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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

    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

    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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  • 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.

    Stuart Lau

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  • Ahead of Xi meeting, Biden calls out China

    Ahead of Xi meeting, Biden calls out China

    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.

    Jonathan Lemire

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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

    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

    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.”

    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

    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

    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. 

    Sergei Kuznetsov

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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


    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

    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

    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


    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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  • World leaders grieve deadly Halloween crowd surge in Seoul

    World leaders grieve deadly Halloween crowd surge in Seoul

    HONG KONG — World leaders expressed sadness and condolences after at least 151 people were killed in a crowd surge Saturday night in Seoul, South Korea.

    The tragedy occurred in Seoul’s Itaewon district during Halloween festivities when a huge crowd surged into a narrow downhill alley. At least 82 others were injured in the South Korea’s deadliest accident in years.

    U.S. President Joe Biden and first lady Jill Biden sent their “deepest condolences” to the families of the deceased.

    “We grieve with the people of the Republic of Korea and wish for a quick recovery to all those who were injured,” said President Biden in a tweet. “The United States stands with the Republic of Korea during this tragic time.”

    Similarly, British Prime Minister Rishi Sunak described the news from Seoul as “horrific” on Twitter.

    “All our thoughts are with those currently responding and all South Koreans at this very distressing time,” Sunak wrote.

    Itaewon’s international character was shaped by its proximity to a U.S. military garrison nearby. The area is still home to restaurants, bars and other businesses catering to the American community in Seoul.

    U.S. Forces Korea, which commands the sizable American military presence in the country, expressed its condolences in a Facebook post.

    “The Itaewon community has opened its arms to us for many years and is part of the reason our Alliance is so strong,” the command said, writing in English and Korean. “During this time of grief, we will be there for you just as you have been there for us.”

    Pope Francis invited the crowd in St. Peter’s Square to pray for the victims.

    “We pray the Risen Lord also for those — especially young people — who died last night in Seoul, due to the tragic consequences of a sudden crush,” Francis said after his Sunday’s Angelus prayer.

    Leaders from countries including Japan, France, China and Singapore reacted with shock and sadness over the tragedy in Seoul.

    “I’m hugely shocked and deeply saddened by the extremely tragic accident in Itaewon, Seoul, that took many precious lives, including those of young people with their future ahead of them,” Japanese Prime Minister Fumio Kishida said in a tweet.

    In France, President Emmanuel Macron — who tweeted in both French and in Korean — offered support to Seoul residents and South Korea.

    “France is with you,” he said.

    Canadian Prime Minister Justin Trudeau echoed similar sentiments on Twitter, sending his “deepest condolences” to the people of South Korea “and wishing a fast and full recovery to those who were injured.”

    Italy’s Prime Minister Giorgia Meloni tweeted: “Our thoughts are with the victims of the tragedy that occurred in Seoul and with their families. Italy is close to the Korean people at this time of great pain and deep sadness.”

    Chinese President Xi Jinping also sent his condolences to South Korean President Yoon Suk Yeol, expressing shock over the accident in Seoul, according to a statement by the Chinese foreign ministry.

    Hong Kong leader John Lee, in a statement on Facebook, hoped for swift recoveries for those injured in the crush.

    “I express profound sorrow over the passing of the victims, extend my deepest condolences to their families and wish for a speedy recovery to all those who were injured,” said Lee.

    Prince William and his wife Kate also sent a message of condolence. The heir to the British throne said on social media: “Catherine and I send all our love and prayers to the parents, families and loved ones of those tragically lost in Seoul yesterday evening.”

    German Foreign Minister Annalena Baerbock said she was “heartbroken” by the tragic news from Seoul.

    “They were looking for a night of lighthearted Halloween festivities but instead found real horror and death,” said Baerbock. “My thoughts are with the victims, their friends and families, and those who still fear for their loved ones.”

