Military drills around Taiwan

• Lai had paid brief transit stops in New York and San Francisco last week on his way to and from the inauguration of the new president of Paraguay, one of Taiwan’s last remaining diplomatic allies.

The People’s Liberation Army (PLA) sent “destroyers, frigates, missile boats, fighters, early warning aircraft, electronic warfare aircraft, and conventional missile units” during the Saturday drills around Taiwan, state-run nationalist tabloid Global Times said on Twitter.

• Taiwan’s Defense Ministry said it detected eight Chinese warships and 42 military aircraft, 26 of which entered Taiwan’s air-defense identification zone (ADIZ), the unofficial barrier between the two militaries.

China has also suspended imports of Taiwan mangoes, saying that Planococcus Minor mealybug pests were found in the fruit, but in what some critics have called another attempt at Beijing’s “fruit diplomacy.”

Click through for details, and see also the following for more on the Taiwan election from The China Project:

• The 2024 presidential election may be Taiwan’s most consequential
• Taiwan’s third-party presidential candidate wants to challenge the political establishment. But can he win?
• Can Beijing influence Taiwan’s presidential election through economic coercion?

Nadya Yeh and Anthony Tao

China’s central bank cut its one-year benchmark lending rate (LPR) down 10 basis points to 3.45%, but unexpectedly left the equivalent five-year rate unchanged at 4.2%, the People’s Bank of China (PBOC) announced today. It’s the latest effort by Beijing to prop up its sluggish economic recovery after releasing some disappointing data last week.

China’s top anti-espionage agency arrested an official accused of spying for the CIA. The 39-year-old Chinese national, surnamed Hǎo 郝, had been recruited by the U.S. Central Intelligence Agency while studying in Japan, the Ministry of State Security (MSS) announced in a statement on WeChat today. No further details of the official have been released.

Hao is the second Chinese national accused by the MSS of working as a spy for the CIA in recent weeks. On August 10, the MSS said in a separate WeChat post that a 52-year-old worker surnamed Zéng 曾 had allegedly been recruited while studying in Italy and had provided sensitive military information to the CIA.

Beijing lodged complaints after the leaders of Japan, South Korea, and the U.S. met at the American presidential retreat in Virginia last week, and released a statement, The Spirit of Camp David, which criticizes “aggressive behavior supporting unlawful maritime claims that we have recently witnessed by the People’s Republic of China in the South China Sea.” The Chinese Foreign Ministry said the statement had “smeared and attacked China on Taiwan-related and maritime issues, grossly interfered in China’s internal affairs and deliberately sowed discord between China and its neighbors.”

China’s top court said the criminal charge of “picking quarrels and provoking trouble” (寻衅滋事 xún xìn zī shì) has been “excessively used” in judicial practice in certain provinces, according to a field investigation report by the No. 4 Criminal Adjudication Tribunal of the Supreme People’s Court (SPC), published in People’s Court Daily on Wednesday.

The investigation was carried out in a total of four cities in the provinces of Zhejiang and Fujian between May and June. It found “a clear tendency (among local courts) to generalize the application” of the law, and that the allegations of criminal intent were difficult to determine. The broadly-defined charge has often been criticized by rights defenders as a way for Chinese authorities to muzzle dissent, often ensnaring the likes of journalists, activists, and petitioners who speak out against the ruling Chinese Communist Party (CCP).

A U.S. federal judge rejected a bid to block a new Florida law barring Chinese citizens and those from Cuba, Venezuela, Syria, Iran, Russia, and North Korea from owning homes and land in some parts of the state. The law, written in its current state, “would apply to a person of Chinese descent domiciled in China the same way it would apply to a person not of Chinese descent domiciled in China. And its application would never turn on a person’s race,” U.S. District Judge Allen Winsor wrote in his 51-page decision on August 17.

Florida’s new law, SB 264, will prohibit citizens from those countries from purchasing properties within 10 miles of military installations or any “critical infrastructure facility,” as well as agricultural land. However, sales to Chinese citizens are subjected to the harshest penalties under the new law.

