- San Francisco is undergoing a tidy up as it prepares to host the Asia Pacific Economic Cooperation (Apec) summit. The city, which has earned a reputation for homelessness and crime in recent years, is making efforts to project a more business-friendly image to the influential visitors. Streets are being cleaned, potholes repaired, and a large police presence has been deployed. While the city's underbelly is still apparent just off the main streets, the authorities hope that the summit will help change the narrative and show that San Francisco is a place to do business and invest.
Behind Public Assurances, Xi Jinping Spread Grim Views on U.S.; Chinese stocks to rise 6-8% in next 12 months on policy pivot: Morgan Stanley
China’s top memory chip maker sues Micron for patent infringement in US
Behind Public Assurances, Xi Jinping Spread Grim Views on U.S.
NY Times
Chinese President Xi Jinping warned military officials in unreported speeches that China must prepare for a potential conflict with the US, a series of speeches that reveal his worldview.
- Xi argued that the West would not accept China’s rise and that the US would continue to try to sabotage China’s ascent.
- His comments reflect a belief in China that the US is trying to contain China and overthrow the Communist Party.
- Xi’s views of the US were formed during China’s troubled years, when the country had slowed its economic reforms, corruption was rife, and protests and dissent were increasing.
- Xi has been trying to stabilize relations with the US, but mutual distrust between the two sides remains deep.
Chinese stocks to rise 6-8% in next 12 months on policy pivot: Morgan Stanley
South China Morning PostMorgan Stanley has predicted that China's stocks will experience mild gains in 2024, as efforts to stimulate growth will be partially offset by long-term structural challenges related to debt and deflation.
- The investment bank's analysts said that the MSCI China Index will finish at 60 by the end of next year, representing a 6% gain from the previous week's close.
- Morgan Stanley believes that Beijing will need to take further action to convince investors of its commitment to restoring growth, such as providing more clarity on policy priorities and consistency.
South China Morning Post
Chinese flash memory maker Yangtze Memory Technologies (YMTC) has filed a lawsuit against US memory chip maker Micron Technology, accusing it of patent infringement. YMTC alleges that Micron and its subsidiary Micron Consumer Products Group infringed on eight of its patents. The lawsuit comes as YMTC seeks to overcome escalating US sanctions on the export of advanced semiconductor tools and services to China.
Albanese ticks off China visit, but caution remains over Aukus, South China Sea
South China Morning PostAustralian Prime Minister Anthony Albanese's visit to Beijing this week is a significant step in the normalization of relations between Australia and China.
- The visit reflects a stabilisation in the relationship between the two countries that had soured in 2020 when the previous administration called for an international probe into the origin of Covid-19.
- Since the Labour Party in Australia wrestled back power in May 2022, Albanese started working on resuming normal ties with his country’s largest trading partner, which is also the biggest consumer of Australian iron ore in the world.
- Before the bilateral meeting between Xi and Albanese, China agreed to review the tariffs it had imposed on Australian wine, which had all but wiped out Australia’s Chinese wine market that had been worth about US$1.2 billion a year.
- It is also expected that trade barriers on Australian lobsters and beef will also be resolved.
- In August, China removed the anti-dumping and anti-subsidy tariffs on Australian barley that had been applied for more than three years.
- Other Australian products such as coal, cotton and timber, which were under unofficial bans over the past few years, have been returning to the Chinese market since early this year.
China's Didi posts first quarterly profit since 2021 as regulatory woes ease
ReutersChina's largest ride-hailing company, Didi Global, has reported a quarterly profit for the first time since 2021, indicating a recovery from regulatory challenges. The company's net income for the three-month period ended September 30 was 107 million yuan ($14.66 million), compared to a loss of 2 billion yuan the previous year. Didi's revenue in the same quarter rose by 25% to 51.40 billion yuan. The company plans to repurchase up to $1 billion in shares over the next two years and increase marketing efforts to support further growth. Didi faced regulatory investigations and penalties after pursuing a US stock listing without approval. It has since worked to streamline its operations and focus on its core ride-hailing services.
