China’s factory activity accelerates at solid pace in September on boost from overseas demand

By Gabriel Crossley


BEIJING (Reuters) – China’s factory activity expanded at a faster pace in September helped by a return to exports growth after several months of shrinking sales, bolstering a steady recovery for the economy as it rebounds from the coronavirus shock.

The official manufacturing Purchasing Manager’s Index (PMI) rose to 51.5 in September from 51.0 in August, data from the National Bureau of Statistics (NBS) showed on Wednesday, and remained above the 50-point mark that separates growth from contraction.

Analysts had expected it to pick up slightly to 51.2.

A private survey, also released on the day, painted a similar picture of the manufacturing sector gaining momentum backed by stronger overseas demand.

China’s vast industrial sector is steadily returning to the levels seen before the pandemic paralysed huge swathes of the economy, as pent-up demand, stimulus-driven infrastructure expansion and surprisingly resilient exports propel a recovery.

The official PMI, which largely focuses on big and state-owned firms, also showed the sub-index for new export orders stood at 50.8 in September, improving from 49.1 a month earlier and snapping eight months of declines.

The signs of stronger overseas demand were also highlighted in the Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI), which focuses more on small and export-oriented firms. Its gauge for new export orders rose at the fastest pace in over three years.


The higher official PMI for both manufacturing and non-manufacturing suggested China’s growth recovery is on track,” Nomura analysts said in emailed comments.

Recently, economic indicators ranging from trade to producer prices have all suggested a further pick up in the industrial sector. Profits at China’s industrial firms extended robust growth in August to the fourth month, official data showed on Sunday.

Domestic demand also shows signs of broadening, with industrial output accelerating the most in eight months in August and retail sales growing for the first time this year.

The official PMI also showed activity in China’s services sector expanded at a faster pace in September, as demand across the economy continues to recover from the coronavirus-induced slump.


Yet, even as China emerges from the pandemic in fairly stable shape, many expect the road ahead to be bumpy.


Although overall manufacturing demand has improved, the industry has recovered unevenly,” said Zhao Qinghe, an official at the NBS, in comments accompanying the data, noting weaknesses in demand for clothing and wood processing manufacturing in particular.

In addition, the global epidemic has not yet been fully and effectively controlled, and there are still uncertain factors in China’s imports and exports,” he said.

A sub-index for employment in the official PMI improved slightly but remained in contractionary territory. It stood at 49.6 in September from 49.4 the month before, indicating the pressure on jobs and keeping policymakers primed for more support measures.

Moreover, a growing rift between China and the United States over trade, technology and a range of other issues have analysts warning about risks to the outlook. Tensions between the two countries are expected to escalate further ahead of the U.S. Presidential election in November, which some China observers say could undercut the recovery.

China’s economy, which grew 3.2% in the second quarter year-on-year, is set to expand 2.2% this year – the weakest in over three decades.

Reporting by Gabriel Crossley and Colin Qian; Editing by Shri Navaratnam

Source: Reuters “China’s factory activity accelerates at solid pace in September on boost from overseas demand”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

China must prepare for ‘long tech march’ following U.S. restrictions on SMIC: Global Times

By Reuters Staff


SHANGHAI (Reuters) – China must engage in a new “long march” in the technology sector now that the U.S. has imposed export restrictions on Semiconductor Manufacturing International Corp, the country’s largest chip manufacturer, Chinese state-backed tabloid the Global Times wrote on Sunday.

The unnamed author of an op-ed in the paper here argues that the U.S’ dominance of the global semiconductor industry supply chain is a “fundamental threat” to China.

It now appears that China will need to control all research and production chains of the semiconductor industry, and rid itself of being dependent on the U.S.,” the author wrote.

On Saturday, Reuters reported that the U.S. had sent letters to companies informing them that they must obtain a license to supply SMIC.

The letter stated that SMIC and its subsidiaries “may pose an unacceptable risk of diversion to a military end use.” SMIC has denied any ties to China’s military.

The restrictions against SMIC, and earlier ones against Huawei Technologies Co Ltd, the op-ed author argues, illustrate that the U.S is leading a protracted battle of “high-tech suppression” against China.

Although companies such as Tencent Holdings Ltd and Beijing ByteDance Co Ltd have made some tech breakthroughs, they are based on U.S. chip technology, the op-ed argues.

The foundation of the entire industry is still in Americans’ hands. For now at least. China must leap from zero to one to provide solid support for the country’s competition with the U.S.,” the author wrote.

