorial disputes and jurisdictional disputes that cannot be addressed in a short period of time. The only path is to cooperate, and marine scientific research remains an area that is relatively easy to start the collaboration,” Wu said.

Writing of South China Sea rule book delayed by lack of trust: maritime expert

He suggested China could “offer more public good” related to marine environmental protection to “build trust in the South China Sea”, and provide conservation services to neighbouring countries.

“[China] could build a marine scientific research laboratory on one of the islands or reefs, and invite scientists from the coastal countries to engage in protecting from the environmental degradation and resource depletion problems that we are all facing together,” he said.

However, Wu warned that multinational joint patrols would further endanger stability in the South China Sea.

“More countries are now offering to conduct joint patrols with the Philippines in the South China Sea … their calculations lie in expanding their military presence in the region and reaping geopolitical benefits,” Wu said, adding that Manila had not yet announced whether it would accept such offers.

Therefore, in the long run, the risk of accidental incidents or collisions in the air or at sea between China and other countries was likely to surge, he said.

Yang Renhuo, deputy director general of the Department of Boundary and Ocean Affairs under China’s foreign ministry, called for bold thinking to enhance cooperation.

Negotiations involving territory and maritime rights were “time-consuming and require patience”, but it was possible to discuss joint use and development, he said during a separate panel discussion at the forum.

China and Asean countries should discuss more cooperation in the South China Sea, Yang suggested, with a focus on projects in “less sensitive areas” such as environmental protection, scientific research, maritime search and rescue, combating transnational crimes at sea and the safety of maritime navigation.

“To mitigate contradictions and differences and strive for more tangible benefits, China advocates the adoption of an inclusive and pragmatic approach on the premise of retaining one’s position, or not challenging the position of the other party,” Yang said.

Wang Sheng, president of China’s National Institute for South China Sea Studies, echoed Yang’s remarks and said fishing and disaster mitigation and prevention were also potential arenas for cooperation.

He also suggested establishing multinational joint scientific exploration in the strategic waters and joint law enforcement around less sensitive issues.

“These functional cooperations could help alleviate the tense atmosphere caused by sovereignty disputes, and create better conditions for promoting the integrated development of the South China Sea,” Wang said.

Meanwhile, Jane Chan, maritime security issues expert at the S. Rajaratnam School of International Studies in Nanyang Technological University (NTU), said regional leaders had not paid enough attention to the safety and security of critical infrastructure in the South China Sea.

“While most of the incidences of damages are accidents, recent development further away from the region suggests that these infrastructures are vulnerable to deliberate and malicious targeting and sabotage,” she said at the sub-forum, apparently referring to the recent Red Sea crisis in which Houthis have attacked and seized vessels.

Elsewhere, damage – suspected to be deliberate – was caused to an undersea gas pipeline between Finland and Estonia last year.

China warns close military ties between US, Philippines could trigger conflict

The South China Sea is a popular and effective location to host undersea cable routes, connecting large parts of Asia, as well as onwards to Africa. Submarine cables carry most international internet traffic.

According to the United Nations, about one-third of global shipping transits through the South China Sea, underscoring its importance to international trade.

Despite lifting Australia wine tariffs, China’s market offers no lifeline for global industry

https://www.scmp.com/economy/global-economy/article/3257937/despite-lifting-australia-wine-tariffs-chinas-market-offers-no-lifeline-global-industry?utm_source=rss_feed

Australia’s wine industry cheered news that China would drop anti-dumping tariffs, reopening its market to imports, but the tougher economic conditions of 2024 are unlikely to deliver the sparkling growth winemakers seek.

For two decades, China has driven growth in the global wine industry as many among the hundreds of millions entering its middle class acquired a taste for wines from Australia, Chile, Italy and France.

But industry executives in China said the market, and domestic consumption, are still struggling to recover from a downturn that began before the Covid-19 pandemic and was drawn out by the lengthy curbs it brought.

“The market has shrunk hugely in terms of consumer interest in wine, and that’s not showing any signs of reversing post Covid,” said Kym Anderson, executive director of the Wine Economics Research Centre at the University of Adelaide.

