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Tag: xi jinping

  • Biden huddles with Asian allies on NKorea threat, China

    Biden huddles with Asian allies on NKorea threat, China

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    PHNOM PENH, Cambodia — President Joe Biden is set to meet Sunday with the leaders of Japan and South Korea to coordinate their response to North Korea’s threatening nuclear and ballistic missile programs, as well as to seek input on managing China‘s assertive posture in the Pacific region on the eve of his planned face-to-face with President Xi Jinping.

    Biden will hold separate meetings with Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk Yeol. The three leaders will then sit down together on the sidelines of the East Asia Summit in Cambodia.

    The meetings come as North Korea has fired dozens of missiles in recent weeks, including an intercontinental ballistic missile 10 days ago that triggered evacuation alerts in northern Japan, and as the allies warn of a looming risk of the isolated country conducting its seventh nuclear test in the coming weeks.

    U.S. National Security Adviser Jake Sullivan told reporters on Saturday that Biden aims to use the meetings to strengthen the three countries’ joint response to the dangers posed by North Korea, officially known as the Democratic People’s Republic of Korea.

    “What we would really like to see is enhanced trilateral security cooperation where the three countries are all coming together,” he said. “That’s acutely true with respect to the DPRK because of the common threat and challenge we all face, but it’s also true, more broadly, about our capacity to work together to enhance overall peace and stability in the region.”

    Tensions on the Korean peninsula have skyrocketed in recent months as the North continues its weapons demonstrations and the U.S. and South Korea launched stepped-up joint defense exercises. Earlier this month, the South Korean military said two B-1B bombers trained with four U.S. F-16 fighter jets and four South Korean F-35 jets during the last day of “Vigilant Storm” joint air force drills. It was the first time since December 2017 that the bombers were deployed to the Korean Peninsula. The exercise involved a total of roughly 240 warplanes, including advanced F-35 fighter jets from both countries.

    North Korea responded with its own display of force, flying large numbers of warplanes inside its territory.

    The Biden administration has said it has sent repeated requests to negotiate with North Korea without preconditions on constraining its nuclear and ballistic missile programs, but that Kim Jong Un’s government has not responded.

    Biden on Monday said he plans to press Xi to use China’s unique sway over North Korea to curtail its aggressive behavior, as part of what is expected to be a wide-ranging bilateral meeting on the margins of the Group of 20 gathering in Bali, Indonesia.

    China “has an interest in playing a constructive role in restraining North Korea’s worst tendencies,” Sullivan said Saturday. “Whether they choose to do so or not is, of course, up to them.”

    Biden told reporters on Sunday that he’s “always had straightforward discussions” with Xi, and that has prevented either of them from “miscalculations” of their intentions. Their meeting comes weeks after Xi cemented his grip on China’s political system with the conclusion of the Community Party congress in Beijing that gave him a norm-breaking third term as leader.

    “His circumstances changed, to state the obvious, at home,” Biden said of Xi.

    Monday’s meeting will be the first in-person sit-down between the leaders since Biden was elected to the White House. U.S. officials in the past have expressed frustration that lower-level Chinese officials have proven unable or unwilling to speak for Xi, and are hoping the face-to-face summit will enable progress on areas of mutual concern — and, even more critically, a shared understanding of each others’ limitations.

    “I know him well, he knows me,” Biden said. “We’ve just got to figure out where the red lines are and what are the most important things to each of us, going into the next two years.”

    As president, Biden has repeatedly taken China to task for human rights abuses against the Uyghur people and other ethnic minorities, Beijing’s crackdowns on democracy activists in Hong Kong, coercive trade practices, military provocations against self-ruled Taiwan and differences over Russia’s prosecution of its war against Ukraine.

    Xi’s government has criticized the Biden administration’s posture toward Taiwan — which Beijing looks eventually to unify with the communist mainland — as undermining China’s sovereignty and territorial integrity. The Chinese president also has suggested that Washington wants to stifle Beijing’s growing clout as it tries to overtake the U.S. as the world’s largest economy.

    Biden also held a pull-aside meeting with Australian Prime Minister Anthony Albanese, who has sought out his own meeting with Xi this week in an effort to ease Chinese sanctions against his country.

    Sullivan said Biden would also ask Japan and South Korea’s leaders which issues they want him to talk about with Xi, though it would not be the primary discussion at their trilateral meeting.

    “One thing that President Biden certainly wants to do with our closest allies is preview what he intends to do,” Sullivan said, “and also ask the leaders of (South Korea) and Japan, ‘What would you like me to raise? What do you want me to go in with?’”

    —

    Kim reported from Nusa Dua, Indonesia. AP writer Josh Boak contributed from Baltimore.

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  • Biden and Xi return to the table with high stakes — and low expectations | CNN

    Biden and Xi return to the table with high stakes — and low expectations | CNN

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    Bali, Indonesia
    CNN
     — 

    When Joe Biden and Xi Jinping first got to know each other more than 10 years ago, the US and China had been moving closer for three decades despite their differences.

    “The trajectory of the relationship is nothing but positive, and it’s overwhelmingly in the mutual interest of both our countries,” Biden said in 2011 when, as vice president, he visited Beijing to build a personal relationship with China’s then leader-in-waiting.

    Seated next to Xi in a Beijing hotel, Biden told a room of Chinese and American business leaders about his “great optimism about the next 30 years” for bilateral relations and praised Xi for being “straightforward.”

    “Only friends and equals can serve each other by being straightforward and honest with them,” he said.

    On Monday, the two leaders are set to meet each other for another honest exchange in Bali, Indonesia, on the sidelines of the Group of 20 summit. But the mood in the room is unlikely to be as balmy as the surrounding location.

    The positivity and optimism of a decade ago has been replaced by mutual suspicion and hostility. When Biden returned to the White House as President, he was handed a US-China relationship in its worst shape in decades, with tensions flaring across trade, technology, geopolitics and ideology.

    The upcoming meeting – the first in-person encounter between Biden and Xi since the US President took office – comes at a crucial time for both leaders. Having further consolidated his power at last month’s Communist Party Congress, Xi is heading into the meeting as the strongest Chinese leader since Mao Zedong. Biden, meanwhile, arrived in Asia following a better-than-expected performance by his party in the US midterm elections – with the Democrats projected to keep the Senate in a major victory.

    The stakes of their much-anticipated encounter are high. In a world reeling from Russia’s invasion of Ukraine, the Covid-19 pandemic and the devastation of climate change, the two major powers need to work together more than ever to instill stability – instead of driving deeper tensions along geopolitical fault lines.

    But expectations for the meeting are low. Locked in an intensifying great power rivalry, the US and China disagree with each other on just about every major issue, from Taiwan, the war in Ukraine, North Korea, the transfer of technology to the shape of the international system.

    Perhaps the only real common ground the two sides share going into the meeting is their limited hopes for what might come out of it.

    A senior White House official said Thursday Biden wants to use the talks to “build a floor” for the relationship – in other words, to prevent it from free falling into open conflict. The main objective of the sit-down is not about reaching agreements or deliverables – the two leaders will not release any joint statement afterward – but about gaining a better understanding of each other’s priorities and reducing misconceptions, according to the US official.

    US national security adviser Jake Sullivan reinforced the message Saturday to reporters aboard Air Force One, noting the meeting is unlikely to result in any major breakthroughs or dramatic shifts in the relationship.

    Hopes for a reset with Washington are similarly low in Beijing. Shi Yinhong, an international relations professor at Renmin University, said it would be an “enormous over-expectation” to believe the meeting can lead to any lasting and significant improvement in bilateral ties.

    “Given that China and the US are in a state of near-total rivalry and confrontation, there is not much possibility to anticipate that the major issues can be truly clarified,” Shi said.

    US President Joe Biden has spoken with Chinese leader Xi Jinping five times over the phone or video call since taking office in January 2020.

    At the center of their divergence is how the two nations view each other’s motives – and how detrimental these goals are to their own interests.

    “The Chinese believe the US goal is to keep China down so we can contain it. And the US believes China’s goal is to make the world safer for authoritarian states, push the US out of Asia and weaken its alliance system,” said Scott Kennedy, senior adviser in Chinese business and economics at the Center for Strategic and International Studies (CSIS) in Washington.

    Each side blames the other entirely for the state of the relationship and each believes they are faring better than the other in the situation, said Kennedy, who has recently returned from a weeks-long visit to China – a rare opportunity in recent years due to China’s zero-Covid border restrictions.

    “The Chinese think they’re winning, the Americans think they’re winning, and so they’re willing to bear these costs. And they think the other side is very unlikely to make any significant changes,” Kennedy said. “All of those things reduce the likelihood of significant adjustments.”

    But experts say the very fact that the two leaders are having a face-to-face conversation is itself a positive development. Keeping dialogue open is crucial for reducing risks of misunderstanding and miscalculations, especially when suspicions run deep and tensions run high.

    Direct communication is all the more important given Xi has just secured a norm-shattering third term with a tighter grip on power than ever – and a possibility to rule for life. “There is no one else in their system who can really communicate authoritatively other than Xi Jinping,” national security adviser Sullivan said.

    On Wednesday, Biden told a news conference that he wants to “lay out what each of our red lines are” when he sits down with Xi, but experts say that might not be as straightforward as it sounds.

    “I would love to be a fly on the wall to see that conversation because I don’t think that the US or China has been very precise about what its red lines are. And I also don’t think either has been very clear about what positive rewards the other side would reap from staying within those red lines,” said Kennedy, of CSIS.

    For Beijing, no red line is starker or more crucial than its claim over Taiwan – a self-governing democracy the Chinese Communist Party has never controlled. Xi views “reunification” with the island as a key unresolved issue on China’s path toward “great rejuvenation,” a sweeping vision he has vowed to achieve by 2049.

    And perhaps no American President has angered Beijing over Taiwan in recent decades more than Biden, who has said – on four separate occasions – the US will defend the island in the event of a Chinese invasion. Each time, his aids have rushed to walk back his remarks and denied any changes in the US’ “One China” policy.

    Under the “One China” policy, Washington acknowledges Beijing’s position that Taiwan is part of China, but has never accepted its claim of sovereignty over the island. The US provides Taiwan defensive weapons, but has remained deliberately vague on whether it would intervene militarily if China attacks the island – a policy known as “strategic ambiguity.”

    US House Speaker Nancy Pelosi with Taiwan's President Tsai Ing-wen during her visit to Taipei this August.

    China has repeatedly accused the US of “playing with fire” and hollowing out the “one China” policy. Beijing’s anger reached a boiling point in August, when US House Speaker Nancy Pelosi brushed aside its stern warnings and landed in Taipei for a high-profile visit.

    China responded by launching large scale military exercises around Taiwan that formed an effective blockade; it also halted dialogue with the US in a number of areas, from military, climate change and cross-border crime to drug trafficking.

    Now the two leaders are sitting down in the same room – a result of weeks of intensive discussions between the two sides – Taiwan is widely expected to top their agenda. But in a sign of the contentiousness of the issue, barbs have already been traded.

    Biden has said he would make no “fundamental concessions” to Xi, and Sullivan has announced plans to brief Taiwan about the talks with an aim to make Taipei feel “secure and comfortable” about US support.

    That plan drew immediate condemnation from Beijing. “It is egregious in nature. China is firmly opposed to it,” Chinese foreign ministry spokesperson Zhao Lijian said Friday, shortly after the ministry confirmed that Xi would meet Biden at the G20.

    The rocket force of China's People's Liberation Army conducts missile tests into the waters off the eastern coast of Taiwan on August 4.