The Global Times is a tabloid published by the People’s Daily, the official newspaper of China’s ruling Communist Party, but does not speak on behalf of the party and government, unlike its parent publication.

Reporting by Josh Horwitz. Editing by Gerry Doyle

Source: Reuters “China must prepare for ‘long tech march’ following U.S. restrictions on SMIC: Global Times”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

Beijing Ramps Up Investment Push In Pakistan, Afghanistan, Despite Risks

September 28, 2020 13:13 GMT
In addition to a growing array of projects, CPEC will grant Beijing access to the Gwadar port in southern Pakistan, which is close to the Strait of Hormuz -- the world's most vital route for shipping oil.
In addition to a growing array of projects, CPEC will grant Beijing access to the Gwadar port in southern Pakistan, which is close to the Strait of Hormuz — the world’s most vital route for shipping oil.

The enhanced footprint for Beijing in the region comes amid a flurry of activity this summer centered around breathing new life into the China-Pakistan Economic Corridor (CPEC), an estimated $62 billion bundle of projects that forms the cornerstone of China’s sweeping Belt and Road Initiative (BRI), which aims to build infrastructure, expand trade links, and deepen ties across Eurasia and Africa.

“The Chinese want to do business, they don’t want to be fighting wars,” Ayesha Siddiqa, a research associate at London’s School of Oriental and African Studies, told RFE/RL. “They want to control the region financially and benefit from that.”

But while China’s renewed push in the region shows the parties’ willingness to move forward, Beijing faces tremendous obstacles as it tries to navigate the notoriously troubled political situations in Afghanistan and Pakistan.

The problems include the uncertain peace talks between the Afghan government and the Taliban in Doha and a series of corruption scandals within CPEC.

Building up Pakistan's port of Gwadar is a key element of China's massive infrastructure project. (file photo)


Senior U.S. Official Warns Pakistan Of Economic Dangers Of China’s Infrastructure Plan

Meanwhile, Chinese BRI projects increasingly find themselves to be the target of Baluch and Sindhi separatist groups in Pakistan.

“This is China’s neighborhood, it isn’t some far-off area. So, there is a strong interest for Beijing to be involved,” Rafaello Pantucci, a senior associate fellow at London’s Royal United Services Institute, told RFE/RL. “But this region has long-standing issues and there is a reason why international donors aren’t there. China now finds itself increasingly embroiled in these difficulties.”

A Busy Summer

CPEC forms the backbone of China’s presence in Pakistan and the recent spate of new deals marks a new phase in its development after years of delays and implementation problems that slowed down the pace of the initiative.

In June and July, Beijing inked $11 billion worth of deals with Islamabad, agreeing to finance two hydropower projects in the Pakistan-administered Kashmir region and an upgrade for the country’s railways — the most expensive Chinese project to date in Pakistan.

Chinese President Xi Jinping (right) meets with Pakistani Prime Minister Imran Khan at the Great Hall of the People in Beijing in November 2018.
Chinese President Xi Jinping (right) meets with Pakistani Prime Minister Imran Khan at the Great Hall of the People in Beijing in November 2018.

Beijing has also made moves to extend CPEC to Afghanistan, with experts saying China is looking to stabilize the country and improve its political and economic links to the country as U.S. troops look to leave Afghanistan, potentially by May 2021.

In August, China began pushing Pakistan to open key border crossings with Afghanistan to allow bilateral and transit trade that remain closed due to security concerns and Kabul recently signed a $2.2 billion contract to help export Afghan pine nuts to global markets.

The daily Financial Times also reported this month that Beijing has proposed “sizeable investments in energy and infrastructure projects” and offered to build a road network for the Taliban in hopes of ensuring a peaceful transition if there is a withdrawal of U.S. forces from Afghanistan.

Kick-Starting The Restart

While Pakistani Prime Minister Imran Khan’s government worries about the long-term implications of becoming dependent on China, proponents hope the CPEC will give Pakistan the infrastructure boost needed to kick-start its economy at a time when Islamabad is struggling to attract international investors.

In addition to a growing array of projects, CPEC will grant Beijing access to the Gwadar port in southern Pakistan, which is close to the Strait of Hormuz — the world’s most vital route for shipping oil.

But the Chinese-financed project has also become embroiled in Pakistan’s own tense domestic politics, with the country’s influential military and civilian government jostling for control of the lucrative initiative.

