China News - 27 July

International

China insist diplomacy “orderly” after foreign minister’s shock removal. China states that its diplomatic affairs are in an “orderly state” despite Qin Gang’s unexplained, month-long absence. Speculation is growing over whether Wang Yi’s appointment is just a stop-gap until a more suitable candidate can be found. Joe Leahy and Edward White. Financial Times, 26 July

Italy’s relationship with China leads the agenda in Meloni-Biden talks. The two leaders are set to deepen their relationship during Meloni’s visit to the White House today. Washington thought it was a mistake that Italy joined China’s Belt and Road Initiative, Meloni must decide whether to renew this deal. Financial Times, 27 July

France's Macron warns against new 'imperialism' in the Pacific. In a speech in Vanuatu, Macron, the first French president to have set foot on the Pacific islands nation since war leader Charles de Gaulle, said France would work "shoulder to shoulder" with states in the region to preserve their independence. Reuters, 27 July

Blinken calls China’s behaviour in the Pacific “problematic” on visit to Tonga. Blinken confirmed that he had no objection to China’s engagement with the region, but he was concerned that its investments needed to be transparent and supported by sustainable finance. He said that the US was committed to Tonga and the broader Pacific Islands. The Guardian, 26 July

Taiwan’s military practices repelling Chinese attack on airport. The annual Han Kuang military exercise has become more of an authentic test than a mere showpiece for the first time. Taiwan’s armed forces have practised repelling an air assault as Taipei seeks to strengthen its defences against China. Kathrin Hille. Financial Times, 26 July

India “open” to Chinese investment despite tensions with Beijing, official says. New Delhi has banned more than 100 social media, lending and other apps (including TikTok), and has launched regulatory probes against Chinese mobile phone producers (Xiaomi, Oppo and Vivo). However, Rajeev Chandrasekhar, minister of state for electronics and information technology states that India “is open to doing business with any company as long as they are investing and conducting their business lawfully”. John Reed and Qianer Liu. Financial Times, 26 July

New Chinese foreign minister Wang talks Ukraine in Turkey on first trip. Reuters, 26 July

Economy & Tech

China’s politburo meeting leaves many economic headaches unaddressed. The main concern is that the economic slowdown is more structural than cyclical and needs significant political change in policies that have proven successful for decades but now generate more debt than growth. Experts say that options to restore the Chinese economy include government funded consumer vouchers, significant tax cuts, and building a social safety net with higher pensions. Marius Zaharia. Reuters, 26 July

China launches economic data inspections to “prevent, punish falsification and fabrication” as key census begins. Beijing has pledged to improve the quality of its economic data for a long time. With the fifth national economic census on the horizon, China’s statistics bureau will conduct data inspections in many provinces starting this month. Ji Siqi. South China Morning Post, 26 July

Tech war: China’s hi-tech state fund grows to over US$8 bln in self-sufficiency drive. China has long used state-level financing to boost major industries. The state media reported that Beijing is using a “whole-country” approach in its bid for tech self-sufficiency, and has pumped tens of billions of yuan into hundreds of enterprises. Lilian Zhang. South China Morning Post, 26 July

Volkswagen takes $700 million Xpeng stake for EV pact to win back China. VW plans to invest in Xpeng Inc and jointly develop electric vehicles as the German automaker fights to halt a sales slide in its most important market. VW will eventually hold a 4.99% stake in the Chinese company. Monica Raymunt. Bloomberg, 26 July

Evergrande EV unit reports about $10 bln loss for 2021-2022. Chinese EV company published its long overdue financial results reporting a combined net loss of 71.12 bln yuan. The company has been under serious financial pressure since its parent group China Evergrande group was sucked into a debt crisis in 2021, and warned that it might have to wind up operations unless it found new funding. Upasana Singh and Clare Jim. Reuters, 26 July

Nissan seals Renault deal, now faces hard yards in China. Nissan has agreed to invest $663 million in Renault’s new electric vehicle unit after long negotiations on Nissan protecting its intellectual property. The Japanese automaker said China remained a challenge as Chinese brands account for over 50% of cars sold domestically. Daniel Leussink and Gilles Guillaume.  Reuters, 26 July

HP to move production of millions of computers to Thailand and Mexico. The company is following brands like Dell and Apple in the diversification of their supply chain to beyond China. HP has been relatively slow in their move away from China compared to other US tech companies. Financial Times, 27 July

Opinion & long-reads

The ISC report on China: Progress, yet consolidation needed. The report rightly underlines the importance of protecting Britain’s science and tech, it also explains the threat posed to UK systems and way of life by the CCP, and calls on the government to provide a swift and effective response. One of the greatest needs is an equivalent of the Covid 19 “SAGE Committee” to give advice to academia and businesses. Charles Parton. Council on Geostrategy, 26 July

Xi should use his sway over Putin to push him to the negotiating table with Ukraine. Chinese President holds the upper hand both economically and diplomatically with Russia. Russia’s economy is a fraction of China’s at US$2 trillion, and their invasion of Ukraine is draining funds and causing sanctions. Since the start of the invasion, Xi has sent many clear signals of support to Russia. William Rhodes and Stuart Mackintosh. South China Morning Post, 26 July

How the Brics nations risk becoming satellites of China. Alan Beattie. FT, 26 July