China News - 18 July 2022

International

China and EU to hold high-level trade talks this week after months of delays. Valdis Dombrovskis, the European commissioner for trade, and Chinese vice-premier Liu He will co-chair the virtual meeting. Discussion topics will include supply chains, food security and energy prices, plus bilateral trade and investment concerns, said the European Commission. A virtual summit in April ended unsuccessfully after the EU failed to gain assurances from China that it wouldn’t support Russia’s war in Ukraine. SCMP, 17 July

China urges banks to extend loans for real estate projects amid mortgage boycott. The China Banking and Insurance Regulatory Commission (CBIRC) urged banks to extend loans to qualified real estate projects and meet developers financing needs where reasonable, in their latest effort to ease concerns triggered by a widening mortgage-payment boycott on unfinished houses. The value of the mortgages involved amounts to 2bn yuan ($300m), according to data from the banks on Friday, but some analysts think the real figure is much higher. Reuters, The Guardian, 17 July

China growth hopes rest on troubled local government financing vehicles. FT, 17 July

Tony Blair urges western powers to stand up to China. Delivering the annual Ditchley lecture on Saturday, the former Prime Minister called for a policy towards Beijing of “strength plus engagement”. He said western powers needed to increase their defence spending in order to maintain their military superiority while extending their “soft power” by building ties with developing nations. The Guardian, 16 July

Hong Kong’s ‘liberal education’ ends as students opt for mainland. About a quarter of Hong Kong secondary school leavers who want to go to university are planning to study in mainland China, while two fifths would consider Taiwan because of greater academic freedom, according to a survey released at the weekend. The Times, 18 May

Mongolia says Russia-China gas pipeline will break ground in 2024. Mongolia’s prime minister Oyun-Erdene Luvsannamsrai told the Financial Times he expects Russia to begin construction of the “Power of Siberia 2” gas pipeline through its territory to China within two years, as Moscow moves to connect its Europe-supplying gasfields to Asia for the first time. FT, 18 July

China holds the key in Sri Lanka’s crunch debt talks. China is a major creditor of Sri Lanka and the question of how that debt is dealt with is complicating the bailout negotiations. The Sunday Times, 17 July

Shanghai ramps up COVID testing; lockdowns extended elsewhere. Several large Chinese cities are on their toes due to new COVID-19 outbreaks, rolling out repeated mass testing or extending lockdowns on millions of residents, with some measures triggering public outcries. Nikkei Asia, 18 July

US approves possible sale of military assistance to Taiwan. Reuters, 16 July

Australian MP: Britain should try to build Australia’s first nuclear subs. The Sydney Morning Herald, 18 July

Economy & tech

China is pariah for global investors as Xi’s policies backfire. President Xi Jinping is now facing the risk of a nasty period of financial de-globalisation. Investors point to one main reason why: Xi’s own policies. Money managers once enticed by China’s juicy yields and huge tech companies now say reasons to avoid the country outweigh incentives to buy. Bloomberg, 17 July

Is China facing an energy crunch, too? Events of both this year and last are laying bare the contradictions between the desire for clean and secure energy and vigorous economic activity. In response, China’s leaders have tried supply-side interventions with varying degrees of heavy-handedness. The Economist, 17 July

India escalates crackdown on Chinese phone makers. Oppo, Vivo and Xiaomi have been hit by claims of tax evasion and unlawful remittances in legal actions that have stoked tensions with China. FT, 16 July

Tesla’s Chinese battery-maker is scoping out factory sites in Mexico. Caixin, 18 July

‘Critical’ sea freight congestion keeps prices high. The Sunday Telegraph, 17 July

Opinion & editorial

No longer the most populous, but still China wants to be world number one. Indians will soon outnumber Chinese, threatening Beijing’s sense of superiority. Rana Mitter. The Observer, 17 July

China’s zero-Covid policy has damaged its stock of global talent. Beijing’s approach may have long-term consequences for the internationalisation of the country’s workforce. Huiyao Wang. FT, 17 July

China's debt bomb looks ready to explode. Many warning signs suggesting that a debt reckoning is imminent. Minxin Pei. Nikkei Asia, 17 July

Smiles and unity at the Pacific Islands Forum mask tough questions shelved for another day. Kate Lyons. The Guardian, 16 July

Long reads

Western companies face ‘existential crisis’ as fears grow of Chinese invasion of Taiwan. A standoff over Taiwan threatens far more collateral damage than the conflict in Ukraine. Matt Oliver. The Telegraph, 16 July

China’s new spy army has invaded — and we’re not fighting back. Ian Williams. The Sunday Times, 17 July

Translated: Wang Jisi’s remarks at the 10th World Peace Forum in Beijing. US-China Perception Monitor, 15 July