Category: Uncategorized

In the wake of a Chinese spy balloon incident over American skies, the tenuous dialogue between Beijing and Washington was shattered. However, throughout the summer, these two global superpowers have engaged in a series of high-level meetings, striving to maintain a connection despite numerous points of contention. Gina Raimondo, the U.S. Secretary of Commerce, arrived in Beijing on Sunday, embarking on a series of critical discussions. She met with her Chinese counterpart, Wang Wentao, as well as Hu Heping, the Minister of Tourism, He Lifeng, the economic czar, and Premier Li Qiang.

Remarkably, Gina Raimondo is the fourth senior American official to visit China in just three months. Prior to her, U.S. Treasury Secretary Janet Yellen, and Special Presidential Envoy for Climate John Kerry, visited Beijing in July, following the visit of U.S. Secretary of State Antony Blinken. While none of these visits has resulted in major breakthroughs, President Xi Jinping and President Joe Biden agreed last autumn in Bali to enhance communication between their administrations, especially in the realms of economics and defense.

A New Bilateral Forum

During her stay in China, Gina Raimondo announced that both countries have agreed to establish new channels of communication on economic and trade issues. Notably, they are setting up a new bilateral forum to discuss the export controls imposed by the United States. Termed the “Export Control Application Information Exchange,” Washington emphasized that this forum is not a negotiation platform.

Matthew Axelrod, the Deputy Assistant Secretary for Export Enforcement, presided over its inaugural meeting, which took place on Tuesday in Beijing.

Consistent with the approach of former President Donald Trump, the Biden administration has taken various measures against China and Chinese companies. Tensions escalated last October when Washington decided to restrict the export of semiconductors and advanced equipment to China in the interest of national security. More recently, President Biden issued an executive order banning certain U.S. investments in Chinese sectors such as quantum computing, advanced chips, and artificial intelligence to prevent the Chinese military from accessing American technology and capital.

No Compromises on National Security

Addressing the press from the Great Hall of the People in Beijing, Gina Raimondo reassured, “We will never seek to decouple or hinder the Chinese economy.” She added firmly, “We do not compromise or negotiate on matters of national security. Period.”

Beijing has decried the U.S. for adopting a Cold War mentality. Wang Wentao, the Minister of Commerce, voiced “serious concerns” about trade restrictions imposed on Chinese companies, stating, “Excessive generalization of national security is not conducive to normal trade and economic exchanges.”

In the complex landscape of international relations, China and the United States continue their dance of diplomacy, navigating a challenging path that requires both cooperation and strategic assertiveness.

FAQs

Q: What prompted Gina Raimondo’s visit to China? A: Gina Raimondo, the U.S. Secretary of Commerce, visited China to engage in high-level discussions on economic and trade matters between the two countries.

Q: What is the significance of the “Export Control Application Information Exchange” forum? A: The forum serves as a platform for discussing U.S. export controls. It aims to facilitate communication between China and the United States on this issue.

Q: How has the Biden administration’s approach to China been different from the Trump administration’s? A: While both administrations have taken measures against China, the Biden administration has continued to implement restrictions and policies on various Chinese sectors and investments, particularly

China is intensifying its efforts to oversee artificial intelligence (AI) as it strives to become a global leader in the sector within the next decade. In a recent meeting of top Chinese officials, including President Xi Jinping, there was a unanimous agreement on the necessity of enhancing control over AI.

State media reported that they have committed to “improve data network surveillance and artificial intelligence.” Following the meeting, officials emphasized the need to be prepared for various challenges, emphasizing their determination to withstand adverse circumstances.

President Xi Jinping underscored the exponential growth in the complexity and gravity of national security issues facing China. In April, Chinese authorities had already announced plans for a “security inspection” of AI tools developed in China, including systems like ChatGPT.

Striving for AI Leadership by 2030

China has set ambitious goals, aiming to become a global AI leader by 2030. To this end, regulatory initiatives have been introduced to ensure the healthy development and standardized implementation of generative AI technology such as the one presented on Inteligencia AI website.

The Chinese Cyberspace Administration has solicited public feedback on these regulations, which, given China’s centralized political system, are likely to become law.

These developments coincide with numerous Chinese tech companies, including Baidu, Alibaba, JD.com, Netease, and ByteDance (TikTok’s parent company), announcing their work on conversational AI models, hoping to capitalize on the success of the American pioneer, ChatGPT.

