Another attack on Chinese engineers in Pakistan

• A total of 23 Chinese personnel were being escorted by three bulletproof SUVs and a van, Chinese state-run nationalist tabloid Global Times reported, along with video of the attack that recorded sounds of gunfire echoing in the background.
• Pakistan’s armed forces said at least two militants were killed and three others injured in an exchange of fire with security forces, who have cordoned off the entire area and launched a search operation. No injuries or casualties of Chinese citizens have been reported by official Chinese and Pakistani sources.

The incident adds to a string of recent attacks from various Baloch separatist groups on a growing number of Chinese citizens and projects in the region. Anti-Chinese sentiment has been brewing among locals, many of whom claim that they do not receive any benefits from the vast influx of new wealth.

• Gwadar, a key seaport town at the head of the Gulf of Oman that would fasttrack the export of oil and gas from landlocked Xinjiang, has been undergoing a slew of development projects in recent years.
• Most of them are being carried out with help from Chinese engineers and financed by Chinese entities under the estimated $62 billion China-Pakistan Economic Corridor (CPEC), part of Beijing’s flagship Belt and Road Initiative (BRI).
• Islamabad has sought to reassure Beijing, its biggest source of military and economic support, over the uptick in terror activities. But beefed up security measures for CPEC projects and Chinese nationals in Pakistan have done little to quell Beijing’s anxieties.

Click here for all the details.

Nadya Yeh

China’s State Council has announced a 24-point plan to improve the environment for foreign investment, according to a document released yesterday (in Chinese, unofficial translation here). The guidelines include increased protection of the rights and interests of foreign investors, tax and visa benefits, greater access to virtual private networks (VPNs) that allow users to get around Chinese internet censorship, as well as stronger enforcement of intellectual property rights.

Last week, data released by the State Administration of Foreign Exchange (SAFE) showed that direct investment by foreign companies in China dropped to $4.9 billion — a 76% plunge from a month earlier and down 87% from the same period last year — the lowest quarterly level recorded since 1998. Meanwhile, the yuan fell to its weakest level since November 2022.

China condemned a “stopover” visit to the U.S. by Taiwan’s Vice President Lai Ching-te (賴清德 Lài Qīngdé) from August 12-13 on his way to attend Paraguay’s presidential inauguration, saying that it “seriously violates the one-China principle,” according to a statement from the Chinese Foreign Ministry.

Lai, a member of Taiwan’s ruling Democratic Progressive Party (DPP), is the frontrunner for the upcoming 2024 presidential election. He paid a visit to New York City to meet with members of the Taiwanese American community, and is set to make another stop in San Francisco on August 16-17 on his way back to Taipei.

Chinese Foreign Minister Wáng Yì 王毅 paid a state visit to Cambodia, where he met with Cambodian Prime Minister Hun Sen in Phnom Penh yesterday in a show of support. Wang Yi is the first foreign leader to visit Cambodia just days after Hun Sen announced that his 45-year-old son and the country’s army chief, Hun Manet, will replace him following a one-sided election last month.

“The election was fair, transparent and in accordance with the law,” Wang said according to the Chinese Foreign Ministry, and expressed China’s willingness to work with Cambodia to build deeper economic and political ties. He also met with Cambodian King Norodom Sihamon, Hun Manet, and other top officials during his visit.

The Philippines should “work with China to seek an effective way to control the situation in the South China Sea,” Wang Yi said according to the Chinese Foreign Ministry (in Chinese). He accused the “United States and some other forces” of using recent disputes over the contested Spratly Islands to “fan the flames, stir up troubles” between China and the Philippines.

China’s defense minister Lǐ Shàngfú 李尚福 will visit Russia and Belarus from August 14-19, where he will attend an international security meeting and meet with leaders from the two countries’ national defense departments, the Chinese Foreign Ministry announced today.

At least 21 people are dead and six are missing as of yesterday after heavy rains caused a mudslide in Xi’an, the capital of Shaanxi Province, on August 11, Chinese state media reported. They are the latest victims in the devastating floods that have wreaked havoc in northern China in the wake of Typhoon Doksuri.

Rare sightings of Hong Kong media tycoon Jimmy Lai (黎智英 Lí Zhìyīng) were captured on camera by the Associated Press in recent weeks. Lai, the prominent 75-year-old pro-democracy activist and publisher of the now-defunct Apple Daily newspaper, has been largely kept in solitary confinement in a maximum security facility ahead of his trial. He faces up to life in prison for “colluding with foreign forces” and endangering Hong Kong’s national security.