    “The problem with China is they don’t like to meet and exchange views – they just repeat talking points. Xi Jinping is not very creative in the way he interacts with his counterparts,” said Jean-Pierre Cabestan, a professor of political science at Hong Kong Baptist University.

    Other key topics on the agenda include Russia’s war in Ukraine – another significant point of tension, as well as areas where the US hopes to cooperate with China – such as North Korea’s ongoing provocations and climate change.

    Shi, the Chinese expert at Renmin University, sees little room for breakthroughs on these issues.

    “On the issue of Ukraine, China has already made its position clear many times. It will not change simply because of the talks with the US President. On North Korea, since March last year, China has already stopped treating the denuclearization of North Korea as a fundamental element of its Korean Peninsular policy,” he said.

    Nor is his assessment for climate cooperation any rosier. “China and the US can find many common interests on this, but when it comes to how to deal with climate change specifically, it always leads to antagonism on policies and rivalry over ideology and global influence,” Shi said.

    Experts in the US and China say some progress on greater communication and access between the two countries will already be considered a positive outcome – such as restoring suspended climate and military talks.

    “Hopefully the meeting can be used for more than just airing mutual grievances,” said Patricia Kim, a China expert at the Brookings Institution. “For instance, a joint declaration by Biden and Xi that they oppose the threat or use of nuclear weapons in Ukraine and on the Korean Peninsula, as well as a nod to restarting working-level exchanges on areas of common interest such as climate change and counter-narcotics would be promising.”

    Over the decade of their relationship, Biden and Xi have spent dozens of hours together across the US and China.

    During Biden’s getting-to-know-you trip to China in 2011, the two leaders shared a marathon of meetings and meals in Beijing and the southwestern city of Chengdu. They also took a trip deep into the green mountains of Sichuan province to visit a rural high school rebuilt after a deadly earthquake.

    The next year, Xi paid a reciprocal visit to the US at the invitation of Biden, who hosted his Chinese counterpart for dinner at his residency after a series of meetings at the White House, State Department and the Pentagon. Biden also flew to Los Angeles to meet Xi on the last leg of his trip.

    Their in-person encounters continued after Xi took power in 2012. The last time they met face to face was in 2015, during Xi’s first state visit to the US as China’s top leader.

    As relations between their countries plummeted, the once friendly dynamics between the two leaders have also shifted.

    Xi Jinping and Joe Biden, accompanied by their translators, in Chengdu, China, in 2011.

    Xi is an ideological hardliner who believes in China’s return to the center of the world stage and is skeptical – some would say hostile – toward America. Biden, meanwhile, has grown increasingly weary of China’s authoritarian turn under Xi, and has framed the rivalry between the two countries as a battle between autocracy and democracy.

    Last summer, Biden publicly pushed back on being described as an “old friend” of Xi’s.

    “Let’s get something straight. We know each other well; we’re not old friends. It’s just pure business,” he said at the time.

    Given the growing divide, the two-year gap since their last in-person meeting is an extremely long time, Kennedy pointed out.

    “One conversation on the sidelines of a multilateral summit is still insufficient to fully discuss all the key issues that the countries face. And so hopefully, the two sides will facilitate a greater discussion on these issues by many parts of the two governments.”

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  • Biden attends ASEAN conference, calls for stronger alliance between member countries

    Biden attends ASEAN conference, calls for stronger alliance between member countries

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    Biden attends ASEAN conference, calls for stronger alliance between member countries – CBS News


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    President Biden attended the ASEAN conference in Cambodia, emphasizing the need for a stronger U.S. alliance amid China’s growing influence in the Indo-Pacific region. Elizabeth Palmer has the details.

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  • Computer chip ban signals new era as Biden and Xi meet

    Computer chip ban signals new era as Biden and Xi meet

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    WASHINGTON (AP) — The Biden administration’s move to block exports of advanced computer chips to China is signaling a new phase in relations between the globe’s two largest economies — one in which trade matters less than an increasingly heated competition to be the world’s leading technological and military power.

    The aggressive move, announced last month, will help set the tone for President Joe Biden’s upcoming meeting with Chinese President Xi Jinping on Monday on the sidelines of the Group of 20 summit in Asia. It’s evidence of Biden’s determination to “manage” the U.S. competition with China, whose officials were quick to condemn the export ban.

    After more than two decades in which the focus was on expansion of trade and global growth, both countries are openly prioritizing their national interests as the world economy struggles with high inflation and the risk of recessions. The U.S. and China have each identified the development and production of computer chips as vital for economic growth and their own security interests.

    “We’re going to do whatever it takes to protect Americans from the threat of China,” Commerce Secretary Gina Raimondo said in an interview. “China is crystal clear. They will use this technology for surveillance. They will use this technology for cyber attacks. They will use this technology to, in any number of ways, harm us and our allies, or our ability to protect ourselves.”

    Xi responded to the export ban in his statement at last month’s congress of the Chinese Communist Party, where he secured a third term as the country’s leader. He pledged that China would move more aggressively to become self-reliant in producing semiconductors and other technologies.

    “In order to enhance China’s innovation capacity, we will move faster to launch a number of major national projects that are of strategic, big-picture and long-term importance,” Xi said.

    The Chinese government has named the development of advanced computer chips that could handle everything from artificial intelligence to hypersonic missiles as one of its top priorities. To bridge the gap until it can get there, China has been relying on imports of advanced chips and manufacturing equipment from the U.S., which imposed a series of export controls last month that block sending to China the world’s most advanced chips, factory equipment and industry experts tied to America.

    The U.S. and its allies famously deployed export controls against Russia after the February invasion of Ukraine, making it harder for Russian forces to be resupplied with weapons, ammunition, tanks and aircraft. As a result of those constraints, Russia has relied on drones from Iran and the U.S. has accused North Korea of supplying them with artillery.

    The U.S. had until recently operated from the premise that strong trade relationships would bring countries closer together in ways that made the world safer and wealthier, a post-Cold War order. Global supply chains were supposed to lower costs, boost profits and enable democratic values to seep into the terrain of oligarchies, dictatorships and autocracies.

    But after a global pandemic, the war in Ukraine and China’s own ambitions, the Biden administration and many European and Asian allies have chosen to prioritize national security and industrial strategies. Both the U.S. and European Union have provided tens of billions of dollars in incentives to spur more domestic production of computer chips.

    In a speech last month at IBM, Biden said China specifically lobbied against a law that provides $52 billion to produce and develop advanced semiconductors in the U.S., an incentive package that has been followed by a string of announcements by Intel, Micron, Wolfspeed and others about the construction of computer chip plants in the U.S..

    He said that some of the GOP lawmakers who opposed the measure had bought into the arguments made by China.

    “The Communist Party of China was lobbying in the United States Congress against passing this legislation,” Biden said. “And unfortunately, some of our friends on the other team bought it.”

    Donald Trump had fiery rhetoric on China during his presidency, imposing tariffs that the Biden administration has yet to lift. But by any qualitative measure, the export bans on computer chips are much tougher than anything imposed by Trump, said Gregory Allen, a senior fellow in the strategic technologies program at the Center for Strategic and International Studies.

    Allen said the Trump-era tariffs were large in terms of dollars, but they had almost no affect on the balance of trade. Nor were the import taxes strategic. The export controls imposed by the Biden administration would be a setback for Chinese technology that is already decades behind the U.S.

    “We have essentially committed ourselves to saying: China you will not achieve your number one goal,” Allen said.

    The era of China, Russia and other competitors having relatively unfettered access to U.S. and European markets appears to be ending, said Christopher Miller, a Tufts University professor and author of the book, “Chip Wars.”

    “The risks posed by these countries has grown, so Western leaders have reconsidered the wisdom of giving adversaries open access to their markets,” Miller said.

    Instead of trying to work together as a single global economy, new alliances are being formed such as the Quad (Australia, India, Japan and the U.S.) and existing partnerships such as NATO are being expanded. Economic integration among these partners has become essential, as the U.S. export controls on advanced chips need support from other producers in Japan and the Netherlands.

    “All the great powers are restructuring international economic relations in ways they hope will improve their geopolitical position,” Miller said. “Semiconductors are just one of many arenas in which trade, tech, and capital flows are being re-politicized due to great power rivalry.”

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  • Biden arrives in Cambodia looking to counter China’s growing influence in Southeast Asia | CNN Politics

    Biden arrives in Cambodia looking to counter China’s growing influence in Southeast Asia | CNN Politics

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    Phnom Penh, Cambodia
    CNN
     — 

    President Joe Biden underscored the US partnership with Association of Southeast Asian Nations (ASEAN) countries on Saturday as “the heart of my administration’s Indo-Pacific strategy” as he seeks to counter China’s growing influence ahead of a high-stakes meeting with Chinese President Xi Jinping set for Monday.

    The weekend of meetings in Cambodia comes ahead of the highly anticipated Group of 20 summit next week in Indonesia where Biden will meet with Xi for the first time in person since he took office. The ASEAN meetings – along with Sunday’s East Asia Summit, which is also being held in Phnom Penh – will be a chance for the president to speak with US allies before sitting down with Xi.

    In remarks to the summit, Biden announced “another critical step” toward building on the group’s progress as he detailed the launch of the US-ASEAN Comprehensive Strategic Partnership, which, he said, “will tackle the biggest issues of our time, from climate to health security, defend against the significant threats to rule based order and to threats to the rule of law, and to build an Indo-Pacific that’s free and open, stable and prosperous, resilient and secure.” He touted existing US financial commitments to ASEAN as he noted a budget request for $850 million in assistance for Southeast Asia.

    “This is my third trip, my third summit – second in person – and it’s testament to the importance the United States places in our relationship with ASEAN and our commitment to ASEAN’s centrality. ASEAN is the heart of my administration’s Indo-Pacific strategy. And we continue to strengthen our commitment to work in lockstep with an empowered, unified ASEAN,” Biden said in brief opening remarks as the summit began.

    The president’s first order of business in Cambodia was a bilateral meeting with Cambodian Prime Minister Hun Sen as he looks to build on a summit between Biden and ASEAN leaders in Washington earlier this year.

    Biden, national security adviser Jake Sullivan told reporters aboard Air Force One, “was intent on elevating our engagement in the Indo-Pacific” from the start of his presidency, and his attendance at the ASEAN and East Asia summits this weekend will highlight his work so far, including the Indo-Pacific Economic Framework announced earlier this year and security partnership efforts.

    “He’s coming into this set of summits with that record of accomplishment and purpose behind him, and he wants to be able to use the next 36 hours to build on that foundation to take American engagement forward, and also to deliver a series of concrete, practical initiatives,” Sullivan said.

    Among those practical initiatives, Sullivan noted, are new ones on maritime cooperation, digital connectivity and economic investment. Biden is set to launch a new maritime domain effort “that focuses on using radio frequencies from commercial satellites to be able to track dark shipping, illegal and unregulated fishing, and also to improve the capacity of the countries of the region to respond to disasters and humanitarian crises,” Sullivan said.

    Biden will also highlight a “forward-deployed posture” toward regional defense, Sullivan added, to show that the US is on the front foot in terms of security cooperation.

    During his remarks, Biden also pointed to a new US-ASEAN electric vehicle infrastructure initiative.

    “We’re gonna work together to develop an integrated electric vehicle ecosystem in Southeast Asia, enabling the region to pursue clean energy, economic development, and ambitious emissions reductions targets,” he said of the initiative.

    There will also be a focus on Myanmar and discussions on coordination “to continue to impose costs and raise pressure on the junta,” which seized power from the country’s democratically elected government in a February 2021 coup.