Citadel Securities explores China licence as Beijing steps up market-making program
Reuters
Citadel Securities, one of the world's largest market-making firms, is considering setting up a licensed onshore business in China. If it were to obtain a licence, it would be the first foreign firm to enter the market-making sector in China outside of interbank and foreign exchange market making. Citadel Securities handles about $390bn in trades per day and is one of the top market makers in the US. China's market-making sector is expected to be worth CNY250bn ($34bn) in revenues by 2032, compared to CNY40bn last year.
Thailand’s plan to deploy Chinese police patrol to boost tourism sparks outcry
South China Morning Post
Thailand is considering a plan to station Chinese police personnel at popular tourist destinations in order to boost confidence among Chinese travelers. The move has sparked controversy, with critics raising concerns over sovereignty. The plan was discussed by Prime Minister Srettha Thavisin, senior police, and tourism officials as a way to attract more Chinese visitors, who were previously the largest group of foreign arrivals. However, some Thai internet users worry that Thailand could become a location for covert operations targeting Chinese dissidents. The Thai government has reassured that the plan is aimed at busting Chinese mafia groups and has nothing to do with sovereignty. This is the latest attempt by Thailand to attract visitors and revive the tourism industry, as concerns over tourist safety have deterred some Chinese travelers.
Thailand is considering a plan to station Chinese police personnel at popular tourist destinations in order to boost confidence among Chinese travelers. The move has sparked controversy, with critics raising concerns over sovereignty. The plan was discussed by Prime Minister Srettha Thavisin, senior police, and tourism officials as a way to attract more Chinese visitors, who were previously the largest group of foreign arrivals. However, some Thai internet users worry that Thailand could become a location for covert operations targeting Chinese dissidents. The Thai government has reassured that the plan is aimed at busting Chinese mafia groups and has nothing to do with sovereignty. This is the latest attempt by Thailand to attract visitors and revive the tourism industry, as concerns over tourist safety have deterred some Chinese travelers.
U.S., South Korea revise North deterrence plan for 1st time in decade
Nikkei Asia
The US and South Korea have updated their strategy on deterring North Korea, as new security challenges arise from growing military ties between North Korea and Russia. During an annual security consultative meeting in Seoul, US Secretary of Defense Lloyd Austin and South Korean Defense Minister Shin Won-sik approved a 20-page strategic document tailored to address North Korea's growing threat. The document constitutes the first formal change to the strategy since 2013, suggesting that the allies are increasingly concerned about the trajectory of Pyongyang's military power.
Nikkei Asia
The US and South Korea have updated their strategy on deterring North Korea, as new security challenges arise from growing military ties between North Korea and Russia. During an annual security consultative meeting in Seoul, US Secretary of Defense Lloyd Austin and South Korean Defense Minister Shin Won-sik approved a 20-page strategic document tailored to address North Korea's growing threat. The document constitutes the first formal change to the strategy since 2013, suggesting that the allies are increasingly concerned about the trajectory of Pyongyang's military power.
Emerging-Market Stocks Halt Declines as China Sentiment Improves
BloombergEmerging-market stocks have risen for the first time in five days, driven by signs of improving corporate performance in Asia and a thaw in US-China relations. The MSCI Emerging Markets Index rose above its 50-day moving average, with Taiwan Semiconductor Manufacturing Co. contributing to the gains after posting the first increase in monthly sales since February. Alibaba Group Holdings and JD.com also advanced after a successful Singles Day shopping event. Investors are awaiting results from Asian technology and e-commerce firms to gauge China's post-Covid recovery. The sentiment is also improving as Beijing signals its desire to improve relations with the US ahead of this week's meeting between Presidents Xi Jinping and Joe Biden.
China’s Credit Growth Weaker Than Expected in October
Bloomberg
China's credit growth in October was slower than expected. This comes after a few strong months of credit growth supported by government and central bank measures to stimulate the economy. September saw a boost in credit growth due to government bond sales and the release of long-term liquidity by the People's Bank of China. October is traditionally a weak month for lending and credit.