The Pakistani military has so far managed to wrestle greater control through the creation of the CPEC Authority last year, a government body authorized to oversee BRI projects in Pakistan. Under a proposed law put forward this month by supporters of the army, the government would cede further ground to the military, granting it wide-ranging autonomy to implement CPEC with limited oversight.

According to Siddiqa, an expert on the Pakistani military, Beijing prefers to partner with the army as they are seen as more reliable and can guarantee the timely completion of projects that elected officials have failed to deliver.

Moreover, Siddiqa says military control helps ease concerns within the Pakistani elite that strategic territory could be given to China under the guise of CPEC. “Contracts with China by the previous government were drawn up in a very nontransparent way and it made the military nervous,” she said. “It’s not just about what kind of a share the military will get, it’s about how much is being conceded to Beijing.”

Navigating Pushback

But while CPEC has new momentum and Beijing is looking to extend it to Afghanistan, the project faces new obstacles from various forces inside Pakistan.

In August, a report was published alleging that Asim Saleem Bajwa, the retired general who heads the CPEC Authority and also serves as special assistant to Khan, used his influential position to help his family amass huge wealth.

The report led to a backlash on social media and calls for his resignation along with a further investigation. Bajwa offered his resignation as special assistant to the prime minister — which was later rejected by Khan — and has stayed on as chairman of the CPEC Authority.

Lieutenant General Asim Bajwa, then the military's top spokesman, speaks during a news conference in Rawalpindi in September 2016.


Exposé On Former General’s Vast Wealth Spurs Debate About Military Privilege In Pakistan

There are several other developments inside Pakistan that could greatly slow down China’s ambitions in the country.

The Tehrik-e Taliban, Pakistan’s leading Taliban group, which operates out of Afghanistan, has announced the reunification of various splintered factions, leading some analysts to believe that Pakistan’s internal security problems could threaten BRI projects.

Similarly, Baluch and Sindhi separatist groups in Pakistan announced an alliance in July aimed at attacking CPEC and Chinese interests in the country.

That development is likely to increase the security costs for BRI projects in Pakistan.

Baluch insurgents claiming to be aided by Sindhi separatists attacked Pakistan’s stock exchange in June and, in 2018, three gunmen tried to enter the Chinese Consulate in Karachi before being killed in a shoot-out. The attack was later claimed by the Balochistan Liberation Army, a separatist group.

“Sindh and Balochistan are equally affected by the ‘expansionist’ and ‘oppressive’ resolve of China,” said a statement from the Baloch Raji Ajoi Sangar, a merger of several Baluch separatist groups, and the Sindudesh Revolutionary Army, another separatist organization. “Through [CPEC], China aims to subjugate Sindh and Balochistan and occupy the coasts and resources from Badin to Gwadar.”

“Increasingly, China risks becoming a target in the region,” Abdul Basit, an expert on South Asian insurgent groups at Nanyang Technological University in Singapore, told RFE/RL. “But China has the support of the Pakistani military and its own channels in the region, so these types of threats are unlikely to stop Beijing from [pursuing] its goals.”

Source: Radio Free Europe “Beijing Ramps Up Investment Push In Pakistan, Afghanistan, Despite Risks”

Note: This is National Interest’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.

Gwadar to be linked with the rest of the country through a railway line after ML-1: Asim Bajwa

September 29, 2020


Chairman CPEC Authority Lt Gen (r) Asim Saleem Bajwa has hinted at the prospects of increasing connectivity between Gwadar and the rest of the country under CPEC. He said that after completion of Main Line-1 (ML-1), Gwadar will be connected with the rest of the country through a railway line to reap the benefits of CPEC. Moreover, this increased connectivity will also alter the socio-economic fate of the country. He gave this statement in his latest interview with a Youtube channel.

Chairman CPEC Authority Lt Gen (r) Asim Saleem Bajwa has said that a number of companies from Gulf region were interested to establish industrial units in the Gwadar Free Zone.

There has been a lot of progress on free zone in the city that spanned over an area of 2400 acres where not only local and Chinese investors but those from Gulf area were also keen to set up their industries,” he said in his recent interview with a Youtube channel.

He said there had been great progress on the city and the port and recently “we started construction of Gwadar airport with support of the Chinese government who granted $230 million for the project”, he added.

With respect to the planned Oil City in Gwadar, he informed that about 30 kms away from the city near Pasni, an area was being designated for an oil refinery and oil storage.