China’s automobile exports jumped 63% in July, up 310,000 vehicles compared to a year ago and raising the total to 2.65 million units in the first seven months of the year, according to data from the China Passenger Car Association (CPCA). The fresh figures have helped China cement its status as the world’s biggest exporter of cars, after the country edged out Japan out of the top spot in the first three months of the year in March.

Notable reads: The Economist says that “Joe Biden’s China strategy is not working.” The Biden administration’s China moves are “bringing neither resilience nor security. Supply chains have become more tangled and opaque as they have adapted to the new rules. And, if you look closely, it becomes clear that America’s reliance on Chinese critical inputs remains.”

Chinese state media: The People’s Daily today announces the first National Ecological Day, which falls tomorrow, August 15. On the same theme, Xinhua News Agency also highlights the “ecological civilization thought” of Xí Jìnpíng 习近平.

• Japanese Prime Minister Kishida Fumio and South Korea’s President Yoon Suk Yeol will discuss the North Korean threat and strengthening regional economic ties.
• The political leaders of America’s two East Asian allies will meet Biden at Camp David, the President’s country retreat in Maryland.

China has released a tranche of monthly economic data.

• Urban unemployment figures for July will be worth watching, as concerns mount over the country’s growing youth unemployment rate.

Click here for all the major upcoming political and business events.

Arran Hope

• The “dictator’s dilemma” arises from the incapacity of authoritarian leaders to calibrate repression and concessions because they cannot or are not willing to access information about elite dissatisfaction or popular discontent.

The two also discussed the various ways in which Chinese Communist Party leaders retain power, and how the Party handled the protests against COVID zero last year.

Christopher Marquis

You can wait for the general podcast release on Thursday, or you can get the ad-free, subscriber-only version of Sinica using any major podcast app on your phone by following the instructions at this link.

Below are links from our NewsBase to other noteworthy reports published in the last 24 hours from and about China.

BUSINESS AND TECHNOLOGY:

U.S.-China flights
U.S. and China agree to double weekly flights between countries / Nikkei Asia (paywall)
“The U.S. and China will approve twice the number of passenger flights currently permitted for air carriers to fly between the two countries, the Biden administration said on Friday, in a rare sign of cooperation between the world’s largest two economies.”
U.S., China agree to double weekly flights between countries / Reuters

Foreign investment
China State Council issues guidelines in bid to increase foreign investment / Reuters
“China’s State Council issued guidelines on Sunday that it said would further optimize the country’s foreign investment environment and attract more foreign investment.”
Beijing hones in on biotech in fresh pitch to woo foreign business / SCMP (paywall)
“China has introduced fresh efforts to woo foreign investors, with assurances of bolstering R&D in the biotech industry and ‘fast-tracking’ cross-border data flows.”
Foreign investment in China falls to lowest level on record / Nikkei Asia (paywall)

U.S.-China tech war
China accuses U.S. of trying to block its development and demands that technology curbs be repealed / AP
“China accused Washington on Thursday of trying to block its development after President Joe Biden stepped up a feud over technology and security by tightening controls on U.S. investments that might help Beijing develop its military.”
The U.S.-China decoupling story is not over / FT (paywall)
“Tech decoupling between the US and China is about many things, but chief among them is the notion that western technology should not feed Chinese military modernisation and expansion. From an American standpoint, this seems pretty obvious. Why should U.S. money, products and expertise aid the military strength of its chief strategic adversary?”

ByteDance
ByteDance’s China business is slowing, putting spotlight on TikTok / Information (paywall)
“Last year, ByteDance’s revenue in China grew 25% year on year to $69 billion, according to three people with knowledge of the company’s detailed financial results. That compared with growth of 68% in 2021, 105% in 2020 and 150% in 2019, according to the people. ByteDance still managed to increase its total revenue 38% last year to $85 billion, because its overseas revenue—mainly from TikTok—more than doubled.”

Electric vehicles
Electric vehicles: Tesla gives China rivals a taste of price-driven competition / FT (paywall)
“What is the cheapest way to buy a Tesla? Buy it in China. Some models are now half the price in China compared with Europe and the U.S.. The U.S. electric-car maker is leading a cut-throat price war among EV makers in China. It is upending the world’s largest car market.”

Economic gloom
China’s stalling economy puts the world on notice / NYT (paywall)
“As China’s economy flashes indications of decline, the consequences pose perils for countries around the globe.”

Bank of China addresses salary gaps
Bank of China starts nationwide move to reduce salary gap among employees, manager levels -sources / Reuters
“Bank of China Ltd (601988.SS), China’s fourth-largest lender by assets, has launched a countrywide exercise to reduce the salary gaps among its employees and mid- and high-level managers in response to Beijing’s ‘common prosperity’ drive, three sources with knowledge of the matter said.”