    While in Phnom Penh, Biden will be meeting with the leaders of Japan and South Korea on Sunday following multiple weapons tests by North Korea, Sullivan said. The meeting is notable given the historic tensions between Japan and South Korea, and the relationship between the two staunch US allies has been one that Biden has attempted to bridge.

    The Japanese and the South Koreans find themselves united in concern about Kim Jong Un’s missile tests, as well as the prospect of a seventh nuclear weapons test. North Korea has ramped up its tests this year, having carried out missile tests on 32 days in 2022, according to a CNN count. That’s compared to just eight in 2021 and four in 2020, with the latest launch coming on Wednesday.

    Sullivan suggested the trilateral meeting will not lead to specific deliverables, but rather, enhanced security cooperation amid a range of threats.

    The trio of world leaders, Sullivan told reporters, will “be able to discuss broader security issues in the Indo-Pacific and also, specifically, the threats posed by North Korea’s missile and nuclear programs.”

    Sullivan said Thursday that the administration is concerned about the North Koreans conducting a seventh nuclear test but can’t say if it will come during the weekend of meetings.

    “Our concern still remains real. Whether it happens in the next week or not, I can’t say,” Sullivan said earlier this week. “We are also concerned about further potential long-range missile tests in addition to the possibility of a nuclear test. And so, we’ll be watching carefully for both of those.”

    But the Monday meeting with Xi in Bali, Indonesia, will undoubtedly hang over the summits in Cambodia, and will be part of those trilateral conversations.

    “One thing that President Biden certainly wants to do with our closest allies is preview what he intends to do, and also ask the leaders of (South Korea) and Japan, ‘what would you like me to raise? What do you want me to go in with?’” Sullivan said, adding that it “will be a topic but it will not be the main event of the trilateral.”

    Biden and Xi have spoken by phone five times since the president entered the White House. They traveled extensively together, both in China and the United States, when both were serving as their country’s vice president.

    Both enter Monday’s meeting on the back of significant political events. Biden fared better than expected in US midterm elections and Xi was elevated to an unprecedented third term by the Chinese Communist Party.

    US officials declined to speculate on how the two leaders’ political situations might affect the dynamic of their meeting.

    The high-stakes bilateral meeting between Biden and Xi will center on “sharpening” each leader’s understanding of the other’s priorities, Sullivan told reporters.

    That includes the issue of Taiwan, which Beijing claims. Biden has vowed in the past to use US military force to defend the island from invasion. The issue is among the most contentious between Biden and Xi.

    Biden will also raise the issue of North Korea, with an emphasis on the critical role China can play in managing what is an acute threat to the region, Sullivan said.

    Biden has repeatedly raised the issue in his calls with Xi up to this point, but Sullivan underscored the US view that China plays a critical role – and one that should be viewed within its own self-interest.

    “If North Korea keeps going down this road, it will simply mean further enhanced American military and security presence in the region,” Sullivan said. “And so (China) has an interest in playing a constructive role in restraining North Korea’s worst tendencies. Whether they choose to do so or not is of course up to them.”

    Sullivan said Biden will detail his position on the issue, “which is that North Korea represents a threat not just to the United States, not just to (South Korea) and Japan, but to peace and stability across the entire region.”

    Sullivan suggested the meeting will focus on a better understanding of positions on a series of critical issues, but is not likely to result in any major breakthroughs or dramatic shifts in the relationship.

    Instead, “it’s about the leaders coming to a better understanding and then tasking their teams” to continue to work through those issues, Sullivan told reporters aboard Air Force One as Biden traveled to Cambodia.

    The meeting, set to take place on the sidelines of the G-20 summit, was the result of “several weeks of intensive” discussions between the two sides, Sullivan said, and is viewed by Biden as the start of a series of engagements between the leaders and their teams.

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  • Computer chip ban signals new era as Biden, Xi meet

    Computer chip ban signals new era as Biden, Xi meet

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    The Biden administration’s move to block exports of advanced computer chips to China is signaling a new phase in relations between the globe’s two largest economies — one in which trade matters less than an increasingly heated competition to be the world’s leading technological and military power.

    The aggressive move, announced last month, will help set the tone for President Joe Biden’s upcoming meeting with Chinese President Xi Jinping on Monday on the sidelines of the Group of 20 summit in Asia. It’s evidence of Biden’s determination to “manage” the U.S. competition with China, whose officials were quick to condemn the export ban.

    After more than two decades in which the focus was on expansion of trade and global growth, both countries are openly prioritizing their national interests as the world economy struggles with high inflation and the risk of recessions. The U.S. and China have each identified the development and production of computer chips as vital for economic growth and their own security interests.

    “We’re going to do whatever it takes to protect Americans from the threat of China,” Commerce Secretary Gina Raimondo said in an interview. “China is crystal clear. They will use this technology for surveillance. They will use this technology for cyber attacks. They will use this technology to, in any number of ways, harm us and our allies, or our ability to protect ourselves.”

    Xi responded to the export ban in his statement at last month’s congress of the Chinese Communist Party, where he secured a third term as the country’s leader. He pledged that China would move more aggressively to become self-reliant in producing semiconductors and other technologies.

    “In order to enhance China’s innovation capacity, we will move faster to launch a number of major national projects that are of strategic, big-picture and long-term importance,” Xi said.

    The Chinese government has named the development of advanced computer chips that could handle everything from artificial intelligence to hypersonic missiles as one of its top priorities. To bridge the gap until it can get there, China has been relying on imports of advanced chips and manufacturing equipment from the U.S., which imposed a series of export controls last month that block sending to China the world’s most advanced chips, factory equipment and industry experts tied to America.

    The U.S. and its allies famously deployed export controls against Russia after the February invasion of Ukraine, making it harder for Russian forces to be resupplied with weapons, ammunition, tanks and aircraft. As a result of those constraints, Russia has relied on drones from Iran and the U.S. has accused North Korea of supplying them with artillery.

    The U.S. had until recently operated from the premise that strong trade relationships would bring countries closer together in ways that made the world safer and wealthier, a post-Cold War order. Global supply chains were supposed to lower costs, boost profits and enable democratic values to seep into the terrain of oligarchies, dictatorships and autocracies.

    But after a global pandemic, the war in Ukraine and China’s own ambitions, the Biden administration and many European and Asian allies have chosen to prioritize national security and industrial strategies. Both the U.S. and European Union have provided tens of billions of dollars in incentives to spur more domestic production of computer chips.

    In a speech last month at IBM, Biden said China specifically lobbied against a law that provides $52 billion to produce and develop advanced semiconductors in the U.S., an incentive package that has been followed by a string of announcements by Intel, Micron, Wolfspeed and others about the construction of computer chip plants in the U.S..

    He said that some of the GOP lawmakers who opposed the measure had bought into the arguments made by China.

    “The Communist Party of China was lobbying in the United States Congress against passing this legislation,” Biden said. “And unfortunately, some of our friends on the other team bought it.”

    Donald Trump had fiery rhetoric on China during his presidency, imposing tariffs that the Biden administration has yet to lift. But by any qualitative measure, the export bans on computer chips are much tougher than anything imposed by Trump, said Gregory Allen, a senior fellow in the strategic technologies program at the Center for Strategic and International Studies.

    Allen said the Trump-era tariffs were large in terms of dollars, but they had almost no affect on the balance of trade. Nor were the import taxes strategic. The export controls imposed by the Biden administration would be a setback for Chinese technology that is already decades behind the U.S.

    “We have essentially committed ourselves to saying: China you will not achieve your number one goal,” Allen said.

    The era of China, Russia and other competitors having relatively unfettered access to U.S. and European markets appears to be ending, said Christopher Miller, a Tufts University professor and author of the book, “Chip Wars.”

    “The risks posed by these countries has grown, so Western leaders have reconsidered the wisdom of giving adversaries open access to their markets,” Miller said.

    Instead of trying to work together as a single global economy, new alliances are being formed such as the Quad (Australia, India, Japan and the U.S.) and existing partnerships such as NATO are being expanded. Economic integration among these partners has become essential, as the U.S. export controls on advanced chips need support from other producers in Japan and the Netherlands.

    “All the great powers are restructuring international economic relations in ways they hope will improve their geopolitical position,” Miller said. “Semiconductors are just one of many arenas in which trade, tech, and capital flows are being re-politicized due to great power rivalry.”

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  • Biden working on ties with Southeast Asia in shadow of China

    Biden working on ties with Southeast Asia in shadow of China

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    PHNOM PENH, Cambodia — President Joe Biden is formally kicking off his participation at a conference of southeast Asian nations on Saturday, looking to emphasize the United States’ commitment in the region where a looming China is also working to expand its influence.

    Biden’s efforts at the Association of Southeast Asian Nations summit are meant to lay the groundwork ahead of his highly anticipated meeting with Chinese President Xi Jinping — the first face-to-face encounter of Biden’s presidency with a leader whose nation the U.S. now considers its most potent economic and military rival.

    The two leaders will meet on Monday at the Group of 20 summit that brings together leaders from the world’s largest economies, which is held this year in Indonesia on the island of Bali.

    Traveling to Phnom Penh earlier Saturday, national security adviser Jake Sullivan said Biden will raise issues such as freedom of navigation and illegal and unregulated fishing by China with the ASEAN leaders — aimed at demonstrating U.S. assertiveness against Beijing.

    Freedom of navigation refers to a dispute involving the South China Sea — where the United States says it can sail and fly wherever international law allows and China believes such missions are destabilizing. Sullivan said the U.S. has a key role to play as a stabilizing force in the region and in prevention of any one nation from engaging in “sustained intimidation and coercion that would be fundamentally adverse to the nations of ASEAN and other countries.”

    “There’s a real demand signal for that,” Sullivan told reporters aboard Air Force One on Saturday. Referring to the People’s Republic of China, Sullivan continued: “I think the PRC may not love that fact, but they certainly acknowledge it and understand it.”

    One new initiative related to those efforts that Biden will discuss later Saturday focuses on maritime awareness — specifically using radio frequencies from commercial satellites to better track dark shipping and illegal fishing, Sullivan said.

    Biden’s visit to Cambodia — the second ever by a U.S. president — continues his administration’s push to demonstrate its investments in the south Pacific, which was highlighted earlier this year when the White House hosted an ASEAN summit in Washington, the first of its kind. He also tapped one of his senior aides, Yohannes Abraham, as the official envoy to the 10-country bloc that makes up ASEAN, another way the White House has highlighted that commitment.

    ASEAN this year is elevating the U.S. to a “comprehensive strategic partnership” status — a largely symbolic enhancement of their relationship but one that puts Washington on the same level as China, which was granted the distinction last year.

    Biden will begin his day in Phnom Penh by meeting with Hun Sen, the prime minister of Cambodia, the host for the regional summit. He’ll then speak at the annual U.S.-ASEAN summit and participate in the traditional family photo with southeast Asian leaders, and attend a gala dinner hosted by a parallel summit in Cambodia focusing on east Asia.

    Another topic Biden will raise is Myanmar, where the military junta overthrew the ruling government in February 2021 and arrested its democratically elected leader, Aung San Suu Kyi. While in Phnom Penh, the president will discuss with other leaders how they can “coordinate more closely to continue to impose costs and raise pressure” on the military, Sullivan said, as it continues to repress people of Myanmar, which had steadily headed toward a democratic form of governance before the coup.

    Biden will participate in East Asia summit meetings on Sunday, including a gathering with the leaders of South Korea and Japan, before leaving for the G-20 summit in Bali.

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  • China tightens restrictions as rise in virus cases reported

    China tightens restrictions as rise in virus cases reported

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    BEIJING — Everyone in a district of 1.8 million people in China’s southern metropolis of Guangzhou was ordered to stay home Saturday to undergo virus testing and a major city in the southwest closed schools as another rise in infections was reported.