ByteDance Billionaire’s VC Firm Sets Up Shop in Marquee HK Tower
Bloomberg
ByteDance co-founder Zhang Yiming's venture capital firm, Cool River Venture HK, has leased office space in Hong Kong's Two International Finance Centre. The move is seen as an indicator of Zhang's future intentions following his departure from ByteDance amid Beijing's crackdown on tech firms. The billionaire entrepreneur, who holds a Hong Kong ID card, has an estimated fortune of $42.3bn.
Biden to meet with Indonesia president ahead of Xi summit
Yahoo USUS President Joe Biden is to meet with the Indonesian President, Joko Widodo, on 18 October ahead of the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco, where Biden is due to meet China's President Xi Jinping. The pair are expected to discuss increased cooperation in defence and climate issues, and may also discuss a potential minerals partnership focused on the electric vehicle battery metal nickel. The Biden administration is keen to improve environmental, social and governance standards in Indonesia before signing a deal, however.
How Chinese aggression is increasing the risk of war in the Taiwan Strait
Washington PostChina's increasingly aggressive activities around Taiwan, along with its refusal to engage in military-to-military communication with the US, has raised fears that the US could be drawn into a third major war.
- China's unpredictable and incommunicative behavior is aimed at keeping the US military off-guard in the Pacific and warning against American attempts to help defend Taiwan.
- The situation is reaching a "very, very high level of tension" and war could break out at any time, according to Lyle Goldstein, director of Asia engagement at Defense Priorities.
- President Biden is expected to discuss reestablishing communication channels during his meeting with Chinese leader Xi Jinping this week.
- Chinese warships have also been practising repelling US forces and carrying out exercises near Taiwan.
- This military coercion is part of China's strategy to influence the Taiwanese presidential election in January and create psychological pressure on the island's inhabitants to give in to Beijing's demands for unification.
- While the US is pushing Beijing to restore military communications, China may be reluctant to engage in order to wear down Taiwan and keep the US guessing.
- Beijing has also incorporated civilian ships into military exercises, potentially to move the huge numbers of troops needed for an invasion.
- However, despite China's efforts to be unpredictable, the scale of mobilization required for an invasion means a sneak attack would be difficult without American intelligence picking up on Chinese plans.
China proposes cybersecurity check for auditors if national security involved
ReutersChina's finance ministry has released draft measures that propose auditors undergo additional cybersecurity checks when their work involves national security. The measures are part of China's efforts to step up scrutiny of auditors in recent years due to concerns about data security. The draft rules also stipulate that accounting firms should manage data related to Chinese firms in a specific manner. The draft measures are open for public consultation until 11 December. The world's big four auditing firms - PricewaterhouseCoopers, Deloitte, KPMG and EY - did not immediately respond to requests for comment.
International students have returned to US colleges, fueled by a surge from India
Yahoo US
The number of international students enrolling in US universities increased by 12% in the 2022-2023 academic year, with India providing the largest increase, a study by the Institute of International Education and the State Department has found. The number of students from India increased by 35% to 269,000, while China sent 290,000 students, its third consecutive year of decline. The report said that the increased number of Indian students is due to a growing population, increased competition from UK and Canadian universities, and travel restrictions in Asia caused by the pandemic.
Inside Wall Street's scramble after ICBC hack
ReutersIndustrial and Commercial Bank of China’s (ICBC) US broker-dealer, ICBC Financial Services, was temporarily forced to switch to Google mail after a ransomware attack disrupted its corporate email service.
- The attack, allegedly perpetrated by cybercrime gang Lockbit, reportedly resulted in the company owing BNY Mellon $9bn, a sum much larger than ICBC’s net capital.
- The attack has prompted concerns about the resilience of the $26tn Treasury market, despite assurances from market participants and officials that its functioning was unaffected.
- The full extent of the attack is not yet known and some debate has arisen over the potential impact on a major Treasury bond auction.
- The attack is expected to shift the regulatory focus onto cyber threats and may encourage the Securities and Exchange Commission to push for more Treasury trades to go through central clearing.