China’s “apparent consumption” of wine in 2023, which includes imports and domestic production, was barely a quarter of its peak in 2017, with annual import volumes shrinking two-thirds over that period, he added.

At the same time, more domestic and global players have crowded into the market, with many alcoholic drinks besides wine also on offer, said Judy Chan, chief executive of leading domestic winemaker Grace Vineyards.

“Now we see more cocktails, craft beers, there’s so many more choices for consumers,” she said.

“Wine … had this halo of international sophistication. Part of the problem is that it’s lost that halo.”

China-Australia wine trade to resume as Beijing nixes tariffs after 3 years

Grace, set up more than 25 years ago in the northern province of Shanxi to make wine, has also started making gin to diversify its offering.

China’s alcohol market is the world’s biggest, estimated at US$336 billion, though a fiery domestic spirit, baijiu, dominates it.

And efforts to claw a bigger share for foreign beverages have been stymied by consumer malaise after Covid-19.

Although the consumer confidence index rose by 1.5 per cent in January on the month, it is hovering near historic lows as China’s economic slowdown, sluggish property market and high youth unemployment damp discretionary spending.

Yan Yu, who uses social media app WeChat to sell wine directly to clients, most of them middle-class, said they had become more price sensitive since the pandemic, with the most popular price point for her wines below 200 yuan (US$28).

“China is so difficult, the environment is so hard,” said Yu, who is based in the commercial hub of Shanghai.

“I need to find people who haven’t tried wine yet and are curious. That’s how I grow business. You just have to compete.”

Yet the market at the top end remains stronger, Chan said, with people ready to buy high-end wines of good quality.

“I think Penfolds will do really well,” she said, referring to the most famous brand of Australia’s top wine producer, Treasury Wine Estates, as it returns to China.

“People are willing to pay for a recognisable wine brand like that.”

Treasury Wine Estates has been betting as much, continuing to invest in the market and turning out a Chinese-made wine despite punitive tariffs of up to 218 per cent that obliterated its export business to China.

While exceptional offerings such as Penfolds are likely to receive a fillip, the re-entry of Australian wines to China will be tough for many other producers already battling serious issues of oversupply.

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

They will shrink market share for nations such as France, Chile and Italy that benefited from their absence to become the leaders of China’s US$1.6-billion import market, with shares of 48.24 per cent, 19.31 pe cent and 10.1 per cent respectively in 2023.

And Australia’s 2015 free-trade deal with China frees up its wine shipments, giving it a 14 per cent tariff advantage over many nations.

Still, ramping up Australia’s export capacity to China will need time, and imports in a shrinking overall market are unlikely to quickly reach 2019’s pre-pandemic figure of A$1.2 billion (US$790 million).

That is not to rule out hopes for China’s wine market to grow, with Chan betting on a stabilisation, even though she fears the peak has probably passed.

Anderson said there was room for growth as annual adult consumption stands at less than half a litre and wine accounts for less than 1.5 per cent of all alcohol consumption in China.

Still, it was “confounding” that China had overturned normal expectations for the growth of wine-drinking in a developing market.

“Given the growth in incomes, and what we have seen from many other countries and cultures, there’s no reason why we shouldn’t have expected the same type of growth in consumption of wine to continue in China,” he said.

US Treasury Secretary Yellen, in China, calls for level-playing field for US workers and firms

https://apnews.com/article/yellen-china-trade-overcapacity-ev-solar-7f861ff193fdc35b355c650fb84d204cU.S. Treasury Secretary Janet Yellen, left, shakes hands with Wang Weizhong, deputy party secretary and governor of Guangdong prior to a meeting at the Baiyun International Conference Center (BICC) in southern China's Guangdong province, Friday, April 5, 2024. Yellen has arrived in China for five days of meetings in a country that's determined to avoid open conflict with the United States. (AP Photo/Andy Wong, Pool)

2024-04-05T02:28:35Z

GUANGZHOU, China (AP) — U.S. Treasury Secretary Janet Yellen called Friday for a level playing field for American companies and workers as she opened a five-day visit to China in a major industrial and export hub.

Yellen told Wang Weizhong, the governor of Guangdong province, that it’s important for the two sides to have open and direct communication on areas of disagreement.