    Nationwide, a total of 11,773 infections were found over the past 24 hours, including 10,351 in people with no symptoms, the National Health Commission announced. China’s numbers are low, but the increase over the past week is a challenge to a “zero-COVID” strategy that aims to isolate every infected person.

    The quarantine for travelers arriving in China was shortened to five days from seven as part of changes in anti-virus controls announced Friday to reduce their cost and disruption. But the ruling Communist Party said it would stick to “zero COVID” even as other countries ease travel and other restrictions and try to shift to a long-term strategy of living with the virus.

    A total of 3,775 infections were found in Guangzhou, a city of 13 million, including 2,996 in people who showed no symptoms, according to the NHC. That was an increase from Friday’s total of 3,030, including 2,461 people without symptoms.

    People in the Guangzhou’s Haizhu district were ordered to stay home Saturday while testing was carried out, the district government announced on its social media account. One member of each household was allowed out to buy food.

    Guangzhou, 120 kilometers (75 miles) north of Hong Kong, has shut down schools and bus and subway service across much of the city as case numbers rise.

    Flights from Guangzhou to the Chinese capital, Beijing, and other major cities have been canceled.

    Nationwide, people who want to enter supermarkets, office buildings and other public buildings are required to show negative results of a virus test taken as often as once a day. That allows authorities to spot infections in people with no symptoms.

    In the southwest, the industrial city of Chongqing closed schools in its Beibei district, which has 840,000 people. Residents were barred from leaving a series of apartment compounds in its Yubei district but the city gave no indication how many were affected.

    The ruling party earlier this year shifted to isolating buildings or neighborhoods where infections are found instead of its previous approach of suspending access to cities following complaints that was too costly. But in outbreaks, such restrictions still can extend to areas with millions of inhabitants.

    Public frustration and complaints that residents sometimes are left without access to food or medicine have boiled over into protests and clashes with local officials in some areas.

    Elsewhere, mass testing also was being carried out Saturday in eight districts with a total of 6.6 million people in the central city of Zhengzhou.

    Access to an industrial zone of Zhengzhou that is home to the world’s biggest iPhone factory was suspended last week following outbreaks. Apple Inc. warned deliveries of its new iPhone 14 model would be delayed.

    Despite efforts to ease damage to the world’s second-largest economy, forecasters say business and consumer activity is weakening after growth rebounded to 3.9% over a year earlier in the three months ending in September from the first half’s 2.2%.

    Economists have cut their forecast of China’s annual economic growth to as low as 3%, which would be among the lowest in decades.

    President Xi Jinping’s government has refused to import foreign vaccines and defied requests to release more information about the source of the virus, which was first detected in the central city of Wuhan in late 2019.

    Economists and public health experts say “zero COVID” might stay in place for as much as another year. They say millions of elderly people have to be vaccinated before the ruling party can consider lifting controls that keep most foreign visitors out of China.

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  • Ahead of Xi meeting, Biden calls out China

    Ahead of Xi meeting, Biden calls out China

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    PHNOM PENH, Cambodia — U.S. President Joe Biden offered a full-throated American commitment to the nations of Southeast Asia on Saturday, pledging at a Cambodia summit to help stand against China’s growing dominance in the region — without mentioning the other superpower by name.

    Chinese President Xi Jinping wasn’t in the room at the Association of Southeast Asian Nations, or ASEAN, summit in Phnom Penh. But Xi hovered over the proceedings just two days before he and Biden are set to have their highly anticipated first face-to-face meeting at the G20 summit in Indonesia.

    The Biden White House has declared Xi’s nation its greatest economic and military rival of the next century and while the president never called out China directly, his message was squarely aimed at Beijing.

    “Together we will tackle the biggest issues of our time, from climate to health security to defend against significant threats to rules-based order and to threats against the rule of law,” Biden said. “We’ll build an Indo-Pacific that is free and open, stable and prosperous, resilient and secure.”

    The U.S. has long derided China’s violation of the international rules-based order — from trade to shipping to intellectual property — and Biden tried to emphasize his administration’s solidarity with a region American has too often overlooked.

    His work in Phnom Penh was meant to set a framework for his meeting with Xi — his first face-to-face with the Chinese leader since taking office — which is to be held Monday at the G20 summit of the world’s richest economies, this year being held in Indonesia on the island of Bali.

    Much of Biden’s agenda at ASEAN was to demonstrate resistance to Beijing.

    He was to push for better freedom of navigation on the South China Sea, where the U.S. believes the nations can fly and sail wherever international law allows. The U.S. had declared that China’s resistance to that freedom challenges the world’s rules-based order.

    Moreover, in an effort to crack down on unregulated fishing by China, the U.S. began an effort to use radio frequencies from commercial satellites to better track so-called dark shipping and illegal fishing. Biden also pledged to help the area’s infrastructure initiative — meant as a counter to China’s Belt and Road program — as well as to lead a regional response to the ongoing violence in Myanmar.

    But it is the Xi meeting that will be the main event for Biden’s week abroad, which comes right after his party showed surprising strength in the U.S. midterm elections, emboldening the president as he headed overseas. Biden will circumnavigate the globe, having made his first stop at a major climate conference in Egypt before arriving in Cambodia for a pair of weekend summits before going on to Indonesia.

    There has been skepticism among Asian states as to American commitment to the region over the last two decades. Former President Barack Obama took office with the much-ballyhooed declaration that the U.S. would “pivot to Asia,” but his administration was sidetracked by growing involvements in Middle Eastern wars.

    Donald Trump conducted a more inward-looking foreign policy and spent much of his time in office trying to broker a better trade deal with China, all the while praising Xi’s authoritarian instincts. Declaring China the United States’ biggest rival, Biden again tried to focus on Beijing but has had to devote an extraordinary amount of resources to helping Ukraine fend off Russia’s invasion.

    But this week is meant to refocus America on Asia — just as China, taking advantage of the vacuum left by America’s inattention, has continued to wield its power over the region.

    Biden declared that the ten nations that make up ASEAN are “the heart of my administration’s Indo-Pacific strategy” and that his time in office — which included hosting the leaders in Washington earlier this year — begins “a new era in our cooperation.” He did, though, mistakenly identify the host country as “Colombia” while offering thanks at the beginning of his speech.

    “We will build a better future, a better future we all say we want to see,” Biden said.

    Biden was only the second U.S. president to set foot in Cambodia, after Obama visited in 2012. And like Obama did then, the president on Saturday made no public remarks about Cambodia’s dark history or the United States’ role in the nation’s tortured past.

    In the 1970s, President Richard Nixon authorized a secret carpet-bombing campaign in Cambodia to cut off North Vietnam’s move toward South Vietnam. The U.S. also backed a coup that led, in part, to the rise of Pol Pot and the Khmer Rouge, a bloodthirsty guerrilla group that went on to orchestrate a genocide that resulted in the deaths of more than 1.5 million people between 1975 and 1979.

    One of the regime’s infamous Killing Fields, where nearly 20,000 Cambodians were executed and thrown in mass graves, lies just a few miles outside the center of Phnom Penh. There, a memorial featuring thousands of skulls sits as a vivid reminder of the atrocities committed just a few generations ago. White House aides said that Biden had no scheduled plans to visit.

    As is customary, Biden met with the host country’s leader at the start of the summit. Prime Minister Hun Sen, a former Khmer Rouge commander, has ruled Cambodia for decades with next to no tolerance for dissent. Opposition leaders have been jailed and killed, and his administration has been accused of widespread corruption, according to human rights groups.

    Jake Sullivan, Biden’s national security adviser, said Biden would “engage across the board in service of America’s interests and to advance America’s strategic position and our values.” He said Biden was meeting with Hun Sen because he was the leader of the host country. 

    U.S. officials said Biden urged the Cambodian leader to make a greater commitment to democracy and “reopen civic and political space” ahead of the country’s next elections.

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    Jonathan Lemire

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  • G20 host Indonesia lobbies West to soften Russia criticism in communiqué

    G20 host Indonesia lobbies West to soften Russia criticism in communiqué

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    BALI, Indonesia — Senior Indonesian politicians are calling on Western leaders to make concessions on how far to go in criticizing Russia over the war in Ukraine in a last-ditch effort to avoid leaving the G20 summit later this week without a joint declaration, three diplomats with knowledge of the ongoing negotiations told POLITICO.

    According to these diplomats, U.S., European, Australian, Canadian and Japanese officials are among those under pressure from Indonesian counterparts, all the way up to President Joko Widodo, to show “flexibility” and consider using less tough rhetoric in order for Moscow — represented at the Bali summit by Foreign Minister Sergei Lavrov — to say yes to a communiqué at the end of the gathering.

    Widodo “considers it a personal success” if a G20 declaration could be reached, one of the officials said, adding that the Indonesian leader has lamented repeatedly that he is chairing the “most difficult” G20 summit ever.

    He is also seeking to avoid kicking Russia out and making it the G19, which the G8 did in the wake of Moscow’s annexation of Ukraine’s Crimea in 2014.

    One possibility would be to focus squarely on the aspect of “upholding international law.” If adopted, that would be much more coded wording than what’s been used by the G7, which has repeatedly condemned Russian President Vladimir Putin’s war on Ukraine.

    The latest G7 statement, following this month’s meeting of foreign ministers from the group, criticized Moscow for “its war of aggression against Ukraine” and called for Russia to withdraw. “We condemn Russia’s recent escalation, including its attacks against civilians and civilian infrastructure,” it said. The G7 countries also blasted “Russia’s irresponsible nuclear rhetoric,” according to the Nov. 4 statement.

    “Obviously we can’t be as tough as we do it in G7 when you need the Russians, Chinese and Saudis to agree,” a Western diplomat said, referring to the larger G20 grouping. “The question is how much we need to delete.”

    China, Saudi Arabia, India and Brazil, four of the fellow G20 countries, are described as “sitting on the fence” over the issue.

    Beijing, in particular, would find it impossible to accept any direct criticism of Russia. Chinese President Xi Jinping, who will be attending the G20 summit personally, has so far only made an effort to show disapproval of any threats of using nuclear weapons, without attributing such threats to Moscow.

    Another issue for Widodo is the likely lack of a family photo for the two-day summit that starts on Tuesday. According to convention, all the G20 leaders would line up and take a group picture to show solidarity. This time, however, Western leaders have hesitation about being in the same frame as Lavrov, a key aide to Putin, whom U.S. President Joe Biden has called a “killer.”

    Widodo is described as “interested” in assessing fellow leaders’ opinions on having such a family photo.

    Much of his lobbying has taken place in Cambodia, where he’s attending the East Asia Summit. Also in Cambodia were Biden, European Council President Charles Michel, Canada’s Justin Trudeau and Australia’s Anthony Albanese. Russia’s Lavrov and Chinese Premier Li Keqiang were also in Phnom Penh.

    Indonesian President Joko Widodo has urged Western countries for more “flexibility” | Sonny Tumbelaka/AFP via Getty Images

    Speaking in Cambodia, Albanese confirmed to reporters that officials are still negotiating over the wording a G20 final communiqué.

    “You know the way that these conferences work. We’ve just got through an East Asia Summit, an ASEAN meeting and a range of other summits. So we’re waiting to see what happens, but I go into the G20 with a great deal of confidence,” Albanese said.

    Lavrov criticized Washington for stirring up confrontation in Asia. “There is a clear trend on militarization of the region through coordination of efforts of local U.S. allies such Australia, New Zealand, Japan with NATO enlargement,” he said.

