China News - 26 October 2020
International
Chinese leadership meets to set policy direction for next 5 years. China’s leadership start discussions today to set the country’s long-term priorities at the country's key annual political meeting. It will conduct the country’s most important goal-setting exercise, drafting the next Five-Year Plan. Importantly, the plenum will also discuss a broad plan for the next 15 years, with goals that are likely to endure for at least the rest of 67-year-old President Xi Jinping’s rule. Beijing is expected to focus on boosting technological self-sufficiency and domestic demand. The plenum takes place behind closed doors, with state-controlled media set to release details in due course. FT, CNBC, China Daily, 25 October
Semiconductors will be high on the agenda, as Bloomberg reports that China has earmarked more than $200bn for a domestic push in the industry. The FT writes that China’s semiconductor equipment today is where Huawei and ZTE were in the late 1990s, with technical breakthroughs representing the biggest hurdle to success.
China to impose sanctions on US firms over Taiwan arms sales, foreign ministry says. Lockheed Martin, Boeing Defense and Raytheon will be sanctioned after the US State Department approved the potential sale of $1.8bn of weapons systems sales to Taiwan. Reuters, 26 October
Europe must ‘wake up’ to China threat, warns ex-spy chief Gerhard Schindler. Gerhard Schindler, who led the Federal Intelligence Service (BND) from 2011 to 2016, said Huawei’s technology was so far ahead of its European rivals that Germany could no longer tell if “back doors” were being planted in its networks to siphon information to Beijing. “It’s as though an engineer specialised in steam engines were supposed to assess an internal combustion engine,” he said. “If Huawei were to build [5G network components] we would have no idea what they were building. He added that Germany needs to reconsider its stance towards China, which “has been dominated by business relations.” The Times, 25 October
138 new Coronavirus infections reported in Xinjiang, local authorities plan to test 4.7m residents within two days. A 17-year old girl tested positive on Saturday; her family work in factories that are 5-10km away from at least five detention camps identified by the Australian Strategic Policy Institute think-tank using satellite imagery. FT, BBC, 25 October
Millions of coronavirus tests are just costly overkill, says China’s top epidemiologist, citing vast social costs. The Times, 25 October
Debt: G20 is preparing a “common framework” on debt restructuring, set to be a proxy for China joining the Paris club. Beijing’s involvement in a debt service suspension initiative from the G20 has been slow, leading to frustration. China is due to receive the largest amount this year of any G20 lender, with payments of about $13.4bn coming due from DSSI countries, according to the World Bank, while France and Japan were each due to receive about $1.1bn. FT, 26 October
UK faces stiff competition for Global Britain strategy in Africa. The UK has announced one £100m project in Benin, while China has ploughed $683m into the country between 2000 and 2018. Politico, 25 October
John Glen MP, the Economic Secretary to the Treasury, accused of “kowtowing to Beijing” after speech at 48 Group dinner: the MP is reported to have said UK and China are natural partners and should co-operate in President Xi’s ‘Belt and Road’ initiative. Daily Mail, 24 October
China watch
Chinese Vice-President Wang Qishan made his first speech in nearly a year on Saturday, sending a message that Beijing will focus more on economic self-reliance and financial risk ahead of today’s fifth plenum (SCMP)
Economy & tech
Jack Ma rails against global financial rules ahead of $30bn Ant Group IPO. Basel regulations are not relevant for China’s phase of development, says Alibaba founder. FT, 25 October
Italy vetoes 5G deal between Fastweb and China's Huawei. Reuters, 24 October
Huawei: stale mate. The Chinese telecoms giant is running out of options in both its handset and network gear businesses as growth slows. FT, 23 October
Longer reads & opinion
Why China's dramatic economic recovery might not add up. Analysts have cautioned that opaque methodology raises questions over adjustments made to the headline figure of 4.9% GDP growth. Nick Marro, lead analyst at EIU, cautioned that September GDP figures were smoothed by quietly altering the historic basis of comparison. Leland Miller, chief executive of the China Beige Book consultancy, highlighted a discrepancy of 2.5 trillion yuan of fixed asset investment. “Even if growth leaps from a low base next year there are still underlying structural problems,” said George Magnus. The Observer, 25 October
How the Epoch Times created a giant influence machine. New York Times, 24 October
Comment: The Belt and Road strategy has backfired on Xi. It is more a marketing strategy than a geoeconomic power play. Palladium, 24 October
I am an Uighur who faced China’s concentration camps. This is my story. Varsity, 16 October
Whether Trump or Biden wins, US-China relations look set to worsen. Lily Kuo in The Guardian, 25 October
The week ahead
Note: House of Commons is in recess until Monday 2 November.
Monday:
China’s four-day fifth plenum begins, with leaders set to deliberate a new five-year plan.
Tuesday:
Mike Pompeo commences Asia trip with ministerial meetings in India, followed by trips to Sri Lanka, Maldives, and Indonesia.
HSBC’s third-quarter results, with focus on how the bank is dealing with UK and US tensions with China.
Ant Group set to announce pricing ahead of $35bn IPO.
Thursday:
Hong Kong releases GDP estimates for third quarter of 2020.