“This includes the issue of China’s industrial overcapacity, which the United States and other countries are concerned can cause global spillovers,” she said.

Yellen, the first Cabinet-level official to visit China since President Joe Biden met Chinese leader Xi Jinping last November, has telegraphed that she will raise what the U.S. considers to be unfair Chinese trade practices, a concern shared by many European countries.

She is starting her trip in Guangzhou, the capital of Guangdong province, before heading to Beijing.

Before talks with the governor, she met with American, European and Japanese business representatives to hear their concerns, ahead of what will likely be tough talks on trade and other issues with senior Chinese government officials.

Eswar Prasad, a trade professor at Cornell University, expects Yellen to push Beijing to bolster domestic consumption and ensure fair competition in new technology sectors, especially green energy and electric vehicles, along with adequate market access for U.S. companies.

“Concerns about China attempting to export its overcapacity and simultaneously making a big push into these sectors will be top of mind for the U.S. delegation,” he said.

China has pushed back against the overcapacity concerns expressed by both the U.S. and Europe.

Foreign Ministry spokesperson Wang Wenbin said earlier this week that the growth in Chinese EV and solar exports is conducive to green development globally and the result of the international division of labor and market demand.

He accused the U.S. of interfering with free trade by restricting technology exports to China.

“As for who is doing non-market manipulation, the fact is for everyone to see,” he said. “The U.S. has not stopped taking measures to contain China’s trade and technology. This is not ‘de-risking,’ rather, it is creating risks.”

Taiwan earthquake, Kobe Bryant’s lookalike in China, Singapore’s 34-year-old grandma: SCMP’s 7 highlights of the week

https://www.scmp.com/news/world/article/3257809/taiwan-earthquake-kobe-bryants-lookalike-china-singapores-34-year-old-grandma-scmps-7-highlights?utm_source=rss_feed

We have selected seven stories from this week’s news across Hong Kong, mainland China, the wider Asia region and beyond that resonated with our readers and shed light on topical issues. If you would like to see more of our reporting, please consider .

The Taiwanese government has rebuffed an offer of help extended by Beijing as the island contends with the aftermath of a deadly 7.3 magnitude earthquake that struck on Wednesday morning, killing at least nine people. At least 934 people are reported injured and 56 remain trapped in the quake that struck off the east coast at 7.58am and sparked tsunami warnings.

US President Joe Biden and Japanese Prime Minister Fumio Kishida will announce a “historic” agreement next week that will “upgrade” the two countries’ security relationship, deputy secretary of state Kurt Campbell said on Wednesday.

The rugby sevens tournament is held annually in Hong Kong over a weekend in late March or early April, now spanning three days. The 2024 edition is expected to be the final one hosted at its long-time venue, Hong Kong Stadium.

A Dubai prince who made waves in Hong Kong recently appears to have gained fame as a singer-songwriter with a fan base in the Philippines before he decided to set up a US$500 million family office in the city, the Post has learned.

Senator Imee Marcos, sister to President Ferdinand Marcos Jnr, has voiced her disagreement with her brother’s recent efforts to counter China’s aggression in the South China Sea, saying that it’s leading the country down a “dangerous path”.

An online influencer from Singapore, who became a grandmother at the age of 34, has promised her 17-year-old son who is the father to “give him more support”. Shirli Ling, 35, who runs a chicken hotpot restaurant, has 17,000 followers on Instagram.

An influencer in China who bears a striking resemblance to the basketball legend Kobe Bryant has made 80,000 yuan (US$12,000) in just 10 days. Ma Jinghui, 21, from the southwestern province of Yunnan, saw his fan base on Douyin grow from a few thousand to 600,000 all because of his imitation of the sports star.

US-Philippine military drills along South China Sea risk Beijing’s ire: ‘that’s their problem’

https://www.scmp.com/week-asia/politics/article/3257934/us-philippine-military-drills-along-south-china-sea-risk-beijings-ire-thats-their-problem?utm_source=rss_feed

Treaty allies the Philippines and United States will flex their muscles later this month at this year’s Balikatan joint military exercises that take place in waters outside Philippine territory along the outer edge of South China Sea’s waters, which analysts predict will almost certainly provoke Beijing.