- ICBC Financial Services has been supported by its Chinese parent company, which provided a cash injection to repay BNY Mellon.
South China Morning Post
The number of American students studying in mainland China has dropped to its lowest level in over a decade, with only 211 students studying there in the 2021-22 school year, according to new data.
- In contrast, there were over 11,000 American students in mainland China in the 2018-19 school year.
- However, Chinese students continue to vastly outnumber any other foreign group in the US, with 289,526 Chinese students studying there during the 2022-23 school year.
- The US still hosts nearly double the number of Chinese students compared to the next largest host, the UK.
Chinese Communist Party plenums: what is the cycle and what can we expect?
South China Morning PostChina's annual Central Committee plenums are important political events that set the agenda for the following year.
The plenums are usually attended by over 370 members of the Central Committee, who make key decisions on policies and appointments. There are seven plenums held over the five-year term of each Central Committee, with the third plenum being the most important as it sets the economic and reform policies for the next five or ten years.
The fifth plenum focuses on the five-year plan for the country's development objectives.
The fourth and sixth plenums do not have fixed themes but are usually related to party building or ideology.
China’s Consumption Recovery Is Losing Momentum, Data Show
BloombergConsumer demand in China showed signs of slowing in October, as a Paris-based indicator of Chinese consumer demand for recreation and transport, as well as an independent survey of consumer sentiment, both fell from the previous month.
The decline suggests that the nation's consumption rebound struggled last month, even as Beijing announced more fiscal stimulus.
China's leaders had previously warned that the economy follows a pattern of short growth upturns followed by downturns.
Goldman Downgrades Hong Kong-Traded China Stocks, Raises India
Bloomberg
Goldman Sachs has downgraded its rating on Hong Kong-listed Chinese stocks due to low earnings growth and a potential consensus downgrade.
Goldman Sachs has downgraded its rating on Hong Kong-listed Chinese stocks due to low earnings growth and a potential consensus downgrade.
- The bank has upgraded shares in India, citing the market's strategic appeal and strong earnings growth prospects.
- Meanwhile, Goldman remains overweight on Chinese onshore shares due to opportunities in sectors related to the country's shift towards higher productivity and greater self-sufficiency.
Behind Public Assurances, Xi Jinping Spread Grim Views on U.S.
The speeches offer a new, unvarnished view into the leader at the center of a superpower rivalry that is shaping the 21st century. They show how at times he has voiced an almost fatalistic conviction — even before Beijing’s ties with Washington took a steep dive later in the Trump administration — that China’s rise would prompt a backlash from Western rivals seeking to maintain their dominance.
“The faster we develop, the bigger the external shock will be, and the greater the strategic blowback,” Mr. Xi told Chinese Air Force officers in 2014.
In Mr. Xi’s worldview, the West has sought to subvert the Chinese Communist Party’s power at home and contain the country’s influence abroad.
- The Communist Party had to respond to these threats with iron-fisted rule and an ever-stronger People’s Liberation Army.
- Mr. Xi has been trying to stabilize relations with Washington, apparently pressed by China’s economic troubles and a desire to reduce Beijing’s diplomatic isolation.
- “We have a thousand reasons to grow the relationship between China and the United States, and none at all to ruin it,” Mr. Xi told American lawmakers in Beijing recently.
Mr. Xi underscored that his judgment of the challenge posed by the United States remains unchanged, saying with rare public bluntness in March: “Western countries led by the United States have implemented all-around containment, encirclement and suppression of China.”
Doubts About American Might
Mr. Xi’s views of the world and the United States bear the imprint of China’s turbulent years when he was preparing to assume power. China had grown quickly, but the reforms that boosted that growth had slowed, and official corruption was rampant. The security state had expanded, but so had protest and dissent.
As Mr. Xi emerged as the country’s leader-in-waiting in 2007, some diplomats, experts and well-connected Communist Party veterans predicted that he would be a pragmatist who might restart China’s efforts toward economic liberalization. Some even saw in him a chance for political change after a long period of stagnation.
