• China’s relations with the Middle East: gold mine or minefield ahead?
• US blacklists Chinese firms tied to drones used by Russia and Houthis
• US policy on China must pivot to cold-war stance from managing competition, two Republican policymakers say
• How China allegedly interfered with Canada’s elections
• Meteorite suggests asteroid Vesta may once have had magma lake just like the early moon, say Chinese scientists
• China to hear pitches from Nasa scientist, other researchers, to study Chang’e 5 lunar samples
• China eyes home-grown aircraft engine, larger commercial planes with big equipment upgrades by 2027
• China and Taiwan are destined for ‘reunification’, Xi tells former president
• Ukraine war: China must go beyond rhetoric to emerge as a peacemaker
• Chinese military researchers zero in on AI-driven navy, space combat to ‘win future wars’
• China scraps ownership caps on some telecoms services, courting foreign capital resurgence
• China added 1 unicorn per week last year despite slumping global investments thanks partly to AI frenzy, report says
• ‘Not happy, do not come to work’: China retail tycoon introduces ‘unhappy leave’, sparks online discussion
• As US and Japan keep an eye on China, Biden-Kishida meeting to yield outcomes on ‘remarkable’ scale: insiders
• South China Sea: Philippines’ Marcos ‘horrified’ by Xi-Duterte ‘gentleman’s agreement’ for status quo in disputed waters
• Work to start on 2 Vietnam-China high-speed railways by 2030, Hanoi says
• Microsoft’s Blizzard resumes NetEase partnership, bringing World of Warcraft back to Chinese players after bitter break-up
• US wants to ‘flip script’, isolate China with allies’ help, says Washington’s ambassador to Tokyo
• China’s Xi meets with Russian Foreign Minister Lavrov in show of support against Western democracies
• US coastguard rejects Chinese claim it illegally boarded fishing vessels in Pacific: ‘host nations invite us’
• ‘Get used to tighter belts’: how China’s local governments and party bodies are embracing cost-cutting culture
• China hits back after Fitch Ratings downgrades credit outlook, Beijing says local debt risks are controllable
• Enterprising China exporter sells car-replacing rural electric pedicabs to US, bemoans profit levels same as selling clothes
• Philippines steps up defences against Chinese hackers after ‘cyberwar’ warning from telecoms security chief
• China’s Xpeng edges closer to selling right-hand drive EVs in Hong Kong, appointing Malaysian firm as local distributor
• China-US relations: American state department official explains how Beijing risks crossing ‘red line’ with Russia
• From liver to kidney: Chinese scientists pass another milestone in pig organ transplants for humans
• ‘Robotic’ China restaurant boss mimics android to serve delighted customers, goes viral globally
• China turns up heat with regulators, banks under the microscope amid focus on financial revamp
• China’s stockbrokers see salaries slashed for second year amid slumping market, crackdown on flashy finance executives

China’s relations with the Middle East: gold mine or minefield ahead?

https://www.scmp.com/opinion/china-opinion/article/3258388/chinas-relations-middle-east-gold-mine-or-minefield-ahead?utm_source=rss_feed

Flush with capital, investors throughout the Arab world are frantically investing in technology and infrastructure to replace oil as a locomotive of growth. China is among those swept up in the gold rush, jockeying for capital and access to markets as the world’s second-largest economy leverages its relations with Arab nations as a counterweight to the West.

This scramble to broaden and deepen Sino-Arab economic ties involves the biggest players in the Gulf, including 10 of the region’s largest sovereign wealth funds whose combined assets total nearly US$4 trillion. Such funds invested more than US$2.3 billion in Greater China last year, compared with about US$100 million in 2022, according to Global SWF, a database tracking the world’s sovereign wealth funds. Together, China and members of the Gulf Cooperation Council generate more than one-fifth of global gross domestic product.

The spurt of investment follows Chinese President Xi Jinping’s visit to Riyadh in December 2022, when several agreements were signed with the Saudis. The optics affirmed both powers’ overlapping ambitions.

Mergers and acquisitions are a major path for investment. The Middle East’s outbound M&A activity in China grew in 2023, with at least 16 deals worth US$8.5 billion, a significant increase compared to a single US$300 million deal in 2022, data from London Stock Exchange Group shows. This is the highest-ever annual total for Middle Eastern M&A activity in China since records began in the 1980s. In the other direction, Chinese companies also made more direct investment in Saudi Arabia in 2023 than ever before. All are foundations for the long haul ahead.

Hong Kong is hoping that family offices from the Middle East will join the fray, too, as those funds increasingly look to Asia for opportunities.

While the Sino-Arab investment flows are historic in scope, scale and pace, they still pale in comparison with those between the United States and the Middle East. In 2022, US foreign direct investment in the Middle East reached US$94.7 billion, while capital flows from the Middle East into the US totalled US$41.6 billion; manufacturing, mining, real estate and nonbank holding companies attracted the most capital.

Arab leaders’ foreign policies remain focused on the West for armaments, markets, technology and strategic support, despite these leaders’ efforts to assert greater latitude. This is true even as rivalries have sharpened among Saudi Arabia, the United Arab Emirates and Qatar. Meanwhile, the West is pivoting towards the Indo-Pacific to contain Beijing’s influence while diversifying suppliers away from China.

The war between Israel and Hamas, the attacks by Houthi rebels on ships navigating the Red Sea, and Saudi Arabia’s prioritisation of a security guarantee from the US in exchange for normalisation of relations with Israel all attest to how the US continues to be the fulcrum on which stability in the Middle East rests. This reality complicates what China can achieve in the Middle East.

However, national security commitments typically follow financial transactions and vice versa. Military allies are likely to trade more with one another than with non-allies. Security arrangements assure those involved that they will be protected from disruptions. Trade is a carrot to lure a reluctant ally and it can increase wealth for all concerned, with any surplus being spent on building up defence. Eventually, security and trade become hard to untangle.

World needs China to take up diplomatic gauntlet in Middle East

China is counting on this, as the dynamics unfolding between Beijing and the Middle East suggest. Leaders are leveraging shared concerns over the destabilising influence of radical Islamist groups. China has increased arms sales to the Gulf, including of Dongfeng ballistic missiles and Wing Loong bomber drones, and promoted joint weapons production. In August last year, China and the United Arab Emirates held their first joint air drill.

While China is proud to point out the role it played in restoring diplomatic ties between Saudi Arabia and Iran in March last year, that agreement was largely driven by the self-interest of Riyadh and Tehran – namely, Saudi anxiety over realising the country’s Vision 2030 for socioeconomic development, and Iranian insecurity amid anti-government protests and fears that Beijing was aligned too closely with Riyadh. Nevertheless, the Saudi Arabia-Iran rapprochement has enhanced China’s clout.

The future of Sino-Arab relations is challenged by an inherent friction: the inequality of exchange. China, the world’s largest oil importer, depends on the Middle East for about half of these imports. Saudi Arabia is its main supplier in the region, while Iraq, Oman, Kuwait and the UAE are among its other key suppliers. This dependency is deepened by the importance of the Gulf to China’s Belt and Road Initiative.

But China is finding clever ways to make its dependence on the Middle East less of a constraint by bartering its armaments for Gulf countries’ oil and gas.

Moreover, ties with Opec+ members provide China with another avenue to deepen relations with Russia, as US warnings about Chinese support of Russia’s military industrial complex grow louder.

Yet China is also trying to displace Russia as the preferred alternative source of armaments, against the complex backdrop of China and the Gulf States pursuing various triangulation strategies in the Middle East. Chinese arms sales to the region are up 80 per cent over the last decade, and involve every US ally there except Israel.

Two millennia ago, China and the Arab world had established a bridge through the Silk Road for trade, cultural and scientific exchanges. The Prophet Mohammed advised followers to seek knowledge as far as China. History is repeating itself somewhat, with new plots and undercurrents.

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US blacklists Chinese firms tied to drones used by Russia and Houthis

https://www.scmp.com/news/world/united-states-canada/article/3258569/us-blacklists-chinese-firms-tied-drones-used-russia-and-houthis?utm_source=rss_feed

The United States restricted trade with five companies on Wednesday that it said were helping produce and procure drones for use by Russia in Ukraine and by Iran-backed Houthis in Red Sea shipping attacks.

The companies from Russia and China were among 11 additions to the US Commerce Department’s “Entity List”, which means suppliers need licences before shipping goods and technology to them.

Russia has intensified its drone and missile strikes against Ukrainian energy facilities in recent weeks, causing significant damage and threatening a repeat of the blackouts experienced in the first year after Russia invaded Ukraine in February 2022.

The Commerce Department added a Chinese entity, Jiangxi Xintuo Enterprise Co, for supporting Russia’s military through the procurement, development, and proliferation of Russian drones, it said.

Shenzhen Jiasibo Technology Co of China was cited for being part of a network procuring aerospace components, including drone applications, for an aircraft company in Iran.

Three Russian entities – Aerosila JSC SPE, Delta-Aero LLC, and JSC ODK-Star – were added for being part of the network.

“These components are used to develop and produce Shahed-series UAVs (unmanned aerial vehicles) which have been used by Iran to attack oil tankers in the Middle East and by Russia in Ukraine,” the Federal Register notice said, referring to unmanned aerial vehicles.

Attacks on ships including oil tankers by Iranian-backed Houthis have disrupted global shipping through the Red Sea. Yemen’s Houthis say they are retaliating against Israel’s war against Palestinian Hamas militants in Gaza.

Chinese-owned oil tanker hit by Houthi missiles in Red Sea

Companies are added to the US Entity List when Washington deems them a threat to US national security or foreign policy. Suppliers must then be granted licences, which are likely to be denied, before shipping goods to entities on the list.

The two UAE citations, Khalaj Trading LLC and Mahdi Khalaj Amirhosseini, were added for apparently violating Iran sanctions by exporting or trying to export items from the United States to Iran through UAE, according to the posting.

Four Chinese entities were cited for acquiring US items to support China’s military modernisation efforts, it said.

They are Linkzol (Beijing) Technology Co, Xi’an Like Innovative Information Technology Co, Beijing Anwise Technology Co and Sitonholy (Tianjin) Co.

The companies could not immediately be reached for comment.

US-Chinese military contacts resumed late last year but tensions continue due to fundamental differences over Taiwan and the South China Sea that remain dangerous potential flashpoints.

Chinese leader Xi Jinping has pumped billions into buying and developing equipment as part of his modernising efforts to build a “world-class” military by 2050, with Beijing’s outsize defence budget growing at a faster pace than the economy for some years.

US policy on China must pivot to cold-war stance from managing competition, two Republican policymakers say

https://www.scmp.com/news/china/article/3258561/us-policy-china-must-pivot-cold-war-stance-managing-competition-two-republican-policymakers-say?utm_source=rss_feed

US President Joe Biden’s administration must stop efforts to “manage” competition with China and pivot to an explicit cold-war stance against the Asian giant, two prominent US Republicans who have guided Washington’s China policy said.

Matthew Pottinger, the top Asia adviser on former president Donald Trump’s National Security Council, and Wisconsin congressman Mike Gallagher, ex-chair of the House select committee on China, accused Biden of “prioritising a short-term thaw with China’s leaders at the expense of a long-term victory over their malevolent strategy”.

Likening the Biden administration’s tack to that of detente with the Soviet Union in the 1970s, the policymakers said in an essay published in Foreign Affairs magazine on Wednesday “the current approach will yield little cooperation from Chinese leaders while fortifying their conviction that they can destabilise the world with impunity”.

Gallagher made Washington policymakers’ concerns about China more prominent in the many events that his committee organised, some during prime-time viewing hours. And Pottinger testified at its first hearing, calling Beijing’s ability to present itself as a responsible interlocutor “one of the great magic tricks of the modern era”.

The essay ran amid a series of high-level engagements that the Biden administration has conducted with Chinese counterparts, including a call last week between the US leader and President Xi Jinping that both sides called “candid” and “constructive”.

Deputy Secretary of State Kurt Campbell on Tuesday said recent dialogues with China, including a coming visit to Beijing by Secretary of State Antony Blinken, indicated the Chinese government was “determined to keep US-China relations on a steady, stable path”.

Campbell recently held the same role in Biden’s NSC that Pottinger did under Trump.

Citing a visit to Beijing last year by Blinken, Pottinger and Gallagher turned Campbell’s assessment around, asserting that Xi was using these engagements to control Biden’s officials.

How far did Janet Yellen’s trip move the ball for US-China relations?

“Whereas Xi had sat amiably alongside the billionaire Bill Gates just days earlier, the US secretary of state was seated off to the side as Xi held forth from the head of a table at the Great Hall of the People,” they said.

“For the first time in years, Xi appeared to have successfully positioned the United States as supplicant in the bilateral relationship.”

The essay portrayed the popular Chinese-owned video-sharing app TikTok as a key tool in “a bitter information war against the United States, which is losing, despite its natural advantages”.

Gallagher is the author of a successful House bill that would force TikTok’s owner, ByteDance, to divest the app if the measure passes in the Senate and is signed into law by Biden. In a surprise move, the Wisconsin lawmaker announced last month he would leave the House of Representatives on April 19.

US and Chinese military discuss potential for accidental clashes in Indo-Pacific

On the defence front, recommendations by Pottinger and Gallagher ranged from significant increases in defence spending to “creative solutions” for the Asian theatre that include “missile launchers concealed in commercial container boxes or field the Powered Joint Direct Attack Munition, a low-cost kit that turns standard 500-pound bombs into precision-guided cruise missiles”.