The April 22 to May 8 drills involve some 16,000 soldiers and showcase Manila’s new Comprehensive Archipelagic Defense Concept (CADC), a strategy that aims to defend the country’s exclusive economic zone.

Army Col. Michael Logico, the Filipino spokesman for the drills, said on Wednesday that this year’s Balikatan (“shoulder to shoulder”) exercise will be focusing on territorial defence 12 nautical miles beyond the country’s shoreline.

“That means that our exercises, our defence concepts, have to go beyond 12 nautical miles in order for us to protect our national interests within our territorial waters and also within the exclusive economic zone (EEZ),” Logico told reporters.

“In the previous exercises, we have been focusing mostly inside military camps. However, we are already very familiar with those areas, it offers no more surprises. So the only way for us to upscale or upgrade our training is to start training in areas that we believe will provide the best benefit for our soldiers,” he added.

Asked by reporters if their drills could cause further tensions with other countries, particularly China, Logico said, “Well, that’s their problem, that’s not our problem.”

Why Marcos’ own sister is calling him out over Philippines’ anti-China moves

Previously, Defence Secretary Gilberto Teodoro Jnr said that the CADC aims to develop the country’s capability to protect its entire territory, including its EEZ, to ensure that the next generation of Filipinos will be able to enjoy its natural resources.

“In plain language, we are developing our capability to protect and secure our entire territory and EEZ in order to ensure that our people and all the generations of Filipinos to come shall freely reap and enjoy the bounties of the natural resources that are rightfully ours within our domain,” Teodoro Jnr said.

The 39th edition of the annual exercise, being carried out under the two countries’ Mutual Defence Treaty (MDT), is designed to enhance force capability and strengthen cooperation in maritime security, amphibious operations, live-fire training, urban operations, aviation operations, counterterrorism, humanitarian assistance and disaster relief.

Signed in 1951, the MDT calls on both countries to aid each other in times of aggression by an external power. In previous pronouncements, the Pentagon said it was prepared to assist Manila if it invoked the treaty amid threats from other nations.

This year’s main event will be a sinking exercise in which participants will have to coordinate their movements to test the interoperability of their weapons systems in downing a mock enemy ship. Philippines and US forces will attempt to sink a vessel, formerly designated as the Navy’s BRP Caliraya (AF-81), off the coast of Laoag in Ilocos Norte.

“The message that we want to send is that we are serious about defending our territory and we have allies. The alliance is still going strong,” Logico said.

Fourteen other countries, including Japan, South Korea, India, Canada and the United Kingdom, will be sending forces to the exercises as observers.

Aside from the Balikatan, Japan, the United States, Australia and the Philippines will conduct anti-submarine drills, warfare training, and communication drills from April 7-8 in waters near Palawan, a province in the western Philippines facing the South China Sea.

Manila and US Air Forces are also slated to hold exercise Cope Thunder from April 8-19, which will showcase fighter jet pilots from both countries training together using a newly renovated runway at Basa Air Base in Pampanga.

Duterte-Xi allegedly made ‘gentleman’s agreement’ for status quo in disputed sea

Filipino military historian and defence analyst Jose Antonio Custodio told This Week in Asia that China will always be angry, citing its attempts to enforce its territorial claims within Manila’s EEZ, in violation of the 2016 Hague ruling dismissing Beijing’s assertions.

“They will utilise the vessels of their naval and maritime agencies to shadow and harass us and our partners as we undertake freedom of navigation operations and exercises,” Custodio said.

“China will also protest, but that is the most that they can do and they really won’t be able to do anything else against the combined military might of many countries like the USA and its powerful regional allies like Japan and Australia,” he added.

However, Ramon Beleno III, head of the political science and history department at Ateneo De Davao University in southern Davao City, told This Week in Asia that Beijing will not just sit down and do nothing.

“Let’s keep an eye regarding China’s next move. They might build additional islands there or strengthen their forces as retaliatory actions,” Beleno said, noting the Philippines and China are both preparing to defend their territorial claims within the West Philippine Sea (WPS), Manila’s name for the waters of the South China Sea that lie within its EEZ.

“We are not expecting it to go beyond that, like what happened in Ukraine and Russia. We are praying that cooler heads will still prevail,” he added.

