China News - 9 January 2023

Next event: The realities of doing business in China in 2023. The China Research Group is hosting a discussion with members of the British Chamber of Commerce in China. The event will take place in the Palace of Westminster, Wednesday 25th January (6-7pm). Register here.

International

China reopens borders to tourists after three years of Covid closure. China reopened its borders to international visitors for the first time since it imposed travel restrictions in March 2020, despite the country battling a surge in Covid cases. On Sunday, double-decker coaches packed with travellers arrived at the Hong Kong-Zhuhai-Macau Bridge to catch buses to mainland China. Meanwhile, workers clashed with police at a Covid test kit factory in the southwestern city of Chongqing after a sudden announcement of layoffs and disputes over wages. BBC, 8 January

China says it will track new Covid variants from inbound travellers. China will monitor new Covid-19 variants from inbound travellers by collecting samples from hospitals and using genome sequencing under a new control plan announced on Saturday. The country is worried that the arrival of travellers from overseas poses a further risk after reopening its borders on Sunday. SCMP, 7 January

Hidden Chinese tracking device ‘found in UK Government car’ sparks national security fears. A hidden Chinese tracking device was found in a UK Government car after intelligence officials stripped back vehicles. At least one SIM card capable of transmitting location data had been placed into a vehicle, inside a sealed part imported from a supplier in China, according to a security source. CRG chair Alicia Kearns commented: “If these SIM cards have been duplicitously installed, then this is CCP espionage. If the SIM cards are operationally standard, then it is a failure of security not to have removed them.” iNews, 6 January

Jack Ma cedes control of fintech giant Ant Group, China’s tech crackdown ‘basically’ over. Billionaire Jack Ma is ceding control of Ant Group Co., capping a tumultuous period for the Chinese fintech giant. Ma will no longer be the controlling person of Ant, the company said in a statement on Saturday. Meanwhile, China’s more than two-year clampdown on its sprawling internet sector is coming to an end, according to top central bank official Guo Shuqing. WSJ, The Times, 7 January

Chinese researchers claim to find way to break encryption using quantum computers. Computer security experts have been assessing a startling claim by Chinese researchers that they have found a way to break the most common form of online encryption using the current generation of quantum computers, years before the technology was expected to pose a threat. The method could be used to break the RSA algorithm that underpins most online encryption. FT, 5 January

Today in Parliament: Procurement Bill. The Procurement Bill, which would let the government shape its own post-Brexit procurement rules, is set to be debated today. Amendments forcing the government to reduce dependence on authoritarian states and remove forced labour from UK value chains are expected to be put forward at report stage. House of Commons, 9 January

The UK and Japan to sign defence pact. A Reciprocal Access Agreement (RAA) will be signed when Prime Minister Fumio Kishida visits the UK this week, according to government sources. The pact will set a legal framework for the activities of the Self-Defense Forces in the United Kingdom and British military personnel in Japan. Japan News, 6 January

Republicans plan to pursue priorities on China as McCarthy elected House speaker. Rep. Kevin McCarthy was elected House speaker after multiple days of negotiations and 15 rounds of voting. Amongst the long-time priorities of McCarthy is the creation of a committee to investigate competition between the United States and the Chinese government. Reuters, 7 January

Hong Kong's TVB streaming service to drop BBC channels. It comes after China banned the BBC's news channel, and local broadcaster RTHK dropped its relay of the BBC's radio news channel in 2021. HKFP, 9 January

Argentina and China formalise currency swap deal. Reuters, 8 January

Taiwan pitches democratic alliance to shore up shaky Paraguay ties. Reuters, 9 January

Economy & tech

Sunak revives talks with SoftBank on London listing for Arm. Rishi Sunak has revived efforts to secure London a role in the planned initial public offering of UK tech group Arm. SoftBank, Arm’s Japanese owner, has previously indicated that it wants to list Arm, the chip designer that it acquired in 2016 for $32bn, in New York. FT, 9 January

Beijing blocks listings of ‘red light’ companies to steer funding to strategic sectors. China’s stock regulator is set to stop allowing local companies in certain sectors to list on the country’s main stock exchanges as Beijing works to channel funding into strategic industries, according to two capital markets bankers familiar with the matter. FT, 9 January

China, a pioneer in regulating algorithms, turns its focus to deepfakes. China is implementing new rules to restrict the production of ‘deepfakes,’ media generated or edited by artificial intelligence software that can make people appear to say and do things they never did. WSJ, 8 January

Wisconsin governor plans to ban TikTok from state government-owned devices. Reuters, 6 January

Opinion & editorial

The Chinese Communist Party plans to avoid a zero-covid reckoning. Xi Jinping seems to believe that China’s rise trumps individual suffering. David Rennie. The Economist, 6 January

Is the Uyghur Forced Labour Prevention Act working? Ruth Ingram. The China Project, 6 January

China’s chip industry is struggling. Ian Williams. The Spectator, 8 January

Long reads

Peak China? It is just as dangerous to underestimate Chinese power as it is to overestimate it. Joseph S. Nye Jr. Project Syndicate, 3 January

The Semiconductor Madman. Zhao Weiguo was just the man to lead Tsinghua Unigroup and China's big push into semiconductors — until he wasn't. Brent Crane. The Wire, 8 January

Hong Kong activists in the UK fear the long reach of police repression. Yuan Yang. FT, 6 January