    “This is a sad day for South Korea. Germany stands by their side,” German Chancellor Olaf Scholz said in a tweet.

    Singapore’s President Halimah Yacob described the loss of lives as “tragic” and said it was “hard to imagine” the trauma and grief experienced by the families, loved ones and friends of those affected.

    “My thoughts and prayers are with the people of South Korea during this difficult time, and I wish a quick and full recovery to all those who are injured,” she said.

    ———

    Associated Press journalists from around the world contributed to this report.

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  • China accused of using overseas bases to target dissidents

    China accused of using overseas bases to target dissidents

    THE HAGUE, Netherlands — China has reportedly established dozens of “overseas police stations” in nations around the world that activists fear could be used to track and harass dissidents as part of Beijing’s crackdown on corruption.

    Information about the outposts underscored concerns about the ruling Chinese Communist Party’s influence over its citizens abroad, sometimes in ways deemed illegal by other countries, as well as the undermining of democratic institutions and the the theft of economic and political secrets by bodies affiliated with the one-party state.

    Spanish-based non-government group Safeguard Defenders published a report last month, called “110 Overseas. Chinese Transnational Policing Gone Wild,” that focused on the foreign stations.

    Laura Harth, a campaign director with the group, told The Associated Press that China has set up at least 54 overseas police service stations.

    “One of the aims of these campaigns, obviously, as it is to crack down on dissent, is to silence people,” Harth said. “So people are afraid. People that are being targeted, that have family members back in China, are afraid to speak out.”

    Chinese Foreign Ministry spokesperson Mao Ning said Thursday that Beijing wasn’t doing anything wrong. “Chinese public security authorities strictly observe the international law and fully respect the judicial sovereignty of other countries,” Mao said.

    Many of the facilities appeared to have links to the Fuzhou and Qingtian areas, where many overseas Chinese originate.

    The Irish government said it told China to close a Fuzhou Police Overseas Service Station operating in Dublin. The Department of Foreign Affairs said Chinese authorities did not make an advance request to set up the office.

    “Actions of all foreign states on Irish territory must be in compliance with international law and domestic law requirements,” the Irish government said, noting why it had told the Chinese Embassy that the office “should close and cease operations.”

    “The Chinese Embassy has now stated that the activities of the office have ceased,” it said.

    The Dutch government said this week it was looking into whether two such police stations — one a virtual office in Amsterdam and the other at a physical address in Rotterdam — were established in the Netherlands.

    “We are investigating the activities of these so-called police centers. Once there is more clarity on the matter, we will decide on appropriate action,” the Dutch Ministry of Foreign Affairs said in a statement sent to the AP. “We have not been informed about these centers via diplomatic channels.”

    Another Chinese Foreign Ministry spokesperson, Wang Wenbin, described the foreign outposts identified by Safeguard Defenders as service stations for Chinese people who are abroad and in need of help with, for instance, renewing their driver’s licenses.

    Wang added that China also has cracked down on what he called transnational crimes but said the operation was conducted in line with international law.

    In its report, Safeguard Defenders reproduced Chinese media accounts about people suspected of alleged crimes in China being interrogated by video link from some of the locations in other countries that Beijing allegedly did not declare to other governments.

    In one instance, according to the group, a Chinese man accused of environmental crimes was persuaded in 2020 to return from Madrid to Qingtian, in Zhejiang province, where he turned himself in to authorities.

    Visits by The Associated Press to some of the locations identified by Safeguard Defenders in Rome, Madrid and Barcelona found, respectively, a massage parlor, the Spanish headquarters of an association of citizens from Qingtian and a firm providing legal translation services. There was no indication of police stations or other activity directly related to the Chinese government.

    A worker at the Barcelona translation company confirmed to the AP that a Fuzhou Police Overseas Service Station operated on the premises for a few weeks this year in a test-drive capacity.