The series of exercises come on the heels of China’s growing assertiveness in the waterway.

On March 23, three Philippine navy sailors were injured when Chinese coastguard personnel fired water cannons at their vessels. Manila also accused the Chinese ships of conducting “dangerous” manoeuvres and blocking a civilian chartered resupply ship, the Unaizah May 4, at the Second Thomas Shoal in the South China Sea.

As Marcos Jnr’s approval ratings nosedive, can ‘anger’ over China help him?

China, which has competing claims in the South China Sea with the Philippines, Malaysia, Brunei and Vietnam, has not yet made any comments on the drills.

During his visit to Manila last month, Secretary of State Antony Blinken said the US shared the Philippines’ concerns about Chinese “actions that threaten our common vision for a free and open Indo-Pacific,” including those within the Philippines’ EEZ.

“Repeated violations of international law and the rights of the Philippines – water cannons, blocking manoeuvres, close shadowing, other dangerous operations – these waterways are critical to the Philippines, to its security, to its economy, but they’re also critical to the interests of the region, the United States, and the world,” Blinken said.

But rights group Bayan Muna said President Ferdinand Marcos Jnr’s growing dependence on the US for the country’s external defence was further escalating conflict in the South China Sea.

“For the first time in the history of the joint exercises, maritime activities will be conducted outside the country’s territorial waters. It will escalate the already high tensions in the WPS,” said Teddy Casiño, chair of Bayan Muna.

“At the very least, this gives China an additional justification for more military activities in said areas.”

China trade delegation chief raises US restrictions at Washington meeting

https://www.scmp.com/news/china/diplomacy/article/3257936/china-trade-delegation-chief-raises-us-restrictions-washington-meeting?utm_source=rss_feed

Commerce vice-minister Wang Shouwen raised China’s concerns over US trade restrictions during a meeting in Washington on Thursday with under secretary for international trade Marisa Lago.

Wang was in the US as head of the Chinese delegation for the first meeting of a China-US trade working group aimed at scaling up communication channels to better manage differences between the two countries amid their rising tensions.

According to a Chinese commerce ministry statement on Friday, Wang and Lago discussed tariff and market access issues. Wang also called for an expansion of cooperation and management of differences between the US and China.

The statement said Wang expressed concerns about the additional Section 301 tariffs imposed by the US and related investigation applications against China, as well as the “overstretching” of the concept of national security.

During the meeting, Wang also raised US sanctions on Chinese companies, the revision of trade remedy investigation rules, two-way investment restrictions, and unfair treatment of Chinese businesses.

“China-US economic and trade relations should be a stabilising force in relations between the two countries. China is willing to work with the United States … to create a good environment for enterprises … to conduct trade and investment cooperation,” he said.

Both sides agreed to strengthen communications on export control rules, with Lago set to lead another delegation to China in the second half of this year to convene a second working group meeting, according to the Chinese statement.

They also agreed to continue discussions on trade facilitation, including by supporting each other’s events, such as the China International Import Expo and the China-California Business Forum.

The US commerce department said Lago also raised Washington’s concerns about restricted market access for American companies, cross-border data flows and regulatory transparency.

Wang’s trip follows Chinese President Xi Jinping’s phone call with his US counterpart Joe Biden on Tuesday – their first since last year’s San Francisco summit where they agreed to establish a range of working groups to continue communications.

The first meeting of the trade working group took months of preparation, which included meetings between Chinese commerce minister Wang Wentao and his US counterpart Gina Raimondo. Economy and finance working groups have met a few times.

In his phone call with Biden on Tuesday, Xi said China would not “sit idle” if the US insists on suppressing China’s hi-tech development.

Under the Biden administration, US-China competition has intensified on all fronts. Washington retained the tariffs slapped on a wide range of Chinese goods by former president Donald Trump, adding a semiconductor export ban and restrictions on US investments in China’s hi-tech fields.

The US has long complained about the lack of a level playing field for its businesses in China, saying tightened state regulations and frequent raids on American companies have hampered their development.

Washington has also become increasingly alarmed over “overproduction” of cheaper Chinese electric vehicles and is considering a duty increase to stop them flooding the US market.