The Chairman pointed out that after completion of the Main Line one (ML-1) railway up-gradation project, the Gwadar port city would be linked with the rest of the country through railway line.

A new railway line would be laid from Quetta to Gwadar to link the port city with rest of the country and beyond,” Asim Bajwa said.

Further he said the railway line up to Iran would also be up-graded to enhance scope of the mega project.

Bajwa who is also Special Assistant to Prime Minister on Information and Broadcasting pointed out that the biggest ever project that was being executed under CPEC was the ML-1 project.

All initial processes have been completed, its evaluation has been done, and estimation has also been reviewed,” he termed the $6.8 billion project a historical one for logistic infrastructure in Pakistan as every business was going to become viable so far as freight traffic through railways was concerned.

Besides he said the ML-1 project would also bring revolution in the passenger movement from Karachi to Peshawar as the travel time from Lahore to Karachi would be reduced to only 8 hours.

To a question, Bajwa said the 1870 kilometers ML-1 project was a huge initiative that was scheduled to be completed over a period of 7-9 years in phases.

However, he said as many projects under CPEC had already been completed before time so this project could also be done before the settled time period.

When asked about establishment of CPEC Authority, the Chairman said when the government realized that the scope of CPEC project was not expanding, then it decided to establish the Authority to ensure that all works are done at one window.

He said since so many ministries, departments, provinces and federating units were involved in the mega project, a forum was direly needed to be established that would provide one window facility to the foreign investors.

To another query, the Chairman said “Basically the emphasis of CPEC is more on the implementation of projects but we also do planning, monitoring and evaluation of the projects”.

Whatever we plan for CPEC project is in consensus with the overall master planning of the country which is done by the Planning Commission of Pakistan, so it becomes easier for all of us to coordinate”.

He said after the establishment of the Authority, the work of various projects under CPEC had been streamlined as it helped removing so many hiccups in the projects.

Asim Bajwa pointed out that in energy sector an amount of $8 billion had already been executed whereas more energy projects worth $9.5 billion were under execution.

In communication sector he said $4 billion were already invested whereas another over $3 billion investment was going to be executed soon.

To another query, Bajwa said “We are at the peak of our engagements with the Chinese government and we are entering into second phase CPEC project”.

He informed that the government was fully focused on the development of Balochistan and progress on Western rout of CPEC project was moving fast.

He said motorway from Islamabad to D.I. Khan was almost completed while the project from DI Khan to Zhob would be taken up in the meeting of Joint Coordination Committee of CPEC next month for approval.

Similarly, he said from Zhob to Quetta, groundbreaking of the road project had already been done, the money had been allocated and the land had also been acquired.

In Azad Kashmir he said, the government had recently concluded two hydro power projects, Azad Pattan (701 MW) and Kohala hydro power project (1120 MW) that would bring foreign investment of $4 billion.

Soruce: “Gwadar to be linked with the rest of the country through a railway line after ML-1: Asim Bajwa”

Note: This is’s I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

5 charts show how much the U.S. and Chinese economies depend on each other

  • President Donald Trump has repeatedly raised the possibility of divorcing the U.S. and Chinese economies.
  • But various data suggest that such a process may be challenging as the two economies have grown more connected over the years.
  • The U.S. and China have been major trading partners for years, and they rely on each other’s supply chain for input into goods and services consumed within their borders.
President Donald Trump (L) shakes hand with Chinese President Xi Jinping at the end of a press conference at the Great Hall of the People in Beijing on November 9, 2017.
President Donald Trump (L) shakes hand with Chinese President Xi Jinping at the end of a press conference at the Great Hall of the People in Beijing on November 9, 2017.
Fred Dufour | AFP | Getty Images

SINGAPORE — As the rivalry between the U.S. and China intensifies, investors and analysts are increasingly worried that the two economies will grow more distant from each other — a development that would make it harder for companies to operate on the international stage.

There have been signs that the world’s two top economies have started to go their separate ways, some observers said.

In recent months, Washington began targeting several major Chinese technology companies — such as smartphone-maker Huawei and short-video sharing app TikTok’s owner ByteDance —  making it more difficult for them to do business in the U.S.

Beijing is also expected to place foreign firms on a blacklist that it’s developing, known as the “unreliable entity list.”

U.S. President Donald Trump has repeatedly raised the possibility of divorcing the two economies.