    The employee, who spoke on the condition of anonymity because they were not authorized to speak to journalists, the press, said the police service center offered document renewal services to Fuzhou citizens living in the Barcelona region who could not return to China due to pandemic travel restrictions and the high cost of flights.

    According to Safeguard Defenders, China claims 230,000 suspects of fraud were “persuaded to return” to China from April 2021 to July 2022.

    “These operations eschew official bilateral police and judicial cooperation and violate the international rule of law, and may violate the territorial integrity of third countries involved in setting up a parallel policing mechanism using illegal methods,” its report said.

    The European Union’s executive arm said Thursday it was up to member countries to investigate such allegations since it would be a matter of national sovereignty.

    A Hungarian opposition lawmaker claimed this month to have discovered two sites in Budapest where Chinese overseas police stations operated without the knowledge of the country’s Interior Ministry.

    The lawmaker, Marton Tompos, said one of the two locations in Hungary’s capital had a sign that said Qingtian Overseas Police Station. Tompos said he was unable to contact anyone affiliated with the sites and that when he visited again days later, the sign had been removed.

    The Hungarian Interior Ministry did not immediately respond to AP questions on the matter.

    Three informal Chinese police stations are operating in Portugal, Safeguard Defenders reported. Portuguese authorities did not immediately reply to AP questions about the claim.

    A Portuguese TV report said one of the venues, located in an industrial complex in northern Portugal, appeared to be a car shop operated by a Chinese man. The man denied any connection with the Chinese government, though broadcaster S.I.C. Noticias showed him in a video promoting the Beijing Winter Olympics and said he heads a local association that helps Chinese immigrants.

    In Tanzania, both police and the Chinese Embassy have denied the presence of a Chinese-run police station in the country’s commercial hub and former capital, Dar es Salaam, after the BBC reported on it last week.

    “You are fabricating stories,” the embassy tweeted, calling the report an example of disinformation aimed at dividing China-Africa relations. A police spokesman sent the AP a copy of China’s denial in response to questions Thursday.

    In Lesotho, a kingdom in southern Africa, national police Senior Superintendent Mpiti Mopeli also denied the existence of any Chinese law enforcement activities. He said such operations would be illegal as any form of policing in Lesotho is conducted by local authorities.

    Over his decade in power, Chinese President Xi Jinping has pushed a relentless anti-corruption drive that has seen tens of millions of Communist Party cadres investigated and expanded overseas via a pair of campaigns known as Sky Net and Fox Hunt. Both are tasked with locating allegedly corrupt officials who have fled abroad and convincing them to return to China with their stolen state assets.

    Since China began opening up in the 1980s, corruption has been a major problem among those enjoying access to state funds and resources with few safeguards in place, and cash was often squirreled away abroad, particularly in the U.S. and other countries without extradition treaties with China.

    ———

    Herbert Moyo in Maseru, Lesotho, Cara Anna in Nairobi, Kenya, Francesco Sportelli and Maria Grazia Murru in Rome, Justin Spike in Budapest, Renata Brito in Barcelona, Aritz Parra in Madrid, Barry Hatton in Lisbon, Samuel Petrequin in Brussels, Jill Lawless in London and AP reporters in China contributed to this story.

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  • US, allies warn decisive response if North Korea tests nuke

    US, allies warn decisive response if North Korea tests nuke

    TOKYO — Officials from the United States and its Asian allies Japan and South Korea suspect North Korea is preparing for a nuclear test, and vice foreign ministers from the three countries said Wednesday their joint response would be “decisive.”

    Cho Hyundong, South Korea’s First Vice Foreign Minister, said the trio is bolstering their defense cooperation to deter the growing possibility of North Korea’s use of nuclear weapons since the adoption in September of legislation spelling out scenarios where it would use nukes, including preemptively.

    North Korea’s new nuclear policy is “creating a serious tension on the Korean Peninsula,” Cho told a joint news conference after talks with U.S. Deputy Secretary of State Wendy Sherman and Japanese Vice Foreign Minister Takeo Mori.