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    Stuart Lau

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  • Russia’s Putin won’t attend upcoming G-20 summit in Bali

    Russia’s Putin won’t attend upcoming G-20 summit in Bali

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    JAKARTA, Indonesia — Russian President Vladimir Putin will not attend the Group of 20 summit in Indonesia next week, an Indonesian government official said Thursday, avoiding a possible confrontation with the United States and its allies over his war in Ukraine.

    Luhut Binsar Pandjaitan, the chief of support for G-20 events, said Putin’s decision not to come was “the best for all of us.”

    U.S. President Joe Biden, Chinese President Xi Jinping and other world leaders are to attend the two-day summit that starts Nov. 15. The summit would have been the first time Biden and Putin were together at a gathering since Russia invaded Ukraine in February. Indonesian President Joko Widodo is hosting the event on the island of Bali.

    “It has been officially informed that Russia’s President Vladimir Putin will not attend the G20 summit, and will be represented by a high-level official, and this has been discussed by President Joko Widodo and Putin in previous telephone conversations,” Pandjaitan said after meeting security officials in Denpasar, the capital of Bali.

    “Whatever happens with Russia’s decision, it is for our common good and the best for all of us,” added Pandjaitan, who is is also the coordinating minister of maritime affairs and investment. He said earlier that Russian Foreign Minister Sergey Lavrov will lead the Russian delegation.

    Pandjaitan did not know why Putin decided not to come but said “maybe it’s because President Putin is busy at home, and we also have to respect that.” Pandjaitan confirmed the same reasons may be keeping Ukrainian President Volodymyr Zelenskyy at home as well.

    Widodo earlier this year travelled to Kyiv and Moscow in an effort to get the two leaders to sit down in Bali and make peace.

    Putin’s decision not to attend the G-20 comes as Russia’s forces in Ukraine have suffered significant setbacks. Russia’s military said it will withdraw from Kherson, which is the only Ukrainian regional capital it captured and a gateway to the Russian-occupied Crimean Peninsula.

    Russia’s announced retreat from Kherson along with a potential stalemate in fighting over the winter could provide both countries an opportunity to negotiate peace, Army Gen. Mark Milley, chairman of the U.S. Joint Chiefs of Staff, said Wednesday.

    He said as many as 40,000 Ukrainian civilians and “well over” 100,000 Russian soldiers have been killed or wounded in the war, now in its ninth month. “Same thing probably on the Ukrainian side,” Milley added.

    The G-20 is the biggest of three summits being held in Southeast Asia this week and next, and it remained unclear if Lavrov will represent Russia at all of them. The Association of Southeast Asian Nations summit began Thursday in Phnom Penh, Cambodia, followed by the G-20 and then the Asia-Pacific Economic Cooperation summit in Bangkok, Thailand.

    Biden will attend ASEAN and the G-20 while Vice President Kamala Harris will travel to APEC. Biden is expected to meet with Xi in Bali.

    Biden had ruled out meeting with Putin if he had attended the summit, and said the only conversation he could have possibly had with the Russian leader would be to discuss a deal to free Americans imprisoned in Russia.

    Biden administration officials said they had been coordinating with global counterparts to isolate Putin if he had decided to participate either in person or virtually. They have discussed boycotts or other displays of condemnation.

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  • Beleaguered Billionaire Hui Ka Yan Struggles To Hold Onto His Crumbling Empire

    Beleaguered Billionaire Hui Ka Yan Struggles To Hold Onto His Crumbling Empire

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    Once China’s richest person, Hui falls out of the top 100 for the first time in 14 years.

    Hui Ka Yan, the founder of real estate firm China Evergrande Group, has lost nearly all of his once massive fortune. Worth $42.5 billion and ranked the richest person in Asia at his peak in 2017, his wealth has been drastically diminished as debt woes plague the embattled developer. Yet as pressure mounts for the former tycoon to find a concrete way to repay his firm’s debts, analysts say he will certainly lose a lot more.

    The 64-year-old, who dropped out of the 2022 ranks of China’s top 100 richest for the first time since his 2007 debut, now has an estimated net worth of $2.9 billion, an amount that is based entirely on the dividends he’s received over the years, though some of it has since been plowed into mansions, jets and a yacht. The number excludes Hui’s 60% stake in Evergrande, whose shares were suspended from trading in March, and still can’t meet the criteria for a resumption. Even before the suspension, the firm had lost about 95% of its peak value.

    But even his personal assets are not safe from the firm’s creditors. Hui was forced to use $1 billion of his own cash to pay down Evergrande debt late last year earlier this year, and he sold earlier this year two luxury apartments at a discount–one in the city of Shenzhen and one in Guangzhou–for a combined $50 million (360 million yuan), apparently to help pay off more.

    As Evergrande struggles to come up with a plan for restructuring its more than $300 billion in liabilities, which according to one person with knowledge of the matter will probably get delayed again and pushed out into 2023 due to the sheer size and complexity of the matter, more of his remaining trophy assets are likely at risk. Chen Zhiwu, a professor of finance at the University of Hong Kong, says amid China’s drastically changed political environment, the pressure is “really high, if not higher” for Hui to keep paying down corporate liabilities with his own money.

    In fact, one of his three homes in Hong Kong’s prestigious The Peak neighborhood was seized by China Construction Bank (Asia) last week in November after Evergrande defaulted on a loan collateralized by the $90 million (estimated market value) property.

    “Of course, he would like his personal assets and corporate assets very clearly separated, which officials aren’t willing to accept,” Chen says. “What this means is that when his company debt is in default, some of his personal fortune may have to be used to contribute to the payments to debt holders.”

    Hui, who according to Evergrandethe company’s website is still a member of the ruling Communist Party, has pledged his two other luxury homes in the same posh Hong Kong locale as collateral for loans from Orix Asia Capital. He is also looking to sell his 45-room Knightsbridge mansion overlooking London’s Hyde Park area, two years after buying it from a Saudi prince for $232 million. And he owns private jets and a $60 million superyacht that he could be forced to sell.

    As Evergrande’s revenues have fallen off a cliff (it only recorded $2.5 billion in contracted sales during the first eight months of the year, a plunge of around 96% from the prior year), Hui is unlikely to convince creditors that the company could ever generate enough cash flow for future repayment.

    Of course, he would like his personal assets and corporate assets very clearly separated, which officials aren’t willing to accept.

    Chen Zhiwu, professor of finance at the University of Hong Kong

    Meanwhile, a nationwide mortgage boycott by angry buyers, who paid for their purchases in full but aren’t getting apartment complexes delivered on time after troubled developers such as Evergrande ran out of money, is putting pressure on the government. To quell public protests, which are rare in China, officials have agreed to issue special loans totaling $27.6 billion (200 billion yuan) to help with this type of work. Victor Shih, an associate professor of political economy at the University of California, San Diego, says banks are likely to have been told to lend to the financing arms of local governments, so that they could buy the unfinished projects from distressed real estate firms at a small discount. Evergrande said in September it had resumed working on 95% of its 706 pre-sold but undelivered construction projects.

    But aside from protecting the interests of average homebuyers, few expect Beijing to reverse its course and unveil broader sector bailout measures–which are seen as crucial to restoring offshore creditor confidence. Kaven Tsang, a Hong Kong-based senior vice president at Moody’s Investors Service, says the economic pain inflicted by the real estate meltdown–including defaults, falling sales and rapidly slowing growth–are “within the [government’s] tolerance level.”

    “The central government has made it clear in the past that they aren’t going to use the property sector to support the economy,” says Tsang. “We haven’t seen any changes so far.”

    Ron Thompson, a Hong Kong-based managing director at consulting firm Alvarez & Marsal Asia, says he thinks it would take at least two years for China’s housing demand to stabilize. Moody’s estimated in October that China’s property sales would continue to decline over the next 12 months, after shrinking 21% in August from the prior year, and 15.3% in September. Default risk remains high, given that the country’s developers have at least a combined $55 billion in bonds due over the next two years, but face weaker sales and limited refinancing options.

    Amid this environment, bond investors mired in the restructuring of defaulted developers “aren’t expecting 100 cents on the dollar,” and are likely to demand equity and other collaterals to compensate for their rising losses, says Alvarez & Marsal Asia’s Thompson. Those who have lent specifically to Hui are increasingly taking things into their own hands, with more asset seizures and “wind-up” petitions to liquidate assets due to unpaid financial obligations, says Brock Silvers, a Hong Kong-based chief investment officer at Kaiyuan Capital, which invests in distressed assets.

    Evergrande is facing a wind-up hearing in Hong Kong on Nov. 28, which was first brought in June by creditor and Samoa-based investment holding Top Shine Global Limited over $110 million in unspecified financial obligations.

    Evergrande’s Hong Kong headquarters, which it acquired for $1.6 billion (HK$12.5 billion) in 2015 from Chinese Estates Holdings, controlled by Hui’s billionaire friend Joseph Lau, has also been seized by creditors and recently put on sale. The 26-story China Evergrande Centre located in Wan Chai now has an estimated value of around $1 billion, and the bidding process, concluded in late October reportedly drew interest from billionaire Li Ka-shing’s CK Asset Holdings.

    Hui appears to be pinning his last hope on electric cars. The Hong Kong-listed China Evergrande New Energy Vehicle Group , two thirds owned by parent Evergrande and whose trading has also been suspended since March, announced in late October that it had delivered the $24,700 Hengchi 5 electric sports utility vehicle to the first batch of 100 buyers, constituting a “major milestone” for Hengchi Auto. Parent company Evergrande also said in a July filing that it may offer equity interests in its EV unit as part of a “supplemental credit enhancement” package for restructuring offshore debt.

    But Shen Meng, managing director at Beijing-based boutique investment bank Chanson & Co., says the EV deliveries offer little comfort to creditors. The beleaguered Hui, who once cherished ambitions to become the Elon Musk of China and propel Evergrande above Tesla, still has a long way to go before establishing Hengchi as a stable brand.

    “The deliveries of the first batch doesn’t mean the maturing of Evergrande’s EV business, as it will take quite some effort to start bigger-scale production and delivery to the mass,” says Shen. “The EV unit is unlikely to be seen as a reliable asset, and it won’t help much with the restructuring process.”

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    Yue Wang, Senior Contributor

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  • Germany may block sale of chip factory to Chinese-owned firm

    Germany may block sale of chip factory to Chinese-owned firm

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    BERLIN — The German government may decide this week to block the sale of a chip factory to a Swedish subsidiary of a Chinese company, following a recent compromise over a Chinese shipping firm’s investment in a German container terminal.

    German company Elmos said late Monday that it was informed by the Economy Ministry that the sale of its factory in Dortmund to Silex Microsystems AB “will most likely be prohibited in the upcoming cabinet session.” The ministry previously “had indicated to the parties that the transaction most likely will be approved,” Elmos added.

    Silex is owned by Sai Microelectronics of China, according to German media. The planned 85 million-euro (dollar) sale was announced in December.

    The change comes as Germany struggles with the extent it should allow Chinese companies to invest in Europe’s biggest economy.

    The Cabinet, which will hold its weekly meeting Wednesday, reached a compromise late last month after officials argued over whether to allow China’s COSCO to take a 35% stake in a container terminal at the Hamburg port.

    Members of two junior parties in the governing coalition opposed that deal while Chancellor Olaf Scholz, a former Hamburg mayor, downplayed its significance.

    COSCO was cleared to take a stake below 25%, with a threshold above that allowing an investor can block a company’s decisions.