China’s total fertility rate fell to 1.09 in 2022 from 1.30 in 2020, according to a study by the National Health Commission (NHC) reported last week by National Business Daily, a media outlet managed by the municipal government of Chengdu, the capital of Sichuan Province. That figure falls well below the fertility rate of 1.26 for Japan, a country long known for its aging population.

About half of a record $358 billion global investment in renewable energy was in China for the first half of this year, with the lion’s share going to the country’s solar power projects such as cheaper modules, a robust rooftop photovoltaic (PV) market, and commissioning of energy megabase projects, according to a report from Bloomberg.

Huawei pledged to work with the Taliban as it considers an “advanced camera system” in every province of Afghanistan.

Xí Jìnpíng 习近平 will attend the BRICS summit in Johannesburg, South Africa, the Chinese Foreign Ministry confirmed. He will be in South Africa from August 21-24, where he will also co-chair the China-Africa Leaders’ Dialogue with his South African counterpart Cyril Ramaphosa, the ministry added.

The annual meeting of BRICS — a group which consists of Brazil, Russia, India, China, and South Africa — is largely symbolic, but it increasingly embodies growing frustrations in the Global South against Western global leadership. Now it is considering expanding its membership in a bid to counter Western-led forums like the Group of Seven (G7) advanced nations.

Chinese state media: Xinhua News Agency leads with a brief announcement of Xi’s visit tio South Africa for BRICS.

The People’s Daily’s top front page story is about Xi replying to a letter from an organization that appears to be connected to the Chinese government but is called the “U.S.-China Youth and Student Exchange Association.” There’s also a piece on a TV program called “Ping Language close to people — allusions Xi Jinping likes” that has been translated into English, French, Arabic, Hausa, Swahili and other languages and will be broadcast during and after the BRICS meeting in various African countries.

• Ko’s party, the TPP, has adopted the color white, in contrast with the green associated with the Democratic Progressive Party’s (DPP), which emphasizes Taiwanese identity and sovereignty, and the blue of the Nationalist Party (KMT), which favors closer ties with Beijing.
• Ko has positioned himself as someone who can heal Taiwan’s sharp political divide by leading with “pragmatism and professionalism,” as opposed to rival candidates who frame the election as a choice between war and peace or autocracy and democracy.

So far, Ko P, as he is known (with the P standing for “professor”), has made significant traction, especially with young voters. But he is not without his detractors.

• His tendency to speak freely has led to frequent gaffes and may be costing him support — especially from women. Zoe Lee (李菁琪 Lǐ Jīngqí), chair of Taiwan’s Green Party, says Taiwan’s recent #MeToo wave may have contributed to the gender disparity in Ko’s support base.
• Some critics have accused him of flip-flopping. He was self-described as “dark green” when he won the Taipei mayoral election in 2014, but during his tenure shifted toward blue (for example, holding regular exchanges with Shanghai).

What does Ko’s popularity mean for Taiwan, and could his popularity actually translate to votes come January? Jordyn Haime investigates from Taipei.

Jordyn Haime

• Xí Jìnpíng 习近平 will attend the 15th BRICS Summit in Johannesburg, South Africa, from August 22 to 24.
• Canada’s environment minister will travel to China next week. Steven Guilbeault will be in Beijing August 26-31, the first official visit of a Canadian cabinet minister to China since 2019.
• U.S. Trade Secretary Gina Raimondo was rumored to have planned to travel to Beijing this week. Although the dates aren’t finalized and could shift, Beijing stated that it would welcome her visit, in spite of U.S. investment controls announced last week.
• China’s fifth national economic census will be held from August to October. The extensive survey from the National Bureau of Statistics (NBS) seeks to ascertain key information about the state of businesses and the economy, from personnel wages to ecommerce transactions to research and development.

Click through for more, including a list of earnings reports, IPOs, and other business and market events.

Arran Hope

Welcome to the Jing is a photobook project shot by French photographer Laurent Hou (罗鸿 Luó Hóng) between 2013 and 2017. The photobook captures a special moment in the city’s history: after the Olympics and before the citywide demolition of illegal buildings that began in 2017, Hou snapped around 100,000 shots, mostly of quirky people and happenings inside the city center.