    “South Korea and the U.S. will step up their extended deterrence by utilizing all the elements of the national power and show an overwhelming, decisive response to any use of a nuclear weapon by North Korea,” Cho said.

    In 2022 alone, North Korea has launched more than 20 ballistic missiles at unprecedented pace, including one that overflew northern Japan in early October. It has also fired a barrage of artilleries toward the south in response to South Korea’s joint military exercises with the United States, which Pyongyang views as a practice to invade the country.

    Sherman, during her meeting with Cho on Tuesday ahead of the three-way talks, criticized North Korea’s military actions as “irresponsible, dangerous and destabilizing” and said the United States will fully use its military capabilities, including nuclear, as she warned North Korea against escalating its provocations.

    Sherman stressed again Wednesday that the cooperation among the three countries are “ironclad,” citing signs of Japan and South Korea improving their troubled ties over historical wartime-related disputes.

    “There is so much we can achieve and are achieving when our countries work together,” Sherman said.

    It was the second in-person meeting of the three officials since conservative South Korean President Yoon Suk Yeol took office in May, signaling an improvement in difficult ties between Tokyo and Seoul. A year ago in Washington, Japanese and South Korean vice ministers declined to participate in a joint news conference after their talks, leaving Sherman to make a solo media appearance.

    The three officials also condemned Russia’s nuclear threat, as well as any other escalation of threats, and its unsubstantiated allegation that Ukraine was preparing to launch a so-called dirty bomb — which uses explosives to scatter radioactive waste — as unacceptable.

    Mori said the three officials also agreed to closely watch China’s maritime activity in the East and South China Seas and the situation in the Taiwan Strait under Chinese President Xi Jinping’s third term.

    ———

    Follow AP’s coverage of the Asia-Pacific region at https://apnews.com/hub/asia-pacific

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  • The awkward lunch: Macron prepares to snub Scholz in Paris

    The awkward lunch: Macron prepares to snub Scholz in Paris

    BERLIN/PARIS — Relations are now so icy between Emmanuel Macron and Olaf Scholz, the leaders of the EU’s two economic powerhouses, that they are even struggling to agree on whether to be seen together in front of the press.

    As the French president and German chancellor prepared for a tête-à-tête in Paris on Wednesday, Berlin announced that they would make a joint appearance in front of the cameras, which is normally the driest of routine diplomatic courtesies after bilateral meetings.

    But on Tuesday evening, a statement from the French Elysée Palace contradicted the German announcement, saying there was no press conference planned.

    If confirmed, it would be quite a snub for Scholz, who’s traveling with an entire press corps to Paris, and from there continuing to Athens for another state visit. Denying a press conference to a visiting leader is a political tactic that’s generally applied to deliver a rebuke, as was recently done by Scholz when Hungarian Prime Minister Viktor Orbán visited Berlin.

    “Presumably, there has so far been a lack of contact and exchange between the respective new government teams of Scholz and Macron,” said Sandra Weeser from Germany’s liberal Free Democratic Party, who sits on the board of the Franco-German Parliamentary Assembly. “So, we are certainly also at the beginning of new interpersonal political relations, for which trust must first be built.”

    The tussle over a media show is just the latest episode of a deepening row between the EU’s two biggest powers.

    In recent weeks, Scholz and Macron have clashed over how to tackle the energy crisis, how to overcome Europe’s impotence on defense and the best approach to dealing with China.

    Last week, those tensions spilled into public when a planned Franco-German Cabinet meeting in the French town of Fontainebleau was postponed to January amid major differences on the text of a joint declaration, as well as conflicting holiday plans of some German ministers. Disagreement between the two governments was also broadly visible at last week’s EU summit in Brussels.