According to McKinsey, the AI sector could contribute approximately $600 billion annually to China’s GDP by 2030.

As China advances its AI aspirations, it is also vigilant about addressing potential risks and ensuring that the technology aligns with its national objectives.

FAQs

Q: Why is China increasing its control over artificial intelligence? A: China aims to become a global leader in AI within the next decade and believes that enhanced control is necessary to achieve this goal and manage potential risks.

Q: What measures has China taken to regulate AI development? A: China has introduced regulatory initiatives to ensure the healthy development and standardized implementation of generative AI technology. These initiatives include security inspections and public feedback solicitation on regulations.

Q: How much could the AI sector contribute to China’s GDP by 2030? A: McKinsey estimates that the AI sector could contribute approximately $600 billion annually to China’s GDP by 2030, as China strives to lead in AI innovation.

The UN remains steadfast in its commitment to ensuring that human rights violations in China’s Xinjiang province do not go unpunished, despite facing criticism from NGOs for its perceived inaction. A recent on-site visit by the International Labour Organization has sparked debate.

Ongoing Concerns

The economic world’s indices may fluctuate, but concerns about human rights persist. In late August, a delegation from the International Labour Organization (ILO), a UN-affiliated body, quietly journeyed to China’s Xinjiang province. This region has faced allegations of severe repression against the Uighur minority by the Chinese government. According to “Nikkei Asia,” this marked the first known visit by the ILO since allegations of widespread labor rights violations surfaced, with millions of Muslim Uighurs reportedly subjected to arbitrary detention and forced labor.

An ILO spokesperson stated that the visit aimed to engage in “technical discussions on the implementation of international conventions against workplace discrimination and forced labor within China’s laws and practices.” These conventions, ratified by Beijing in 2006, came into effect in early August.

Controversial Visit

The UN agency declined to divulge further details about the visit, which was viewed with skepticism by advocates for the Uighur cause, who lamented not being informed beforehand. Dolkun Isa, President of the World Uighur Congress, told “Nikkei Asia” that even if the intentions were good, such missions provided the Chinese Communist Party with opportunities to whitewash its crimes and promote propaganda.

Ma Xingrui, the Xinjiang party secretary, used the occasion to denounce “reckless accusations” of human rights violations by “certain anti-Chinese forces” in the local newspaper “Xinjiang Daily.” He also expressed hope that the ILO delegation would maintain a “fair and objective attitude.”

Xi Jinping’s Visit

Coincidentally, Xi Jinping himself paid a brief visit to Xinjiang, where he celebrated the “hard-won social stability” in the region. In 2014, the government launched a campaign to regain control, citing attacks attributed to Uighur separatist militants. However, it consistently denies the existence of repression against this Muslim minority or the existence of labor camps where nearly a million people are said to have been held. Beijing refers to these facilities as “vocational training centers” designed to combat extremism.

Dolkun Isa argues, “Visits like the one by the ILO won’t eliminate forced labor programs. What’s needed are creative and tangible measures from the international community, including the ILO, to end this system of oppression and exploitation.”

Criticism from Amnesty International and Human Rights Watch

Criticism isn’t limited to the ILO visit. Amnesty International and Human Rights Watch (HRW) have also censured the United Nations for its perceived inaction. Just a year ago, former UN High Commissioner for Human Rights Michelle Bachelet published a report, against Beijing’s objections, suggesting possible crimes against humanity. Her successor, Volker Türk, pledged to follow up, but both NGOs accuse him of not doing enough. His office responded, affirming that the High Commissioner “engaged in a longer-term process with Chinese authorities,” including implementing the report’s recommendations.

Amnesty and HRW continue to call for an international on-site investigation and appeal to the member states of the Human Rights Council, which will convene from September 11 to October 13 in Geneva. However, this mechanism seems unlikely given Beijing’s political influence within the UN body. In October 2022, China secured a victory at the UN when a slim majority of the 47 Human Rights Council member states rejected a proposal by several Western countries to hold a debate on Xinjiang.

In the realm of human rights, the path ahead remains fraught with challenges, while international organizations grapple with their roles and responses in the face of ongoing global concerns.

FAQs

Q: Why is the UN criticized for its inaction in Xinjiang? A: The UN has faced criticism for its perceived inaction in addressing human rights violations in China’s Xinjiang province, particularly concerning the Uighur minority.

Q: What was the purpose of the recent visit by the International Labour Organization (ILO) to Xinjiang? A: The ILO’s visit aimed to engage in technical discussions regarding the implementation of international conventions against workplace discrimination and forced labor within China’s laws and practices.