Taking it as a matter of faith that Xi plans to invade Taiwan militarily, a move that “could kill tens of thousands of US service members, inflict trillions of [US] dollars in economic damage and bring about the end of the global order as we know it”, the two called on Biden “to immediately build and surge enough hard power to deny Xi a successful invasion”.

They also called for defence spending on the order of “four or even five per cent of GDP” – up from about three per cent currently – and an additional US$20 billion to be earmarked as “a dedicated ‘deterrence fund’ overseen by the secretary of defence, who would award resources to projects that best align with the defence of Taiwan”.

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

How China allegedly interfered with Canada’s elections

https://www.washingtonpost.com/world/2024/04/10/canada-china-foreign-interference-trudeau/2024-04-09T17:10:29.612Z

TORONTO — The conclusions in the top-secret intelligence briefing were stark: China “clandestinely and deceptively” interfered in Canada’s 2019 and 2021 federal elections, seeking to support candidates favorable to Beijing’s strategic interests.

The activity was aimed at discouraging Canadians, particularly Chinese Canadians, from voting for the Conservative Party, which it viewed as having an anti-Beijing platform, the Canadian Security Intelligence Service reported.

In both elections, China got the outcome it wanted — the reelection of Prime Minister Justin Trudeau with a minority government — but intelligence officials have said there is no evidence that Beijing’s efforts had an impact on the result.

The document was prepared for the prime minister’s office after Canadian news outlets reported last year on leaked intelligence documents that alleged that China sought to interfere in the elections. Now those claims are at the center of a public inquiry in Ottawa.

Trudeau, who long resisted pressure from opposition parties to launch a public inquiry, will testify before Quebec Court of Appeal Justice Marie-Josée Hogue on Wednesday.

The inquiry began public hearings in January and will wrap up in the fall. It will involve testimony from dozens of witnesses, including election officials, members of diaspora groups, the country’s top spy and Trudeau’s closest advisers.

Intelligence officials have cautioned that reports that have been introduced as evidence in the inquiry might contain information that is uncorroborated and based on a single source. The reports represent a snapshot in time, they’ve warned, and subsequent information might have since emerged to invalidate the findings.

Hogue will release an interim report in May and a final report in December. Here’s what to know.

What was China allegedly up to?

A secret 2021 intelligence report introduced as evidence identified China as “the most significant” foreign interference actor, one that acts in a “sophisticated, pervasive and persistent” manner to target politicians at all levels of government.

China, the report said, uses proxies, state entities, Chinese officials in Canada, its diaspora, Chinese-language news outlets and “inducements or coercive means” to achieve its aim: ensuring the election of candidates “perceived to further or at least not actively oppose” Beijing’s interests.

Some targets are unaware of China’s interest in them, the report said. Others “willingly cooperate.”

A top-secret intelligence report from 2021 said there were several articles in Chinese-language news outlets and on WeChat that contained false claims about Conservative Party candidates ahead of that year’s election to dissuade Chinese Canadians from voting for them.

While there wasn’t “clear evidence” that the Chinese government directed the campaign, the report said there were “indicators of potential coordination” between Chinese-language news outlets in Canada and those of the Chinese Communist Party.

Erin O’Toole, leader of the Conservative Party during that election, testified that he believes the party lost as many as nine seats because of the campaign. It was “nowhere enough to change the results of the election,” he said, but meant “democratic rights were being trampled upon.”

The inquiry has also focused on a Liberal Party nomination race in 2019 for a Toronto-area electoral district. A 2020 intelligence report said Chinese government officials “likely manipulated” that contest, which was won by Han Dong. He was later elected in that year’s federal race.

Dong testified that he had sought the support of international students from China studying at a private high school. They were bused in to vote for him in the nomination race, but he said he did not know who chartered the bus.

In fact, he only remembered having sought their support after his wife reminded him of it shortly before his testimony. It is not against the rules for international students to vote in a Liberal Party nomination race as long as they live in that electoral district.

But an unclassified intelligence summary said that there were indications that a known proxy agent of the Chinese government provided students who didn’t live in the district with falsified documents and that the Chinese Consulate threatened to revoke their student visas or punish their family members in China if they didn’t vote for Dong.

The summary says that some of the information was reported to intelligence officials before the election but was “not firmly substantiated,” while other information came to light after the vote.

Dong quit the Liberal caucus last year and sits as an independent.

China has long denied interfering in Canada’s elections.

Were other actors interfering too?

Intelligence reports introduced as evidence in the inquiry named India as a country that “actively” engages in foreign interference here, working through Indian officials in Canada and seeking to leverage its large diaspora community “to shape political outcomes in its favor.”

An unclassified intelligence summary said that India focused on a small number of ridings in the 2021 election and that a proxy agent might have clandestinely provided illicit funding to pro-India candidates — possibly without their knowledge.

India, intelligence reports said, is focused on suppressing support for a separatist movement that seeks to carve from India an independent Sikh state called Khalistan and seeks to oppose the reelection of candidates perceived to possess pro-Khalistani views.

The Indian high commission in Canada did not respond to a request for comment, but the country’s External Affairs Ministry has previously dismissed claims that it has sought to interfere in Canada’s internal affairs as “baseless.”

Trudeau in September said in Parliament that there were “credible allegations” that agents of the Indian government were behind the killing of a Sikh separatist leader in British Columbia last year. India has denied the allegations.

Pakistan is also named in the documents, though it is identified as a “limited” actor. Its aims are similar to those of India and China: to clandestinely support candidates with positions favorable to their interests.

A top-secret report from 2020 said that the Canadian Security Intelligence Service undertook a “threat reduction measure” to reduce the government of Pakistan’s attempts to interfere in Canada’s democratic processes that had a “tangible effect.”

The high commission of Pakistan in Canada did not respond to a request for comment.

What about Russia?

Russia possesses “robust” foreign interference capacity, according to a July 2021 intelligence report introduced as evidence in the inquiry, but lacked the intent to interfere because Canada’s main federal political parties are largely united in their stance toward Moscow. The Kremlin saw no benefit in supporting one party over the others.

Was the public alerted to alleged election meddling?

No. In 2019, the federal government created a panel of senior civil servants and tasked it with notifying candidates if they have been the target of interference and to alert the public about threats to election integrity.

Members of the panel told the commission that they made no such announcements because none of the intelligence they reviewed met the threshold for notification. They maintained that the overall results of the votes weren’t compromised.

The bureaucrats said that sometimes the intelligence they were provided was based on a single source, uncorroborated or of limited reliability. It was also not clear, they said, whether misinformation or disinformation online was spreading organically or linked to a foreign actor.

“The possibility that a proxy may have done something is not enough,” testified François Daigle, a deputy minister of justice and member of the panel. “We would need reliable information that we could test to know there’s actually something nefarious going on here and we have to correct the record.”

Nathalie Drouin, a former deputy minister of justice who served on the panel, said intervention could do “more harm than good.”

“It had the potential to create confusion and also to be seen as interfering in a democratic exercise,” testified Drouin, now Trudeau’s national security and intelligence adviser. “We want also to make sure that we were not being seen as taking a position — a partisan position — in any debate.”

Meteorite suggests asteroid Vesta may once have had magma lake just like the early moon, say Chinese scientists

https://www.scmp.com/news/china/science/article/3258529/meteorite-suggests-asteroid-vesta-may-once-have-had-magma-lake-just-early-moon-say-chinese?utm_source=rss_feed

Chinese scientists said a meteorite found in Algeria showed that an ancient magma ocean once existed on Vesta, one of the largest asteroids in our solar system.

The researchers said that while Vesta is much smaller than the moon and other planets, the “planetary embryo” has a similar evolutionary history to the moon.

Vesta, which is about 530km (330 miles) wide, has a structure of core, mantle and crust – much like the moon and Earth. The moon has a diameter of nearly 3,500km while the Earth’s is almost 13,000km.

Vesta emerged in the first 1 to 2 million years after the solar system formed and is now the second largest body in the asteroid belt, which sits between Mars and Jupiter.

Space scientists view Vesta and other asteroids as protoplanets and have been looking for clues about how they evolved.

The Chinese researchers, from institutes in Guiyang, Hefei, Changsha, Nanjing and Xian, said: “Its structure and chemical features provide critical insights into the origin and formation history of parent planetary bodies in the early solar system.”

Soon after the moon’s formation its outer surface melted, forming an ocean of magma on the surface.

The latest study, published in the peer-reviewed journal Nature Astronomy on Wednesday, looks at a 230-gram meteorite that was found in Algeria in 2021 and sold to a Chinese buyer the following year.

The Chinese researchers later confirmed its Vestan origin by comparing it with previous samples traced to the asteroid.

Lead author Li Shijie, a researcher at the Chinese Academy of Sciences Centre for Lunar and Planetary Sciences in Guiyang, said the analysis showed that more than 90 per cent of the meteorite is composed of a mineral called anorthite, a key indicator of a magma ocean.

Anorthosites are formed when magma oceans solidify and the only ones that have previously been found have come from the Earth or the moon.

Asteroid dust caused 15-year winter that killed dinosaurs, study says

Previous meteorites from Vesta have shown no signs of the mineral, but Li said the new discovery suggested there was an ancient magma ocean on the asteroid.

He said their calculations suggested that anorthite formed at a depth of 30km in the magma ocean and may have floated to the surface of Vesta, a process that could happen in as little as 200 years or as long as 20,000 years.

The team said remote sensing may struggle to detect an anorthositic crust on Vesta’s current surface. Nasa’s Dawn spacecraft, a probe launched in 2007 and sent to explore Vesta and Ceres, the largest asteroid, found no traces.

Li said it was possible that the evidence for the magma lake had been removed when the asteroid collided with other objects in space as the solar system was taking shape.

“In the early days of the solar system, intensive collisional bombardment events were common as proven in previous studies. Large amounts of crust – just like eggshells – may have been eroded,” Li said.

China to hear pitches from Nasa scientist, other researchers, to study Chang’e 5 lunar samples

https://www.scmp.com/news/china/science/article/3258530/china-hear-pitches-nasa-scientist-other-researchers-study-change-5-lunar-samples?utm_source=rss_feed

China’s space agency has invited 10 scientists from the US, Europe and Asia to pitch their plans in person to study lunar samples brought back to Earth by China’s Chang’e 5 moon mission.

The pitches will be heard at a review meeting at the China University of Geosciences’ Nanwangshan campus in the central Chinese city of Wuhan on April 26, with applicants encouraged to attend the meeting in person, according to the China National Space Administration (CNSA).

Chinese scientists may be a step closer to unravelling mystery of lunar surface

Each applicant will have 15 minutes to make a presentation and take questions from the review committee, CNSA said on its website on Tuesday, adding that online participation was also acceptable.

Ryan Zeigler, a lunar geochemist and sample curator for Nasa’s Apollo missions at the Johnson Space Centre in Houston, Texas, will be the second person to present a submission, according to the meeting agenda.

If Zeigler’s pitch is accepted, it would be a rare example of high-level US-China space cooperation – Nasa-funded scientists have been forbidden to collaborate with China under a US law known as the Wolf Amendment, unless otherwise approved by the Congress.

China’s Chang’e 5 spacecraft touched down on the moon in 2020 in a region known as the Ocean of Storms and sent back 1.73kg (3.8lbs) of lunar material to Earth. The samples distributed to Chinese researchers were very different and much younger compared to the material collected by the US Apollo missions five decades earlier.

Last November, the CNSA began accepting applications from scientists outside China to study the Chang’e 5 samples. Nasa urged its researchers to apply in spite of the Wolf Amendment.

“The Chang’e 5 samples originate from regions of the moon not yet sampled by Nasa and are expected to provide valuable new scientific insight on the geological history of the moon,” Nasa wrote in an internal email.

“Applying for samples will ensure that United States researchers have the same research opportunities as scientists around the world,” Nasa said, adding that it had “certified its intention to Congress”.

Other US applicants to appear at the review include planetary scientists Stephen Parman from Brown University, Timothy Glotch from Stony Brook University, Stephen Sutton from the University of Chicago, and Michelle Thompson from Purdue University.

All of them receive research grants from Nasa, and some chair Nasa-funded projects worth millions of dollars.

Scientists from The Open University in Britain, the University of Cologne, the Paris Institute of Planetary Physics, the Pakistan Space & Upper Atmosphere Research Commission, and Osaka University in Japan will also make presentations.

Earlier this month, Nasa announced that global scientists could apply to borrow the asteroid samples collected by its OSIRIS-REx asteroid mission last September.

The Post has contacted Nasa headquarters in Washington to confirm if applications from China would be considered.

Can Chinese scientists solve the mysteries presented by Chang’e 5 moon samples?

It is not clear if Nasa could obtain congressional approval to allow exchanges of samples for scientific research purposes.

In last year’s internal email, Nasa indicated that the approval for the Chang’e 5 application was an exceptional case.

“This allowance applies specifically to Chang’e 5 mission samples; the normal prohibition on bilateral activity with [China] on Nasa-funded projects remains in place,” the agency wrote.

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China eyes home-grown aircraft engine, larger commercial planes with big equipment upgrades by 2027

https://www.scmp.com/economy/china-economy/article/3258534/china-eyes-home-grown-aircraft-engine-larger-commercial-planes-big-equipment-upgrades-2027?utm_source=rss_feed

China expects to make progress on an advanced aeroplane engine, a bigger commercial jet, and an amphibious search-and-rescue aircraft under a government plan to upgrade production equipment across industries through 2027 and improve the economy.

