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Tuesday, May 28, 2024

MEDIA EXTRACTS ON CHINA #481

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Graham Perry
Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

#1   GERMANY SENDS TWO WARSHIPS TO INDO-PACIFIC

#2   JAPANESE CAR MAKERS UNDER PRESSURE FROM GROWING CHINA COMPETITION

#3   CHINA’S RICH LIST

#4   HUAWEI BOUNCE BACK

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#1 GERMANY SENDS TWO WARSHIPS TO INDO-PACIFIC

Germany will send two warships to the Indo-Pacific in 2024, Defence Minister Boris Pistorius said on Sunday, amid rising tensions between China and Taiwan and over the disputed South China Sea. Speaking at the Shangri-La Dialogue in Singapore, Asia’s most important security conference, Pistorius said countries needed to stand up for the rules-based international order and the protection of major maritime passages.

To this end, the German Federal Government sent a frigate to the Indo-Pacific in 2021, and will again, in 2024, deploy maritime assets – this time a frigate and a supply ship – to the region,” he said, according to a script of his speech distributed by the defence ministry in Berlin.

He added the deployments were not directed against any nation, a remark apparently addressed at China. “To the contrary: They are dedicated to the protection of the rules-based international order that we all signed up to and which we all should benefit from – be it in the Mediterranean, in the Bay of Bengal or in the South China Sea.”

By showing a greater military presence in the region, Germany is walking a tightrope between its security and economic interests as China is Berlin’s most important trading partner.

China claims almost the entire South China Sea as its own, despite an international tribunal ruling that Beijing has no legal basis for these claims, and has built military outposts on artificial islands in the waters that contain gas fields and rich fishing. Some 40% of Europe’s foreign trade flows through the South China Sea.

GRAHAM PERRY COMMENTS;

There are two conflicting views. The West led by the US and including EU countries views China as a “coercive” state with aspirations to be the dominant military power in the world. Statistics, in fact, show that the US has a much bigger military and weaponry than China but China has sufficient numbers and weapons to discourage the US from taking action. China sees things quite differently; it is a country dedicated to sharing – through the Belt and Road Initiative – its hard earned wealth to bring about a Win-Win outcome. A Win for China who wants to assist developing countries especially in the Southern Hemisphere and a Win for the recipient country who can take important steps to develop prosperity. China does not want war but is aware that strong influences within the US want to eliminate China’s power – sooner rather than later.

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#2 JAPANESE CAR MAKERS ARE UNDER PRESSURE FROM CHINA GROWING COMPETITION

Japanese automakers’ global strategies are under pressure as the rapid rise of China’s electric-vehicle industry undercuts their traditional strength of fuel efficiency in the world’s largest car market. One casualty of this transition is Mitsuibushi Motors which said on Tuesday it will end auto production in China, withdrawing from its joint venture with Guangzhou Automobile Group (GAC).

Japanese automakers are falling behind in China this year. Toyota Motor, Honda Motor and Nissan Motor together sold 1.29 million new vehicles in the first nine months of 2023, down 26% on the year, researcher MarkLines reports, with declines in the 30% range for Toyota and Nissan.

Chinese companies such as BYD and Great Wall Motor now hold more than half the country’s auto market, taking share away from their Japanese, American and European competitors. Japanese automakers whose strengths lie in gasoline-fuelled cars have failed to keep up with Chinese rivals’ rapid EV development, which has evolved with new electrification and software.

Chinese brands are gaining ground in the South East Asia region at the expense of their Japanese competitors as governments there promote EVs.

GRAHAM PERRY COMMENTS

In recent months much has been written about China’s economic problems. They are significant and they will impact upon China’s growth plans. But it is not all bad news. Far from it. Huawei’s new mobile phone, Mate 60 Pro,  has escaped the clutches of US controls (more below at #4). But it is China’s surge in Electric Vehicle production and sales to W Europe which has again reminded the world not to underestimate the strong heartbeat of China’s economy. China will make mistakes because it is in uncharted waters, No country has reached the path that China now treads and there are two things you can be sure of looking forward at China – there will be more mistakes but it is the corrections and bounce back that are more significant. 