Q: What are the main concerns regarding human rights violations in Xinjiang? A: Allegations include arbitrary detention, forced labor, and widespread human rights abuses against the Uighur minority in Xinjiang. These allegations have drawn international scrutiny and condemnation.

In a challenging economic landscape, China’s external trade has faced yet another setback in August. The latest figures, driven primarily by sluggish foreign and domestic demand, mark the latest in a series of worrying indicators pointing to a concerning slowdown in the country’s economic activity.

Export Woes

Historically, China’s exports have been a pivotal driver of its growth, but the trend is taking a worrisome turn. Year-on-year, exports have dropped by 8.8% in August, following a contraction of 14.5% in July.

Aside from a brief uptick in March and April, China’s overseas sales have been consistently declining since October 2022.

The international demand for Chinese products remains lackluster, coupled with a sluggish economic recovery within the country. The looming threat of recession in Europe, combined with soaring inflation, contributes to the dampened international appetite for Chinese goods.

Geopolitical tensions with the United States and Western countries’ efforts to reduce their reliance on China and diversify their supply chains also play roles in the decline of Chinese exports.

Import Conundrum

On the flip side, China’s imports have faced their tenth consecutive month of decline in August, down by 7.3% year-on-year. This reflects weak domestic demand, though it’s a milder contraction compared to the 12.4% drop in July. Consequently, the trade surplus for the world’s second-largest economy narrowed to $68.3 billion (€63.6 billion) last month, down from $80.6 billion a month earlier.

The Broader Picture

The dip in external trade adds to a slew of negative figures reported over the summer. Besides the plunge in exports, Beijing has announced a slowdown in production, negative territory in the price index, and a spike in youth unemployment, reaching a record level of over 20% in June, according to official data that has been suspended since.

China’s economic growth is further hampered by its troubled real estate sector, with an increase of only 0.8% between the first and second quarters of 2023. In July, Chinese authorities introduced stimulus measures, yet investors have remained disappointed. There’s a desire to see Beijing take more substantial actions, a move the government hesitates to make to avoid worsening debt levels.

In summary, China’s external trade continues to grapple with challenges, reflecting broader concerns about its economic performance. With a subdued international demand and domestic recovery, coupled with global uncertainties and geopolitical dynamics, the road to economic stability remains uncertain for the world’s second-largest economy.

FAQs

Q: What’s the reason behind China’s declining exports? A: China’s exports have been declining due to sluggish foreign demand, a slow domestic economic recovery, European recession threats, high inflation, geopolitical tensions, and efforts by Western countries to reduce dependence on Chinese goods.

Q: Why are China’s imports also falling? A: China’s imports have been declining primarily due to weak domestic demand, though the rate of contraction in August was less severe compared to July.

Q: How is China’s economic growth affected by these trade issues? A: China’s economic growth is challenged by a range of issues, including declining exports, a troubled real estate sector, and reluctance to increase stimulus measures to avoid exacerbating debt levels.

China’s real estate crisis can be explained in several ways. First of all, cash-flow problems plagued many developers. As a result, banks in the country lowered interest rates to make mortgage payments more affordable. Second, the government has not abandoned developers. Third, the Evergrande case was only a symptom of a larger problem.

Chinese developers are facing cash-flow problems

Several Chinese developers are facing cash-flow problems due to rising debt levels and falling property prices. The latest developer to experience trouble is Evergrande. The Chinese developer is having difficulty covering short-term debts, despite selling equity shares. As a result, local governments have bought $4.6 billion of its equity, but it may not be enough to resolve the deeper issues underlying the developer’s ballooning debt.

The problem has spread to dozens of cities, with wildcat boycotts affecting more than 300 housing projects. Some homebuyers have even halted mortgage payments to protest construction delays. Banks already have a difficult time meeting repayments due to developer defaults, and unfinished collateral could make their loans even more difficult to service. A full-blown crisis could leave millions of homebuyers stranded.

The problem is so severe that the People’s Bank of China has cut interest rates for Chinese developers. The bank hopes the lower rates will ease the burden on homebuyers and help developers obtain loans. However, the problem is not limited to funding and developers need to find ways to raise cash so that they can continue building.