However, various data sets suggest the process may be quite challenging — at least for now — as the two countries have grown more connected over the last decade.

U.S.-China trade

A large part of the relationship between the U.S. and China is centered on trade, with the two countries having been each other’s major trading partner for years.


Chart of U.S.-China merchandize goods trade from Q1 1999 to Q2 2020

Those ties suffered somewhat following a tariff fight that erupted in 2018, but bilateral trade of goods and services still totaled a substantial $636.8 billion last year, according to data by the Bureau of Economic Analysis.

The trading relationship is an uneven one. In merchandize goods trade, the U.S. imports way more from China than it exports to the Asian country; but the reverse is seen in services trade, in which China buys more from the U.S. than the amount it sells, BEA data showed.

Despite touting separation of the two countries, or what some have referred to as “decoupling,” Trump has sought to push China to purchase more U.S. agricultural products to appease American farmers who are seen as a crucial voting bloc for him in the upcoming presidential election in November.


Chart of U.S.-China services trade from Q1 1999 to Q2 2020

Both countries also tried to address their large goods trade imbalance by having China to agree to import more from the U.S. in the so-called phase one trade deal signed earlier this year.

But experts said trade between the two countries will likely deteriorate further this year as relations worsen and the coronavirus pandemic hit global economic activity.

Supply chain linkages

Beyond direct trade, the U.S. and China have also become “increasingly interdependent through rising supply-chain linkages over the past decade,” Fitch Ratings said in a report last month.

Supply chains are a complex network of companies that work together to provide raw materials, intermediate parts or expertise in order to produce a final product or service that can be consumed either domestically or globally.


Chart of sources of value added in goods and services consumed in the U.S.

It’s hard to gather accurate data that breaks down specific supply chain contributions by each company. However, the OECD — or the Organisation for Economic Co-operation and Development — launched a database in 2013 that provides some insight into how global supply chains work.

Latest available estimates by the OECD showed that in 2015, foreign input accounted for 12.2% — or around $2.2 trillion — of total goods and services consumed in the U.S. China was the largest contributing country of that foreign input, the data showed.

Some manufacturers within the U.S. were especially reliant on China for intermediate input or final products, said Fitch, citing the OECD data. Those include American producers of textiles, electronics, basic metals and machinery, the agency said.


Chart of sources of value added in goods and services consumed in China.

In China, foreign suppliers made up around 14.2%, or $1.4 trillion, of total goods and services consumed within its borders in 2015, according to OECD data. The U.S. was also the largest single contributing country to that foreign input, the estimates showed.

In contrast with U.S. reliance on Chinese input in the manufacturing sector, China is “much more” dependent on American contribution in services, said Fitch.

Investment flows

While trade and supply chain inter-dependency may be difficult to unravel, investment flows between the U.S. and China have dropped as bilateral tensions escalate.

Over the last three years, the total value of foreign direct investment and venture capital deals between the countries have been falling, according to data by Rhodium Group.


Chart of U.S.-China FDI and VC investment flows from 2020 to 2020 (Jan-June)

A “notable trend is the drop in Chinese acquisitions of US technology assets,” the company said in its latest report this month. Meanwhile, U.S. investments in China have been relatively “more resilient,” it added.

Many U.S. businesses operating in China said they’re not yet looking to move out, noted Fitch.

The ratings agency cited a survey conducted last year by the American Chamber of Commerce in China, in which 83% of respondents said they’re not considering relocating manufacturing or sourcing outside China. That proportion of companies intending to remain in China has risen compared to past surveys, from 80% in 2018 and 77% in 2017, said Fitch.

Source: CNBC “5 charts show how much the U.S. and Chinese economies depend on each other”

Note: This is CNBC’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.

China’s President Xi says Xinjiang policies ‘completely correct’ amid growing international criticism

This CNN report precisely proves what this reblogger said about Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era meaning China can say no.

By Isaac Yee and James Griffiths, CNN

Updated 0326 GMT (1126 HKT) September 28, 2020

Hong Kong (CNN)Chinese President Xi Jinping believes his policies in the far-western region of Xinjiang are “completely correct,” despite growing international criticism of alleged human rights abuses and mass internment.

Up to 2 million Uyghurs, a predominantly Muslim ethnic group, as well as other minorities, are believed to have passed through detention centers in the region in recent years, according to the US State Department, where they have allegedly been subject to political indoctrination and abuse under the guise of de-radicalization efforts.