A notice from seven central government departments calls for “promoting the aviation industry to comprehensively develop final assembly-integration capabilities and supply-chain-supporting capabilities for a large aircraft, a large amphibious aircraft, and an engine”.

The March 27 notice calls for “updates and upgrades of high-end, advanced equipment” to reach those goals.

China is working on its first home-grown turbofan commercial aircraft engine, the CJ1000, to reduce reliance on imports.

Driven by C919 and Airbus, China’s aviation sector opens up for S Korean firms

The CJ1000’s developer, the Aero Engine Corporation of China, had expected to receive an airworthiness certification by 2025, but research reports have indicated that mechanical setbacks and a lack of experience in testing and assembly have held back development.

“China definitely feels the urgency to develop its own aircraft engines,” said Liang Yan, chair of economics at US-based Willamette University, pointing to efforts by former US president Donald Trump to block exports of an American engine type to China.

“With the new industrial policy and plan to boost new productive forces, I think various advanced manufacturing will accelerate and help aircraft,” Liang said.

The C919 narrowbody airliner developed by the Commercial Aircraft Corporation of China (Comac) still depends on foreign components, including for its engine produced by a joint venture between GE Aerospace of the US and France’s Safran Aircraft Engines.

GE Aerospace recently announced a US$5.2 million investment in its engine-parts plant in Suzhou, Jiangsu province, to increase capacity and start production on the GE9X engine for the C919.

The C919 is China’s first domestically produced narrowbody commercial airliner, in a league with the Airbus 320 and Boeing 737 aircraft families. Chinese airlines currently get most of their larger planes from Airbus and Boeing.

Equipment upgrades targeted by Beijing cover factory tools, farming equipment, the photovoltaic energy sector, the production of electric vehicles, and aviation.

Chinese leaders are trying to guide the world’s second-largest economy toward a stronger post-pandemic recovery and increased self-sufficiency in the face of US curbs on trade and technology.

China’s eVTOL craft gets clearance as ‘low-altitude economy’ prepped for launch

“A ‘made-in-China’ CJ1000 engine would improve prospects for Comac – not immediately, but in the near-term – reflecting the progress that’s been made, especially in terms of safety,” said Shukor Yusof, founder of Singapore-based aviation consultancy Endau Analytics.

The government document said equipment upgrades are also linked to improving the AG600, the world’s largest amphibious plane.

China began work on the AG600 in 2014 to meet growing demand for an emergency rescue aircraft that can fight forest fires and aid in maritime searches. The developer, China Aviation Industry General Aircraft (AVIC), conducted maiden flights over land in 2017 and at sea in 2020, followed by the start of airworthiness tests this year, according to Chinese state media outlets. Technological setbacks had pushed back the plane’s development in recent years.

To give China a commercial airliner bigger than the C919, Comac has reached a 175-million-yuan (US$24.2 million) agreement with Hunan Aerospace Huanyu Communication Technology to build metals, composites and components for its widebody C929 passenger jet, according to a stock market filing.

Comac expects to begin C929 deliveries in 2027, a company official said at an event in Shanghai last month.

Overseas sceptics of the C919 have said the aircraft relies too heavily on foreign-made parts, but those parts may also help the aircraft pass safety tests outside China, where it has garnered few sales.

“The fact that it’s using Western engines that are used in other aircraft makes it easier,” said Brendan Sobie, founder of the Singapore-based consultancy Sobie Aviation.

Across industries, investment in industrial equipment upgrades will grow by more than 25 per cent by 2027 compared with 2023, the government statement said. The penetration rate of digital research, development, and design tools would increase by 90 per cent, it said.

US officials investigate after Boeing whistle-blower raises concerns about 787

Chinese officials aim to reach their 2027 goals in part by establishing special loans for technological innovation and equipment renewal, the government statement said. It added that local governments should “strengthen protection of essential resources” such as land and energy to support upgrades.

“Promoting large-scale equipment upgrades in industrial fields is conducive to expanding effective investment and promoting the continuous increase in the proportion of advanced production capacity,” the government document said.

Scientific and technological advances across industries to date will help China’s economy grow by about 5.3 per cent this year, despite the nation’s rapidly ageing workforce, according to Hoe Ee Khor, chief economist with the ASEAN+3 Macroeconomic Research Office. He pointed to previous gains in agricultural technology, factory automation and e-commerce technology.

“That’s going to increase the productivity growth of the Chinese economy, and that happens at a time when the population is ageing,” Khor said at a news conference on Monday.

China and Taiwan are destined for ‘reunification’, Xi tells former president

https://www.theguardian.com/world/2024/apr/10/china-taiwan-destined-for-reunification-xi-jinping-tells-ma-ying-jeou

Xi Jinping has met the former Taiwan president Ma Ying-jeou, in what analysts said was an attempt to promote peaceful unification as the only alternative to military annexation of Taiwan.

Ma, who was leading a student delegation to China, met Xi in Beijing at the Great Hall of the People, a venue typically reserved for foreign leaders meeting with senior Chinese officials. Xi used the meeting to emphasise his belief that Taiwan and China were destined for what he terms “reunification”.

“External interference cannot stop the historical trend of reunion of the country and family,” Xi said, according to Taiwanese media. He said that people on both sides of the Taiwan strait were Chinese, and “there is no rancour that cannot be resolved, no problem that cannot be discussed, and no force that can separate us”.

According to local reports, Ma said that a war between the two sides would be “an unbearable burden for the Chinese nation”.

“The Chinese people on both sides of the Taiwan Strait will definitely have enough wisdom to handle cross-strait disputes peacefully and avoid conflicts,” Ma said.

Xi claims Taiwan as a province of China and has sworn to annex it, by force if necessary. In the interim he has presided over a wide-scale campaign of political, economic and cognitive warfare, and near-daily military intimidation, in order to persuade Taiwan to accept Chinese rule.

However a growing majority of Taiwan’s people and its government reject the prospect. The Kuomintang (KMT) opposition party, of which Ma remains a senior member, also rejects reunification but advocates for closer ties with China as the way to preserve peace. Ma is one of the party’s most China-friendly figures.

Amanda Hsiao, a senior China analyst with the International Crisis Group, said Beijing was trying to put on a friendlier face but also probably trying to undermine the ruling party and incoming government, just weeks out from the presidential inauguration of Lai Ching-te, whom Beijing despises. At the same time it was attempting to give the KMT “more material to say that only they can lower cross-strait tensions”.

“While parts of the messages conveyed during the meeting will appeal, other aspects [like] that the two sides are parts of a great Chinese nation will likely have limited appeal to a larger society which increasing identifies as distinctly Taiwanese,” Hsiao said.

Ma left office eight years ago but still holds some social and political influence, and has remained a visible public figure. On Wednesday, Xi praised Ma’s promotion of cross-strait exchanges and opposition to Taiwanese independence.

Wen-Ti Sung, a political expert at the Australian National University, said Ma was probably trying to preserve his legacy of warmer ties with China. Sung said Beijing’s “continued fixation” on Ma could suggest an inability to cultivate other senior political figures in Taiwan who were “willing to play dove towards Beijing today”.

However, Beijing was also likely to be using the visit to signal that peaceful unification through “winning over hearts and minds” remained Beijing’s preferred option, he said.

Wednesday’s meeting had been rumoured but was not confirmed until shortly before. It was the second for Xi and Ma, after a landmark summit in Singapore in 2015, while Ma was still president. No current leader of Taiwan has visited China since the end of the civil war in 1949.

Additional reporting by Chi Hui Lin

Ukraine war: China must go beyond rhetoric to emerge as a peacemaker

https://www.scmp.com/opinion/world-opinion/article/3258470/ukraine-war-china-must-go-beyond-rhetoric-emerge-peacemaker?utm_source=rss_feed

For more than a week last month, Li Hui, Chinese special envoy for Eurasian affairs, travelled through Europe in a second attempt at Chinese shuttle diplomacy. This follows Beijing’s announcement of its support for and participation in a peace conference. Switzerland plans to convene such a conference in the near future.

However, despite its efforts, Beijing has been unable to position itself as a credible mediator in the resolution of the Russia-Ukraine war. Given China’s “no limits” partnership with Russia, Beijing’s advocacy for a peace conference potentially hosted by Switzerland can be understood as strategic posturing rather than a credible commitment to resolving the war.

China clearly wishes to develop an image as a peacemaker and global mediator. Most Western countries, however, fail to see how what some have called China’s “pro-Russian neutrality” and its strong support of Moscow could possibly enable it to mediate in the war. China has continued to prop up Russia’s sanctions-hit economy. In 2023, China bought significant and increasing amounts of oil and gas and delivered urgently required dual-use products to Russia, including drones, semiconductors and spare parts.

Since the introduction of the Belt and Road Initiative in 2013, Beijing has been taking part in more multilateral dialogues. During the last decade, China has, in fact, attempted to act as a mediator in conflict areas on several occasions, such as in Afghanistan, Myanmar and South Sudan, but with only very limited success.

On Ukraine, Beijing’s 12-point-peace plan has been dismissed by the US and most Nato members as largely siding with Russia.

As part of this plan, Beijing envisioned not only the ceasing of hostilities and resolving the devastating humanitarian crisis, but also the large-scale lifting of sanctions on Russia. While Russian President Vladimir Putin formally welcomed China’s 2023 peace plan, Moscow has yet to engage with the proposal in any practical way, despite its close ties with Beijing. This, however, has not stopped Beijing from trying again.

Li’s visit to Europe last month was billed as China’s “second round of shuttle diplomacy on seeking a political settlement of the Ukraine crisis”. He visited Russia, Ukraine, France, Germany and the European Union headquarters in Brussels.

In a press conference held in Beijing on March 22, Li said that as a permanent member of the UN Security Council and a common friend of Russia and Ukraine, China can use its “shuttle mediation efforts” to convey information between the two countries. While Li’s announcement expressed peaceful sentiments, it does not appear that either of the warring parties and their supporters were impressed with this rhetoric.

As far as can be discerned, Li’s shuttle diplomacy in Europe has not led to any direct outcomes until now. China must realise the lack of confidence in the Swiss effort. Putin has remained unconvinced too, it seems: Russia has rejected its own participation in the peace conference. Aware of this sentiment, Beijing’s efforts may well be more concerned with the building of its global image than with an actual commitment to ending the war in Ukraine.

Taking part in the envisaged Swiss peace conference would be China’s third attempt to put itself forward as a mediator in the Ukraine war. If China wants to make a credible effort to end the war, Beijing ought to exert pressure on Russia to offer concessions regarding the eastern Ukrainian territory Moscow has conquered since February 2022, including a proposal on Crimea. Moscow, meanwhile, seems to have recently warmed to Beijing’s peace proposal.

Beyond Russia, China also needs to work closely with both the United States and Nato’s European members in creating the necessary conditions for an end to the military action in Ukraine. But most importantly, Beijing needs to reflect on its own assumed neutrality in direct contradiction to its partnership and support for Russia.

There have been few signs of China going beyond its non-committal rhetoric of peace to becoming involved in a more concrete and practical way to help end the devastating war in Ukraine. Li’s shuttle diplomacy in Europe does not seem to have convinced European leaders yet of China’s ability to act as a mediator to end the Ukraine war.

Chinese military researchers zero in on AI-driven navy, space combat to ‘win future wars’

https://www.scmp.com/news/china/military/article/3258503/chinese-military-researchers-zero-ai-driven-navy-space-combat-win-future-wars?utm_source=rss_feed

Researchers in China’s armed forces have prioritised key areas of military technologies, including AI-driven naval warfare and aerospace combat capabilities, expanding on President Xi Jinping calls for “bold innovations” in advanced technology.

In a series devoted to Xi’s concept of developing “new quality combat power”, Study Times, a publication under the Central Party School of China’s Communist Party, published articles on Monday by various People’s Liberation Army (PLA) researchers stressing that such technologies had become the strategic high ground in military dominance and were essential to winning on future battlefields.

Xi has repeatedly pushed the PLA to develop hi-tech and advanced capabilities to win a modern war. In a meeting in March he urged officials to “boldly innovate and explore new types of combat force construction and applications, and liberate and develop new quality combat power”.

The authors said the role of artificial intelligence was a priority for “new combat forces”, and that it was a “clear trend” that AI-powered military systems would be a “key variable in changing the rules of war”.

The authors discussed how AI technology was changing the nature of military command and decision-making, saying it could process and analyse large amounts of data to help make faster decisions, and in some cases, independently make complex tactical decisions and operations. Unmanned Aerial Vehicles (UAVs) and unmanned drone boats were also becoming more prevalent, they said.

New attack helicopter seen as vital in any PLA operations against Taiwan, India

After Xi last month urged forces to prepare “for the military struggle at sea”, the articles discussed how “unmanned intelligent combat will deeply change the deployments of naval forces, prompting changes in battle concepts and accelerating the evolution of combat”.

The authors also explored how massive drone networks could assess situational awareness during sea battles, process data with cloud computing, and use advanced algorithms to form adaptive command, assault and logistic chains. AI-controlled drones could also be used for tasks such as air refuelling, communications relays, electronic countermeasures for reconnaissance and surveillance, swarm bombing and decoy deployment, they said.

The flexibility and cost-effectiveness of AI-integrated drones would upend traditional naval theories, one researcher wrote, and “new methods of warfare at sea, such as unmanned attrition warfare and unmanned guerrilla warfare, will gain new asymmetric advantages”.

