China News - 26 October 2022

International

Biden and Sunak vow to support Ukraine and counter China in first call. New Prime Minister Rishi Sunak spoke with US President Joe Biden on Tuesday evening and they are set to meet in person at the upcoming G20 Summit in Indonesia. The leaders discussed the extent of UK-U.S. cooperation, both bilaterally and in regions such as the Indo-Pacific where the AUKUS pact forms part of efforts to counter China's malign influence, a Downing Street spokesperson said. The FT outlined the foreign policy challenges facing Sunak, who has retained James Cleverly as Foreign Secretary. Reuters, 25 October

Ex-UK pilots in China did not share classified information - flying school. Last week, the Ministry of Defence (MoD) said it was taking "decisive steps" to stop Chinese recruitment schemes attempting to headhunt serving and former pilots. Officials said a South African flying academy was linked to their recruitment. The South African flying school - Test Flying Academy of South Africa (TFASA) - has now released a written statement, saying the company "has been in contact with the UK MoD for many years and they are fully aware of the nature of the company's business". BBC, 25 October

Failure to investigate UK imports linked to forced Uyghur labour unlawful, court told. UK government agencies have broken the law by not investigating the importation of cotton products manufactured by forced Uyghur labourers in China, the high court has heard. The World Uyghur Congress (WUC) is challenging the home secretary, HM Revenue and Customs and the National Crime Agency (NCA), claiming a failure or refusal to investigate imports from Xinjiang was unlawful. The Guardian, 25 October

China accused of illegal police stations in Netherlands. The Chinese government has been accused of establishing at least two undeclared "police stations" in the Netherlands. Dutch media found evidence that the "overseas service stations", which promise to provide diplomatic services, are being used to try to silence Chinese dissidents in Europe. Last week, the Mail published an exclusive investigation into China’s secret long-arm police stations in the UK, following a report by NGO Safeguard Defenders. BBC, 26 October

Hu Jintao: Fresh China congress footage deepens mystery over exit. Fresh footage shows in greater detail how outgoing Politburo member Li Zhanshu, to former president Hu Jintao’s left, takes a file away and speaks to him. Then China's current leader Xi Jinping gives lengthy instructions to another man who subsequently attempts to persuade Hu to leave. The footage suggests that Hu's handling of the document in front of him played a role in the incident. Nikkei Asia, 26 October

‘We need to get China’: John Kerry calls for return to bilateral climate talks. US climate envoy John Kerry has urged China to return to the negotiating table with the US on the climate crisis to kickstart stalled global progress on cutting greenhouse gas emissions. Kerry said China - responsible for 30% of all emissions - had in effect stopped negotiating with the US on climate issues since Nancy Pelosi, the speaker of the House of Representatives, visited Taiwan. The Guardian, 25 October

Hong Kong publisher Jimmy Lai found guilty on fraud charges. Pro-democracy Hong Kong publisher Jimmy Lai was found guilty Tuesday on two fraud charges related to lease violations, the latest in a series of prosecutions apparently aimed at punishing him for his past activism. The Diplomat, 25 October

Germany allows China's Cosco to take 24.9% stake in largest port. Reuters, 26 October

Australia boosts defence, Pacific diplomacy spending in budget. Reuters, 25 October

Economy & tech

Renminbi hits 2007 low as China budget deficit nears record $1 trillion. China’s renminbi has hit its weakest level against the dollar since 2007 as concerns over President Xi Jinping’s appointment of a harder line leadership team and a struggling economy spread from equities to currency markets. China’s broad fiscal deficit hit an all-time high in the first nine months of the year. FT, Bloomberg, 26 October

Taiwan’s first industrial output fall in 2.5 years sign ‘Asia is slowing down’. Taiwan’s industrial output index fell for the first time in more than two and a half years in September, with production in South Korea and Singapore having also eased due to weak consumer demand caused by the war in Ukraine, high inflation and fallout from China’s zero-Covid policy. SCMP, 25 October

HSBC sets aside $1.1bn for bad debts in wake of China property crash. HSBC has been forced to set aside $1.1bn (£970m) to cover bad debts in the wake of rising interest rates and a weak Chinese property market, prompting its share price to slump. HSBC has just under $20bn worth of exposure to China's commercial real estate market. Around two fifths of this is secured against real estate within mainland China, with the rest booked in Hong Kong. The Telegraph, 25 October

Beijing-backed British tech company reveals string of accounting errors. The Telegraph, 25 October

Long reads & opinion

China’s limitless presidency means limited diplomacy. Communicating with foreign audiences will become more difficult as internal party discipline hardens. Yuan Yang. FT, 25 October

Xi Jinping has purged China of hope – but he can’t stamp out small acts of resistance. Yangyang Cheng. The Guardian, 25 October

The hidden audience of China’s undiplomatic diplomacy. Incidents like the beating of a protester in Manchester are aimed at boosting diplomats’ political standing at home. Ethan McAndrews. The Diplomat, 25 October

Your phones and cars aren’t going to work the same after new US rules on selling chips to China. Paul Triolo. The China Project, 25 October