Speaking at a two-day work conference on Xinjiang that ended on Saturday, Xi said that China’s Xinjiang strategy was correct “and must be adhered to in the long term.”

“The whole party must treat the implementation of the Xinjiang strategy as a political task, and work hard to implement it completely and accurately to ensure that the Xinjiang work always maintains in the correct political direction,” Xi added, according to state media.

“We must also continue the direction of Sinicizing Islam to achieve the healthy development of religion,” Xi said. The Chinese leader added that “it is necessary to tell the story of Xinjiang in a multi-level, all-round, and three-dimensional manner, and confidently propagate the excellent social stability of Xinjiang.”

Even before the mass detention policy, Muslims in Xinjiang faced growing restrictions on practicing their religion, from limits on wearing the veil or growing beards, to pressure not to fast during Ramadan.

Xi claimed current policies in Xinjiang have brought “unprecedented achievements” in economic growth, social development, and improvement in peoples’ livelihoods. He added that “the sense of gain, happiness, and security among the people of all ethnic groups has continued to increase.”

His remarks come amid rising condemnation from Western nations including the United States over alleged human rights abuses in the region. Last week, the US House of Representatives overwhelmingly approved a bill called the “Uyghur Forced Labor Prevention Act,” which aims to prohibit certain imports from Xinjiang and impose sanctions on those responsible for human rights violations in the region.

Speaking at the United Nations General Assembly this month, French President Emmanuel Macron called for an official investigation into Xinjiang.

Growing international pressure comes as many human rights groups have begun describing the situation in Xinjiang as a genocide, amid reports of mass sterilization of Uyghur women as part of state-driven efforts to push demographic change. Last week, Chinese authorities confirmed there had been a drop in birth rates in Xinjiang since 2018, but denied this was the result of sterilizations.

The Xinjiang government said in a statement to CNN that the birth rate in the region had dropped from 15.88 per 1,000 people in 2017 to 10.69 per 1,000 people in 2018. The statement said that the drop was due to “the comprehensive implementation of the family planning policy.”

Former internees who spoke to CNN testified to receiving or being aware of forced sterilizations. Numerous other witnesses have spoken about widespread abuse and forced indoctrination in the camps.

Source: CNN “China’s President Xi says Xinjiang policies ‘completely correct’ amid growing international criticism”

Note: This is CNN’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

South China Sea: Manila and Beijing agreed to shelve dispute, ambassador says – despite Duterte’s vow to uphold ruling

  • Presidents Xi and Duterte had already reached a ‘consensus’ to ‘put aside’ their competing maritime claims, said Chinese envoy to Manila Huang Xilian

  • His comments came just days after Duterte vowed to uphold a 2016 arbitration ruling, and led one retired judge to say the president had been ‘taken for a ride’

Raissa Robles

Published: 8:36pm, 28 Sep, 2020

Philippine President Rodrigo Duterte pictured with Chinese President Xi Jinping at the Great Hall of the People in Beijing last April. Photo: AP

China and the Philippines have agreed to shelve their dispute over the South China Sea, according to the Chinese ambassador to Manila – who spoke mere days after Philippine President Rodrigo Duterte won praise from critics for vowing before the United Nations General Assembly to uphold a 2016 arbitration award that had invalidated many of Beijing’s controversial maritime claims.

Source: Excerpts from SCMP’s report “South China Sea: Manila and Beijing agreed to shelve dispute, ambassador says – despite Duterte’s vow to uphold ruling”, full tex of which can be found at

Note: These are excerpts of SCMP’s ’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

US restrictions on SMIC to force China to quicken self-reliance of microchips

By GT staff reporters Source: Global Times Published: 2020/9/27 17:00:38

Self-developed main control chips developed by a company based in Shanghai are showcased in April. Photo: VCG

The US’ reported sanctions on the Semiconductor Manufacturing International Corp (SMIC) could not only deal a heavy blow to the Chinese chipmaker, but will also force the whole country, from the policymakers to industry players, to find out an effective way to grow a completely self-reliant industrial chain, even if it means huge losses in the short term, industry analysts said.

They noted that a ban could also be seen as the Trump administration’s latest and short-sighted struggle in an effort to gain political benefit, and may end up affecting enterprises across the world along the industrial chain, and will likely draw a “collective fight-back” that will threaten its dominance in the global high-tech sector.