In another article, researchers focused on the expansion of “new military realms”, in which “electromagnetic space, cyberspace and aerospace” would become the “new frontiers of military struggle”.

“History has proved that whoever can effectively grasp and use the right to control a certain space through the development of new combat forces will gain a great advantage in future military competitions,” the article said.

The researchers also singled out circumstances that they thought would compel China’s space combat force to modernise, and warned that the PLA must avoid situations “in which core technologies are controlled by others as soon as possible”.

“We must have a deep understanding of the important role of emerging tech and new combat forces in modern warfare, be aware of new fields of technology, and understand the potential of new combat capabilities to see the future battlefield clearly and win future wars,” they said.

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China scraps ownership caps on some telecoms services, courting foreign capital resurgence

https://www.scmp.com/economy/china-economy/article/3258531/china-scraps-ownership-caps-some-telecoms-services-courting-foreign-capital-resurgence?utm_source=rss_feed

China has designated areas where limits on foreign investment for select telecommunications services will be lifted, with the cities of Beijing, Shanghai, Shenzhen and the island province of Hainan acting as testing grounds for an oft-cited goal to open the bedrock industry to overseas capital.

These regions will “adopt internationally recognised economic and trade practices and optimise the business environment for foreign firms”, the Ministry of Industry and Information Technology (MIIT) said on Wednesday.

“We will share the dividends of China’s digital economic development with the world.”

Foreign ownership caps will be scrapped for businesses involved in several varieties of telecoms services, including data centres, content distribution, internet access, online data and transaction processing as well as information release, delivery and protection.

However, online news publishing, online audiovisual services and internet cultural services are still off-limits to foreign investors seeking full ownership.

The ministry said aside from internet access services – where the four enumerated regions will be the only ones where overseas players are given free rein – foreign telecoms operators can offer services covered in the new regulations to clients across the country.

Will China’s state ‘pioneers’ help the country reach tech’s new frontiers?

Governments in Beijing, Shanghai, Shenzhen and Hainan will need to draft their own implementation plans subject to the assessment and approval of the MIIT, and the ministry will summarise best practices – including national treatment standards for foreign firms – to be used in a potential wider roll-out if the trial period is successful.

Foreign telecoms operators will still need to secure ministry approval and will be subject to oversight from authorities, said the MIIT in its announcement.

The rule change comes as Shanghai’s Lingang free-trade zone – itself part of a pilot region – launched a dedicated cross-border transfer centre to facilitate outbound data flows.

Beijing first removed foreign investment restrictions on three categories of telecoms services – domestic multiparty communications, storage and forwarding and call centres – in 2019. The commerce ministry promised a further loosening the following year, and the rules governing foreign telecoms firms were updated in 2022.

In recent months, China has leveraged pro-business rhetoric to shore up its economic recovery and retain foreign capital to achieve a host of objectives, particularly its goal of “around 5 per cent” for gross domestic product growth in 2024.

President Xi Jinping listed telecoms services as a tertiary sector to be opened to foreign investment in his address at the China International Fair for Trade in Services in September, an imperative reaffirmed at December’s central economic work conference and during Premier Li Qiang’s government work report delivered at the national parliamentary sessions in March.

However, new data security legislation has created ambiguity in this drive for wider opening, shrinking confidence among foreign investors. Some say these new laws have complicated their operations, increasing their risk and compliance costs.

China added 1 unicorn per week last year despite slumping global investments thanks partly to AI frenzy, report says

https://www.scmp.com/tech/big-tech/article/3258526/china-added-one-unicorn-week-last-year-despite-slumping-global-investments-thanks-partly-ai-frenzy?utm_source=rss_feed

China last year bred an average of one new unicorn each week amid frenzied growth in the country’s artificial intelligence (AI) sector, bucking a declining trend in global venture capital investments, according to a new research report.

The nation added 56 unicorns – start-ups valued at more than US$1 billion – in 2023, trailing only the US, which minted 70 unicorns, according to the Global Unicorn Index 2024 published by the Hurun Research Institute on Tuesday. The rest of the world saw the arrival of 45 new unicorns, the report said.

This was the sixth instalment of Hurun’s annual unicorn report. The institute, founded by former accountant Rupert Hoogewerf, is best known for its annual “rich list”, which tracks the net worth of billionaires in China and abroad.

The US remains the top breeding ground for unicorns, with more than 700 of the global total of 1,453 based there. In second place was China, which had more than 340 unicorns as of last year.

AI overtook e-commerce to become one of the top three unicorn-producing sectors: as of the end of last year, there were 115 AI unicorns. The other popular sectors were fintech, which had 185 unicorns, and software-as-a-service, which yielded 139 unicorns, according to the report.

“The US has half of the world’s known unicorns, led by software-as-a-service, fintech and AI, China a quarter, led by AI, semiconductors and new energy, while the rest of the world has the other quarter, led by fintech and e-commerce,” said Hoogewerf.

The growth in unicorn numbers might have been due to a gloomy initial public offering (IPO) market, according to Hoogewerf. With some unicorns delaying listing plans, they ended up as “the bridesmaid that never gets to be a bride”, he said.

Last year, global private equity fundraising fell to its lowest since 2017, according to investment data firm Preqin.

Beijing-based ByteDance, valued at US$220 billion, remains the world’s largest unicorn, followed by US tech mogul Elon Musk’s rocket and satellite operator SpaceX, which is valued at US$180 billion, according to Hurun.

Microsoft-backed OpenAI, which launched the AI conversational bot ChatGPT in late 2022, saw the fastest valuation increase, surging 14 places to rank third with a valuation of US$100 billion.

Ant Group, which abruptly halted its IPO in Shanghai and Hong Kong in 2020, came in at No 4, followed by fast-fashion shopping platform Shein in fifth place. Ant is the fintech affiliate of Alibaba Group Holding, owner of the South China Morning Post.

Other top Chinese start-ups on the list include Tencent Holdings-backed fintech firm WeBank in tenth place, and Shanghai-based video gaming studio MiHoYo, which shot up 91 places to rank 12th after its valuation jumped to US$23 billion from US$15.8 billion.

MiHoYo launched in September 2020 its flagship video game Genshin Impact, which had bagged US$4 billion in global revenue by the end of 2022, making it one of the most successful Chinese video games of all time, according to app analytics firm Sensor Tower.

Investors that had the most unicorns in their portfolios include US investment firm Tiger Global Management, Japanese tech conglomerate SoftBank Group, and venture capital firm HongShan, formerly known as Sequoia Capital China. They had stakes in 205, 169 and 125 unicorns, respectively.

Amid rising geopolitical tensions, most of the top 30 investors that invested in Chinese unicorns are based in the country, such as state-backed investment bank China International Capital Corporation, Big Tech companies like Tencent, Alibaba, and Xiaomi, and funds such as HongShan.

A US congressional panel announced last year an investigation into four American venture capital firms over their investments into China’s AI and semiconductor sectors, dealing another blow to potential US investments in China.

‘Not happy, do not come to work’: China retail tycoon introduces ‘unhappy leave’, sparks online discussion

https://www.scmp.com/news/people-culture/trending-china/article/3257179/not-happy-do-not-come-work-china-retail-tycoon-introduces-unhappy-leave-sparks-online-discussion?utm_source=rss_feed

A retail tycoon in China has introduced “unhappy leave” days to help employees achieve a better work-life balance.

During 2024’s China Supermarket Week in late March, Yu Donglai, who is the founder and chairman of Pang Dong Lai, a retail chain in central China’s Henan province, announced that employees would be eligible to request 10 days of additional leave at their discretion.

The event is a six-day gathering to promote the development of the country’s supermarket sector.

“I want every staff member to have freedom. Everyone has times when they’re not happy, so if you’re not happy, do not come to work,” said Yu.

Yu wants employees to freely determine their own rest time, and for them all to have sufficient relaxation outside work.

“This leave cannot be denied by management. Denial is a violation,” he said.

The “unhappy leave” idea has garnered support on mainland social media.

“Such a good boss and this company culture should be promoted nationwide,” one person said on Weibo.

“I want to switch to Pang Dong Lai. I feel like I would gain happiness and respect there,” said another.

More than 65 per cent of employees feel tired and unhappy at work, according to a 2021 survey on workplace anxiety in China.

Low wages, complex interpersonal relationships and overtime culture are reportedly the main sources of negative emotions in the mainland workplace.

In March 2023, Yu made a speech in which he condemned the culture of Chinese bosses advocating for long working hours.

“Making staff work overtime is unethical and an expropriation of other people’s opportunities for growth,” he said.

Yu’s employment policies stipulate that employees work only seven hours a day, have weekends off, are entitled to 30 to 40 days annual leave and five days off during Lunar New Year.

Speaking about the future of his company, Yu said: “We do not want to be big. We want our employees to have a healthy and relaxed life, so that the company will too.”

Pang Dong Lai’s philosophy is “freedom and love,” he said.

The average monthly salary of employees at the company is 7,000 yuan (US$970).

In comparison, the average salary of retail workers in China was 3,566 yuan in 2019, according to China’s retail news outlet linkshop.com.

This year, Pang Dong Lai also introduced a job-level certification system.

“Even a janitor can earn up to 500,000 yuan (US$70,000) annually as long as their professional capabilities reach a certain level,” said Yu.

Despite having only 13 stores in Xuchang and Xinxiang – two third-tier cities in Henan province – Pang Dong Lai has earned nationwide recognition as “the ceiling of China’s industry” due to the high standard of customer service achieved over its 29-year history.

The Pang Dong Lai supermarket is equipped with pet cabinets at the entrance, along with dedicated pet water and cooling devices.

It also offers about 100 free services, including free blood pressure measurements, air conditioning cleaning and handbag maintenance.

As US and Japan keep an eye on China, Biden-Kishida meeting to yield outcomes on ‘remarkable’ scale: insiders

https://www.scmp.com/news/china/article/3258464/us-and-japan-keep-eye-china-biden-kishida-meeting-yield-outcomes-remarkable-scale-insiders?utm_source=rss_feed

US President Joe Biden and Japanese Prime Minister Fumio Kishida will unveil nearly six dozen “deliverables” in security, economic and people-to-people areas on Wednesday, senior Biden administration officials said hours before the leaders met.

Their long-anticipated summit is aimed at further cementing their partnership as tensions mount in the Indo-Pacific region. It comes as China takes an increasingly muscular stance in the South China Sea and is aimed at deterring Beijing through a growing latticework of security and economic arrangements, according to officials who spoke on condition of anonymity late on Tuesday.

“We will judge it to be a remarkable summit,” one of the officials said of the projected number of outcomes. “Seventy is not common. Occasionally we have a dozen, maybe 20 at the outside. This is probably the largest number of substantial deliverables that we’ve seen of its kind.”

The officials declined to provide specifics but indicated that many would relate to reorganising and integrating their two militaries and new joint operating command structures. Some 54,000 US troops are stationed in Japan.

US officials warned that even after particulars were disclosed, the reorganisation would take months as the two defence bureaucracies wrangle over details and implementation.

Other announcements on Wednesday are expected to involve tapping Japan’s formidable manufacturing expertise to fill gaps in the overstretched US military-industrial structure with construction of US naval vessels, aircraft and other equipment years behind schedule.

There would also be five space cooperation agreements, the officials said – likely involving the participation of a Japanese astronaut in a future Artemis moon-landing mission and a US$2 billion moon rover project overseen by Toyota.

Also expected are several people-to-people announcements: an artificial intelligence partnership between Carnegie Mellon and Keio universities, several Japanese firms and Microsoft; a US$50 million tie-up between Washington state’s University of Washington, the University of Tsukuba, Amazon and Nvidia; and the creation of a US$12 million fund to promote high school exchanges between the two countries.

Beyond the deliverables, officials said, this week’s summits underscored the merits of prioritising a latticework of groupings. When China tries to punish Australia or the Philippines economically or militarily and allies respond with joint naval patrols and trilateral arrangements, it is ultimately Beijing that stands alone, they said.

“The country that’s isolated is China, not the Philippines,” another senior official said, with the leading partner being Japan. “In the past, it was all about the defence of Japan. They are stepping beyond that … They are a global partner.”

US officials acknowledged there was anxiety in foreign capitals over whether newly minted partnerships under Washington’s Indo-Pacific strategy would last should Biden lose his re-election bid to former president Donald Trump in November. Some countries had decided to lie low, others doubled down, they said. But they expressed confidence the architecture would withstand the test of time.

“We think it creates a momentum of its own,” one official said.

Although US-Japan relations are increasingly close, officials declined to say definitively whether Japan was ready to join the Five Eyes – an intelligence alliance composed of Australia, Canada, New Zealand, Britain and the US – or fight alongside the US in a war.

“It’s fair to say our Japanese partners have taken substantial steps on information security,” one official said. “There is still more work to do.”

Biden and Kishida will also join a trilateral summit on Thursday with Philippine President Ferdinand Marcos Jnr as the Biden administration works to bolster its network of Indo-Pacific economic and security agreements amid growing tension in the waters around the Philippines.

In addition to meetings with Biden and a state dinner on Wednesday night in the East Room, Kishida has been invited to address a joint meeting of Congress on Thursday to be only the second Japanese leader to address the body after prime minister Shinzo Abe spoke in 2015.

At a media preview of the 230-guest dinner, Jill Biden said the menu would reflect the long-term partnership between the two allies, including rib-eye steak, shishito pepper butter and shiso leaf fritters.