    As Scholz and Macron meet in Paris on Wednesday for a “working lunch,” which has been hastily set up as a downgraded replacement for the scrapped Cabinet meeting, politicians and officials across Europe will be closely watching to see whether the bloc’s two heavyweights can find a way back to much-needed unity. The war in Ukraine and the inflation and energy crisis have strained European alliances, just when they are most needed.

    French officials complain that Berlin isn’t sufficiently treating them as a close partner. For example, the French claim they weren’t briefed in advance of Germany’s domestic €200 billion energy price relief package — and they have made sure their counterparts in Berlin are aware of their frustration.

    “In my talks with French parliamentarians, it has become clear that people in Paris want more and closer coordination with Germany,” said Chantal Kopf, a lawmaker from the Greens, one of the three parties in Germany’s ruling coalition, and a board member of the Franco-German Parliamentary Assembly.

    “So far, this cooperation has always worked well in times of crisis — think, for example, of the recovery fund during the coronavirus crisis — and now the French also rightly want the responses to the current energy crisis, or how to deal with China, to be closely coordinated,” Kopf said.

    Late last month, Paris felt snubbed by Berlin when German Chancellor Olaf Scholz found no time to speak to French Prime Minister Elisabeth Borne | Jens Schlueter/AFP via Getty Images

    A similar conclusion is being drawn by Weeser from the FDP, another coalition partner in the Berlin government. “Paris is irritated by Germany’s go-it-alone on the gas price brake and the lack of support for joint European defense technology projects,” she said. At the same time, she accused the French government of having until recently dragged its feet on a new pipeline connection between the Iberian peninsula and Northern Europe.

    Unprecedented tensions

    Most recently, the French government was irritated by the news that Scholz plans to visit Beijing next week to meet Xi Jinping in what would be the first visit by a foreign leader since the Chinese president got a norm-breaking third term. Germany and China also plan their own show when it comes to planned government consultations in January.

    The thinking at the Elysée is that it would have been better if Macron and Scholz had visited China together — and preferably a bit later rather than straight after China’s Communist Party congress where Xi secured another mandate. According to one French official, a visit shortly after the congress would “legitimize” Xi’s third term and be “too politically costly.”

    Germany and France’s uncoordinated approach to China contrasts with Xi’s last visit to Europe in 2019 when he was welcomed by Macron, who had also invited former Chancellor Angela Merkel and former European Commission President Jean-Claude Juncker to Paris to show European unity.

    Macron has refrained from directly criticizing a controversial Hamburg port deal with Chinese company Cosco, which Scholz is pushing ahead of his Beijing trip. But the French president last week questioned the wisdom of letting China invest in “essential infrastructure” and warned that Europe had been “naive” toward Chinese purchases in the past “because we thought Europe was an open supermarket.”

    Jean-Louis Thiériot, vice president of the defense committee in the French National Assembly, said Germany was increasingly focusing on defense in Eastern Europe at the expense of joint German-French projects. For example, Berlin inked a deal with 13 NATO members, many of them on the Northern and Eastern European flank, to jointly acquire an air and missile defense shield — much to the annoyance of France.

    “The situation is unprecedented,” Thiériot said. “Tensions are now getting worse and quickly. In the last couple of months, Germany decided to end work on the [Franco-German] Tiger helicopter, dropped joint navy patrols … And the signature of the air defense shield is a deathblow [to the defense relationship],” he said.

    Germany’s massive investment through a €100 billion military upgrade fund, as well as Scholz’s commitment to the NATO goal of putting 2 percent of GDP toward defense spending, will likely raise the annual defense budget to above €80 billion and means Berlin will be on course to outgun France’s €44 billion defense budget.

    Sick note

    Last week’s suspension of the joint Franco-German Cabinet meeting wasn’t by far the first clash between Berlin and Paris when it comes to high-level meetings.

    Back in August, the question was whether Scholz and Macron would meet in Ludwigsburg on September 9 for the 60th anniversary of a famous speech by former French President Charles de Gaulle in the palatial southwestern German town. But despite the highly symbolic nature of that ceremony, the leaders’ meeting never happened — with officials presenting conflicting accounts of why that was the case, from appointment conflicts to alleged disagreements over who should shoulder the costs.

