In this week’s Chinascope, we look at Evergrande debt vows, Xi’s visit to Shaanxi, the coming crackdown on the cosmetics industry and other stories buzzing in China – and the world.
China over the week
Over the past week, the Evergrande Group was on everyone’s mind in China. The Chinese real estate group’s enormous debt crisis sent distress calls across financial markets. Last week, Chinascope had recommended a New York Times story that explained the enormity of Evergrande’s debt crisis.
Evergrande investors protested outside the company’s office in Shenzhen. The debt crisis adds up to $300 billion in financial risks.
Following the protest, the People’s Bank of China injected $14 billion on “a net basis through seven-day and 14-day reverse repurchase agreements” into the economy, according to Bloomberg. Evergrande insiders have sold $11 million worth of shares, according to Hong Kong filling. The company has revealed the corporate structure of the organisation on its website.
Similar to the impact Evergrande had, Chinese markets tumbled after the announcement of the Macau government’s oversight on casino stocks. While Sands China fell by 32.5 per cent, Wynn Macau shed 29 per cent in stock value.
Despite the Evergrande crisis, President Xi Jinping was in Shaanxi for an inspection over the past week.
This year, Xi has travelled extensively on inspection tours. Shaanxi is Xi Jinping’s province as his family belongs to Fuping county.
While in Fuping county, Xi presided over the opening of the 14th National Games.
He also inspected a military base in northwest China’s Xi’an city. The Chinese President was seen interacting with officers who likely belonged to the specialised Xi’an satellite control centre. At the military base, Xi emphasised “preparing for war” in his speech to the officers.
The Chinese military actively opposed a US destroyer’s passage through the Taiwan Strait.
People’s Library Army (PLA) Eastern Theatre Command conducted a military exercise in the Taiwan Strait in response to the passage of Arleigh Burke-class destroyer through the strait. USS Barry’s passage was the ninth such mission in the Taiwan Strait. The PLA called USS Barry a “troublemaker” after the destroyer’s passage.
In continuation of Chinese tech regulatory action, the Ministry of Industry and Information Technology wants companies to stop blocking URL links on each other’s platforms.
For years, the two technology giants, Tencent and Alibaba, have blocked the sharing links of each other’s services on their websites and social media platforms. In the past weeks, we have seen Chinese regulators emphasise the need to break up monopolies. The links blocking regulation falls within the anti-trust category of actions.
Tencent has started complying with the regulation by allowing rival services to share links on its social media platform, WeChat.
Another key tech news on Saturday was Douyin’s – Chinese language version of TikTok – announcement on WeChat that the company will limit access for those below 14 to 40 minutes a day. Chinascope had recently shared about the limitation imposed on time spent playing video games.
After action against “sissy boys” and celebrities, China wants to crack down on the popular cosmetics surgery industry. Communist Party mouthpiece People’s Daily said it was “imperative and urgent” to “control the advertisement of cosmetic surgery procedures and treatments. China’s cosmetic surgery industry will be worth $46 billion by 2022. Investors believe a crackdown on the cosmetic industry is likely on the way.
Chinascope recently told you about MeToo scandals involving Chinese celebrities. The MeToo movement received a setback this week when a Beijing court dismissed Zhou Xiaoxuan’s sexual assault case made against Zhu Jun. The case dates to 2018 when Zhou – known by her online name Xianzi – went public with her accusation against Chinese television host Zhu Jun. Zhou was an intern with State-owned CCTV when the alleged assault took place.
Despite the rhetoric around the MeToo movement and support by the party, the recent actions don’t inspire confidence among China’s MeToo activists.
China in world news
China has formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific by handing a letter of intent to the New Zealand trade minister. Experts believe China’s inclusion into the trade pact is doubtful. Australia has said China would need to improve its trade practices for inclusion into the trade bloc.
China wants to engage with the world on its own terms but underlying tensions because of the unsolved mystery of Covid-19 origins remains a barrier.