One blemish colouring ties between the two leaders is Biden’s decision last month to oppose a US$41 billion takeover bid by Nippon Steel for US Steel on national security grounds.

“The president has made it clear that he will always stand up for American workers,” said Mira Rapp-Hooper, special assistant to the president for East Asia and Oceania. “But he’s equally strong and he has conviction that he will always stand up for the US-Japan alliance. I’ll leave it at that.”

The US ambassador to Japan, Rahm Emanuel, in Washington for the prime minister’s visit, sought on Monday to downplay the effect of the Nippon rejection on the relationship – noting that the Biden administration approved a multibillion US dollar deal in February for Japan’s Mitsui Engineering & Shipbuilding to build container cranes.

“The United States’ relationship with Japan is a lot deeper and stronger and more significant than a single commercial deal,” Emanuel said.

Japanese lawmaker says US Steel deal would help counter China dominance

Biden has focused heavily on the Pacific since coming to power as a way to counter China’s rising economic and military might, even as the administration has been forced to grapple with Russia’s invasion of Ukraine and the war between Israel and Hamas.

As it has become more stretched, it has increasingly leaned on Japan to pursue economic and diplomatic initiatives with Southeast Asia and Pacific Island nations.

China has expanded its island building activity in the South China Sea, increasingly challenged US “freedom of navigation” flights and voyages, used water cannons and other tactics against Philippine vessels and greatly expanded its coastguard and naval fleet in recent years.

Beijing maintains that much of the contested South China Sea is solely its territory.

In addition to the Quad, the US has organised the Japan-South Korea-US trilateral; the Aukus alliance, a pact comprising Australia, Britain and the US; and the 14-nation Indo-Pacific Economic Framework led by the US.

Biden administration officials repeatedly say these are not aimed at any particular country, and so far Beijing has not reacted particularly strongly, although analysts said they were taken aback by the Seoul-Tokyo link given China’s long history of divide-and-conquer tactics involving its two neighbours.

“We oppose cobbling together exclusive groupings and stoking bloc confrontation in the region,” Chinese foreign ministry spokeswoman Mao Ning said on Monday.

The trilateral summit on Thursday is designed to show economic, military and diplomatic support for the Philippines as it comes under growing pressure from Beijing. On March 5, the Chinese coastguard and Chinese maritime militia collided with the Philippine coastguard. And on March 23, Chinese water cannons damaged a Philippine supply vessel and injured some of the crew attempting to reach the Sierra Madre, a rusting naval vessel grounded to reinforce Manila’s sovereignty claims to the surrounding area.

“The US-Philippine mutual defence treaty applies to the Philippines in the South China Sea,” Rapp-Hooper said. “We stand strongly by our alliance commitments to the Philippines and that is one of the things we will be talking to President Marcos about.”

US ‘back in force’ in Pacific as Biden engages with regional leaders at summit

Marcos will be looking for some economic and diplomatic benefits he can take home to voters to show his tough stance against China is paying dividends, according to analysts.

“Even if this is a US-China conflict, there will be Philippine sailors involved,” said Jeremy Chan, a geopolitical analyst with the Eurasia Group. “They’re the marines on the Sierra Madre ship, ground zero. There’s absolutely a Philippines domestic component.”

Additional reporting by Khushboo Razdan

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South China Sea: Philippines’ Marcos ‘horrified’ by Xi-Duterte ‘gentleman’s agreement’ for status quo in disputed waters

https://www.scmp.com/news/asia/southeast-asia/article/3258506/south-china-sea-philippines-marcos-horrified-xi-duterte-gentlemans-agreement-status-quo-disputed?utm_source=rss_feed

Philippine President Ferdinand Marcos Jnr said he’s “horrified” to learn of an agreement between his predecessor, Rodrigo Duterte, and China that bars Manila from shipping construction materials to a military outpost in a disputed shoal in the South China Sea.

“If that agreement says we need to seek permission from another country to be able to do something within our own territory, it would probably be difficult to honour that agreement,” Marcos told reporters on Wednesday.

“I am horrified by the idea that we have compromised through a secret agreement the territory, the sovereignty and the sovereign rights of the Philippines,” he added.

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

Duterte’s former spokesperson, Harry Roque, has said the Philippines entered into a “gentleman’s agreement” with China during Duterte’s term that restricts Manila from sending repair materials to a World War-II era ship that’s been serving as the nation’s outpost in the Second Thomas Shoal for about a quarter of a century.

Philippine military missions that rotate and resupply troops on the ship, known as BRP Sierra Madre, have become a constant source of tension between Manila and Beijing, with Chinese vessels deploying water cannons on Philippine ships on several instances.

Marcos said his government isn’t aware of any record of the agreement, and that they were not briefed about it when he came into office in 2022. The administration is talking to former officials during Duterte’s term about the matter, but Marcos said, “we still haven’t gotten a straight answer.”

How Philippines’ domestic politics can affect South China Sea tensions

Tensions with China will be at the centre of the White House summit on Thursday between President Joe Biden, Japanese Prime Minister Fumio Kishida and Marcos as Washington seeks to boost cooperation among allies in the Indo-Pacific region in a bid to counter mainland China as Beijing presses claims over Taiwan and the East and South China Seas.

There is likely to be an agreement among the three countries “in terms of maintaining security and freedom of navigation in the South China Sea,” Marcos said. The Philippine leader will also have bilateral talks with Biden on the sidelines of the summit to continue discussions on strengthening further the alliance between Manila and Washington, he said.

Work to start on 2 Vietnam-China high-speed railways by 2030, Hanoi says

https://www.scmp.com/news/asia/southeast-asia/article/3258495/work-start-2-vietnam-china-high-speed-railways-2030-hanoi-says?utm_source=rss_feed

Vietnam aims to start building two high-speed railway lines linking its capital Hanoi with China before 2030, the Ministry of Planning and Investment said, another sign of a recent warming of ties between the two communist-ruled neighbours.

China is Vietnam’s largest trading partner and a vital source of imports for its manufacturing sector. The two countries are already connected via a system of highways and two railway lines that are old and need upgrading on the Vietnam side.

One of the planned high-speed lines would run from Vietnam’s port cities of Haiphong and Quang Ninh through Hanoi to Lao Cai province, which borders China’s Yunnan province, the ministry said in a statement released late on Tuesday.

China puts trust in AI to maintain largest high-speed rail network on Earth

The other would run from Hanoi to Lang Son province, which borders China’s Guangxi region, passing through an area densely populated with global manufacturing facilities, including some owned by Chinese investors.

The ministry didn’t provide further details about the projects.

Earlier this month, Vietnam said it was seeking to learn from China to develop its first high-speed railway network and had sent its officials to work with Chinese railway companies.

A massive high-speed railway line linking capital Hanoi with business hub Ho Chi Minh City is also being planned in the country.

Vietnam’s National Assembly chairman Vuong Dinh Hue met executives of Chinese railway companies on Monday during his ongoing visit to Beijing, where he was hosted by President Xi Jinping.

This came after Vietnam and China signed dozens of cooperation agreements, including on railways, during a visit to Hanoi by Xi in December.

Trade between Vietnam and China in the first quarter of this year rose 22 per cent from a year earlier to US$43.6 billion, according to Vietnamese government data.

The two countries remain embroiled in a years-long maritime dispute in the South China Sea, though the tensions appear to have calmed recently.

Microsoft’s Blizzard resumes NetEase partnership, bringing World of Warcraft back to Chinese players after bitter break-up

https://www.scmp.com/tech/big-tech/article/3258471/microsofts-blizzard-resumes-netease-partnership-bringing-world-warcraft-back-chinese-players-after?utm_source=rss_feed

Blizzard Entertainment, the video game giant behind World of Warcraft, is resuming its partnership with NetEase under its new owner Microsoft, marking a revival of the most enduring US-China video game partnership that had an acrimonious break-up over a year ago.

Confirming an earlier South China Morning Post report, the two companies renewed a publishing agreement that will cover games under the previous arrangement, including World of Warcraft, Hearthstone, and other titles in the Warcraft, Overwatch, Diablo, and StarCraft universes, according to a joint statement on Wednesday. These titles are expected to start returning to mainland China this summer.

“After continuing discussions over the past year, both Blizzard Entertainment and NetEase are thrilled to align on a path forward to once again support players in mainland China and are proud to reaffirm their commitment to delivering exceptional gaming experiences,” according to the statement.

Chinese regulators retract gaming rule proposal after stock market turmoil

Last January, the two companies suspended services for all Blizzard titles in the mainland, except for Diablo Immortal, a mobile title co-developed by NetEase and Blizzard, as their 14-year partnership came to an end. Both sides blamed each other for treating Chinese players badly after failing to agree to new terms to extend the deal.

The latest announcement comes five months after US tech giant Microsoft finalised its US$68.7 billion deal to acquire Activision Blizzard, the parent company of Blizzard Entertainment.

Separately, the new deal also deepens cooperation between Microsoft and NetEase, aiming to bring new NetEase titles to Xbox consoles and other platforms, according to the statement.

“Returning Blizzard’s legendary games to players in China while exploring ways to bring more new titles to Xbox demonstrates our commitment to bringing more games to more players around the world,” said Phil Spencer, CEO of Microsoft Gaming.

The news sparked excitement from Chinese players on social media. The return of Blizzard was the top trending topic on Chinese microblogging platform Weibo immediately after the announcement, achieving over 100 million views within two hours.

“I’ve been wandering in foreign servers for over a year, and finally I can come back home,” one Weibo user commented.

However, there is still work to be done before the games become available for Chinese players. NetEase is looking to hire positions including game operations planners, engineers and project managers for World of Warcraft, Hearthstone and Overwatch under its gaming studio Leihuo, according to new job posts on Wednesday.

After the previous partnership ended last January, NetEase disbanded the local team responsible for operating Blizzard titles in Shanghai, the Post reported earlier.

US wants to ‘flip script’, isolate China with allies’ help, says Washington’s ambassador to Tokyo

https://www.scmp.com/news/asia/article/3258486/us-wants-flip-script-isolate-china-allies-help-says-washingtons-ambassador-tokyo?utm_source=rss_feed

US President Joe Biden’s administration is looking to reverse China’s attempts to isolate countries in Asia including the Philippines with help from Japan and other allies in the region, according to US Ambassador to Tokyo Rahm Emanuel.

“Our strategy is to flip that script, and make the isolated party China,” Emanuel said in Washington ahead of a summit between Biden and Japanese Prime Minister Fumio Kishida.

The meeting, part of the first official visit by a Japanese leader to the US in nearly a decade, comes at a critical time in the bilateral relationship. The countries are seeking to step up cooperation on security in the Indo-Pacific region as China takes an increasingly assertive stance on disputed waters in the South China Sea.

Will the Philippines’ summit with US, Japan further erode Manila-Beijing ties?

The two leaders will hold an unprecedented trilateral summit with Philippine President Ferdinand Marcos Jnr on Thursday to discuss advancing three-way cooperation in strategic areas including security, emerging technologies and supply chains.

Rahm flagged the importance of the alliance with Japan in helping the US switch to a more multinational approach to security and economic development. The US has been known for a “hub and spokes” approach to security ties that didn’t require close relationships among its allies.

“This lattice structure is a fundamental shift of the United States to a more multinational approach whether it comes to military exercises, economic development, or whether it comes to diplomatic initiatives,” Emanuel added.

Meanwhile, a senior US admiral has said that China’s actions in the South China Sea were an example of it trying to gain territorial space through force, and were destabilising the region.

The Philippines and China have had a series of maritime run-ins, including water cannon use, and heated verbal exchanges that have triggered concern about an escalation at sea.

Admiral John Aquilino, Commander of the US Indo-Pacific Command, said on Tuesday in an address to the Lowy Institute think tank in Sydney that China’s actions against the Philippines, particularly in Second Thomas Shoal, were “dangerous, illegal and they are destabilising the region”.

Aquilino said he was “very concerned about what is happening at Second Thomas Shoal”, where the physical action of the Chinese coast guard and a fishing vessel had resulted in six sailors injured. “So what’s next and how far are they willing to go in that area?”

He said similar actions by China were also being seen elsewhere in the region, including in Japan and Malaysia.

“This is not isolated, this is about the PRC [People’s Republic of China] trying to gain territorial space unilaterally through force,” he said.

China claims almost the entire South China Sea as its territory, policed by an armada of coastguard vessels, some more than 1,000km (620 miles) from its mainland, and has maintained its responses have been appropriate in the face of Philippine encroachment.

Aquilino said there was positive movement in the US-China relationship since the leaders of the two countries had spoken, with no concerning maritime interactions between the US and China since then.

But Aquilino said he was concerned this detente was temporary, as China sought to stabilise its economy.

He also expressed concern about what he said was synchronisation between Russia and China, and Russia and North Korea.

“Those sets of cooperation and the linkages are really a new world and a concern,” he said.

In Pacific nations, he said China was exercising economic coercion, and said Australia and the US were working together to focus on increasing development assistance to the region, including the Solomon Islands which has struck a security pact with China.

“An increased military presence in that region is a direct threat to Australia as it applies to homeland defence and it doesn’t put the US in a good position either,” he said.