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

BUSINESS AND TECHNOLOGY:

Economic gloom or boom
China takes the slow road on stimulus / Reuters
“China chose to only trim its one-year benchmark lending rate by 10 basis points and leave the five-year rate unchanged, surprising analysts who had looked for cuts of 15 basis points in both.”
As China falls into deflation, the mood turns dark / NYT (paywall)
“Consumers and business owners say they feel paralyzed by despair, and their reluctance to spend and borrow is feeding what could become a dangerous cycle.”

Rate cuts and stimulus
Chinese banks come out with smaller-than-expected rate cuts / Caixin (paywall)
“Chinese banks made a smaller-than-expected cut to their benchmark lending rate on Monday and avoided trimming the reference rate for mortgages, despite the central bank putting pressure on lenders to boost loans.”
China stocks and currency sink after weak response to property mess / NYT (paywall)

Real estate and property development
More economists cut China forecasts as real estate gloom deepens / Nikkei Asia (paywall)
“Foreign banks are cutting their China forecasts further after the property sector revealed even more signs of distress.”
Guangzhou mulls housing vouchers to revive home market / Caixin (paywall)
“Authorities in southern China’s metropolitan Guangzhou may introduce housing vouchers as compensation for families affected by urban renovation projects in an effort to revive the sluggish housing market.”
China is on edge as fallout from its real estate crisis spreads / NYT (paywall)

Evergrande
Evergrande files for U.S. bankruptcy protection as China economic fears mount / Reuters
“Embattled developer China Evergrande Group has filed for U.S. bankruptcy protection as part of one of the world’s biggest debt restructurings, as anxiety grows over China’s worsening property crisis and its impact on the weakening economy.”

Country Garden
Country Garden crisis: why a default isn’t the worst possible news for embattled Chinese property developer / SCMP (paywall)
“While the cash crisis at Country Garden Holdings has stirred a range of concerns — about the property developer’s future, other firms following suit and contagion risk — a default is not the end of the world, restructuring and property analysts said.”
China’s Country Garden to propose delaying $535m debt redemption / Nikkei Asia (paywall)
“Struggling Chinese property developer Country Garden Holdings is set to propose plans that would spread out the redemption of a privately placed bond totaling 3.9 billion yuan ($535 million) over a three-year period, Chinese news media reported.”
Country Garden’s plan to extend bond repayment meets with resistance / Caixin (paywall)

U.S.-China tech war
Biden order could hit Chinese VC firms run by Americans / Information (paywall)
“Some of China’s most prominent venture capitalists are U.S. citizens or green-card holders. That could soon become a problem for their firms.” The article mentions Matrix Partners China, Lightspeed China Partners, INCE Capital, and Qiming Venture Partners.
Opinion: With China in its sights, U.S. techno-nationalism will only burn brighter / SCMP (paywall)
Patrick Kurniawan writes: “America’s latest curbs on U.S. hi-tech investments in Chinese companies, in the name of national security, are really a part of a continuing techno-nationalist strategy to contain and halt China’s rapid rise to the upper echelons of technologically advanced nations.”
Why China remains hungry for AI chips despite U.S. restrictions / FT (paywall)
“The U.S. acted aggressively last year to limit China’s ability to develop artificial intelligence for military purposes, blocking the sale there of the most advanced U.S. chips used to train AI systems.”

Flying cars
Chinese flying car maker one step closer to take off for commercial use / Caixin (paywall)
“EHang Holdings Ltd. has completed all necessary tests for obtaining a type certificate for its electric vertical takeoff and landing (eVTOL) aircraft, smoothing the way for the startup to possibly become one of the first companies globally to produce unmanned flying cars for commercial use.”

Smartphones
China’s Honor stages India return with local manufacturing plans in early 2024 / Reuters
“Chinese smartphone brand Honor will relaunch in India through a licensing deal with a local company and is aiming to start domestic manufacturing by early next year, its country head told Reuters.”