    Scholz traveled to Beijing last week, becoming the first leader from the Group of Seven leading industrialized nations to meet President Xi Jinping since the start of the COVID-19 pandemic. The visit, coming shortly after Xi further cemented his authoritarian rule at home, drew some criticism at home.

    Scholz is encouraging companies to diversify but not discouraging business with China. He said before the trip that “we don’t want decoupling from China” but that “we will reduce one-sided dependencies in the spirit of smart diversification.”

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  • Xi Jinping has secured his power at home. Now he’s stepping back out on the international stage | CNN

    Xi Jinping has secured his power at home. Now he’s stepping back out on the international stage | CNN

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    Editor’s Note: A version of this story appeared in CNN’s Meanwhile in China newsletter, a three-times-a-week update exploring what you need to know about the country’s rise and how it impacts the world. Sign up here.


    Hong Kong
    CNN
     — 

    After securing his iron grip on power in a leadership reshuffle late last month, Chinese leader Xi Jinping is now moving back onto the world’s stage – in person – in an apparent bid to bolster China’s standing amid rising tensions with the West.

    A handful of state visits in Beijing last week, which included meetings between Xi and leaders of Tanzania, Pakistan, Vietnam and Germany, and expected travel to international summits later this month are a sharp change of pace for Xi, who has drastically limited his foreign guests and only left the country once since start of the Covid-19 pandemic.

    For more than two years, Xi – who is the most important figure in China’s Communist Party by a long shot – hunkered down as China ramped up a stringent zero-Covid policy that seeks to eliminate the virus using border controls, mandatory quarantines, lockdowns and routine mass testing.

    China continues to restrict its citizens under that policy, but Xi’s recent and expected diplomatic schedule suggests he is no longer willing to forfeit his place alongside other world leaders after assuming a norm-breaking third term following the ruling Communist Party’s National Congress last month.

    There Xi gave a stark assessment of external threats facing China. Those growing challenges stem from “a grim and complex international situation,” with “external attempts to suppress and contain China” threatening to “escalate at any time,” Xi told his party members and the nation in a work report delivered during the congress.

    “(Xi) made it very clear … that the big challenges China will face (stem from) the less and less conducive international environment – and that is an area that China must contest,” said Steve Tsang, director of the University of London’s SOAS China Institute.

    Xi’s apparent ramping up of foreign engagement is likely a bid to counter those headwinds, but also one based on a calculation: “He must have come to some kind of a conclusion that the risk of Covid is more containable than he had thought before,” according to Tsang.

    For a leader whose aim throughout his decade in power has been to enhance China’s global stature, a diminished physical presence on the world’s stage – such as sending his foreign minister to last year’s G20 – threatens to hinder Xi’s personal diplomacy.

    Even as other leaders resumed international travel and hosted dignitaries, Xi’s roster of diplomatic events remained largely dominated by remote engagements – speaking in online summits to the leaders of key partner countries, delivering addresses via video link, taking “cloud” group photos with counterparts at virtual events – in an apparent bid to minimize potential Covid-19 risk.

    A handful of foreign leaders have met Xi in Beijing this year, marking his first in-person state meetings since 2020. But the vast majority who visited before the party congress were there for Beijing’s Winter Olympics in February. Then, China-friendly nations like Russia and Egypt attended, while the US and its allies launched a diplomatic boycott over China’s human rights record.

    Xi made his first foray out of the country since the start of the pandemic in September to attend a meeting of the China-led Shanghai Cooperation Organization in Uzbekistan.

    Xi’s foreign affairs priorities in the weeks and months ahead will likely continue to focus on shoring up relationships with friendly nations, experts say, as he finds himself operating in a very different world from the last time he was playing regular host or attending summits like G20 or the Asia-Pacific Economic Cooperation leaders’ summit – both of which convene later this month and which he is expected to attend, though yet unconfirmed by Beijing.

    Since then, Western concerns about China’s rising global power have been fanned by Beijing’s close rapport with Moscow, damning reports on China’s human rights record in its Xinjiang region and shrinking liberties in Hong Kong, as well as negative views of how China has handled the pandemic.

    “The main challenge that China faces is the deterioration of relations with the US … With the US being hostile, China faces great headwinds in its relations with the West, especially in terms of decoupling of the economy,” said Yun Sun, director of the China Program at the Washington-based think tank Stimson Center.

    “China will not directly discuss the US as the competitor, but instead will try to rally support and solidarity from the rest of the world,” she said.

    Xi’s meeting with German Chancellor Olaf Scholz on Friday, the first between Xi and a G7 leader in about three years, may be one aspect of that strategy, as a Germany that is more friendly toward China has the potential to hinder solidarity in an approach toward China from within the European Union, experts say.

    During his visit, which also included talks with Chinese Premier Li Keqiang, Scholz voiced support of economic partnership with China, “on equal footing,” but said he raised issues like human rights, market access and the future of self-governing Taiwan, while also stressing that China’s relationship with one EU member affects all.

    Scholz brought up the responsibility to push for peace in Ukraine, and Xi used the meeting to release what may be his strongest comments about the escalation of the conflict.

    Xi called for the international community to “oppose the threat or use of nuclear weapons” and prevent a “nuclear crisis in Eurasia” – drawing an apparent red line, even as China has yet to condemn Russia’s invasion of its neighbor and as Xi maintains a close rapport with President Vladimir Putin.

    Scholz, who came in for heavy criticism at home for taking the trip, which was seen by critics as an endorsement of Xi’s rule, said later those comments on nuclear weapons alone made the trip “worth it.”

    Xi’s strategy in upcoming summits may fall along similar lines.

    “He will try to demonstrate that China is still committed to the world, and is ready to assume its due leadership,” said Sun of the Stimson Center.

    However, there will be challenges, nearly three years into the pandemic, as China’s top leader is only beginning to re-engage in person. Sun added: “There is a lot of catch-up to do.”

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  • Ukrainians prep for a possible Russian nuclear attack

    Ukrainians prep for a possible Russian nuclear attack

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    KYIV — There’s a nuclear threat hanging over Ukraine.

    The atomic saber rattling by the Kremlin ranges from President Vladimir Putin’s threat to defend illegally annexed Ukrainian territory “by all means available,” to increasingly unhinged comments from former President Dmitry Medvedev and Moscow’s (false) hints that Ukraine is developing a nuclear “dirty bomb” — something Ukrainian President Volodymyr Zelenskyy has warned might be Russia preparing for a so-called false flag attack.

    For many Ukrainians, these are far from empty words and the country is getting ready.

    The Serhiy Prytula Charity Foundation in downtown Kyiv has one bomb shelter in the carpark below the building to protect staff from conventional Russian attacks and another to be used in case of a nuclear attack.

    “The second shelter is equipped accordingly. It has a supply of medicines, food, drinking and distilled water, flashlights and batteries,” said TV star Serhiy Prytula, who heads the eponymous foundation.

    “[Predicting the actions of] the Russian military and political leadership is always difficult if you use normal logic. We have been very unfortunate to have this neighbor. This is why anything connected to a nuclear threat should be taken very seriously, as a real threat, and prepare accordingly,” he said.

    The language coming out of Moscow is worrying.

    Earlier this month, Medvedev, who now serves as deputy chairman of the Russian Security Council, warned that Kyiv’s aim to recapture all of its lost territory “is a threat to the existence of our state and of a dismemberment of today’s Russia,” something he said was a “direct reason” to implement Russia’s nuclear deterrent.

    The Russian military is on the back foot in Ukraine and setting off a nuclear weapon could be seen as a desperate measure by the Kremlin to force a halt in the war.

    Kyiv’s reaction to Medvedev was swift.

    An Ukrainian Emergency Ministry rescuer attends an exercise in the city of Zaporizhzhia on August 17, 2022, in case of a possible nuclear incident at the Zaporizhzhia nuclear power plant | Dimitar Dilkoff/AFP via Getty Images

    Oleksiy Danilov, secretary of Ukraine’s National Security and Defense Council, branded his nuclear threats “an act of suicide,” saying: “Russia will finally turn into enemy No. 1 for the whole world.”

    Even Russia’s ally China is warning about the danger of using nuclear weapons. Last week, Chinese leader Xi Jinping said: “Nuclear weapons cannot be used, a nuclear war cannot be waged.”

    U.S. President Joe Biden told Putin that it would be an “incredibly serious mistake” to use a tactical nuclear weapon in Ukraine.

    Brace brace

    Those international warnings aren’t stopping Ukrainians from prepping for the worst.

    The authorities in the Kyiv region have hundreds of shelters that could be used in case of nuclear attack. 

    “The past eight months have taught us that anything can happen. As an official, I am preparing for the worst-case scenario, but I hope that everything will be fine,” Oleksii Kuleba, head of the capital region’s military administration, told local media. 

    Kuleba said the shelters are below ground, have ventilation, two entrances, and by November 15 should be equipped with radio sets — which Ukrainian authorities believe might be the only means of communications after a nuclear attack.

    Ukraine’s government bodies have also recently published detailed instructions — informed by the country’s experience with the 1986 Chernobyl nuclear disaster — on what to do in case of a nuclear strike.

    Secretary of the National security and defence council of Ukraine Oleksiy Danilov | Sergei Supinsky/AFP via Getty Images

    “The use of nuclear weapons against Ukraine is considered unlikely, and the main purpose of these threats is to scare Ukrainians and the world and force us to make concessions, and our partners to weaken their support for Ukraine,” say the instructions, which then add: “At the same time, Ukrainians must have an action plan in case of any emergency situations: the use of nuclear weapons, a ‘dirty bomb’ or in the event of an accident at a nuclear power plant.”

    The instructions detail everything from not looking at the blast — “when you notice a flash in the sky (or its reflection), in no case look in that direction” — to covering your ears to prevent damage from a shock wave and removing clothing that has been exposed to radiation. “Run for cover as soon as you can get back on your feet and when the blast wave from the use of nuclear weapons has passed,” they say.

    In early October, the capital city’s administration said the city has enough potassium iodide pills — medicine to help prevent the absorption of radioactive iodine by the thyroid gland — to distribute to medical facilities and family doctors “in case of a radiation threat or a radiation emergency.”

    “If evacuation is necessary, potassium iodide will be distributed at evacuation points to members of the population who were exposed to the radiation zone, in accordance with the recommendations of medical professionals,” the administration added.

    Meanwhile, many Kyiv residents are taking their own preventive measures.

    Kristina Riabchyna, a sustainable stylist living in Kyiv and originally from Donetsk, has bought iodine tablets from a local pharmacy. 

    “I really want to believe that there won’t be a nuclear attack. But unfortunately, we have this insufferable neighbor, so we have no choice but to believe that this absurd thing might actually be possible,” she said.

    “Buying potassium iodide was probably a way of coping with the fear,” Riabchyna added. “What I mean is, I have done what I can at this stage, for my safety and for my loved ones, I haven’t ignored the danger and this means I can carry on living my life. But it goes without saying that I understand that this isn’t a countermeasure that will save us if this threat becomes reality.”

    Mykhailo, 49, and his mother in a school’s bomb shelter where they have stayed for nearly two months on June 4, 2022 in Velyka Novosilka, Ukraine | Anastasia Vlasova/Getty Images

    Foreigners in Kyiv are taking similar measures. 

    In recent weeks, staff working for an EU-funded project — they asked that the project not be identified — received thorough instructions on what to do in case of a nuclear attack or the use of a dirty bomb — a conventional bomb laced with radioactive material.

    “Nuclear explosions can cause significant damage and casualties from blast, heat, and radiation but there are steps you can take to try to mitigate against the impact,” the instructions said, recommending that, “If warned of an imminent attack, immediately get inside the nearest building, ideally under ground, and move away from windows.”