Additional reporting by Reuters

China’s Xi meets with Russian Foreign Minister Lavrov in show of support against Western democracies

https://apnews.com/article/china-russia-lavrov-ukraine-38cf75eb975b5fd1b9cc5b7c4dbbe33cIn this photo released by Xinhua News Agency, Russian Foreign Minister Sergey Lavrov, left, and Chinese President Xi Jinping meets at the Great Hall of the People in Beijing on Tuesday, April 9, 2024. Chinese leader Xi Jinping met with Russian Foreign Minister Sergey Lavrov Tuesday in a sign of mutual support and shared opposition to Western democracies amid Moscow's invasion of Ukraine. (Li Xueren/Xinhua via AP)

2024-04-09T10:29:49Z

BEIJING (AP) — Chinese leader Xi Jinping met with Russian Foreign Minister Sergey Lavrov Tuesday in a sign of mutual support and shared opposition to Western democracies amid Moscow’s invasion of Ukraine.

“We would like to express our highest appreciation and admiration for the successes that you have achieved over the years and, above all, over the last decade under your leadership,” Lavrov told Xi, according to Russian media.

“We are sincerely pleased with these successes, since these are the successes of friends, although not everyone in the world shares this attitude and are trying in every possible way to restrain the development of China — in fact just like the development of Russia,” Lavrov said.

Russia’s growing economic and diplomatic isolation has made it increasingly reliant on China, its former rival for leadership of the Communist bloc during the Cold War. In past decades, the two have closely aligned their foreign policies, held joint military exercises and sought to rally non-aligned states in groupings such as the Shanghai Cooperation Organization.

Lavrov held a news conference earlier Tuesday with his Chinese counterpart Wang Yi at which they reaffirmed solidarity in international affairs.

Lavrov said Russia and China oppose any international events that do not take Russia’s position into account.

He said Ukrainian President Volodymyr Zelensky’s “so-called peace formula” was “completely detached from any realities.”

Zelensky has called for the withdrawal of Russian forces and the return of all occupied Ukrainian territory, but is heavily reliant on support from the U.S., where the Republican Party majority in the House of Representatives has been holding up a new military aid package.

China and Russia are each others most important diplomatic partners, both holding permanent seats on the United Nations security council and working together to block initiatives by the U.S. and its allies to spread democratic values and human rights from Venezuela to Syria.

While China has not provided direct military support for Russia, it has backed it diplomatically in blaming the West for provoking Russian President Vladimir Putin’s decision to launch the war and refrained from calling it an invasion in deference to the Kremlin. China has also said it isn’t providing Russia with arms or military assistance, although it has maintained robust economic connections with Moscow, alongside India and other countries, amid sanctions from Washington and its allies.

At their joint news conference Wang repeated China’s calls for a ceasefire and “an end to the war soon.”

“China supports the convening at an appropriate time of an international meeting that is recognized by both Russia and Ukraine, in which all parties can participate equally and discuss all peace solutions fairly,” Wang said.

China’s peace proposal has found little traction, in part due to the country’s continuing support for Russia and lack of vision for what a future resolution would look like, particularly the fate of occupied Ukrainian territories and their residents.

Wang also said Xi and Putin would continue to maintain close exchanges this year amid expectations of visits to each other’s capitals.

“China and Russia have gone through ups and downs, and both sides have drawn lessons from historical experience and found a correct path to promote the healthy and stable development of bilateral relations,” Wang said. “Today’s good relations between China and Russia are hard-won and deserve to be cherished and carefully maintained by both sides.”

Lavrov arrived in China on Monday, while Wang and other leading Chinese figures have recently visited Russia and maintained China’s line of largely backing Russia’s views on the cause of the conflict.

China has at times taken an equally combative tone against the U.S. and its allies. China and Russia have held joint military drills, and are seen as seeking to supplant democracies with dictatorships in areas where they wield influence. China is involved in its own territorial disputes, particularly over the self-governing island of Taiwan and in the South China and East China Seas.

Just weeks before Russia invaded Ukraine, Putin visited Beijing for the opening of the 2022 Winter Olympics and the sides signed a pact pledging a “no limits” relationship that has China supporting Russia’s line, even while formally urging peace talks.

In a phone call last week with Chinese leader Xi Jinping, U.S. President Joseph Biden pressed China over its defense relationship with Russia, which is seeking to rebuild its industrial base as it continues its invasion of Ukraine. And he called on Beijing to wield its influence over North Korea to rein in the isolated and erratic nuclear power.

US coastguard rejects Chinese claim it illegally boarded fishing vessels in Pacific: ‘host nations invite us’

https://www.scmp.com/news/asia/australasia/article/3258467/us-coastguard-rejects-chinese-claim-it-illegally-boarded-fishing-boats-pacific-host-nations-invite?utm_source=rss_feed

The United States’ coastguard has rejected comments by a Chinese diplomat that its recent boardings of Chinese fishing boats in the Pacific alongside local police are illegal, saying the joint patrols are at the behest of Pacific nations to protect coastal fisheries.

Six Chinese fishing boats were reportedly found to be violating Vanuatu’s fisheries law last month after being inspected by local police who were on board the first US Coast Guard boat to patrol the waters of the Pacific island nation.

The US Coast Guard and Kiribati police also boarded two Chinese fishing boats during a patrol in February, the first joint patrol in a decade, but found no issues aboard.

Warily eyeing China’s influence, US talks up US$7.1 billion in Pacific aid

China’s Ambassador to New Zealand Wang Xiaolong said in a letter circulated by the Chinese embassy on Friday the use of “shiprider” agreements between the US and Vanuatu, Kiribati and Papua New Guinea to “carry out law enforcement activities against China’s fishing vessels” was a violation of international law.

In the letter, Wang claimed the agreements are not binding on China’s fishing fleet.

“China is not obliged to accept the law enforcement of countries other than coastal states for fishing activities in their exclusive economic zones,” the letter said.

US coastguard Rear Admiral Michael Day on Wednesday said the Chinese ambassador’s statement was inaccurate and the bilateral shiprider agreements complied with international law.

“We do these boardings at the behest of those host nations who invite us to board, to work with them collaboratively in protecting their exclusive economic zones,” he said at a press conference in Honolulu to mark the return of the US Coast Guard cutter Harriet Lane after its Pacific islands patrol.

“A free and open Indo-Pacific is predicated upon the following of international rules and norms and laws, and I am happy to say the coastguard is complying with all international law and these are legal boardings.”

Commander Nicole Tesoniero said shiprider agreements with Samoa, Fiji, Vanuatu and Papua New Guinea had resulted in 23 boardings of fishing boats operating in the “far reaches of the respective countries’ exclusive economic zones”, with 12 violations found by local police.

“The targeting of vessels within the exclusive economic zones as well as the enforcement actions were all dictated by our partners,” she said.

The patrol comes after Vanuatu and Solomon Islands, Pacific island nations with close ties to China, blocked the US Coast Guard from coming to port to refuel in 2022 and 2023 as it undertook a patrol for illegal fishing on behalf of the Pacific Islands Forum regional block.

Australia, New Zealand and Britain have also stepped up navy patrols for illegal fishing in partnership with Pacific islands nations, many of whom do not have militaries or boats to monitor coastal waters and exclusive economic zones spanning millions of kilometres.

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‘Get used to tighter belts’: how China’s local governments and party bodies are embracing cost-cutting culture

https://www.scmp.com/news/china/politics/article/3258472/get-used-tighter-belts-how-chinas-local-governments-and-party-bodies-are-embracing-cost-cutting?utm_source=rss_feed

Local government and party agencies in China are rolling out rules to cut spending, including greater use of new energy vehicles, less tea and fewer indoor plants.

They vowed to “get used to living a tight life” in every aspect in keeping with Beijing’s persistent call amid a faltering economy.

The northwestern province of Shaanxi has mandated that new energy vehicles account for at least 40 per cent of newly procured and replaced official vehicles at the provincial level, excluding those for special purposes, the official Shaanxi Daily newspaper said on Sunday.

In Fujian province in southeastern China, “personal use of public resources” – such as using office supplies to print test papers and workbooks for workers’ own children – should be “resolutely eliminated”, the Education Bureau of Changting county said in a proposal to all faculty and staff issued on Sunday.

“[We should] resolutely wipe out the prolonged practice of sitting around and brewing tea in the office,” it added. Fujian is one of the major tea-producing provinces of China and has a strong tea culture.

The Government Office Administration of Luan in nearby Anhui province pledged on Sunday to cut the overall number of indoor plants in office areas by one-third, which it estimated would save more than 30,000 yuan (over US$4,000) a year.

It also ruled that no agency should use more than three vehicles a day and same-day return was required, except under special circumstances.

“The party and government take the lead in living a tight life, with the purpose of enabling the people to live a good life,” Chinese President Xi Jinping said during the two sessions in 2019 in an explanation of the rhetoric.

Beijing has told both central and local governments to cut spending amid intense downward economic pressure. While delivering his annual government work report last month, Premier Li Qiang urged the government to get used to “tightening their belt” – a call that has been repeated in China many times in recent years.

“Living within tight financial constraints is not a temporary measure or expedient, but a principle and guideline that needs to be adhered to in the long term,” China’s top supervisory organ said in an article published on its website in January.

In frugality campaigns across the country, local authorities have vowed to conserve daily resources, promoting water-saving appliances, efficient lighting sources and a paperless working environment.

“Every employee can start by reducing travel expenses, saving water and electricity costs, to truly practise the concept of ‘all costs can be reduced’,” said the party organ of an iron-making plant in Yunnan in its expense control proposal on Sunday.

It outlined its cost-cutting goals for the year: a 30 per cent reduction in travel expenses and drinking water costs compared to 2023.

Staff who were planning business trips should prioritise cost-effective transport and book their tickets at least three days in advance to get the lowest-priced tickets, it said.

The factory authorities also said they would not approve unnecessary bottled water consumption, and that bottled water would no longer be available during meetings.

China hits back after Fitch Ratings downgrades credit outlook, Beijing says local debt risks are controllable

https://www.scmp.com/economy/economic-indicators/article/3258479/china-hits-back-after-fitch-ratings-downgrades-credit-outlook-beijing-says-local-debt-risks-are?utm_source=rss_feed

A decision by a leading credit rating agency to downgrade China’s sovereign debt outlook to negative from stable failed to foresee the “positive role” of Beijing’s fiscal policy mix in promoting economic growth and stabilising the macro-leverage ratio, the Ministry of Finance said on Wednesday.

Fitch Ratings had earlier on Wednesday made the move due to concerns over China’s property and public finance stress and “eroded fiscal buffers” because of wide fiscal deficits and rising government debts.

“It is a pity to see Fitch’s downgrade,” the finance ministry said.

“The long-term positive trend of China’s economy has not changed, nor has the Chinese government’s ability and determination to maintain good sovereign credit.”

‘We can’t fall behind’: China’s local debt woes hurt firms, create distrust

The ministry added that the local debt risk was “controllable”, and that de-risking was progressing in an orderly manner.

China had also expressed disappointment in December after fellow international rating agency Moody’s Investors Service cut the outlook for Chinese sovereign bonds from stable to negative.

But the move by Fitch comes at a delicate time for the world’s second-largest economy, with China set to release its first-quarter data on Tuesday, which is expected to show a rebound in economic activities.

The finance ministry, which had deep and extensive discussions with Fitch before the downgrade, said that it had scientifically and rationally arranged the scale of the fiscal deficit, and kept the rate at a reasonable level.

“Keeping the deficit rate at a reasonable level, 3 per cent in 2024, is conducive to stabilising growth, controlling the government debt ratio and reserving policy space to deal with risks and challenges in the future,” the ministry said.

“In the long run, maintaining a moderate deficit and making good use of precious debt funds will help boost domestic demand, support growth and in turn help maintain good sovereign credit.

“The Chinese government always takes into account multiple goals like supporting economic development, preventing fiscal risks and achieving fiscal sustainability.”

Fitch did maintain its A+ rating for China’s sovereign bonds, but the rating remains lower than the AA+ rating for US bonds.

The rating means China’s sovereign bonds are still considered to have an upper-medium investment grade.

Many investment banks have started to show optimism in China’s economy, with higher growth estimates, after economic activity data so far this year has shown some signs of stabilisation.

Citi lifted its annual growth forecast from 4.6 per cent to 5 per cent, while Nomura raised its projection from 4 per cent to 4.2 per cent.

Beijing’s stated target is for China’s economy to grow by “around 5 per cent” this year.

However, there are increasing calls for stronger fiscal stimulus to ensure this year’s growth target.

“Fitch believes that fiscal policy is increasingly likely to play an important role in supporting growth in the coming years, which could keep debt on a steady upwards trend,” the rating agency said.

“Contingent liability risks may also be rising, as lower nominal growth exacerbates challenges to managing high economy-wide leverage.”

Enterprising China exporter sells car-replacing rural electric pedicabs to US, bemoans profit levels same as selling clothes

https://www.scmp.com/news/people-culture/trending-china/article/3257010/enterprising-china-exporter-sells-car-replacing-rural-electric-pedicabs-us-bemoans-profit-levels?utm_source=rss_feed

A 25-year-old man from China has trended on mainland social media for selling electric pedicabs – which are popular in rural parts of the country – to customers in the United States where they are rare.

Called san beng zi in Mandarin, the small vehicle can carry cargoes weighing a tonne or several people on an uncovered trailer.

The vehicles can travel tens of kilometres on a full charge.

Luo Hao graduated from a Shanghai university in 2022 with a bachelor’s degree in marketing, and gained a master’s degree in finance from a university in Britain in the summer of 2023.