Local debt
China’s ‘hidden debt’ of local governments threatens national economy / Caixin (paywall)
“China’s local government financing arms — and the real estate industry that supports them — have long been viewed as two important drivers for the nation’s economy. Now, after years of rapid growth, the property sector has hit the skids, triggering a liquidity crisis for municipal and provincial borrowers that poses risks to the country’s financial system.”

Foreign investments
Shanghai free trade zone vows 2-hour approvals for ‘high-growth’ projects to woo foreign capital as China’s inward investments slump / SCMP (paywall)
“Shanghai, the mainland’s commercial and financial hub, has pledged to cut red tape and to accelerate infrastructure construction in a bid to lure new foreign-invested projects as it did with Tesla’s [factory] in the Lingang free-trade zone (FTZ).”
The benefits of stabilizing foreign investment in China / Caixin (paywall)
“The Chinese government has once again emphasized its commitment to foreign investment. Recently, the State Council outlined 24 policy measures in its Opinion on Further Optimizing the Environment for Foreign Investment and Enhancing Efforts to Attract Foreign Investment. These measures cover a range of areas including improving the quality of foreign capital utilization, ensuring national treatment for foreign-invested enterprises, continuously strengthening the protection of foreign investments, enhancing the convenience of investment operations and intensifying fiscal and tax support.”

EU looks for plan to curb China investments
Biden plan to curb China investments focuses EU minds as deadline looms / SCMP (paywall)
“As European officials slowly trickle back from summer holidays, the latest U.S. move to curb investments in China will be burning a hole in their in-boxes.”

Military AI
China, U.S. test intelligent-drone swarms in race for military AI dominance / WSJ (paywall)
“The U.S. and China are accelerating research on how to integrate artificial intelligence into their militaries as part of a global race to take advantage of the fast-developing technology.”

Foreign research firms under fire
China punishes U.S. due-diligence firm Mintz over statistical work / WSJ (paywall)
“Beijing imposes $1.5 million in penalties for unapproved investigations after detaining company staff members in March.”

SCIENCE, HEALTH, AND ENVIRONMENT:

Population
China hits the east Asian demographic wall / FT (paywall)
“Like Japan and South Korea, China has a shrinking population but it has fewer ways to manage the change.”

Fertility rate
China’s fertility rate dropped sharply, study shows / WSJ (paywall)
“A Chinese media report gave rare insight into the country’s demographic crisis since Beijing stopped publishing fertility-rate data.”

Renewable energy
China’s new green-power guidelines to drive interprovincial trade / Nikkei Asia (paywall)
“One of China’s main power exchange centers has released new guidelines for green power trading in a move that aims to drive interprovincial transactions in renewable energy across most of the country.”
Chinese solar makers face new tariffs after U.S. finds they’re dodging duties / Caixin (paywall)
“A U.S. government probe concluded that some manufacturers in Asia are illegally bypassing tariffs on Chinese solar equipment, exposing them to duties that threaten to boost the cost of renewable power and slow the development of clean energy.”

POLITICS AND FOREIGN AFFAIRS:

Data collection and censorship
Is China’s data manipulated, or flawed? Maybe both / WSJ (paywall)
“Suspension of the youth unemployment rate fits the autocrat’s playbook of burying unflattering statistics.”

Is Xi learning to delegate?
Signs of Chinese President Xi Jinping delegating more to hand-picked deputies at start of third term / SCMP (paywall)
“Chinese leader Xí Jìnpíng 习近平 appears to be delegating more responsibilities to his chosen deputies, with fewer reported appearances at top-level meetings in the first stage of his unprecedented third term.”

Crackdown on international organized crime
China launches joint crackdown on organized crime with Thailand, Myanmar / Caixin (paywall)
“Law enforcement authorities of China, Thailand, Myanmar and Laos have launched a joint campaign to crack down on illegal gambling and fraud perpetrated by organized crime rings in their border regions, according to the Chinese embassy in Myanmar.”

