China News - 27 January 2022

International

Government pledges £100m for Sizewell nuclear site. The investment - announced by Business and Energy Secretary Kwasi Kwarteng - marks the latest stage in efforts to build the £20bn reactor on the east coast of England. However, it does not commit the government to approving the project, which is still subject to negotiations, as it looks to replace the 20% stake owned by Chinese company CGN. BBC, 27 January

Brussels challenges China at WTO over block on Lithuania imports. The EU has launched a case against China at the World Trade Organization over its de facto ban on exports from Lithuania in a dispute over Taiwan. The European Commission said it had evidence that Beijing had refused to clear Lithuanian goods through customs and rejected import applications from the country. It also said China pressured EU companies to remove Lithuanian parts from their supply chains. FT, WSJ, 27 January

China tells US to stay calm over Ukraine, and 'stop playing with fire' in Taiwan. China's Foreign Minister Wang Yi said on Thursday that all parties involved in the Ukraine issue should remain calm and refrain from actions that stir tension and hype up the crisis, as he held talks with US Secretary of State Antony Blinken. China's top diplomat also warned Washington to "stop interfering" in the Winter Olympics. The Telegraph, Reuters, 27 January

UK Prime Minister: Chinese air force incursion of Taiwan not conducive to peace. Speaking in parliament yesterday, Boris Johnson called for a peace treaty and constructive dialogue on both sides of the Taiwan Strait. Reuters, 26 January

How the computer chip shortage could incite a global conflict. A war game and study by a think tank illustrate how dependent the world is on Taiwan’s semiconductor foundries. NYT, 26 January

New Honduras leader says she hopes to maintain Taiwan ties. Honduras is grateful for the support Taiwan has provided and hopes to maintain their relationship, President-elect Xiomara Castro said after meeting Taiwan Vice President William Lai. Honduras is one of only 14 countries with formal diplomatic relations with Chinese-claimed Taiwan. Reuters, 27 January

China claims offshore wind top spot from UK as officials hail record 17GW annual bonanza. Recharge, 26 January

Climate change: world must almost double investment to US$9.2 trillion a year to hit Paris Agreement goals. SCMP, 26 January

Economy & tech

Chinese deal-making shifts to Europe amid US tensions. China's mergers and acquisitions activity shifted to Europe from the US last year on the back of rising tensions between the world's two biggest economies. Chinese companies invested more in consumer sectors and the electric vehicle supply chain worldwide, according to a report released by Baker McKenzie and Rhodium Group. Nikkei Asia, CNBC, 26 January

China’s industrial firms see profits grow at slowest pace since April 2020. Profits rose by 4.2 per cent year-on-year in December, the slowest rate since April 2020, pointing to cooling demand amid mounting economic challenges for the world’s second-largest economy. SCMP, 27 January

Evergrande targets restructuring proposal within six months as state tightens control. China Evergrande Group said on Wednesday it aims to have a preliminary restructuring proposal in place within six months as the debt-laden developer scrambles to reassure creditors spooked by defaults since its finances began to unravel last year. Reuters, SCMP, 26 January

Apple reclaims top smartphone spot in China. While Apple’s smartphone shipments in China were up 32 per cent to 50m units from a year earlier, Huawei saw its sales collapse 73 per cent, according to research group Counterpoint. FT, 26 January

Bank of America examines relocating staff from Hong Kong to Singapore. FT, 26 January

China’s banking sector dumps record $490 billion of bad assets in 2021. Caixin, 26 January

China focus

China’s Communist Party expels ex-chief of e-commerce hub Hangzhou in corruption probe. Zhou Jiangyong, former party chief of Hangzhou, accused of disloyalty to the party and colluding with private companies to support their ‘disorderly expansion’. SCMP, Xinhua, 27 January

China begins a tense Spring Festival travel rush. For years, China’s Lunar New Year travel season has been dubbed the world’s biggest human migration. But once again, the threat of the coronavirus is disrupting the festivities. Sixth Tone, 27 January

China to start three-year crackdown on money laundering. Bloomberg, 26 January

Opinion & editorial

What’s plan B if the government can’t attract investors willing to fund Sizewell C? Development money for the nuclear power station is an attempt to draw in investors that could replace China’s CGN. Nils Pratley. The Guardian, 27 January

Britain cannot turn a blind eye to Chinese economic coercion as war threatens. Financial clout should be used to tackle expansionism that threatens smaller nations. Ben Wright. The Telegraph, 26 January

Barbados’ new republic: a win for China? Centering Barbados’ decision to end ties with the British monarchy around China only underscores the problem: the UK’s lack of interest in Barbados and similar countries. Judith Mwai and Lauren Ashmore. The Diplomat, 27 January

Analysis: If Xi secures just 5 more years, he loses. The leader can only maintain grip if subordinates feel he'll stay. Katsuji Nakazawa. Nikkei Asia, 27 January

Long reads

How Beijing’s COVID-19 outbreak exposes urban poverty. Most middle-class Chinese rarely get a glimpse of the lives of the migrant workers who keep the city running. James Palmer. Foreign Policy, 27 January

Taiwan’s $1 billion Lithuania fund is a high-stakes game of economic diplomacy. Mary Hui. Quartz, 26 January

How to navigate the ethical risks of doing business in China. Seth D. Kaplan. Harvard Business Review, 26 January

Meet Eileen Gu - the skier and model who is the face of Beijing 2022. Didi Tang. The Times, 27 January