    The instructions go on to explain how to wash off radioactive fallout, how an electromagnetic pulse can damage electronic equipment and listen for advice on possible evacuation.

    If the attack is a tactical nuclear strike on the frontlines far from Kyiv, then, “The only plan of action for our Kyiv-based staff in such a case is to jump into cars and to be on the border [with Poland] within a couple of hours,” said an EU national with the program, speaking on condition of not being identified.

    Ukrainian troops on the front lines have been given potassium iodine tablets and also received training on what to do in the event of a nuclear attack — although spokespeople from the defense ministry and the military would not specify what those instructions were.

    For Prytula, the charity boss, the danger of a nuclear attack won’t end soon.

    “The threat of a nuclear weapon being used against Ukraine, or indeed any other country in the world, will be real as long as the Russian Federation exists,” he said. 

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  • Germany’s leader and top CEOs have arrived in Beijing. They need China more than ever | CNN Business

    Germany’s leader and top CEOs have arrived in Beijing. They need China more than ever | CNN Business

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    Hong Kong/London
    CNN Business
     — 

    German Chancellor Olaf Scholz arrived in China on Friday with a team of top executives and a clear message: business with the world’s second largest economy must continue.

    Scholz met with Chinese leader Xi Jinping at Beijing’s Great Hall of the People after landing in the capital Friday morning, according to a Chinese state media account. The German chancellor is also expected to meet with Premier Li Keqiang.

    Joining Scholz for the whirl-wind one day visit is a delegation of 12 German industry titans, including the CEOs of Volkswagen

    (VLKAF)    , Deutsche Bank

    (DB)    , Siemens

    (SIEGY)     and chemicals giant BASF

    (BASFY)    , according to a person familiar with the matter. They are set to meet with Chinese companies behind closed doors.

    The group entered China without participating in the usual seven-day hotel quarantine. Images showed hazmat-clad medical workers greeting their jet at Beijing’s Capital International Airport to test the official delegation for Covid-19.

    During the Friday morning meeting between the two leaders, Xi called for Germany and China to work together amid a “complex and volatile” international situation, and said the visit would “enhance mutual understanding and trust, deepen pragmatic cooperation in various fields and plan for the next phase of Sino-German relations,” according to a readout from state broadcaster CCTV.

    Scholz’s visit — the first by a G7 leader to China in roughly three years — comes as Germany slides towards recession. But it has fired up concerns that the economic interests of Europe’s biggest economy are still too closely tied to those of Beijing.

    Since the invasion of Ukraine this year, Germany has been forced to ditch its long dependence on Russian energy. Now, some in Scholz’s coalition government are growing nervous about the country’s deepening ties with China. Beijing has declared its friendship with Russia has “no limits,” while China’s relations with the United States are deteriorating.

    The tension was highlighted recently by a fierce debate over a bid by Chinese state shipping giant Cosco to buy a 35% stake in the operator of one of the four terminals at the port of Hamburg. Under pressure from some members of the government, the size of the investment was limited to 24.9%.

    The potential deal has raised concerns in Germany that closer ties with China will leave critical infrastructure exposed to political pressure from Beijing, and disproportionately benefit Chinese companies.

    But Germany is hardly in a position to rock the boat with Beijing as it grapples with the challenge of reviving its struggling economy. Its consumers and companies have borne the brunt of Europe’s energy crisis, and a deep recession is looming.

    If the European Union and Germany were to decouple from China, it would lead to “large GDP losses” for the German economy, Lisandra Flach, director of the ifo Center for International Economics, told CNN Business.

    The Kiel Institute for the World Economy estimates that a major reduction in trade between the European Union and China would shave 1% off of Germany’s GDP.

    Germany needs to shore up its export markets as ties with Russia, once its main supplier of natural gas, continue to unravel.

    When it comes to China, Germany won’t want to “lose also this market, this economic partner,” said Rafal Ulatowski, an assistant professor of political science and international studies at the University of Warsaw.

    “They [will] try to keep these relations as long as it’s possible.”

    As Western countries have imposed swingeing economic sanctions on Russia, China has publicly maintained its “neutrality” in the war while ramping up its trade with Moscow.

    That has triggered a backlash in Europe, where some companies are already becoming wary of doing business in China because of its stringent “zero Covid” restrictions.

    Pressure on Berlin is also mounting over China’s human rights record. In an open letter Wednesday, a coalition of 70 civil rights groups urged Scholz to “rethink” his trip to Beijing.

    “The invitation of a German trade delegation to join your visit will be viewed as an indication that Germany is ready to deepen trade and economic links, at the cost of human rights and international law,” they wrote in the memo, published by the World Uyghur Congress. Based in Germany, the organization is run by Uyghurs raising awareness of allegations of genocide in China’s Xinjiang region.

    It suggested Berlin was “loosening economic dependence on one authoritarian power, only to deepen economic dependence on another.”

    In an op-ed published in a German newspaper on Wednesday, Scholz said he would use his visit to “address difficult issues,” including “respect for civil and political liberties and the rights of ethnic minorities in Xinjiang province.”

    A spokesperson for the German government addressed wider criticism last week, saying at a press conference that it had no intention of “decoupling” from its most important trading partner.

    “[The chancellor] has basically said again and again that he is not a friend of decoupling, or turning away, from China. But he also says: diversify and minimize risk,” the spokesperson said.

    Last year, China was Germany’s biggest trading partner for the sixth year in a row, with the value of trade up over 15% from 2020, according to official statistics. Together, Chinese imports from, and exports to, Germany were worth €245 billion ($242 billion) in 2021.

    Still, the furore surrounding the Hamburg port deal is a reminder of the tradeoffs Germany has to confront if it wants to maintain close ties with such a vital export market and supplier.

    A spokesperson for Hamburger Hafen und Logistik (HHLA), the company operating the port terminal, told CNN Business on Thursday that it was still negotiating the deal with Cosco.

    Flach, of the ifo Center for International Economics, said the deal warranted scrutiny because “there is no reciprocity: Germany cannot invest in Chinese ports, for instance.”

    A container ship from Cosco Shipping moored at the Tollerort Container Terminal owned by HHLA, in the harbor of Hamburg, Germany on Oct. 26.

    However, it is easy to overstate the impact of the potential agreement, said Alexander-Nikolai Sandkamp, assistant professor of economics at the Kiel Institute for the World Economy.

    “We’re not talking about a 25% stake in the Hamburg harbor, or even the operator of the harbor, but a 25% stake in the operator of a terminal,” he told CNN Business.

    Jürgen Matthes, head of global and regional markets at the German Economic Institute, told CNN Business that critics were no longer simply weighing the business benefits of Chinese investment in the country.

    “Politics and economics have to be looked at together and cannot be taken separately any longer,” he said. “When geopolitics comes into play, the view of China has very much declined and become much more negative.”

    China’s recent treatment of Lithuania has also deepened concerns that Beijing “does not hesitate to simply break trade rules,” Matthes added. The small, Eastern European nation claimed last year that Beijing had erected trade barriers in retaliation for its support for Taiwan.

    China has defended its downgrading of relations with Lithuania, saying it is acting in response to the European nation undermining its “sovereignty and territorial integrity.” This year, after a Lithuanian official visited Taiwan, Beijing also announced sanctions against her and vowed to “suspend all forms of exchange” with her ministry.

    As the German delegation touches down on Friday, they will be faced with another issue, which has become the single biggest headache for companies across China.

    “The biggest challenge for German businesses remains China’s zero-Covid policy,” said Maximilian Butek of the German Chamber of Commerce in China.

    “The restrictions are suffocating economic growth and heavily impact China’s attractiveness as a destination for foreign direct investment,” he told CNN Business.

    An aerial view of the urban landscape in Shanghai on Sept. 25. The city underwent a months-long Covid lockdown earlier this year.

    He said the broader restrictions were so stifling that some companies had moved their regional headquarters to other locations, such as Singapore. “Managing the whole region without being able to travel freely is almost impossible,” he added.

    In a brief statement, Volkswagen told CNN Business that its CEO was attending the trip since “there have been no direct meetings for almost three years” due to the coronavirus pandemic.

    “In view of the completely changed geopolitical and global economic situation, the trip to Beijing offers the opportunity for a personal exchange of views,” the automaker said.

    Despite Beijing’s Covid curbs and geopolitical tensions, Germany has every economic incentive to stay close to China.

    Its dependency on China can be seen across industries. While about 12% of total imports came from China last year, the country was responsible for 80% of imported laptops and 70% of mobile phones, Sandkamp said.

    The automobile, chemical and electrical industries are also reliant on Chinese trade.

    “If we were to stop trading with China, we would run into trouble,” Sandkamp added.

    China made up 40% of Volkswagen’s worldwide deliveries in the first three quarters of this year, and it’s also the top market for other automakers such as Mercedes.

    Wariness among some German officials over the country’s closeness with China could filter into a more restrictive trade policy, though economic cooperation is still in both parties’ interests.

    Last week, Germany’s economy minister Robert Habeck told Reuters that the government was efforting a new trade policy with China to reduce dependence on Chinese raw materials, batteries and semiconductors.

    Unidentified sources also told the news agency that the ministry was weighing new rules that would make business with China less attractive. The ministry did not respond to a request for comment from CNN Business.

    But “despite all odds and challenges, China remains unrivaled in terms of market size and market growth opportunities for many German companies,” said Butek, of the German Chamber.

    He predicted that “the large majority will stay committed to the Chinese market and is expecting to expand their business.”

    Companies appear to be toeing that line. Last week, BASF CEO Martin Brudermüller was quoted in Chinese state media as saying that Germans should “step away from China-bashing and look at ourselves a bit self-critically.”

    “We benefit from China’s policies of widening market access,” he said at a company event, according to state-run news agency Xinhua, pointing to the construction of a BASF chemical engineering site in southern China.

    — CNN’s Simone McCarthy, Chris Stern, Lauren Kent, Claudia Otto and Arnaud Siad contributed to this report.

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  • Germany’s Scholz in China amid trade, Ukraine, rights issues

    Germany’s Scholz in China amid trade, Ukraine, rights issues

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    BEIJING — German Chancellor Olaf Scholz arrived in Beijing on Friday for a one-day visit that has drawn criticism over China’s tacit support for Russia in its war on Ukraine and lingering controversy over economic and human rights issues.

    The German Embassy confirmed the arrival of Scholz and a business delegation traveling with him. He was scheduled to receive a formal welcome from president and newly reelected head of the ruling Communist Party Xi Jinping, hold a working lunch and then meet with Premier Li Keqiang, who nominally has responsibility over the economy.

    Despite their political disputes, Scholz’s visit reflects the importance of Germany’s trade ties with the world’s second-largest economy.

    In an article for the German daily Frankfurter Allgemeine Zeitung, Scholz said he was traveling to Beijing “precisely because business as usual is not an option in this situation.”

    “It is clear that if China changes, the way we deal with China must also change,” Scholz said, adding that “we will reduce one-sided dependencies in the spirit of smart diversification.” Scholz also said he would address “difficult issues” such as the rights of ethnic minorities in Xinjiang.

    Scholz is the first leader from the G7 group of industrialized nations to meet with Xi since the start of the global COVID-19 pandemic, which was first detected in China in 2019. The diplomatically delicate trip comes as Germany and the European Union work on their strategy toward an increasingly assertive and authoritarian Beijing.

    Scholz’s messages will face close scrutiny, particularly at home where some have criticized him for normalizing China’s behavior. While his nearly year-old government has signaled a departure from predecessor Angela Merkel’s firmly trade-first approach, his trip follows domestic discord over a Chinese shipping company’s major investment in a container terminal in Germany’s crucial port of Hamburg.