Taiwan
U.S. trip pays off for Taiwan VP with China drills more ‘thunder than rain’ / Reuters
“Taiwan Vice President William Lai (賴清德 Lài Qīngdé) managed to walk a fine line on his sensitive trip to the United States if China’s drills in response are anything to go by, but Beijing’s ire may not be allayed for long by a person it deeply dislikes.”
U.S. urges China to cease military pressure against Taiwan / Reuters
“The U.S. urged China on Saturday to stop pressuring Taiwan, after Beijing launched military drills around the democratically governed island in response to Taiwan Vice President William Lai’s U.S. visit.”
Taiwan details China drills, VP says election not China’s to call / Reuters
Why is China so angry about the Taiwan vice president’s U.S. trip? / Reuters
“China launched military drills around Taiwan on Saturday, the day after Taiwan Vice President William Lai returned to Taipei after making two stopovers in the United States as part of a trip to Paraguay, angering China which views him as a separatist and a ‘troublemaker.’”
China launches drills around Taiwan in angry response to VP’s U.S. trip / Reuters
China launches military drills around Taiwan after vice-president’s U.S. stopover / FT (paywall)
Taiwan VP in eye of the storm as China drills to protest U.S. visit / Reuters
Taiwan election is between democracy and autocracy, VP says / Nikkei Asia (paywall)
Mainland China bans Taiwanese mangoes in latest trade barb, Taipei hits out at ‘one-sided’ act / SCMP (paywall)
“Mainland China banned imports of mangoes from Taiwan from Monday in the latest hit to the island’s agricultural sector amid worsening political ties following the recent U.S. stopovers by Taiwanese vice-president and leading presidential contender William Lai Ching-te.”

South China Sea
South Korea, India rebuke Beijing over South China Sea claims / Nikkei Asia (paywall)
“South Korea and India have joined the U.S., Japan and European countries in supporting the Philippines in its maritime disputes with Beijing in the South China Sea, as China’s recent use of water cannon against a Philippine resupply ship creates a global backlash.”
Water Cannons and Lasers: South China Sea Standoff Around World War II-Era Ship Heats Up / WSJ (paywall)
“A World War II-era ship rusting atop a tiny, teardrop-shaped reef in the South China Sea has become the center of a new round of tensions between the Philippines, a U.S. ally, and China.”

BRICS
China and Iran pledge cooperation ahead of Brics summit, as Tehran seeks to join bloc / SCMP (paywall)
“The Chinese and Iranian foreign ministers have spoken ahead of Tuesday’s Brics summit in Johannesburg, where Tehran is seeking to become the sixth member of the bloc.”
China urges Brics to become geopolitical rival to G7 / FT (paywall)
“China will push the Brics bloc of emerging markets to become a full-scale rival to the G7 this week, as leaders from across the developing world gather to debate the forum’s biggest expansion in more than a decade.”

Chinese migration to the U.S. through South America
Why Chinese migrants to the U.S. risk deadly journey via the jungles of South America / SCMP (paywall)
“Conditions in China are forcing many middle-class Chinese to beat a treacherous path from Ecuador to Mexico and the U.S. for a chance to live the American dream.”

• Last week: Return to China? Xing would rather die in the jungle / Economist (paywall)

U.S.-China competition and tensions
China investigates citizen accused of spying for CIA, security ministry says / Reuters
“China is investigating a Chinese national accused of spying for the U.S. Central Intelligence Agency (CIA), the country’s state security ministry said on Monday.”
China points to CIA again in second case of alleged spy recruitment / SCMP (paywall)
The à la carte world: our new geopolitical order / FT (paywall)
“Welcome to the à la carte world. As the post-cold war age of America as a sole superpower fades, the old era when countries had to choose from a prix fixe menu of alliances is shifting into a more fluid order. The stand-off between Washington and Beijing, and the west’s effective abandonment of its three-decade dream that the gospel of free markets would lead to a more liberal version of the Chinese Communist party, are presenting an opportunity for much of the world: not just to be wooed but also to play one off against the other — and many are doing this with alacrity and increasing skill.”