    French President Emmanuel Macron has refrained from directly criticizing a controversial Hamburg port deal with Chinese company Cosco | Pool photo by Aurelien Morissard/AFP via Getty Images

    Late last month, Paris felt snubbed by Berlin when Scholz found no time to speak to French Prime Minister Elisabeth Borne: A meeting between both leaders in Berlin had been canceled because the chancellor had tested positive for coronavirus. But several French officials told POLITICO that a subsequently arranged videoconference was also canceled, allegedly because the Germans told Borne’s office that Scholz felt too sick.

    Paris was even more surprised — and annoyed — when Scholz then appeared the same day via video at a press conference, in which he didn’t seem to be quite so sick, but instead confidently announced his €200 billion energy relief package. The French say they weren’t even briefed beforehand. A German spokesperson could not be reached for a comment on the incident.

    Yannick Bury, a lawmaker from Germany’s center-right opposition who focuses on Franco-German relations, said Scholz must use his visit to Paris to start rebuilding ties with Macron. “It’s important that France receives a clear signal that Germany has a great interest in a close and trusting exchange,” Bury said. “Trust has been broken.”

    Hans von der Burchard and Clea Caulcutt

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  • Taiwan’s Tsai says no backing down to Chinese aggression

    Taiwan’s Tsai says no backing down to Chinese aggression

    TAIPEI, Taiwan — Taiwan won’t back down in the face of “aggressive threats” from China, the president of the self-governing island democracy Tsai Ing-wen said Tuesday, comparing growing pressure from Beijing to Russia’s invasion of Ukraine.

    Tsai’s comments follow the conclusion of the twice-a-decade congress of China’s Communist Party at which it upped its long-standing threat to annex the island it considers its own territory by force if necessary.

    The party added a line into its constitution on “resolutely opposing and deterring” Taiwan’s independence “resolutely implementing the policy of ‘one country, two systems,'” the formula by which it plans to govern the island in future.

    The blueprint has already been put in place in the former British colony of Hong Kong, which has seen its democratic system, civil liberties and judicial independence decimated.

    Speaking to an international gathering of pro-democracy activists in Taipei, Tsai said democracies and liberal societies were facing the greatest host of challenges since the Cold War.

    “Russia’s unprovoked invasion of Ukraine is a prime example. It shows an authoritarian regime will do whatever it takes to achieve expansionism,” Tsai said.

    “The people of Taiwan are all too familiar with such aggression. In recent years, Taiwan has been confronted by increasingly aggressive threats from China,” she said, listing military intimidation, cyber attacks and economic coercion among them.

    The rising Chinese threat has spurred calls on Taiwan for additional defense investments and a lengthening of the term of national service required of all Taiwanese men.

    “However, even under constant threats, the people of Taiwan have never shied away from the challenges” and have fought to work against authoritarian forces looking to undermine their democratic way of life, Tsai said.

    Tsai was speaking at the opening ceremony of the World Movement for Democracy’s Steering Committee, which is chaired by 2021 Nobel Peace Prize laureate Maria Ressa.

    Taiwan and China split amid civil war in 1949 and Taipei enjoys strong U.S. military and political support, despite the lack of formal military ties.

    Despite having just 14 official diplomatic allies, Taiwan has drawn increasing backing from major nations, including Japan, Australia, the U.S., Canada and across Europe.

    A recent visit by U.S. House Speaker Nancy Pelosi enraged Beijing, which responded with military exercises seen as a rehearsal of a blockade of the island.

    On Monday, Tsai met with a German parliamentary delegation focusing on human rights, who expressed concern about how Taiwan would handle threats from China.