    With China still imposing tough COVID-19 restrictions, his delegation won’t stay in Beijing overnight.

    Scholz’s visit comes just after Xi was named to a third term as head of the ruling Communist Party and promoted allies who support his vision of tighter control over society and the economy. It is also accompanied by rising tensions over Taiwan and follows a U.N. report that said Chinese human rights violations against Uyghurs and other ethnic groups may amount to “crimes against humanity.”

    German officials say the trip is intended to probe where China is going and what forms of cooperation are possible.

    An official pointed to China’s “particular responsibility” as an ally of Russia to help end the war in Ukraine and press Moscow to tone down its nuclear rhetoric; to concerns over tensions in Taiwan and the broader region; to Germany’s desire for a “level playing field” in economic relations; and to Scholz’s current status as this year’s chair of the Group of Seven industrial powers.

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  • Germany’s Scholz: The way we deal with China must change

    Germany’s Scholz: The way we deal with China must change

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    BERLIN — Berlin must change the way it deals with China as the country lurches back toward a more openly “Marxist-Leninist” political trajectory, German Chancellor Olaf Scholz wrote in an op-ed on Thursday.

    In his article for POLITICO and the German newspaper Frankfurter Allgemeine Zeitung, Scholz defended his trip to China on Thursday but stressed that German companies would need to take steps to reduce “risky dependencies” in industrial supply chains, particularly in terms of “cutting-edge technologies.” Scholz noted that President Xi Jinping was deliberately pursuing a political strategy of making international companies reliant on China.

    “The outcome of the Communist Party Congress that has just ended is unambiguous: Avowals of Marxism-Leninism take up a much broader space than in the conclusions of previous congresses … As China changes, the way that we deal with China must change, too,” Scholz wrote.

    Germany has faced withering criticism for pressuring Europe into a strategically disastrous dependence on Russian gas over recent years, and Berlin is now having to hit back against suggestions that it is making exactly the same mistakes by depending on China as a manufacturing base and commercial partner.

    While Scholz signaled a note of caution over China, he was far from suggesting that Germany was close to a major U-turn in its largely cozy relations with China. Indeed, he clearly echoed his predecessor Angela Merkel in insisting that the (unnamed but obviously identified) United States should not drag Germany into a new Cold War against Beijing.

    “Germany of all countries, which had such a painful experience of division during the Cold War, has no interest in seeing new blocs emerge in the world,” he wrote. “What this means with regard to China is that of course this country with its 1.4 billion inhabitants and its economic power will play a key role on the world stage in the future — as it has for long periods throughout history.”

    In a thinly veiled criticism of Washington’s policies, Scholz said Beijing’s rise did not justify “the calls by some to isolate China.”

    Crucially, he insisted that the goal was not to “decouple” — or break manufacturing ties — from China. He added, however, that he was taking “seriously” an assertion by President Xi that Beijing’s goal was to “tighten international production chains’ dependence on China.”

    Scholz is planning to fly to Beijing late on Thursday for a one-day trip to the Chinese capital on Friday, where he will be the first Western leader to meet Xi since his reappointment, and the first leader from the G7 group of leading economies to visit China since the outbreak of the coronavirus pandemic.

    The chancellor also sought to counter criticism that his trip undermines a joint European approach to China. According to French officials, President Emmanuel Macron had proposed that he and Scholz should visit Xi together to demonstrate unity and show that Beijing cannot divide European countries by playing their economic interests off against each other — an initiative that the German leader rejected.

    “German policy on China can only be successful when it is embedded in European policy on China,” Scholz wrote. “In the run-up to my visit, we have therefore liaised closely with our European partners, including President Macron, and also with our transatlantic friends.”

    Chancellor Olaf Scholz echoed his predecessor Angela Merkel in insisting that the United States should not drag Germany into a new Cold War against Beijing | Clemens Bilan-Pool/Getty Images

    Scholz said he wanted Germany and the EU to cooperate with a rising China — including on the important issue of climate change — rather than trying to box it out.

    At the same time, he warned Beijing that it should not pursue policies striving for “hegemonic Chinese dominance or even a Sinocentric world order.”

    Scholz also pushed China to stop its support for Russia’s war against Ukraine and to take a more critical position toward Moscow: “As a permanent member of the [United Nations] Security Council, China bears a special responsibility,” he wrote. “Clear words addressed from Beijing to Moscow are important — to ensure that the Charter of the United Nations and its principles are upheld.”

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  • China’s Xi Jinping congratulates Lula on Brazil election win

    China’s Xi Jinping congratulates Lula on Brazil election win

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    Chinese President Xi Jinping on Monday congratulated Luis Inacio Lula da Silva for his win in Brazil’s presidential election, according to state broadcaster CCTV.

    “I attach great importance to the development of China-Brazil relations,” said Xi.

    “I am willing to work with President-elect Lula, from a strategic and long-term perspective, to jointly plan and promote to a new level the comprehensive strategic partnership between China and Brazil, for the benefit of the two countries and its peoples.”

    Relations between China and Brazil, two of the world’s largest developing countries, worsened under right-wing President Jair Bolsonaro, who has not conceded the election yet.

    Leftist Lula, previously a two-term president, led Brazil into the first BRICS grouping in 2009, initially made up of Brazil, Russia, India, and China, before South Africa joined in 2010.

    Lula last year praised China and its response to the COVID-19 pandemic in an interview with a Chinese media outlet, contrasting the strength of the ruling Communist Party to what he called the “weakening of the state” in Latin American and developing world countries.
     

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  • US curbs on microchips could throttle China’s ambitions and escalate the tech war | CNN Business

    US curbs on microchips could throttle China’s ambitions and escalate the tech war | CNN Business

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    Hong Kong
    CNN Business
     — 

    Chinese leader Xi Jinping’s push to “win the battle” in core technologies and bolster China’s position as a tech superpower could be severely undermined by Washington’s unprecedented steps to limit the sale of advanced chips and chip-making equipment to the country, analysts say.

    On October 7, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license. The rule also restricts the ability of “US persons” — including American citizens or green card holders — to provide support for the “development or production” of chips at certain manufacturing facilities in China.

    “The US moves are a major threat to China’s technological ambitions,” said Mark Williams and Zichun Huang, analysts at Capital Economics, in a recent research report. The analysts pointed out that the global semiconductor industry is “almost entirely” dependent on the United States and countries aligned with it for chip design, the tools that make them, and fabrication.

    “Without these,” the analysts said, “Chinese firms will lose access not only to advanced chips, but to technology and inputs that might over time have allowed domestic chipmakers to climb the ladder and compete at the cutting edge.” They added: “The US has chopped the rungs away.”

    Chips are vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing. US officials have talked about the move as a measure to protect national security interests. It also comes as the United States is looking to bolster its domestic chip manufacturing abilities with heavy investments, after chip shortages earlier in the pandemic highlighted the country’s dependance on imports from abroad.

    Arthur Dong, a teaching professor at Georgetown University’s McDonough School of Business, described the recent US sanctions as “unprecedented in modern times.”

    Previously, the US government has banned sales of certain tech products to specific Chinese companies, such as Huawei. It has also required some major US chip-making firms to halt their shipments to China. But the latest move is much more expansive and significant. It not only bars the export to China of advanced chips made anywhere in the world using US technology, but also blocks the export of the tools used to make them.

    With its Made in China 2025 road map, Beijing has set a target for China to become a global leader in a wide range of industries, including artificial intelligence (AI), 5G wireless, and quantum computing. At the Communist Party Congress earlier this month, where he secured a historic third term, Xi highlighted that the nation will prioritize tech and innovation and grow its talent pool to develop homegrown technologies.

    “China will look to join the ranks of the world’s most innovative countries by 2035, with great self-reliance and strength in science and technology,” Xi said in the party congress report, released on October 16.

    Dong said the latest US sanctions will make it harder for China to advance in AI as well as 5G, given the role advanced chips play in both industries.

    “In any circumstances,” Williams from Capital Economics said, “China would find achieving global tech leadership hard to achieve.”

    One dramatic, and potentially disruptive aspect of the rules is the ban on American citizens and legal residents working with Chinese chip firms.

    Dane Chamorro, a partner at Control Risks, a global risk consultancy based in London, said such measures are usually “only enacted against ‘rogue regimes’” such as Iran and North Korea. The decision to use this against China is “unprecedented,” Chamorro said.

    Many executives working for Chinese firms may now have to choose between keeping their jobs or acting as lawful US residents. “You can’t do both,” Chamorro said.

    The ban could lead to a mass resignation of top executives and core research staff working at Chinese chip firms, which will hit the industry hard, Dong from Georgetown University said.

    So far it’s not clear exactly how many American workers there are in China’s domestic chip industry. But an examination of company filings indicates that more than a dozen chip firms have senior executives holding US citizenship or green cards. At Advanced Micro-Fabrication Equipment China (AMEC), one of the country’s largest semiconductor equipment manufacturers, at least seven executives, including founder and chairman Gerald Yin, hold US citizenship, the latest company documents show.

    A woman inspects the quality of a chip at a manufacturer of IC encapsulation in Nantong in east China's Jiangsu province Friday, Sept. 16, 2022.

    Other examples include Shu Qingming and Cheng Taiyi, who currently serve as vice chairman and deputy general manager, respectively, at GigaDevice Semiconductor, an advanced memory chip firm. The Financial Times report said in a recent report that Yangtze Memory Technologies has already asked American employees in core tech positions to leave, citing anonymous sources. But it’s unclear how many.

    AMEC, GigaDevice Semiconductor, and Yangtze Memory Technologies didn’t respond to requests for comments.

    If these senior executives depart, “this will create a leadership and technological void within China’s chipmaking industry,” Dong said, as the country loses executives with years of chipmaking experience in an industry with “one of the most complex manufacturing processes known to mankind.”

    While much of the world’s chip manufacturing is centered in East Asia, China is reliant on foreign chips, especially for advanced processor and memory chips and related equipment.

    It is the world’s largest importer of semiconductors, and has spent more money buying them than oil. In 2021, China bought a record $414 billion worth of chips, or more than 16% of the value of its total imports, according to government statistics.

    But some Western suppliers have already started preparing to halt sales to China in response to the US export curbs.

    ASM International

    (ASMIY)    , the Dutch semiconductor equipment supplier, said Wednesday that it expected the export restrictions will affect more than 40% of its sales in China. The country accounted for 16% of ASML’s equipment sales in the first nine months of this year.

    Lam Researc

    (LRCX)    h, which supplies semiconductor equipment and services, also flagged last week that it could lose between $2 billion and $2.5 billion in annual revenue in 2023 as a result of the US export curbs.

    The party congress, which recently wrapped up, has slowed China’s response to latest US export controls, analysts said. But as Beijing starts assessing the significance of the measures, it might retaliate. Xi is “concerned” about US plans to bolster domestic chip production as his administration moves to restrict China’s ability to make them, said US President Joe Biden in a speech on Thursday.

    “This conflict is just beginning,” said Chamorro.

    Chamorro said the most valuable “card” in China’s hand might be the supply of processed rare earth minerals, which Beijing could embargo. Rare earth minerals are important materials in electric vehicle production, battery making and renewable energy systems.

    “These are not easily or quickly replaced and China dominates the processing and supply chain,” Chamorro said.

    The Biden administration, meanwhile, is also weighing further restrictions on other technology exports to China, a senior US Commerce Department official said Thursday, according to the New York Times.

    If either country takes these steps, it could shift the tech arms race between the United States and China to a whole new level.

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