Defaulting wealth management firms
How Zhongzhi became the latest Chinese financial holding group to fall / Caixin (paywall)
“The financial sector has been rocked by the news that four major Chinese wealth management firms under the umbrella of Zhongzhi Group have defaulted on their fixed-income products. The sheer volume of money involved and the number of related parties have led to an ongoing buzz in the Chinese market, while drawing much scrutiny from regulatory bodies toward the firm.”

Provincial debt
China sends finance experts to tackle regions’ debts / FT (paywall)
“Beijing is making one of its biggest top-down efforts in years to tackle the debts racked up by local governments in a sign of authorities’ mounting concern over the risk to financial stability as the Chinese economy falters.”

Changes in cybersecurity behind breakdown of Chinese and global law firm
A global law firm separates from its Chinese partner, citing cybersecurity and data rules / AP
“One of the world’s biggest law firms,” Dàchéng Dentons, which had branded itself with a Chinese character as “大成 Dentons” last week announced that “it is separating from the Chinese firm that was part of its global network for eight years, citing changes in cybersecurity and other rules that have rattled foreign companies.”

AI
Xiaohongshu accused of using users’ artwork to train Its AI / Sixth Tone
“According to one illustrator, the social media platform has admitted to using his artwork to train its image generating AI. The platform says the artwork used was from open access sources.”

Real estate woesChina’s Country Garden seeks to delay onshore bond repayment, fanning market fears / Reuters
“Country Garden, China’s largest private developer, is seeking to delay payment on a private onshore bond for the first time, a source said, after suspending trading in 11 onshore bonds, sending its shares plunging to a record low on Monday.”
Is China’s property crisis at breaking point? Country Garden heads for debt workout while Sino-Ocean misses payments / SCMP (paywall)
“China’s property crisis faces a reckoning as two of the country’s best-known developers find themselves under the spotlight for their debt woes.”
Country Garden is not a repeat of Evergrande, but it’s in the same hole / FT (paywall)
Chinese property shares tumble as Country Garden hits record low / Nikkei Asia (paywall)
“Chinese property shares fell on Monday as distressed developer Country Garden Holdings hit a record low after suspending trading in some of its onshore bonds.”
China’s home buyers are waiting out the property slump / WSJ (paywall)
“After a short-lived sales rebound earlier this year, China’s property market has fallen back into a deep slump, developers are having more cash-flow problems and Chinese authorities are trying more ways to revive housing demand.”
China’s deepening housing problems spook investors / WSJ (paywall)

China’s tech giant woes
Triple woes weigh on Alibaba, Tencent and other Chinese tech titans / Nikkei Asia (paywall)
“Chinese high-technology stocks are pushing up against the limits of their upside potential, beset by the triple woes of an intensifying U.S.-China confrontation, concern regarding the Chinese government’s regulatory regime and the stuttering pace of the economy.”

Foxconn
iPhone maker Foxconn’s cautious pivot to India shows limits of ‘China plus one’ / FT (paywall)
“Apple supplier still relies on Chinese plants for 75% of global operations.”

Disney
No magic recovery for Hong Kong Disneyland as ‘labor shortage, slow flight resumption’ delay park’s post-pandemic revival / SCMP (paywall)
“A labor shortage and the slow resumption of flights remain the largest hurdles to Hong Kong Disneyland’s full recovery following the COVID-19 pandemic, the theme park has said as it seeks to bring in 500 extra staff to boost competitiveness.”

SCIENCE, HEALTH, AND ENVIRONMENT:

Infectious diseases
China’s Inner Mongolia reports two cases of bubonic plague / Reuters
“China’s northern region of Inner Mongolia reported two cases of bubonic plague on Saturday, following a previous infection that was detected on Aug. 7, the local government said.”

Farmland
China expands farmland in bid to cut foreign food reliance / FT (paywall)
“More than 170,000 hectares have been reclaimed in a drive to cut imports amid global supply chain fears.”

Flooding aftermath
China’s Hebei Province plans for two years of post-flood reconstruction / Reuters
“China’s northern province of Hebei may spend two years carrying out post-flood reconstruction, state media China News Service reported on Friday.”
Severe floods in China’s northern province killed 29 and caused tens of billions of economic losses / AP
Death toll from mudslide in China’s Xian rises to 21 / Reuters
“The death toll from a mudslide in China’s northwestern city of Xian has risen to 21, with six people still missing, the city’s emergency management authority said on Sunday, as China grapples with unusually high summer rainfall.”
China evacuates residents and searches for mudslide victims as storms lash parts of the country / AP
China faces early attack from crop pests after extreme weather / Bloomberg (paywall)
“China’s farmers are facing an earlier than expected assault on their crops this year as extreme weather accelerates the spread and growth of destructive diseases and pests such as the dreaded fall armyworm.”