- They cited Mr. Xi’s pedigree as the son of a revolutionary leader who had helped oversee China’s economic overhaul in the 1980s and the decades Mr. Xi had spent as an official in the commercial coastal provinces of eastern China, including 17 years in Fujian, where he courted investors from neighboring Taiwan.
- Li Rui, a retired senior official who had once served as Mao Zedong’s aide, recorded in his diary a conversation in 2007 about the relatively unknown Mr. Xi.
“I asked what Xi Jinping was like, and the answer was four words: ‘governing by doing nothing,’” Mr. Li wrote. “That would be good,” Mr. Li added, “letting everyone play to their strengths with less meddling.” (Mr. Li died in 2019; his diaries and correspondences are held by the Hoover Institution at Stanford University.)
But Mr. Xi’s upbringing and family background left a more complex imprint than many assumed: He was, above all, proud of the party and the Communist revolution. And skepticism about American might and wariness about its intentions toward China were becoming more mainstream in Beijing as Mr. Xi prepared to take the reins of power.
The global financial crisis of 2007-08 had shattered official Chinese assumptions that Washington’s economic policymakers were competent, even if Beijing disagreed with them. Chinese officials quizzed American officials like Hank Paulson, then the Treasury secretary, about their mishandling of the situation. For many in Beijing, the lessons extended beyond the financial system.
- “It was a defining moment,” said Desmond Shum, a businessman whose memoir, Red Roulette, describes those years, when he mingled with China’s political elite.
- “After that point, the entire Western model was questioned much more. There was also this growing belief that the world would need China to lead the way out of the mess.”
Specter of ‘Color Revolution’
As Mr. Xi prepared to become China’s leader, President Vladimir V. Putin of Russia was emerging as a model of an authoritarian strongman pushing back against American pre-eminence.
- “These two men have a shared mental map of the world — not perfectly the same, but shared,” said Jude Blanchette, a China expert at the Center for Strategic and International Studies.
- “Both want to return their countries to a lost inheritance of greatness; both want to reclaim key territories; both have a shared sense of the trauma of the collapse of the Soviet Union.”
In particular, Mr. Xi and Mr. Putin, who met in 2010, shared a suspicion that the United States was bent on destabilizing its rivals by instigating insurrection in the name of democracy. Mr. Xi and other Chinese leaders adopted Mr. Putin’s conception of “color revolutions” to describe such unrest.
In the mid-2000s, official Chinese fears of an eruption of anti-party protests did not seem so far-fetched. Flagrant corruption and official scandals had incensed many people. The internet opened up new channels for amplifying grievances.
Chinese Communist Party leaders have long sought to mobilize support by citing a miasma of external threats. Warnings of an American conspiracy to overthrow the party and transform China into a capitalist country by “peaceful evolution” go back to the Mao era. But Mr. Xi has evoked those warnings with distinct urgency.
“He’s somebody who spent years of his life lacking security and, as he said later, learning from his father about the fickleness of human relationships and power,” said Joseph Torigian, a research fellow at the Hoover History Lab at Stanford University who has examined Mr. Xi’s speeches to the military. “Now he becomes the named successor, and he’s looking around the world and seeing ‘color revolutions’ and United States meddling and, for him, it’s this idea that, ultimately, power is the last guarantor of security and strength.”
Mr. Xi saw lessons in the “Arab Spring” uprisings that had toppled corrupt authoritarian leaders across the Middle East. The overthrow of Egypt’s leader, Hosni Mubarak, in 2011, left a deep impression on Chinese leaders, who saw parallels with the 1989 pro-democracy protests at Tiananmen Square in Beijing, said John K. Culver, a former Central Intelligence Agency officer who followed Mr. Xi’s rise.
“What really scared them was Egypt, because Hosni Mubarak rose as an officer in the Egyptian military, and yet the military turned on him,” Mr. Culver said. Chinese leaders, he added, “saw that and asked themselves: ‘If Tiananmen Square happened today, would the army again save the party?’”
In the mid-2000s, official Chinese fears of an eruption of anti-party protests did not seem so far-fetched. Flagrant corruption and official scandals had incensed many people. The internet opened up new channels for amplifying grievances.