US Treasury Secretary Janet Yellen – who is also on a four- day trip to China – flagged that she would be raising these concerns in her meetings with Chinese officials.

Yellen was in Guangzhou, in the southern province of Guangdong, on Friday where she was due to meet the province’s governor Wang Weizhong before travelling to Beijing for a series of meetings until Monday, including Premier Li Qiang and Vice-Premier He Lifeng.

China will use AI to disrupt elections in the US, South Korea and India, Microsoft warns

https://www.theguardian.com/technology/2024/apr/05/china-using-ai-disrupt-elections

China will attempt to disrupt elections in the US, South Korea and India this year with artificial intelligence-generated content after making a dry run with the presidential poll in Taiwan, Microsoft has warned.

The US tech firm said it expected Chinese state-backed cyber groups to target high-profile elections in 2024, with North Korea also involved, according to a report by the company’s threat intelligence team published on Friday.

“As populations in India, South Korea and the United States head to the polls, we are likely to see Chinese cyber and influence actors, and to some extent North Korean cyber actors, work toward targeting these elections,” the report reads.

Microsoft said that “at a minimum” China will create and distribute through social media AI-generated content that “benefits their positions in these high-profile elections”.

The company added that the impact of AI-made content was minor but warned that could change.

“While the impact of such content in swaying audiences remains low, China’s increasing experimentation in augmenting memes, videos and audio will continue – and may prove effective down the line,” said Microsoft.

Microsoft said in the report that China had already attempted an AI-generated disinformation campaign in the Taiwan presidential election in January. The company said this was the first time it had seen a state-backed entity using AI-made content in a bid to influence a foreign election.

A Beijing-backed group called Storm 1376, also known as Spamouflage or Dragonbridge, was highly active during the Taiwanese election. Its attempts to influence the election included posting fake audio on YouTube of the election candidate Terry Gou – who had bowed out in November – endorsing another candidate. Microsoft said the clip was “likely AI generated”. YouTube removed the content before it reached many users.

The Beijing-backed group pushed a series of AI-generated memes about the ultimately successful candidate, William Lai – a pro-sovereignty candidate opposed by Beijing – that levelled baseless claims against Lai accusing him of embezzling state funds. There was also an increased use of AI-generated TV news anchors, a tactic that has also been used by Iran, with the “anchor” making unsubstantiated claims about Lai’s private life including fathering illegitimate children.

Microsoft said the news anchors were created by the CapCut tool, which is developed by Chinese company ByteDance, the owner of TikTok.

Microsoft added that Chinese groups continue to mount influence campaigns in the US. It said Beijing-backed actors are using social media accounts to pose “divisive questions” and attempt to understand issues dividing US voters.

“This could be to gather intelligence and precision on key voting demographics ahead of the US Presidential election,” said Microsoft in a blog post accompanying the report.

One post on X, formerly Twitter, referred to a $118bn bipartisan bill in the US that combined a $20bn of investment in the US-Mexico border with a $75bn package for Ukraine and Israel. It asked: “What’s your reaction?” Another flagged the loss of an F-35 fighter in South Carolina last year, saying “only under the Biden administration” could a valuable piece of military hardware be lost – although debris was found soon after – and asked “what do you think about this?”

The report was published in the same week that a White House-appointed official review board said “a cascade of errors” by Microsoft let state-backed Chinese cyber operators break into email accounts of senior US officials. Last month, the US and UK governments accused China-backed hackers of waging a years-long cyber campaign targeting politicians, journalists and businesses, as well as the UK’s election watchdog.

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Chinese cities spark outcry with ban on joss paper sales and ‘feudal superstitions’ for Ching Ming Festival

https://www.scmp.com/news/china/politics/article/3257876/chinese-cities-spark-outcry-ban-joss-paper-sales-and-feudal-superstitions-ching-ming-festival?utm_source=rss_feed

Local governments across China have provoked an outcry on social media by cracking down on the burning of joss paper and other offerings during this year’s Ching Ming Festival – a tradition they have described as “feudal superstition”.

The city of Nantong in the eastern province of Jiangsu announced a ban late last month on the manufacturing and selling of spirit money, joss paper and other supplies for the holiday, also known as tomb-sweeping day.