The US has imposed restrictions on exports to China’s biggest chip maker SMIC after concluding there is an “unacceptable risk” the equipment supplied to it could be used for military purposes, Reuters said, citing a letter seen by it from the US Commerce Department dated Friday.

The Financial Times also reported that the US has imposed sanctions on SMIC, citing a letter the US Department of Commerce sent to related companies.

Following the move, companies must obtain export licenses before shipping crucial US software and equipment to SMIC, which experts say could cripple SMIC’s operations.

The Pentagon earlier this month said it was working with other agencies to determine whether to blacklist SMIC for the alleged links to China’s military, Reuters reported.

The Global Times had not found the document on the department’s official website as of press time on Sunday.

In a statement sent to the Global Times on Saturday, SMIC said that it has not received any official notification about the US sanctions, reiterating that SMIC only provides products and services for civilian and commercial end-users. “SMIC has no relationship with the Chinese military and does not manufacture for any military users,” the statement said.

“It’s highly likely that the Trump administration is mulling the ban, as it’s their last chance to play the card ahead of the US presidential election,” Xiang Ligang, a veteran industry analyst, told the Global Times on Sunday.

The Trump administration is applying pressure in a desperate attempt to score political points ahead of the US Presidential election in November as the administration has found that the crackdown on Chinese firms including Huawei, WeChat and TikTok has not generated a “big windfall,” Ma Jihua, an industry analyst, told the Global Times.

If SMIC is restricted as reported, most of its business will freeze as the company cooperates with US partners across all of its industrial chain. For example, SMIC buys chips for terminals from Qualcomm, according to Ma.

Unlike Huawei, which has stockpiled chips ahead of the September 15 ban, the Chinese chipmaker has not prepared for the situation. The impact on its business could be broad, analysts warned, noting that the move clearly demonstrates that strangling China’s high-tech sector will be a long-term strategy of the US government.

“The US chip ban on Huawei has already acted as a ‘wake-up’ call to China’s high-tech sector, and the move on SMIC will only accelerate the company’s efforts to become self-reliant,” Jiang Junmu, chief writer at Chinese telecom industry news website, told the Global Times on Sunday.

It now appears that China needs to have a fighting spirit to master the entire chain of research and production in the semiconductor industry in order to get rid of the US bullying, though it will require time and huge costs, analysts said.

Xiang noted that unlike the Huawei ban, restrictions on the Chinese chipmaker could have a more subtle impact – if SMIC’s operations came to a halt, all its customers, which are spread cross the whole world, will also find nowhere to produce chips.

According to a South China Morning Post report, citing Bloomberg data, China was the country of origin for 13 of SMIC’s 38 biggest customers, or 34 percent of the total as of August 14, making up about a fifth of the chip producer’s revenue. The second-biggest group of customers are based in Taiwan, at 26 percent. The US is in third place with US-based customers making nine of the top 38, or 24 percent, while South Korea is in fourth place.

Observers warned that China’s highly anticipated “unreliable entity list” will be released soon if Washington imposes sanctions on SMIC.

Ma predicted that Cisco— a major competitor of Huawei and SMIC – could be put onto the list. US tech firm Oracle could also be listed.

“The US has to be aware that the harder the US crackdown on China, the more resolution will China’s high-tech sector become – history has already proved the ‘China spirit,'” Xiang said.

Source: Global Times “US restrictions on SMIC to force China to quicken self-reliance of microchips”

Note: This is Global Times’ article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.

China’s industrial profits grow for fourth straight month

By Reuters Staff


SHANGHAI (Reuters) – Profits at China’s industrial firms grew for the fourth straight month in August, buoyed in part by a rebound in commodities prices and equipment manufacturing, the statistics bureau said on Sunday.

China’s recovery has been gaining momentum as pent-up demand, government stimulus and surprisingly resilient exports propel a rebound.

Industrial firm profits grew 19.1% year-on-year in August to 612.81 billion yuan ($89.8 billion), the statistics bureau said.

That compares with a 19.6% increase in July and is the fourth straight month of profit growth.

However, industrial firms’ profits still face external pressures as rising tensions between Washington and Beijing cloud the global trade outlook.

Raw material manufacturing profits increased by 32.5% in August, up from 14.7% in July, according to Zhu Hong, an official at the statistics bureau. This was driven in part by a rebound in the prices of international commodities such as crude oil and iron ore, he added.

Meanwhile, profits of the general equipment manufacturing sector notched up 37% in August on-year, with electrical machinery up by 13.3% over the same period.