Fresh tensions emerged between India and China at the BRICS summit last week. According to The Hindu, Prime Minister Narendra Modi called for an investigation into the origins of Covid-19 during the “closed door” session. But President Xi countered the remarks by urging BRICS countries to “oppose politicisation” of virus origins tracing.
India and China struck a different tone at the Shanghai Cooperation Organisation summit in Dushanbe. External Affairs Minister S. Jaishankar underlined the importance of disengagement at the border as a “basis for the development of bilateral ties”.
Following the summit, Jaishankar expressed disagreement with the “clash of civilisation” remarks made by Chief of Defence Staff General Bipin Rawat. “It is also essential that China does not view its relations with India through the lens of a third country,” said the minister.
Later, the Chinese foreign ministry also commented on the “clash of civilisation” remarks.
“The Indian side hopes that both sides will work together to bring India-China relations back on track and guide all parties to establish a perception of India-China relations that is more positive and mutually beneficial. India does not subscribe to any clash of civilisations theory and believes that solidarity among Asian countries is very important,” said Zhao Lijian at the regular press conference.
China has sought Russia’s support on Afghanistan as other countries gave Beijing a cold shoulder at multiple forums. Xi Jinping and Russian President Vladimir Putin pledged to share intelligence and hold regular talks on Afghanistan at the SCO summit.
As expected, China wasn’t pleased with the announcement of the new security pact.
“The nuclear submarine cooperation between the US, the UK and Australia has seriously undermined regional peace and stability, intensified the arms race and undermined international non-proliferation efforts,” said Zhao Lijian.
Chinascope recommends reading C. Raja Mohan’s op-ed in Foreign Policy on what the AUKUS pact could mean for India.
The date for a decision on the extradition case of detained Huawei CFO Meng Wanzhou in British Columbia is coming to a close. On Saturday, Globe and Mail reported, citing two sources, that the US Justice Department and Meng’s legal team have resumed negotiations on a plea deal.
Meng is the daughter of Huawei founder Ren Zhengfei, currently detained in Vancouver, Canada, in a US judicial proceeding related to sanctions violations while conducting business with Iran.
Chinascope recommends some of the excellent articles that dig deep into the most recent news coming out of China.
When Germany Was China — Lucian Staiano-Daniels
China’s Afghanistan Dilemma — Seth Jones and Jude Blanchette
Experts this week
“Although India has not formally joined the Five Eyes, it has established different forms and levels of intelligence cooperation with group members. In this regard, China must be vigilant against the future impact of intelligence sharing between India and the Five Eyes,” wrote Lin Minwang, a professor with the Institute of International Studies at Fudan University.
India in China
Over the past week, India’s decision to conduct trial of the nuclear-capable intercontinental ballistic missile (ICBM) Agni-V was the leading topic of discussion on Weibo.
The hashtag “Two children in India receive tens of billions of money because of bank error” was another prominent trend on Weibo. It was based on the story of two children in Bihar who received Rs 900 crore in their account because of a bank error.
Recently announced Beijing Stock Exchange has set the investment threshold of $77,459 for investors who want to buy stocks on the new bourse. The new stock exchange wants to support Small and Medium-Sized Enterprises.
Hong Kong has proposed a new stock listing regime that allows companies to list through the SPAC model. Hong Kong has suffered a financial setback since Beijing’s National Security Law kicked in. The autonomous region is looking to maintain its position in the financial world through innovations.
China’s gaming restrictions are driving players to a platform called Steam, and this migration is likely to hurt the domestic video game industry. Listen to South China Morning Post’s Inside China podcast episode, which digs deeper into players looking for alternate gaming platforms.
China is a relatively new power in the Middle East, and its relationship with Israel is complicated. This week’s China in Africa Podcast episode on Beijing’s relations with Tel Aviv will demystify their bilateral relationship.
On 22 September, President Xi Jinping will address the UN General Assembly session in New York via a video link.
The author is a columnist and a freelance journalist. He was previously a China media journalist at the BBC World Service. He tweets @aadilbrar. Views are personal.
This is a weekly round-up that Aadil Brar will write about what’s buzzing in China. This will soon be available as a subscribers’-only product.
(Edited by Anurag Chaubey)
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