U.S.-Japan-South Korea
A defense agreement likely to deepen Chinese rancor / NYT (paywall)
“What its signers, Japan, South Korea and the United States, call deterrence, China characterizes as encirclement, even provocation.”
China lodges complaint over criticisms of it at Camp David / Reuters
“China has lodged representations with relevant parties over U.S., Japanese, South Korean leaders’ criticism of China at Camp David, a spokesperson with China’s foreign ministry said on Monday.”

U.K.
British foreign minister to visit China this month after delay — sources / Reuters
“British Foreign Secretary James Cleverly is due to visit China at the end of this month, three sources familiar with the matter said, a long-awaited trip seeking to stabilize a turbulent relationship that has sunk to its lowest point in decades.”

Germany
Germany must adapt research practices in light of Chinese threat — minister / Reuters
“Germany must bring its academic practices in line with its security interests in light of tensions with systemic rivals such as China, the country’s research minister wrote in an editorial published in the FAZ newspaper’s Monday edition.”
Germany wants tighter foreign investment controls amid China ‘de-risking’ / Reuters
“German Economy Minister Robert Habeck wants to tighten the process for reviewing foreign investments with a new law that would aim to enhance economic security, according to a ministry document seen by Reuters on Sunday.”
German minister proposes tougher rules on Chinese foreign direct investment / FT (paywall)

North Korea
China approves North Korean airline to resume flights between the countries / Reuters
“Beijing has approved North Korea’s state carrier Air Koryo to resume flights to China, the Chinese foreign ministry said on Monday.”
China approves North Korean airline to resume flights / Nikkei Asia (paywall)

Russia
Russian miners, Chinese investors interested in Polymetal’s Russian assets / Reuters
“Russian miners and Chinese investors are among the parties interested in buying gold and silver producer Polymetal International’s Russian assets, CEO Vitaly Nesis told the Financial Times.”
Russia remains China’s top crude supplier in July despite less discounts / Nikkei Asia (paywall)
“Russia remained China’s largest crude supplier in July, Chinese government data showed on Sunday, even as Russian shipments fall from all-time highs on narrower discounts and rising domestic demand crimps Russian exports.”
Booming China-Russia trade sends trench-digging machines to Ukraine’s front lines / WSJ (paywall)

Afghanistan
Why China is still on the sidelines in Afghanistan, 2 years after messy US troop pull-out / SCMP (paywall)
“No major power, not even neighboring China, appears keen to fill the void that Washington left after its nearly 20-year troop deployment sparked by the September 11 terror attacks.”

Middle East
China sees Iran-Saudi Arabia relations improving – foreign ministry / Reuters
“After China’s dialogue with Iran and Saudi Arabia, both countries have continued to take steps to improve relations, leading to the formation of a “wave of reconciliation” in the Middle East, China’s foreign minister said on Monday.”

SOCIETY AND CULTURE:

Gambling groups in China
Billion-dollar Singapore money laundering case linked to China gambling groups / Caixin (paywall)
“Several foreigners arrested Aug. 15 in Singapore’s biggest anti-money laundering operation are allegedly linked to individuals who were investigated in China for illegal gambling activities.”

Sports
China’s MMA champ / Caixin (paywall)
“Zhāng Wěilì 张伟丽 successfully defended her UFC strawweight title, defeating Amanda Lemos of Brazil in UFC 292 in Boston.”

Music
As live music booms in China, disabled fans call for more inclusion / Sixth Tone
“The return of large-scale pop concerts has sparked huge excitement in China over recent months. But fans with disabilities still face serious barriers to accessing the events — and they’re calling for change.”

Art
Recreating a bygone China, one miniature home at a time / NYT (paywall)
“China’s rapid economic growth has meant the demolition of countless rural homes, and a burgeoning nostalgia. That’s where the miniaturists come in.”

Travel
Top 5 Douyin KOLs fueling China’s travel economy / Jing Daily
“Jing Daily identifies the top five travel KOLs on short video platform Douyin who are inspiring tourists’ choice of experiences and destinations.”

Peter Hessler
Peter Hessler’s world of words / Sixth Tone
An interview: “The acclaimed author on generations, his approach to writing, and how China has changed since the 1990s.”