Economic indicators in August, ranging from exports to producer prices and factory output, all pointed to a further pickup in the industrial sector.

However, factory activity grew at a slower pace with smaller firms facing sluggish market demand and financial strains.

The country has introduced a slew of measures to kick-start the economy, from tax and fee reductions to grace periods for the calling in of debt.

China’s economy may stagnate if it fails to rise up the value chain, as it faces increasing competition from countries with advanced technologies and lower labour costs, economists warned.

Authorities have pledged to boost investment in strategic industries including core tech sectors such as 5G, artificial intelligence and semiconductors, and accelerate new material development to ensure stable supply chains.

For January-August, industrial firms’ profits fell 4.4% from a year earlier to 3.72 trillion yuan, better than the 8.1% decrease in the first seven months.

Liabilities at industrial firms rose 6.6% on-year at end-August, edging higher than the 6.5% at end-July.

Earnings at state-owned industrial firms were down 17% on an annual basis for the first eight months of the year, versus a 23.5% decline in the first seven months.

Private-sector profits fell 3.3% in January-August, narrowing from January-July’s 5.3% fall.

Reporting by Luoyan Liu and Engen Tham in Shanghai; Editing by William Mallard and Stephen Coates

Source: Reuters “China’s industrial profits grow for fourth straight month”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

Chinese Navy Crafts Unmanned Sea Hunter Knock-off

By: H I Sutton

September 25, 2020 11:07 AM

Chinese Navy USV

A candid photograph posted on Chinese social media sheds light on a Chinese project to develop an unmanned ship similar to the U.S. Navy’s Sea Hunter. The trimaran is remarkably similar to the Sea Hunter in almost every respect.

Although the designation of the project is unknown, based on imagery analysis, the builder and dimensions have been established.

The uncrewed Sea Hunter has been designed under the Continuous Trail Unmanned Vessel (ACTUV) program. The uncrewed surface vessel’s (USV) primary mission is to track quiet diesel-electric submarines. It is designed to “lock on” to a submarine and trail it continuously.

Platforms of this size and with this autonomy may have additional capabilities. But the inference is that China may seek the same capability as the Navy’s Sea Hunter.

Due to their higher speed, nuclear-powered submarines could out-run the USV, so the U.S. Navy’s own submarine should be largely immune. But other countries in China’s area of interest — notably Japan, Australia and India — all have diesel-electric submarines.

HI Sutton Image, used with permission

Compared to the Sea Hunter, the Chinese vessel is slightly longer (based on measurements in satellite images) and wider, so it may have a higher displacement. It is narrower overall, however due to the closer placed trimaran outriggers.

The Chinese vessel has been built by Jiang Tongfang New Shipbuilding Co., Ltd. In Jiujiang City, Jiangxi. Based on historic satellite imagery, the vessel was launched before August 30, 2019. The yard, on the banks of the Yangtze River, is 760 km (470 miles) from the sea. It is unclear whether it is an official Chinese government-funded program or a private venture. Jiang Tongfang New Shipbuilding is known to build government vessels but is not generally associated with the Chinese Navy (PLAN).

Chinese firms have already unveiled several USVs. These include armed models such as the Tianxing-1 unveiled at the 2017 China Marine Economy Expo in Zhanjiang. That uses a RIB (rigid inflatable boat) hull and is armed with a machine gun, likely of 12.7 mm. And more recently the Chinese unveiled the JARI catamaran, which is armed with a 30mm canon, surface-to-air missiles and two anti-submarine torpedoes. But both these drone vessels are a fraction of the size of the new trimaran USV.

PLA KJ-600

The main benefit of the increased size should be range and seakeeping. The U.S. Navy’s Sea Hunter is almost identical in size and boasts ‘transoceanic’ ranges.

While Chinese defense manufacturers have a reputation for copying, this vessel is unusual in the degree to which it appears based on an American design. But it is not alone in that respect. China’s new KJ-600 carrier-borne airborne early warning and control (AEW&C) aircraft is a dead ringer of the E-2 Hawkeye family.

Only one prototype of the Chinese “Sea Hunter” drone is known and it appears to still be at the shipyard. More details may emerge, especially if it is a government or export project.

A version of this post originally appeared on Naval News. It’s been republished here with permission.

Source: USNI News “Chinese Navy Crafts Unmanned Sea Hunter Knock-off”

Note: This is USNI News’ article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.