While he was researching business opportunities last year, Luo saw videos filmed by a Chinese woman living in the US who had bought a san beng zi for her American father-in-law as a Christmas gift.

The father-in-law was amazed by the electric pedicab which was bought for US$600 but cost much more to be shipped from China and transported to their home.

He was so fascinated with the vehicle, which he called beng beng because san beng zi is difficult for foreigners to pronounce, that he drove it around his neighbourhood and to the supermarket.

Locals were equally taken by the unusual form of transport.

The pedicab soon became a sensation in their town, with many people asking where they could buy one, according to video clips of the woman who is identified as @Bobozaimeiguo on Douyin.

Local police granted the pedicab the same licence as a motorcycle after it passed basic performance tests.

The clips show US police officers admiring the vehicle and noting how convenient it is to drive and easy to park.

“Her videos have been viewed by tens of millions of people in China. But only I went into action,” Luo told the mainland news outlet, Jimu News.

Luo and a friend decided to move to the US at the start of this year to set up a business selling the vehicles.

They have another partner based on the mainland who is responsible for buying the pedicabs from factories.

Luo said the cost of buying the pedicabs and shipping them from China was 10,000 yuan (US$1,400) each.

In addition, there is the cost of renting storage in the US and paying for trucks to deliver them to customers.

To save money, Luo learned how to drive a truck. He said he has sold dozens of the vehicles since the beginning of March.

“On the first day, when our sales began, our revenue was US$10,000. This makes me very proud,” said Luo. “But I’d like to say it’s really hard to start a business. I’ve put a tremendously large amount of effort into it.”

Luo said he and his friend once sent a pedicab to a farm in the evening and the forklift broke. They had to unload it by themselves and did not get home until 2am.

Another time on a delivery when he had almost reached a customer’s home, they sent him a message cancelling the order.

“Profits are not as high as many internet users might think. It’s on a par with that of selling clothes in China,” said Luo.

He said that after his business went viral on mainland social media, many internet users left him messages and some expressed an interest in selling san beng zi abroad.

“If you have no experience or no resources in this industry, I suggest you look before you leap,” Luo said.

Philippines steps up defences against Chinese hackers after ‘cyberwar’ warning from telecoms security chief

https://www.scmp.com/week-asia/politics/article/3258419/philippines-steps-defences-against-chinese-hackers-after-cyberwar-warning-telecoms-security-chief?utm_source=rss_feed

Following a recent spate of cyberattacks blamed on Chinese hackers, Philippine President Ferdinand Marcos Jnr has unveiled a six-year plan to step up cybersecurity and counter the risks posed by digital intrusions from abroad.

The plan, announced on Sunday, stresses the “need for operational guidelines” and the urgent need for existing mechanisms to be enhanced to deter cyberattacks.

It comes after the official Facebook account of the Philippines’ coastguard was hacked on March 29. An “unidentified entity” posted several “malicious” short videos to the account before the government regained control of it six days later, according to coastguard spokesman Rear Admiral Armand Balilo.

Hackers help Philippines’ understaffed cyberdefence team fight China threat

It was the second time the coastguard’s Facebook account had been hit this year. Hackers also gained control of the account in February, less than two weeks after the coastguard’s official account on X, formerly Twitter, was also hacked.

Marcos Jnr’s own website, the email server of the Philippine Department of Information and Communications Technology and the website of National Coast Watch Centre were also all targeted by hackers in January, according to The Philippine Star newspaper.

“We are not attributing this to any state. But using the internet protocol addresses, we pinpointed it to China,” Renato Paraiso, spokesman for the Department of Information and Communications Technology, said in February.

He said investigators had traced the hackers and suspected they were using the services of Chinese state-owned telecoms company China Unicom.

Chinese officials have denied any involvement in the cyberattacks on Philippine government websites, and offered help in locating the suspects in China.

Martina Tagacay, a data protection consultant for the Philippine government, said the coastguard’s website and social-media accounts were most likely targeted because of Manila’s disputes with Beijing over the South China Sea.

But it was “too early” to conclude that Chinese hackers were behind the attacks, although “publicly we know China has interest in the coastguard’s activities in the West Philippine Sea” added Tagacay, who is also a retired professor of computer studies at Notre Dame University in the southern Philippines, using Manila’s name for the parts of the South China Sea that fall within its exclusive economic zone.

Art Sarmiento, a technology editor at the Manila Bulletin newspaper, said the coastguard had to take comprehensive measures to fortify its digital defences, including through non-technical means.

“There is a need to educate staff on identifying phishing scams, adopting secure practices, and recognising suspicious activities,” Sarmiento said.

The Philippines has seen a number of major cyberattacks in recent months.

In October last year, the personal information – including names, addresses and dates of birth – of up to 20 million members of state insurer Philippine Health Insurance was leaked online following a cyberattack.

Millions of Malaysians shun subsidy-linked database over hacking fears

The country’s biggest telecoms company, PLDT, and its wireless unit Smart Communications have said the number of cyberattacks on their infrastructure rose by nearly 9,000 per cent last year, from 182 million cases in 2022 to 16 billion in 2023.

“We are in the middle of a cyberwar. Private entities and government units must collaborate, and we need the government to orchestrate our efforts,” PLDT’s chief information security officer Angel Redoble said in January.

China’s Xpeng edges closer to selling right-hand drive EVs in Hong Kong, appointing Malaysian firm as local distributor

https://www.scmp.com/business/china-business/article/3258416/chinas-xpeng-edges-closer-selling-right-hand-drive-evs-hong-kong-appointing-malaysian-firm-local?utm_source=rss_feed

Chinese electric vehicle (EV) maker Xpeng has taken a significant step towards tapping the right-hand drive market after forming a partnership with Sime Darby group of Malaysia to distribute its cars in Hong Kong.

It is poised to become the first major Chinese electric car assembler to build tailor-made vehicles for local customers when sales of its premium EVs fitted with preliminary autonomous driving systems start in the third quarter of this year.

“Today marks a major milestone in Xpeng’s go-global strategy,” Brian Gu, president of Xpeng, said in a statement on Tuesday. “With our advanced smart driving technology and innovative mobility solutions, we are committed to providing Hong Kong car owners with smarter, more convenient and environmentally friendly driving experiences.”

Sime Darby Motors, a unit of Kuala Lumpur-based automotive to property conglomerate, aims to open a flagship store in Hong Kong to sell Xpeng’s right-hand drive G6 sport-utility vehicle and X9 multipurpose vehicle in the third quarter, Xpeng said in a statement.

Xpeng currently assembles only left-hand drive vehicles, most of which are sold on the mainland.

The Guangzhou-based company, partly owned by Volkswagen Group, is raising the ante in overseas market as a bruising price war in mainland China, the world’s largest EV market, is escalating and squeezing profit margins.

Last month, CEO and co-founder He Xiaopeng said Thailand, Singapore and Malaysia would be targeted as the company looked to hone its international image as a ­leading builder of intelligent EVs. It also plans to make inroads into key European markets such as Germany and France with its ­left-hand drive models, he added.

Along with Shanghai-based Nio and Beijing-headquartered Li Auto, Xpeng is viewed as China’s best response to Tesla as their vehicles feature autonomous driving systems, digital cockpits and high-performance batteries.

On the mainland, its vehicles are capable of navigating their way automatically along city streets using the company’s Navigation Guided Pilot.

The five-seat G6, which has a driving range of at least 580 kilometres, is priced from 209,900 yuan (US$29,015) to 276,900 yuan on the mainland. The seven-seat X9, whose basic edition can go as far as 610km on a single charge, is priced between 359,800 yuan and 419,800 yuan.

Tesla regains EV crown from BYD by outselling rivals in shrinking China market

Xpeng has yet to unveil the prices for its right-hand drive vehicles built for Hong Kong consumers.

“Hong Kong is an ideal market for Xpeng to start with, because the company’s stock is publicly traded there and has established brand awareness,” said Eric Han, a senior manager at Suolei, an advisory firm in Shanghai. “Its profit margin in the overseas markets will definitely be higher than in the mainland where all EV makers are offering discounts to bolster deliveries.”

Cui Dongshu, general ­secretary of the China Passenger Car Association, said in February that most carmakers are likely to continue slashing prices to retain their market share amid a slowdown in the mainland EV market.

Xpeng is now offering a roughly 10 per cent discount on its bestselling G6 to spur deliveries at home.

The company also plans to launch a mass-market brand this month to challenge market leader BYD in the world’s largest EV market.

Models under this new brand will be fitted with autonomous driving systems and priced between 100,000 yuan and 150,000 yuan, He told an automotive forum in Beijing last month.

China-US relations: American state department official explains how Beijing risks crossing ‘red line’ with Russia

https://www.scmp.com/news/china/diplomacy/article/3258441/china-us-relations-american-state-department-official-explains-how-beijing-risks-crossing-red-line?utm_source=rss_feed

China’s closer ties with Russia risk crossing a line as sensitive to Washington as Taiwan is to Beijing, a senior member of US President Joe Biden’s administration suggested on Tuesday.

Asked about Chinese President Xi Jinping’s meeting with Russian Foreign Minister Sergey Lavrov earlier in the day, Deputy Secretary of State Kurt Campbell first cited the “red line” and “core interest” that his department’s officials often hear about from Chinese counterparts.

“For the United States … our most important mission, historically, has been the maintenance of peace and stability in Europe,” Campbell said. “The point that we’re trying to make to Chinese interlocutors is that this is our strategic interest. This is the most central issue, and China is involving themselves in a way that they think that we don’t completely understand.”

Assurances that Washington does not support independence for the self-ruled island are a regular fixture in high-level dialogue with Beijing. In his first meeting with Biden after the US leader entered the White House in 2021, Xi labelled the “Taiwan issue” the “first red line that must not be crossed” in bilateral relations.

Beijing sees Taiwan as a part of China that will eventually be reunited, by force if necessary. Most countries, including the US, do not recognise Taiwan as an independent state, but Washington opposes any attempt to take the island by force and remains committed to supplying it with weapons.

While Beijing considers Taiwan part of its territory and the US does not consider the island a sovereign state, Ukraine is a sovereign state that was invaded by Russia in February 2022.

Campbell, who was speaking during a discussion with Stephen Orlins, president of the New York-based National Committee on US-China Relations, said Beijing had decided “to provide the necessary wherewithal in terms of machine tools, joint use capabilities, a whole variety of capacities to basically allow Russia to retool”.

He said his team had “told China directly if this continues, it will have an impact on the US-China relationship”.

The Beijing-Moscow relationship appeared tighter on Tuesday after Lavrov met Xi to jointly condemn Western-led “bloc confrontation” and “promote reform” in the global system.

“We will not sit by and say everything is fine, for instance, if Russia’s offences continue and they gain territory in Ukraine, that will alter the balance of power in Europe in ways that are, frankly, unacceptable from our perspective,” Campbell added.

China turns up protest over treatment of Chinese arrivals by US border officials

Last week, Campbell cited China’s closer relations with Russia as part of the Biden administration’s rationale for a stronger alliance with Japan and the Philippines, whose leaders will meet the US president for formal talks in Washington this week.

Campbell’s comments come amid a series of high-level bilateral engagements in which both sides are confronting each other on thorny issues which appear difficult to resolve.

Those include US restrictions on sales of advanced technology to China. Last week’s call between Chinese President Xi and Biden highlighted contention over a series of moves that Biden has made to block Chinese firms from buying the most advanced semiconductor chips and receiving investment from US firms to develop cutting-edge technology such as artificial intelligence.

Far from signalling greater understanding on the issue, Beijing’s post-call readout characterised these restrictions as “an endless stream of measures to suppress China’s economy, trade, science and technology”.

Days later, US Treasury Secretary Janet Yellen said during discussions in Beijing with Chinese Vice-Premier He Lifeng that excessive Chinese exports could undercut American interests and lead to “global spillovers”.

In a response to the talks from state news agency Xinhua, Beijing said it had responded fully “to the production capacity issue” and expressed “serious concerns” about US trade restrictions against China.

While not central to her discussions with Vice-Premier He, Yellen also had a message about Beijing’s economic engagement with Russia, warning of “significant consequences” if Chinese companies provide material support for Russia’s invasion of Ukraine.

In remarks to reporters after the meeting, she said China had assured her it would not do so and did not want this to be a bilateral issue, according to Reuters.

Senators propose plan to stem flow of US tech to adversaries

Still, Campbell said recent high-level dialogues with China – including an “upcoming” visit to Beijing by Secretary of State Antony Blinken – indicate that the Chinese government is “determined to keep US-China relations on a steady, stable path”.

“I think we are now back to a situation in which the lines of communication are almost fully open,” he added. “What we’re still seeking … is more engagement on the military and operational side and I think the Chinese system is ready to take those steps, and we’re ready to meet them halfway and in keeping those lines of communications open.”

From liver to kidney: Chinese scientists pass another milestone in pig organ transplants for humans

https://www.scmp.com/news/china/science/article/3258390/liver-kidney-chinese-scientists-pass-another-milestone-pig-organ-transplants-humans?utm_source=rss_feed

Chinese doctors have transplanted a pig’s kidney with multiple gene edits into a brain-dead human recipient, just weeks after the same team performed the world’s first pig liver transplant on a human.

The latest operation was the first of its kind in China and follows previous transplants in the United States.

“As of April 7, the transplanted kidney has been working continuously for 13 days,” Qin Weijun, director of the Air Force Medical University Xijing Hospital, told Science and Technology Daily on Monday.