The ban aims to “promote funeral and burial reforms” and advocate for “civilised” customs and practices, according to an announcement released last week.

The city warned of fines, administrative penalties and even criminal prosecution for those found violating the rules.

During Ching Ming Festival, Chinese families visit the tombs of their ancestors, clean their gravesites and make ritual offerings to the dead in a solemn ceremony of remembrance.

Offerings typically include traditional food dishes and the burning of joss sticks, incense paper, and paper replicas of items such as mansions, cars, and luxury bags for ancestors to use in the afterlife.

This is not the first time authorities have targeted Ching Ming rituals with bans or other restrictions.

China’s cabinet, the State Council, banned manufacturing and sales of joss paper and similar items in 2012, when it revised the country’s funeral management regulations. Local governments then revised their own policies based on the national rules.

However, these prohibitions went largely unnoticed by the public until Nantong’s announcement on WeChat a week ahead of this year’s holiday, which fell on Thursday.

The announcement sparked an uproar on Chinese social media with many users defending the preservation of folk customs and objecting to what they saw as a one-size-fits-all regulation.

“[The authorities] talk about preserving culture and traditions … while they keep imposing bans on this and that,” one commenter wrote on the Chinese social media platform Weibo. “Future generations will have no idea what the true and normal traditions are.”

“Some [traditions] still need to be complied with, and it is the only way we can find solace to express our longing for departed loved ones,” another said.

Meanwhile, others approved of the ban and suggested alternative ancestor worship rituals, such as offering fresh flowers and virtual tomb-sweeping, which they said were more eco-friendly and did not pose a risk of wildfires.

In 2021, Nantong recorded a total of 210 incidents related to the holiday, including 121 fires, according to an article published by city authorities that year.

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

Local governments across China have been promoting “civilised rituals” in recent years and have issued bans on “superstitious” activities during traditional Chinese holidays such as Ching Ming Festival, the Hungry Ghost Festival and Lunar New Year.

Heyuan city in Guangdong province, Xunyang city in Shaanxi province, Echeng city in Hubei province also announced prohibitions this year.

In addition to banning the production and sale of ritual supplies, some governments have prohibited mournful music, the burning of joss paper, the construction of mourning halls and displaying of corpses in public.

Following the ban, Nantong authorities urged people to honour the dead “in a modest and non-extravagant manner, using simple and plain methods” and to adopt environmentally friendly practices.

“[We should] integrate the remembrance of the deceased with the promotion of exemplary family values, shifting the focus from physical tomb-sweeping to spiritual inheritance, and consciously resist feudal superstitious practices and advocate for a civilised new culture,” they said.

The ban prompted a dissent from the country’s state-run media, with China National Radio calling the measure “too crude and heavy-handed”.

“In people’s everyday perception, burning joss paper is just one aspect of tomb-sweeping, similar to offering flowers as an expression of remembrance. It cannot be regarded as a feudal superstition,” the radio network’s news channel said.

“This kind of management is rigid, impractical, and lacks human touch. It should be treated with caution.”

An official from the Nantong Municipal Civil Affairs Bureau said the ban was issued in the interest of “spiritual civilisation construction and environmental protection” and was based on relevant laws and regulations, according to China National Radio.

“It is unrelated to the solemn remembrance and respect that people have for their ancestors,” the official said. “We emphasise the prohibition of manufacturing and selling in terms of market behaviour, but there is no mention of prohibiting the use.”

Hu Xijin, former editor-in-chief of the nationalist tabloid Global Times, wrote on Weibo that regulating the use of joss paper and restricting burning sites was understandable and also “clearly different from a complete ban”, which would be “too harsh and abrupt at the current moment”.

Vivian Zhan Jing, a political scientist at the Chinese University of Hong Kong, said the bans “may be motivated by some local governments’ calculations, or miscalculations, under the pressure of fulfilling multiple policy goals” such as environmental protection, public safety, and promoting new funeral norms.

Liu Dongshu, a political scientist at City University of Hong Kong, said that for local governments in China, it was “relatively politically safe” and “administratively the easiest choice” to use “feudal superstition” as an excuse for regulating ritual practices.