Chinese Communist Party leaders have long sought to mobilize support by citing a miasma of external threats. Warnings of an American conspiracy to overthrow the party and transform China into a capitalist country by “peaceful evolution” go back to the Mao era. But Mr. Xi has evoked those warnings with distinct urgency.
“He’s somebody who spent years of his life lacking security and, as he said later, learning from his father about the fickleness of human relationships and power,” said Joseph Torigian, a research fellow at the Hoover History Lab at Stanford University who has examined Mr. Xi’s speeches to the military. “Now he becomes the named successor, and he’s looking around the world and seeing ‘color revolutions’ and United States meddling and, for him, it’s this idea that, ultimately, power is the last guarantor of security and strength.”
Mr. Xi saw lessons in the “Arab Spring” uprisings that had toppled corrupt authoritarian leaders across the Middle East. The overthrow of Egypt’s leader, Hosni Mubarak, in 2011, left a deep impression on Chinese leaders, who saw parallels with the 1989 pro-democracy protests at Tiananmen Square in Beijing, said John K. Culver, a former Central Intelligence Agency officer who followed Mr. Xi’s rise.
“What really scared them was Egypt, because Hosni Mubarak rose as an officer in the Egyptian military, and yet the military turned on him,” Mr. Culver said. Chinese leaders, he added, “saw that and asked themselves: ‘If Tiananmen Square happened today, would the army again save the party?’”
Xi’s Military Renovation
Within weeks of taking power in late 2012, Mr. Xi met with officials and sounded a warning: The collapse of the Soviet Union, he said, was a cautionary tale for China. It had fallen, he lamented, because its military had lost its nerve. He warned officials that China could suffer the same fate unless the party recovered its ideological backbone.
Months later, he issued an internal edict to roll back the influence of what he called Western ideas, such as the concept of universal human rights and the rule of law, in universities and the news media.
From his first presidential summit with Mr. Obama in 2013, Mr. Xi had shown himself to be a “much more assertive and confident leader” than his predecessor, Hu Jintao, setting aside his talking points to press his views, according to Ben Rhodes, a former deputy national security adviser to Mr. Obama.
“This was a guy who was not just the frontman of a party, he was his own man,” Mr. Rhodes said in an email.
Mr. Xi, who leads the military as chairman of the Central Military Commission, reserved some of his bluntest warnings about the West for his commanders.
“The ‘laws of the jungle’ of international competition have not changed,” he told military delegates to China’s national legislature in 2014. He pointed to the growing presence of American jets, ships and aircraft carriers in the Asia-Pacific region as evidence that the United States was seeking to contain China.
He also said that the pro-Western protests that were then sweeping across Ukraine were a warning for Beijing. “Some Western countries are fanning the flames there and secretly scheming to achieve their geopolitical goals there,” he said. “We must take heed of this lesson.”
To prepare for the threats Mr. Xi saw ahead, he said, China needed to urgently overhaul its military. From late 2015, he initiated a sweeping reorganization of the People’s Liberation Army, seeking to make it an integrated force capable of extending Chinese power abroad, especially through air, sea and space forces. His warnings about the West helped underscore the urgency of those changes.
“Speeches to people within the system are attempts to mobilize,” said Mr. Blanchette, the researcher in Washington. “You don’t do that by just saying that the world is getting a little bit complicated; you need a narrative that is going to allow you to smash vested interests to achieve change.”
Mr. Xi warned that the People’s Liberation Army was still dangerously backward, and could fall behind if it did not seek to innovate, particularly in upgrading its weaponry and command organization. In these speeches, Mr. Xi did not say that war was unavoidable. But he made clear that without a formidable military, China would not be able to assert its will.
“In international contestation, political operations are very important, but ultimately it comes down to whether you have strength and whether you can use that strength,” he told the commanders on the Central Military Commission in November 2015. “Relying on a silver tongue won’t work.”
The post Behind Public Assurances, Xi Jinping Spread Grim Views on U.S. appeared first on New York Times.
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