 

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#3  CHINA’S RICH LIST

The number of Chinese individuals worth more than 5 billion yuan ($690 million) has fallen 15% from its peak in 2021, reflecting the property crisis-plagued economic slowdown and competitive e-commerce landscape.

That is according to Shanghai-based Hurun Research Institute, which released its latest list of China’s wealthiest people on Tuesday. The total wealth of the 1,241 individuals on the list dropped by 4% to $3.2 trillion compared to last year, with some 898 individuals seeing their worth decline or remain unchanged.

“Whilst the number of dollar billionaires from China has dropped by 51 in one year and 290 in two years, it is worth noting that China is still the ‘billionaire capital of the world’ with 895 billionaires, almost 200 ahead of the U.S. and more than triple the number in India,” said Rupert Hoogewerf, the report’s chairman and chief researcher.

Zhong Shanshan, of Nongfu spring water fame, topped the rich list for the third straight year with $62 billion, followed by Pony Ma Huateng of internet giant Tencent with $38.6 billion.

The wealth of Wang Jianlin, founder of real estate developer Dalian Wanda Group, declined by $7.3 billion and topped the loser list, which also included Richard Liu of JD.Com.

GRAHAM PERRY COMMENTS

In conversations with people about China – both those that are informed and those that are not so up-to-date – there is widespread ignorance about the significance of China’s Billionaires. How is it possible in a country that in every policy statement pays respect to “the principles of Marxism-Leninism with Chinese characteristics” there is pride in the presence of even one Billionaire. Read carefully – China knows what it knows but more significantly it knows what it does not know. The Party does not know how to make money. Its people are schooled in politics as the key vehicle for promoting prosperity but they themselves are not businessmen. They know about Marx and Lenin but not Marks and Spencer. The Party’s strength was to give businessmen their heads and to promote growth, profits and products that the people want. The Billionaires in China do not – and never will – have the power of the Oligarchs in Russia. In China, the Party will always be in charge but the Billionaires will always be permitted to make profits. The beneficiary will continue to be the people

 

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#4  HUAWEI BOUNCE BACK

Recall that a few years back, before US sanctions began to bite, Huawei had enjoyed worldwide success with its Kirin series of chips – designs that were in the same league as mobile processors from Apple, Qualcomm, and other leading players but then US sanctions began to bite and China was on the back foot and pressure was applied to chip-making giant TSMC that ultimately led to Huawei being unable to ship handsets containing its own silicon. The Chinese multinational technology company had to rethink both its software and hardware. And this gets to the heart of why the Huawei Mate 60 Pro is grabbing so much attention – the firm has once again produced an advanced smartphone with its own silicon, the Kirin 9000 chip. It is not an overstatement to say that China’s bounce back has astonished the US.

GRAHAM PERRY COMMENTS

The US is always seeking to clip China’s wings. The US has no illusions – its main number one world competitor is China and a China that does not play by the rules of Washington. London, Tokyo and Canberra. China is new, different and challenging. It is a threat, in particular, to the dominance of the US. The US has a dilemma. For some matters China must be embraced – for example Climate Control and Artificial Intelligence. For other matters – trade and investment – China must be knocked back. Hence the flurry of tariffs and duties that Trump and Pompeo imposed and that Biden and Blinken have continued. One of the main targets was Huawei, the China company that has blazed a trail in mobile technology. It is in this context that Huawei’s Mate 60 is so significant. It was not meant to be. Led by the US, the restraints on China were meant to strangle Huawei. China was meant to be knocked back. The “Free World” was meant to have landed a knock out blow. It hasn’t. The US is mystified. How is China to be restrained? Maybe the correct question is – Can China be restrained?

Graham Perry MA FCIArb

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