November 5, 2018
Note: This map represents many of the areas covered by our intelligence briefs. For the purposes of the brief, we cover mainland China, Taiwan, Southeast Asia and disputed territories in the South China Sea. This does map/image not reflect our organization’s stance on any specific regional issue, nor does it infer one country or region is more prominent than others. We maintain an apolitical stance towards regional disputes and only seek to convey facts and insight through our written assessments.
China International Import Expo begins in Shanghai
Summary: China International Import Expo begins in Shanghai with a keynote speech from Chinese President Xi Jinping. President Xi announced to 172 countries that China will be opening foreign investment in previously closed sectors and will continue to enforce IP regulations. President Xi later implicitly touched on U.S. policies, strongly asserting China’s longevity and endurance considering the ongoing trade war. The United States is not present at the Expo.
Why is this important? China has consistently promoted itself as a champion of free trade. While many critics highlight the fact that China refuses to address concerns including domestic protectionism and IP violations, U.S. policy shifts in the past year have given China greater leverage in its narrative to portray itself as the global champion of free trade.
Opportunity & Risk for Business: As Chinese firms continue to push towards the technology frontier and become leading developers in their respective industries, there will be more pressure from market forces and the State to adhere to IP regulations. Whereas China has followed other E. Asian economies with a reliance on imitation and low-cost alternatives, Japan and South Korea have been able to move out of that production market to create global brands of their own.
Source: Washington Post
China’s service sector growth rate slows to lowest point in over a year
Summary: Data from the Caixin/Markit PMI show a decrease from 53.1 in September to 50.8 in October. (Anything below 50 in this index indicates contraction) A lack of new orders, in part due to the tariffs imposed by the U.S. in the ongoing trade war, has decreased growth momentum.
Why is this important? Many were expecting strong service sector growth to offset other areas hurt by the trade war. This has weakened business confidence, especially in the financial markets. China has been undergoing a shift from heavy industry and investment to value-added services and technology development – this trajectory is called into question given these stalling numbers.
Opportunity & Risk for Business: While China has promised to open its finance sector to foreign partnerships in the coming months, weakness on part of the Chinese financial and service sectors may de-incentivize foreign entrance into the market given the sector’s slowing growth. China’s Finance Chiefs have admitted to downward pressures being exerted on the service sector – future partnerships may be easier to negotiate, but riskier to maintain.
Source: CNBC
UN Probe on China Human Rights Record
Summary: On Tuesday, China’s human rights record will be under scrutiny from the UN. This review comes considering Beijing’s treatment of ethnic minorities in Xinjiang. With detention and ‘reeducation centers’ holding over one million ethnic Uyghurs, many have likened Beijing’s ‘anti-radicalism’ program as one of interment and suppression of cultural identity.
Why is this important? China’s human rights record is consistently criticized by most of the global community. However, this universal periodic review (UPI) comes after the revelation of these camps. With growing worry of Xi Jinping’s administration tightening its control of speech, it remains to be seen how China will respond to growing global accusations.
Opportunity & Risk for Business: Given the general business trend where large firms are expected to hold social stances alongside ‘company values,’ the current U.S. market is generally more sensitive than before in terms of a company’s social and economic impact. Firms that sell products directly to the American consumer should be wary in seeking production partnerships with China at this time, especially if more condemning news from Xinjiang develops.
Source: The Guardian
November 8th, 2018
China-Russia Confirm Arms Deals at Zhuhai Airshow
Summary: During the ongoing 2018 Zhuhai Airshow (Nov. 6th – Nov. 11th) the Russian Federation’s state arms exporter Rosoboronexport confirmed that it has signed three weapons contracts with China. This deal violates U.S. sanctions that have been in place against Russia due to 2016 election interference. Disregarding the sanctions, Russia has announced that it will complete all outstanding deals including the delivery of Su-35 fighter planes and S-400 anti-air defense systems. Although the details of the new arms deal were not revealed, the Russian exhibition at the airshow also successfully sold several civilian and utility helicopters to private Chinese buyers.
Why is this important? The relationship between Russia and China continue to warm, in some part influenced by U.S. pressure on both countries. Arms deals are a significant indicator in terms of geopolitical partnerships – Russia and China have demonstrated closer ties at war game participation and through these transactions.
