China News - 15 July 2022

International

China posts weakest quarterly growth in 2 years. Second quarter growth flattened to 0.4% from a year earlier as COVID-19 lockdowns in major cities, including the financial capital of Shanghai, hit factory output and consumer activity. The latest GDP figures were the worst showing for the world's second-biggest economy since the data series began in 1992, excluding a 6.9% contraction in the first quarter of 2020 due to the initial COVID shock. Nikkei Asia, BBC, 15 July

Britain and Japan aim to merge Tempest and F-X fighter programmes. Britain and Japan are close to an agreement to merge their next-generation Tempest and F-X fighter jet programmes, with the two countries aiming for a deal on a new joint project by year-end, three sources told Reuters. It would be the first time Japan has sought a non-US partner for a large military programme. Reuters, 14 July

Pacific leader blasts China’s botched attempt to strike pact. China’s attempt to strike a wide-ranging economic and security pact in the Pacific region fell apart in May because of Beijing’s rushed attempts at diplomacy, according to the head of the Pacific Islands Forum (PIF). Speaking at the PIF, Chinese liaison department head Liu Jianchao stressed China was willing to work with its Pacific island “brothers” to promote projects under the Belt and Road Initiative and to tackle climate change. Bloomberg, SCMP, 15 July

UK-China trade talks on ice as candidates vie to replace Boris Johnson. Earlier this week, Sky News reported that the China-UK Economic and Financial Dialogue had been scrapped by the Treasury. The UK-China Joint Economic and Trade Commission (JETCO) dialogues, which were set for the end of July having not taken place since 2018, have now also been stalled. Politico, 14 July

Four Hong Kong men arrested while trying to flee to Taiwan. The police said the four, aged 16 to 24, were intercepted at a bus terminal near a ferry pier before dawn on Wednesday. Senior Supt Steve Li, from the police’s national security department, said the men had been hiding from law enforcement since failing to respond to court summonses. The Guardian, 14 July

China willing to ‘recalibrate’ strained Australia ties, FM says. Al Jazeera, 15 July

China will agree to aid ‘at some point,’ Sri Lanka envoy says. Bloomberg, 15 July

Economy & tech

Chinese regulators rush to tame investor panic over mortgage boycotts. Hundreds of thousands of buyers have halted mortgage payments on more than 200 unfinished property projects in China this week, aggravating a property sector crisis that has dragged down economic growth. The country’s banking and insurance watchdog said it would step up coordination with the central bank and housing regulator to help local governments complete pending real estate developments. FT, 15 July

Alibaba executives called in by China authorities as it investigates historic data heist. Executives from Alibaba Group’s cloud division have been called in for talks by Shanghai authorities in connection with the theft of a vast police database, according to people familiar with the matter. Cybersecurity companies say Alibaba’s cloud platform that hosted Shanghai’s police database used outdated systems that didn’t offer the ability to set a password. WSJ, 14 July

Barclays seeks entry into China's $4.3 trillion asset management market. Barclays is seeking a Chinese banking partner to set up an asset management joint venture in the country, two people with knowledge of the matter said, as part of the British lender's plans to expand its footprint in the world's second-largest economy. Reuters, 14 July

Commercial Aircraft Corporation of China wants to take on Airbus and Boeing. SupChina, 14 July

Chinese drone maker lobbies to defeat US national security ban. FT, 14 July

China focus

Xi inspects Urumqi in China's Xinjiang, first trip visit for eight years. The Chinese President said Xinjiang would be a main hub for connecting China to other nations. The trip is the first since he ordered a crackdown in the region and brings an end to the largest gap in his schedule on record this year. SCMP, 15 July

China’s surveillance state encounters public resistance. Beijing’s swift move to censor news about one of the largest known data breaches shows keen awareness of how major security lapses can harm its credibility. NYT, 14 July

Shanghai declares third rare extreme heat warning of summer. The highest of a three-tier colour-coded warning system, it requires construction and other outdoor work to be reduced or halted. The Guardian, 14 July

Long reads & opinion

Where does each potential Prime Minister stand on China? Beijing to Britain, 14 July

US raises the ante in Pacific Islands after Chinese swoop. But the Pacific Islands are loath to be pawns in a geopolitical game. Foreign Policy, 14 July

Biden is fighting the wrong battle against China. Casting the rivalry as a struggle between democracy and autocracy risks undermining all the good that the administration’s actual policies are doing. Minxin Pei. Bloomberg, 14 July