Under its atheistic political system, China also has its own established political narrative regarding “feudal superstition”, considering it to be incorrect and uncivilised, he said.

Mainland China rail services return to normal a day after Taiwan earthquake

“However, this forms a fundamental contradiction with the people’s deep and extensive demand for folk customs … and it is difficult [for local governments] to draw a line between acceptable practices and those that are ‘too much’”, he said.

“When faced with such complex matters, they chose to simply ban it altogether,” he said.

Liu added that local governments are required to take responsibility for everything within their jurisdictions, but given the limited resources, they tend to focus only on matters that will affect their political records.

He also said the local policies were unlikely to be strictly enforced.

“They have to make public statements and pledges so that if anything happens, it would not be their responsibility. They may exercise some flexibility in their actual implementation.”

China’s central bank sees resolve for stable yuan, stimulus tested as Fed holds firm on rates

https://www.scmp.com/economy/china-economy/article/3257723/chinas-central-bank-sees-resolve-stable-yuan-stimulus-tested-fed-holds-firm-rates?utm_source=rss_feed

Although China’s central bank has hinted at plans for more monetary easing, uncertainty over the exact timing of US interest rate cuts and renewed depreciation pressures on the yuan are likely to delay any moves in that vein, analysts said.

Stress has piled on the yuan as the US Federal Reserve holds interest rates steady following a two-day policy meeting that ended on March 20. At least one reduction in rates is widely anticipated for this year after months of increase and maintenance, and officials have suggested as many as three could be on the agenda.

The yuan has plunged an average of 0.53 per cent against the US dollar since March 20, despite strong fixing rates being set by the People’s Bank of China (PBOC) for the national currency.

Louise Loo, China economist at Oxford Economics, said that the PBOC is still in a relatively “accommodative” mode when it comes to yuan exchange rate management.

“The currency weakness is also, to a large degree, driven by dollar strength and still-weak domestic fundamentals, and a weak currency can provide a helpful economic boost – so we think they could still tolerate further weakening,” Loo said.

Most analysts expect interest rate differentials between China and the US to remain significant until the Federal Reserve begins its first rate cut this year.

Money and credit growth slowed for China in February as the PBOC seeks to manage the fallout from a property market downturn while countering deflationary pressures.

Xuan Changneng, a deputy governor at the PBOC, said at a press briefing on March 21 that there is still room to cut the amount of cash that lenders have to keep in reserve and that the central bank has a “wealth” of monetary policy tools at its disposal.

The Chinese central bank only made two “conservative” interest rate cuts in 2023, according to the US-based Institute of International Finance (IIF), a trade group for the financial services industry.

The PBOC has so far prioritised the stability of the yuan over easing. China’s trade surplus – a point of contention with the US and Europe over perceived overcapacity – hit 4.6 per cent of its gross domestic product (GDP) in 2023, the IIF said. Further depreciation of the yuan, the group added, may trigger capital outflows and exacerbate trade imbalances.

“We think there is a chance for one more policy rate cut in 2024, especially if deflation stays entrenched and the Fed starts easing in the second half of this year,” said the institute in a note on March 28, adding that much of the PBOC’s monetary easing was achieved through quantity-based instruments, including credit policy tools.

To steady the yuan’s exchange rate, last year China’s central bank twice cut the amount of foreign exchange reserves that financial institutions would be required to hold, once in August and again in September.

Guan Tao, chief global economist for Bank of China International, said markets should not “misinterpret” the recent volatility of the yuan as a sign of depreciation.

“The trend of the yuan exchange rate cannot only depend on the decision of the Federal Reserve and the US dollar index, but also depends on the speed and quality of the potential growth rate of China’s economy,” said Guan, a former director of the State Administration of Foreign Exchange, in an editorial for Chinese media outlet Yicai on April 2.

Rory Green, head of Asia research at GlobalData TS Lombard, said while the PBOC is capable of taking steps to support growth and defend the yuan’s exchange rate simultaneously, there is a limit on how long such contradictory policies will hold out.

“We think that despite PBOC intervention, the yuan will trend weaker, as US and China growth differentials persist and traders price in Trump trade war risks,” Green said in a note on March 28.

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