POLITICS AND FOREIGN AFFAIRS:

Censorship
When tragedy strikes in China, the government cracks down on grief / NYT (paywall)
“The Chinese government represses public grief, withholding information and stanching displays of mourning to tell history the way it wants it told.”

Corruption
Anti-corruption storm sweeps China’s health-care industry / Caixin (paywall)
“An unprecedented anti-corruption crackdown is sweeping through China’s health-care industry, causing anxiety among hospitals, pharmaceutical companies and other segments of an industry that is vital to the well-being of 1.4 billion Chinese people.”

Belt and Road
China state media says developed nations not shunning Belt and Road Forum / Reuters
“Chinese state media on Saturday rejected a Western claim that developed nations were shunning the country’s Belt and Road Forum, while saying most of the leaders invited this year were from developing nations.”

Rule of law in Hong Kong
AP gets rare glimpse of jailed Hong Kong pro-democracy publisher Jimmy Lai / AP
“Jimmy Lai (黎智英 Lí Zhìyīng), a former newspaper publisher and one of Hong Kong’s most prominent pro-democracy activists, spends around 23 hours a day in solitary confinement in a maximum-security facility while he awaits a trial that could send him to prison for life.”
Hong Kong’s corporate lawyers test boundaries as Beijing’s influence grows / FT (paywall)
“When Hong Kong justice minister Paul Lam (林定國 Lín Dìngguó) last month hailed the Chinese territory’s robust legal system and pool of ‘diversified’ legal talent, he touched on what is both the biggest draw for business and the biggest potential blot on their future there — the rule of law.”

Taiwan VP in the U.S. and PLA response
China criticizes visit of ‘troublemaker’ Taiwan VP to U.S. / Reuters
“China on Sunday condemned a brief U.S. visit by Taiwan Vice President William Lai (賴清德 Lài Qīngdé), saying he was a separatist and ‘troublemaker through and through,’ and Beijing would take strong steps to protect its sovereignty, drawing a rebuke from Taipei.”
Taiwan vice president stops over in New York on way to Paraguay / Reuters
“Taiwan Vice President William Lai arrived in New York on Saturday at the start of a sensitive U.S. stopover, which China has condemned and Taiwanese officials fear could prompt more Chinese military activity around the democratically governed island.”
As a Taiwanese presidential contender visits U.S., he tries to walk a fine line / NYT (paywall)
China sends ships and fighter jets toward Taiwan in new show of force / AP
“China sent navy ships and a large group of fighter jets toward Taiwan, continuing its military pressure on the island, Taiwan’s defense ministry said Thursday.”
China’s military, ‘chasing the dream,’ probes Taiwan’s defenses / NYT (paywall)
“China has been steadily intensifying military pressure on Taiwan over the past year, sending jets, drones, bombers and other planes farther and in greater numbers to extend an intimidating presence all around the island.”

U.S.-China competition and tensions
China detains a military group worker suspected of spying for the CIA / AP
“China has detained a worker from a military industrial group on suspicion of spying for the CIA, national security authorities said Friday, adding to the list of public accusations of espionage between Beijing and Washington.”
Chinese security ministry attacks ‘selfish, hegemonic and disingenuous’ U.S. over criticism of anti-spying law / SCMP (paywall)
“China’s counter-intelligence ministry has defended a new anti-spying law in a rare commentary that directly singles out the United States for criticism.”
U.S. and China poised to drift further apart after investment ban / WSJ (paywall)
“After years of blacklisting Chinese companies and scrutinizing their investments in the U.S., the Biden administration is sending an unmistakable signal to American business to steer investment away from China.”
China’s options for retaliation are few after U.S. investment ban / WSJ (paywall)
“China is unlikely to hit back at the U.S. blow for blow over the Biden administration’s new investment ban on certain Chinese tech companies. That’s because Beijing is limited both in its ability and desire to fire a big salvo, analysts say.”
Biden describes China as a time bomb over economic problems / NYT (paywall)

Middle powers Germany and Australia
Germany offers lessons in managing a relationship with China / AFR (paywall)
Australian scholar Rory Medcalf, who previously worked as diplomat and intelligence analyst, says: “Australia and Germany both have economies heavily geared to China. What can they learn from each other on de-risking without drama?”