Chinese banks have lowered interest rates to make mortgage payments more affordable

China’s central bank has compiled data from banks and lowered the key interest rate by 10 basis points in a bid to boost the economy. In the meantime, the government is also working to rein in the soaring price of real estate. With property prices continuing to rise, the government is under pressure to curb prices and maintain social stability. This has caused many banks to tighten their lending standards. The PBOC also announced that it would cut the amount of reserves that lenders must set aside. Whether these measures will curb prices in the near future remains to be seen.

The move is aimed at helping some home buyers afford mortgage payments. However, it will not stabilize the housing market, and will only drive the mortgage rates lower. This move could actually make property prices worse as households are hesitant to buy property for fear the projects will not be completed on time and prices will fall in the future. Furthermore, it could cost up to 6% of China’s GDP to shore up the balance sheets of property developers.

Chinese government isn’t abandoning developers

Although many developers are facing financial crisis, the Chinese government has proven to be more willing to bail out these companies than in the past. The three-red-line policy restricts developers from taking additional loans, which has cut into their cash. These new regulations also have made access to foreign markets much more difficult for developers.

The Chinese government is trying to contain the current crisis while at the same time keeping the property market on track. The government initially wanted to reduce debt in the property sector, but the current crisis has forced it to step in. Developers have also been facing difficulties in buying land. A slowdown in the construction sector is likely to worsen the problem.

The property boom in China has been a major driver of the country’s economy, accounting for nearly one-quarter of the country’s GDP. However, the Chinese government is now trying to rein in the real estate industry due to its stringent “zero-covid” policy. This has forced developers to sell off parts of their empire. At the same time, China’s real estate market is cooling off, with less demand for new apartments.

Evergrande case is a symptom of a bigger problem

The Evergrande case in China has put global investors on edge. The second largest property developer in China is deeply indebted. Its failure to meet its debt obligations could spark a credit crunch and threaten to undermine the confidence of investors in Chinese investments. The company’s failure could also affect the Chinese economy in general, affecting markets across the globe.

The company’s problems are closely linked to a structural problem that is affecting the real estate industry in China. The real estate sector is undergoing a slowdown and overinvestment. This could cause Evergrande to incur higher liabilities during its restructuring process.

While the Chinese government is concerned, the case is unlikely to spark a systemic financial crisis. Evergrande is not a bank, and it is unlikely that it will be rescued by the Chinese government. But the Chinese government is trying to help. It has told its major lenders to extend the interest payments on Evergrande’s loans. However, some analysts believe a direct government bailout is unlikely.

The tariff war raging between the United States and China was the main focus of the meeting between Xi Jinping and Donal Trump at the G20 in Buenos Aires.

This trade war affects traditional economic markets such as automobiles and steel. It also concerns a much more sensitive and vital sector for the future: technology (computer networks, artificial intelligence) and semiconductors.

Supremacy and dependence

Silicon Valley takes its name from Silicon, one of the most important chemical elements that make up electronic chips. The Pentagon strongly supported the California region because one of the first applications of electronic chips emerging from Silicon Valley was the guidance systems for nuclear missiles. These chips are now the foundation of the digital economy and national security. Cars have become rolling computers.

Banks are computers that manage the flow of money. American companies dominate the most advanced sectors of the industry. China, on the other hand, remains dependent on the outside world for its supply of quality electronic chips. And China intends to do the right thing.

The tariff war

Long before Donald Trump started his tariff war, China announced its intention to catch up. In 2014, Beijing announced the creation of an investment fund of one billion yuan (126 billion euros) to improve its national industry. China’s ambitions to create a high-tech industry worried Barack Obama and his administration, a wave of Chinese tenders for semiconductor companies confronted his administration during his last mandate. In particular, Barack Obama prevented Intel from selling some of its most potent chips to China in 2015. Other countries are also concerned, including Taiwan and South Korea, which have regulations in place to stop Chinese purchases of semiconductor companies and to stop the looting of intellectual property.

The limits of the Chinese offensive

Today, America has the advantage over China in the design and manufacture of high-end chips. With this war, the US can probably slow China down, but progress will be difficult to stop.

The attacks will even make China even more determined. Just as the emergence of Silicon Valley was based on the support of the American government, China combines the resources of the state and companies in the pursuit of its objectives. It has set up support and incentive programs to attract engineers from other countries, including Taiwan.

Companies like Huawei have proven their ability to innovate; the blocking of Intel chips in 2015 only encouraged China to develop its domestic supercomputer industry, such as the “Taihu-Light,” which is Chinese made. Also, China’s ambition to become a world power in the semiconductor field comes at the right time.