“It is functioning well in the recipient’s body and producing urine normally.”

The transplant was conducted on March 25, only a couple of weeks after the team performed the pig liver transplant. In both cases the patients’ families agreed to the procedure to help advance medical science, the university said.

Kidney transplants are the only cure for end-stage kidney disease. Although over a million patients in China suffer from the condition, only 10,000 transplants are performed every year, the Air Force Medical University’s department of urology said in a WeChat post last week.

However, xenogenic transplants – the transplant of an organ or tissues from one species into another – could offer a solution.

Pig organ transplants in China and the US open an ethical can of worms

Pigs are used for these operations because they have similar metabolisms and organ size to humans. While monkeys are the most similar species to humans, the US Food and Drug Administration has banned the use of their organs because of the higher risk of disease spreading.

Medical teams in both China and the US have tested pig organ transplants on brain-dead patients who need a ventilator to survive, with the consent of their families, before trying the technology on other patients.

“Research on xenogenic organ transplantation has entered an accelerated period,” said Dou Kefeng, one of the transplant team leads, according to the post.

Such transplants can provide “a highly imaginative solution” to transplant organ shortages, even just by buying time for patients waiting for human organs, Dou said.

During the transplant, the renal artery of the pig’s kidney was connected to the patient’s external iliac artery, which provides blood supply to the legs.

Once the blood flow resumed and the kidney began producing urine, the patient’s own kidneys were removed, the university said.

One of the major ethical concerns with xenotransplantation is the risk of acute rejection as well as the transfer of infectious diseases between the donor animal and humans.

To reduce that risk, the scientists used CRISPR/Cas9 gene-editing technology to add two human genes to the pig used in the transplant and remove three pig genes that can cause hyperacute rejection, the university said.

Last month, a team from the Massachusetts General Hospital in the United States made history with the first transplant of a gene-edited pig kidney into a non-brain-dead patient with end-stage kidney disease.

The 62-year-old recipient suffered an episode of acute rejection eight days after the transplant when white blood cells infiltrated the organ, according to US medical site STAT news.

However, this type of rejection is common in human kidney transplants and the report said the patient was successfully treated with steroids and a drug to deplete the white blood cells.

The doctors in China had been monitoring their kidney recipient for signs of rejection or infection, the university said.

The team’s feat with a pig liver last month, which also functioned normally for 10 days until it was removed, posed a bigger challenge than their recent success, because human livers are more complex than kidneys in both function and structure which means they cannot be completely replaced by a pig’s organ.

The Chinese team chose to keep the recipient’s own liver alongside the transplant to address this issue.

Chinese team grows humanised kidneys in pigs, raising hopes and ethical concerns

Before their attempts with humans, the transplant team also transplanted pig organs into monkeys in 2020, the university said.

Qin said that the transplant team’s work could pave the way for future transplants that could help the millions waiting for life-saving operations.

‘Robotic’ China restaurant boss mimics android to serve delighted customers, goes viral globally

https://www.scmp.com/news/people-culture/china-personalities/article/3257003/robotic-china-restaurant-boss-mimics-android-serve-delighted-customers-goes-viral-globally?utm_source=rss_feed

As debate rages over the ability of artificial intelligence, or AI, to replace human jobs, a hotpot restaurant owner in China has taken things to a new level.

The eatery entrepreneur in Chongqing municipality in the southwest of the country has become an online sensation with her innovative impersonation of a robot waitress.

Her unique performance, captured in a series of viral videos, shows her adopting robot-like mechanical movements to serve customers.

One of the online videos features her robotically serving a dish to a table set with a spicy hotpot soup base, duck intestines, ham and vegetables.

From robotically waving to greet guests at the entrance, to mechanically serving dishes, pouring tea and making toasts, her performance has confused viewers, many of whom think she is a real robot.

One online observer asked: “Is this really a robot?”

Another marvelled at her ability not to blink.

However, the more astute viewers have identified the “robot” as a real person after noticing subtle details like the blackheads and pores on her nose and the slight movement of her nostrils as she breathed.

According to Jiupai News, the restaurant owner, a 26-year-old, surnamed Qin, has been passionately involved in dance since her childhood, and underwent professional training from the age of 12.

She said that the rhythmic and mechanical movements of robots closely resemble the beats of street dance, making it easy for her.

“Eye expressions are definitely acted, but the moves rely on muscle control,” said Qin.

Her robotic idea emerged from her daily interactions with friends, leading to unexpected online fame.

“When customers or friends come to the restaurant, we dance together. By chance, they thought my impersonation was very realistic and recorded a video of me, which was then uploaded online,” said Qin.

“It’s about having fun using my talents and adding a unique feature to the restaurant,” she added.

The performance not only delighted many on-site customers but also prompted many people on mainland social media to express a desire to experience the service in person.

“I was fooled at first, thinking it was a real robot,” said one person.

While another added: “I laughed so hard at this video! I’ll go to this hotpot restaurant just to see the business owner.”

As the story was reposted on Facebook, it received about 50,000 likes and international attention.

“I love creativity!” one viewer said.

“It’s unbelievable. She didn’t even blink. That is almost impossible to do,” said another.

China turns up heat with regulators, banks under the microscope amid focus on financial revamp

https://www.scmp.com/economy/china-economy/article/3258403/china-turns-heat-regulators-banks-under-microscope-amid-focus-financial-revamp?utm_source=rss_feed

China has initiated a new round of inspections on major economic and financial regulators, as well as the big four state-owned banks, marking the latest step in Beijing’s revamp to keep close tabs on the sprawling industry.

The 34 targets of the discipline inspections – a routine tool to identify corruption and ensure government agencies toe the Communist Party line, include China’s central bank, its banking, securities and foreign exchange regulators, the top economic planner and the finance ministry, the state-backed Xinhua News Agency said on Monday.

China’s five largest state banks – the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, China Construction Bank and the Bank of Communications – two state-owned insurers and the Export-Import Bank of China will also open their doors for reviews by the the country’s top anti-corruption body.

They are the first inspections since President Xi Jinping said fending off financial risks were the “eternal theme” for Beijing and brought forward his financial superpower vision – with a variety of regulatory criteria and requirements in the pipeline – at the central financial work conference in October.

China’s banks cut salaries, rescind bonuses amid Beijing’s financial reshuffle

The financial sector, including regulatory bodies and financial service firms, has traditionally been a key target for Beijing’s anti-corruption drive.

On top of that, the top leadership has embarked on a sweeping remoulding of the world’s second-largest financial market and its 461 trillion yuan (US$63.7 trillion) asset pool.

Anti-corruption body chief Li Xi said on Monday that the inspections would focus on vital finance and economy-related entities.

He told inspectors to check the functions, responsibilities and performance of financial units to “enforce discipline, tackle risks, find deviations from the party’s political course and rectify problems”.

Under Xi’s superpower ambition, China’s financial market is duty-bound to marshal resources to serve national endeavours, prop up growth and the real economy and surmount risks at home and abroad, even at the expense of their profits.

Financial officials and executives have reported pay cuts and have been told to ditch “character defects”, including greed and elitism, to align more closely with the Communist Party.

“Upcoming inspections ram home the message that financial officials and managers must discipline themselves and deliver on Beijing’s demands and they will be checked and appraised,” said Li Xuenan, a finance professor with the Cheung Kong Graduate School of Business.

Li compared the Communist Party’s stronger oversight with the Western solution of environmental, social and governance (ESG).

With new regulations and mandates, is the party over for China’s finance sector?

“How to align the interests of the financial industry with the greater good of the public is a global issue,” she said.

“Incorporating party leadership into the running of financial institutions can also be a unique method of implementing ESG in China.”

Many financial officials and executives have been caught in corruption and discipline probes since last year.

High-profile cases involved former deputy central bank governor Fan Yifei, former Bank of China chief Liu Lianke and the former chairman of China Everbright Group, Tang Shuangning.

“The impression is that the financial sector is the key realm for the party’s discipline apparatus going forward,” said a Beijing scholar who declined to be identified due to the sensitivity of the issue.

“The banking sector is always a focus for graft-busters, but now the new inspections are part of stricter, more intrusive, pervasive party supervision of the entire financial sector. The party is breathing down their neck.”

Beijing is also eyeing deeper penetration into financial entities, with stricter organisation and moral guard rails to weed out corruption and poor performers.

On Monday, the Central Financial Commission and Central Financial Work Commission - the top Communist Party organs overseeing in the financial industry - urged for more party committees and units in more banks, insurers and security brokers, including their divisions and subsidiaries.

“Efforts should be made to expand the party’s organisational coverage and penetration,” said a co-written article published in the Study Times, a newspaper affiliated with the Central Party School that trains Communist Party officials.

The article also reiterated Xi’s directives on eradicating erroneous thoughts and defects, including hedonism, extravagance and “latent, hidden” rules condoning unscrupulous practices and “hidden deviations”.

“High-pressure anti-corruption campaigns must be maintained to target power abuse, dereliction of duty, a political-business ‘revolving door’ and using resignation to avoid graft probes,” the article added.

“We must pursue those taking and giving bribes, investigate corruption behind financial risks, make corrupt officials disgorge ill-gotten gains and eradicate the breeding soil of corruption.”

China’s stockbrokers see salaries slashed for second year amid slumping market, crackdown on flashy finance executives

https://www.scmp.com/business/china-business/article/3258352/chinas-stockbrokers-see-salaries-slashed-second-year-amid-slumping-market-crackdown-flashy-finance?utm_source=rss_feed

China’s stockbrokers took a pay cut for a second straight year in 2023 as the double whammy of a slumping equities market and a government crackdown on corporate extravagance eroded the incomes of financial workers.

Data from the 10 biggest brokerages, from Citic Securities to China International Capital Corp (CICC), all showed a reduction in salaries bills last year.

While some smaller securities firms are yet to release their annual results, wages are likely to have taken a hit across the industry, according to data compiled by the Post and Wind Information.

The pay cuts among the top 10 brokerages ranged from 1.2 per cent to 27 per cent, with Shanghai-based Shenwan Hongyuan Group slashing salaries the most, the data shows. The average salary at Citic Securities, the biggest of the firms by revenue, dropped by 5.3 per cent to 792,000 yuan (US$109,492) last year, while wages at its next-largest rival, Guotai Junan Securities, fell by 10 per cent to 668,000 yuan.

CICC’s employees earned an average of 700,000 yuan, a 15 per cent decline from the previous year.

The predicament reflects both regulatory pressure and the fallout from a three-year market slump in an industry once hailed as one of the highest-paid in China.

Policymakers demanded pay cuts in the sector after the monthly salary of a CICC employee stirred controversy on social media in 2022. Falling revenues from brokerage and investment banking businesses as a result of the bear market prompted brokerages to tighten their budgets.

The most extreme government-mandated pay cuts “seem to have been in the financial services sector because that was an area that was singled out” for its hedonism, said Jason Bedford, a former China analyst with Bridgewater and UBS Group.

The pay cuts applied to even the most senior executives. The salary paid to Zhang Youjun, chairman of Citic Securities, fell to 5.05 million yuan in 2023 from 5.6 million yuan the year before, according to the brokerage’s annual reports.

CICC’s president, Wu Bo, earned 1.7 million yuan last year when there was no chief executive officer at the helm. That was roughly half the 3.48 million yuan paid to then-CEO Huang Zhaohui in 2022, when the company had no president and Huang occupied the top management role.

In 2022, regulators intervened to ask the whole industry to implement pay cuts after the wife of a junior CICC trader drew the ire of the public by flaunting her husband’s monthly wage of 80,000 yuan on social media. As a result, the average compensation for the sector dropped to 543,000 yuan that year from 659,000 yuan in 2021, according to Wind data.

A notice issued by the finance ministry that year required state-owned financial entities to cap wage increases for senior staff at the company average and strengthen their budget management by limiting expenses in areas like business travel and office decorations.

The financial industry became a key focal point for President Xi Jinping’s anti-corruption campaign after he mooted the concept of “common prosperity,” which is interpreted as a means to narrow a wealth gap that has grown exponentially in China over the last few decades.

The pay cut “is understandable and I am in favour of it,” said an employee in the fixed-income department of a top-ranked brokerage, who spoke on condition of anonymity. “Even after the cut, the financial industry is still a high-paid one. It does have some impact on me as I have become more conservative in my spending now.”

A slumping stock market has also made brokerages more cautious about splurging on wages. The 26 publicly traded brokerages that have released their annual results posted an average 4 per cent decline in profit year-on-year, according to Haitong Securities. Net income for Citic Securities fell 7.5 per cent last year and that for CCIC plunged 19 per cent, their annual results showed.

A gauge of at least 50 mainland-listed brokerages has dropped almost 6 per cent this year, trailing a 3 per cent gain in the benchmark CSI 300 Index.

While China’s stock market is showing some signs of bottoming out thanks to a flurry of regulator intervention, some of the rescue measures may put further pressure on the brokerage industry, dimming the outlook for 2024.

The pledge by the stock-market regulator to boost the quality of new listings by slowing the pace of new offerings could weigh on the industry’s investment banking business. Initial public offerings on the mainland’s markets tumbled 65 per cent from a year ago in the first quarter, according to Bloomberg data.

“Against the regulatory backdrop of mandated pay cuts, brokerages’ salaries are not looking hopeful this year,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai.

“While the salary level may hinge on the market performance, I don’t think there will be a pay increase even if the market ends the year higher.”

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