Opportunity & Risk for Business: The defense and arms industries are very enclosed and exclusive. This event indicates the continuation of positive Sino-Russian relations in the wake of U.S. sanctions against both nations. Even if the U.S.-China trade war concludes soon, many political developments will be irreversible despite economic normalization.
Source: scmp
China unveils ‘world’s first’ AI news anchor
Summary: On Thursday, the Chinese state media agency Xinhua unveiled an ‘AI’ news anchor. The branding as an ‘AI’ is liberally applied, as the platform is essentially a real-time rendering of an existing newscaster that can read text. The bot is programmed to perform various facial gestures to appear more organic, but its robotic, computerized voice immediately takes viewers out of any illusion. It appears to be in early development stages and has not received positive feedback from Chinese social media.
Why is this important? With the world’s fastest supercomputer and investment from the CCP, China’s computing and AI development is part of Made in China 2025. Though this ‘AI’ news anchor may be nothing more than a publicity stunt, it reaffirms China’s designation as a leading innovator in AI, and a focus to bring it in contact with mass consumption.
Opportunity & Risk for Business: China’s tech industry is a paradox because while it currently boasts some of the largest tech companies and a domestic base of over 800 million users, it also is very heavily censored. U.S. tech companies such as Google and Facebook have faced difficulties entering the Chinese market due to heavy regulation and state oversight required by the Chinese government. At the same time, some U.S. firms have faced domestic backlash for trying to do business with an ‘unfree’ China. Firms who are interested in partnering with Chinese tech companies, or extend business into the Mainland, would do well to understand the challenge in terms of publicity and optics.
Source: The Guardian
Mattis, Pompeo, meet with Chinese leadership in Washington
Summary: On Friday Nov. 9th, Secretary of State Mike Pompeo and Defense Secretary Jim Mattis met with their respective Chinese counterparts Tang Jiechi and Wei Fenghe. Amid trade tensions, the meeting – which was originally scheduled to be held in Beijing last month – indicates continued effort on both sides to limit growing tensions ahead of the G20 Summit in Argentina later this month. The two sides aim to discuss North Korea, human rights, Middle East cooperation, and strategic trade. In particular, the U.S. wants China to cut oil imports from the Middle East and limit the export of fentanyl – a synthetic opioid that is augmenting drug addiction in the U.S.
Why is this important? The outcome of these talks will be a scene setter for both the U.S. and China going into the G20 meeting. Success at Friday’s meeting may provide the foundation necessary to re-stabilize relations. China-watchers indicate that the Chinese leadership hopes that U.S. President Donald Trump will be more willing to reach a compromise now that the domestic midterm elections have concluded.
Opportunities/challenges for companies: The course of the trade war – particularly the potential of U.S. tariffs on the remainder of all Chinese goods – may be determined by negotiations at the G20 summit later this month.
Source: Military Times
Analyst’s Bio
Analyst- Michael Tian
Michael Tian is currently a Junior at Brown University concentrating in International Relations and Economics with a focus on East Asia. Dedicated to understanding the global economy and its effects on inter-state relations, Michael seeks to promote mutual cooperation and foster cultural ties across cultures and space by developing informed and objective publications in both policy and academia. As a Chinese immigrant growing up in Boston Massachusetts, Michael is deeply invested in improving the livelihood of Asian-Americans and Asian immigrants – he has volunteered at various Chinese cultural associations in the Boston community, and currently tutors English to overseas Chinese students.
Senior China Analyst- Alicia Fawcett
Alicia Fawcett is a China analyst with expertise in US-China trade and cyber issues. Her professional experience includes U.S. Department of State, Cybersecurity firms, The National Bureau of Asian Research, the International Crisis Group, International Media, and the United Nations. She has studied and worked in Mainland China, Hong Kong and Taiwan. She holds a Master’s Degree from the University of Economics in Prague in International Economic Relations and two bachelor degrees in Economics and International Studies with China from the University of Northern Colorado. She is fluent in Mandarin Chinese and speaks German, Italian, Spanish and basic Czech. Her writing and original ideas have been published across Europe, with Asia-focused think tanks, universities, and in the D.C. based academic journal, The Washington Journal on Modern China.
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