Philippines
China asks Philippines to jointly work on defusing South China Sea tensions / Reuters
“​​Chinese Foreign Minister Wáng Yì 王毅 urged the Philippines to work with China to seek an effective way to defuse tensions in the South China Sea, the official Xinhua news agency said on Saturday.”

Afghanistan
China cultivates transactional Taliban ties as Afghan regime turns 2 / Nikkei Asia (paywall)
“As Afghanistan approaches two years since the Taliban returned to power, China stands out for its active engagement of the regime, though it is treading cautiously and has not extended formal recognition.”

Cambodia
China’s foreign minister visits Cambodia days after incumbent premier hands off the job to his son / AP
“China’s foreign minister visited Cambodia over the weekend to reaffirm his country’s commitment to the southeast Asian country after its incumbent prime minister handed off the job to his son following a one-sided election last month, officials said.”
China’s Wang Yi visits Cambodia, meets with Hun Sen and son / Nikkei Asia (paywall)
“China’s foreign minister visited Cambodia over the weekend to reaffirm his country’s commitment to the Southeast Asian country after its incumbent prime minister handed off the job to his son following a one-sided election last month, officials said.”

Singapore
‘Extreme’ U.S.-China rivalry could be ‘disastrous’ for global economy: Singapore’s Lawrence Wong / SCMP (paywall)
“The existing state of ‘extreme competition’ between the United States and China, with the mutual use of economic punitive measures, could be ‘disastrous’ for the global economy, Singapore’s No 2 leader Lawrence Wong warned on Monday.”
China diplomat Wang Yi’s deft touch with a tie wins online praise / SCMP (paywall)
“Chinese Foreign Minister Wang Yi won fans among Singapore’s online community during his visit to the city state last week as part of a swing through Southeast Asia.”

Chinese chiefs in Africa
‘The first Chinese chief in Africa’, but does he — and others like him — wield any real influence? / SCMP (paywall)
“By the age of 50, former English teacher Hú Jièguó 胡介国 had moved to Nigeria and built a multimillion-dollar Chinese-style hotel, at a time when East Asian faces were uncommon there. Now in his 70s, Hu lives in Lagos surrounded by government-funded, submachine-gun-toting guards.”

Pakistan
Militants attack Pakistani military convoy escorting Chinese nationals / Reuters
“Militants attacked a Pakistani military convoy near the strategic southwestern port of Gwadar on Sunday as it was escorting a delegation of Chinese nationals to a construction project, the military and China’s consulate in Karachi said.”
Attacks on Chinese targets in Pakistan ‘unlikely to derail close economic ties’ / SCMP (paywall)
“Attacks on Chinese workers in Pakistan are not expected to have a major impact on the economic cooperation between the two countries, analysts said following the latest attack.”

Russia
China defense minister to visit Russia, Belarus Aug 14-19 / Reuters
“China’s defense minister Lǐ Shàngfú 李尚福 will visit Russia and Belarus from Aug. 14-19, the ministry said in a statement on Monday.”
China’s defense chief Li Shangfu heads to Russia, Belarus on 6-day trip / SCMP (paywall)

Middle East
How China’s Communist Party seeks to win friends and influence through Mideast political groups / SCMP (paywall)
“From brokering a deal between rivals Saudi Arabia and Iran to offering to intervene in the Israeli-Palestinian crisis, China’s diplomatic efforts in the Middle East have raised Beijing’s profile as a player in the region.”

SOCIETY AND CULTURE:

Rock music and politics
Rock ’n’ roll according to the Chinese Communist Party / NYT (paywall)
“It was a story of disillusionment and hopelessness in the industrial city of Shijiazhuang, and it was one of China’s most influential indie rock songs. Then a local Communist Party group decided to rewrite it.”

Music festivals
Young Chinese flock to music festivals, giving tourism a boost / Nikkei Asia (paywall)
“Musical events, including outdoor festivals and concerts, are attracting China’s young in droves, with revenues from the events believed to have risen above the pre-pandemic level in 2019 to an all-time high in the first six months of 2023 to June.”

Lottery
China’s youth seek fortune’s favor / Caixin (paywall)
“Sales of China’s state-run lottery tickets hit 273.9 billion yuan in the first half of this year, up by 50.4% from the same period last year, data released by the Ministry of Finance showed.”

Livestreaming
In China’s clothing markets, a battle over the future of livestreaming / Sixth Tone
“During the pandemic, Chinese wholesalers turned to livestream e-commerce in a desperate bid to revive flatlining sales. Now, a growing number are trying to return to business as usual — and kicking the livestreamers out.”