    “Taiwan is really facing military threats,” delegation head Peter Heidt said. “From Germany’s point of view, changes to the cross-strait status quo, if any, must be based on peaceful means. Also, these changes must be made after both sides have reached a consensus.”

    Also on Tuesday, Taiwanese Premier You Si-kun was meeting with Ukrainian lawmaker Kira Rudik and Lithuanian politician Zygimantas Pavilionis. Taiwan has strongly condemned the Russian invasion and at least one Taiwanese citizen is reportedly fighting with Ukrainian forces.

    The Ukrainian conflict has focused new attention on if and when China might launch military action against Taiwan, given that a solid majority of Taiwanese reject Beijing’s calls for “peaceful reunification.”

    A full-scale invasion across the 160-kilometer (100-mile) -wide Taiwan Strait remains a daunting prospect for China despite its recent massive military expansion, especially in its naval and missile forces.

    However, Chinese leader Xi Jinping’s securing of another five-year term in office has some observers speculating he may be looking to move up the schedule for bringing Taiwan under China’s control.

    Among personnel changes at China’s congress that concluded Saturday, Gen. He Weidong was elevated to second vice chairman of the Central Military Commission. He was formerly head of the Eastern Theater Command, which would be primarily responsible for operations against Taiwan should hostilities break out.

    ———

    Follow AP’s coverage of the Asia-Pacific region at https://apnews.com/hub/asia-pacific

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  • China’s yuan tumbles to all-time low amid fears about Xi’s third term | CNN Business

    China’s yuan tumbles to all-time low amid fears about Xi’s third term | CNN Business


    Hong Kong
    CNN Business
     — 

    China’s yuan tumbled to an all-time low on international markets on Tuesday, as investors fled Chinese assets amid fears about Xi Jinping’s shocking move to tighten his grip on power at a major leadership reshuffle.

    In trading outside of mainland China, the yuan briefly plunged to around 7.36 per dollar early Tuesday, the lowest level on record, according Refinitiv, which has data going back to 2010. It then pared losses, trading at 7.33 by 1 pm Hong Kong time.

    On the tightly managed domestic market, the yuan also dropped sharply on Tuesday, hitting the weakest level in nearly 15 years.

    The declines came alongside a historic market rout for Chinese assets worldwide. On Monday, Chinese stocks plummeted in Hong Kong and New York, wiping out billions of dollars in their market value. Hong Kong’s benchmark Hang Seng

    (HSI)     Index closed down 6.4%. The Nasdaq Golden Dragon China Index also dived more than 14%. On Tuesday, the Hang Seng

    (HSI)     rebounded slightly, up 0.8% by noon.

    The huge sell-offs came just days after the ruling Communist Party unveiled its new leadership for the next five years. In addition to securing an unprecedented third term as party chief, Xi packed his new leadership team with staunch loyalists.

    A number of senior officials who have backed market reforms and opening up the economy were missing from the new top team, stirring concerns about the future direction of the country and its relations with the United States.

    International investors spooked by the outcome of the Communist Party’s leadership reshuffle dumped Chinese assets despite the release of stronger-than-expected GDP data. They’re worried that Xi’s tightening grip on power will lead to the continuation of Beijing’s existing policies and further dent the economy.

    China’s leadership reshuffle “sparked worries about the continuation of market-unfavourable policies and increasing risk of policy mistakes under President Xi’s power domination in coming years,” said Ken Cheung, chief Asian forex strategist at Mizuho Bank.

    “Foreign investors took action to cut their exposure on Chinese assets,” he said, adding that the Chinese currency was faced with mounting capital outflow pressure.

    The Chinese yuan, together with other major global currencies, has weakened rapidly against the dollar in recent months. The greenback has surged to the highest level in two decades against a basket of major counterparts, boosted by a hawkish Fed that attempts to contain runaway inflation.

    So far this year, the yuan has slumped more than 15% against the dollar, on track to log its worst year since 1994 — when China devalued its currency by 33% overnight as part of market reforms.

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