Xiaomi is said to have designed its own 3nm chip – Asia Times

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Xiaomi Inc, a Beijing-based smartphone maker, is said to have “taped out” its first 3 nanometer system-on-chip ( SoC ) processor, which is to be mass produced in the first half of 2025.

Tapeout is a term used in the semiconductor industry to describe the long-awaited point in the development operation when the final design files are kept in storage and sent for processing. It was used in the days of reel-to-reel electrical tape.

Tang Jianguo, the chief economist of Beijing Municipal Bureau of Economy and Information Technology, made the disclosure of the data on Xiaomi’s 3nm chip on Beijing Satellite TV on October 20. &nbsp,

Xiaomi’s success in chip design would be a historic milestone for China, according to Chinese media, as it would be the first 3nm device to be created by a Chinese company if the reports were accurate.

There has been no information regarding the 3nm chipset’s central processing unit ( CPU) cluster, graphic processing unit ( GPU) or architecture. &nbsp,

In an article published on Monday, a technology columnist using the pseudonym” Uncle Biao” claims that it is likely that Taiwan Semiconductor Manufacturing Co ( TSMC) will manufacture the new 3nm chip in conjunction with Xiaomi and Taiwan’s MediaTek. &nbsp,

Wccftech.com, a United States-based IT tool site, says it is possible that Xiaomi may become sanctioned by the United States due to its discovery in designing 3nm cards. &nbsp,

According to the article, if Xiaomi has successfully achieved the tapeout reputation for its 3nm soc, it means that another Chinese companies, including Huawei Technologies, who has been sanctioned, can also use this processor in their products. &nbsp,

Wccftech.com reported in August that Xiaomi may release a system-on-chip computer in the first quarter of 2025, the device to be mass produced via TSMC’s N4P method, which can enhance a chip’s performance, power efficiency and transistor density. &nbsp,

US trade handles

Chinese companies have been prohibited from using the US Commerce Department’s Bureau of Industry and Security ( BIS ) since August 15, 2022, because it has blocked access to the country’s electronic computer-aided design (ECAD ) software, which is used by the military and aerospace defense industries for designing complex integrated circuits in a variety of applications.

Chinese analysts said at that time that the new US trade handles of electronic design automation (EDA) software would not have an immediate impact on China, which did not design 3nm chips. 

In a report released in October 2022, Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies ( CSIS), stated that one of the four choke points being used to stifle the Chinese chip design industry is America’s dominance of the EDA software market. &nbsp,

Other obstacles included the United States ‘ export ban on high-end AI chips, chip-making tools, and related parts to China. &nbsp,

The three leading players in the semiconductor EDA industry are Mentor Graphics, Cadence Design Systems, and Synopsys. Despite the fact that Mentor is a division of Siemens in Europe, all three have their headquarters in the US and employ the majority of their employees there. &nbsp,

A 10-year excursion

How Xiaomi gained admittance to American EDA program is a mystery. But most critics believe that the company’s chip-design systems primarily came from MediaTek. &nbsp,

In November 2014, Pinecore, a fabless chipmaker in which Xiaomi is reported to have a 51 % stake and Leadcore Technology a 49 % stake, said it decided to acquire a chip-making package called SDR1860 from Leadcore for 103 million yuan ( US$ 14.5 million ). Leadcore is a cooperative venture between MediaTek and China’s Datang Telecom Technology. &nbsp,

In 2017, Xiaomi launched its first laptop device called S1, which is an octa-core SoC. It was fabricated on TSMC’s 28nm high-performance compact plus ( 28HPC ) technology, which features high performance and low power advantages. Nevertheless, the S1 device was later found to have a major burning problem.

Xiaomi attempted to introduce a new S2 chipset in 2020, but the tape-out approach was unsuccessful and the device was unable to be used.

Xiaomi’s founder and CEO Lei Jun once said that chip design is a high-risk activity that you end up costing nothing after a lot of money. &nbsp, &nbsp,

A journalist from Yunnan, China, claims in an article published in August this year that it is important for Xiaomi to create its own chips because Qualcomm’s Chipset processors are becoming more expensive. He says the start of a fresh SoC next month is only one of Xiaomi’s techniques to try to reach self-sufficiency. &nbsp,

With a global market share of 39 %, MediaTek maintained its position as the top laptop computer manufacturer in the first quarter of this year. It shipped 1.14 billion bits, up 17 % year-on-year, during the time, according to Canalys, a global technology industry analyst. &nbsp,

Xiaomi, Samsung, and OPPO were the top three contributors, representing 23 %, 20 %, and 17 % of MediaTek’s smartphone processor shipments, respectively.

For comparison, Qualcomm’s smartphone processor shipments grew by 11 % to reach 75 million units in the first quarter, with 46 % of the shipments coming from Samsung and Xiaomi. &nbsp,

Read more: US examines whether TSMC actually cut relations with Huawei.

Observe Jeff Pao on X: &nbsp, @jeffpao3

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Investors welcome China’s rate cuts but want fiscal catalyst – Asia Times

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One of the most drastic interventions by the People’s Bank of China ( PBOC ) in recent years is China’s slashing of its key lending rates on Monday. &nbsp,

The one-year loan prime rate ( LPR ) was reduced by 25 basis points to 3.1 %, and the five-year LPR, widely used as the benchmark for mortgages, fell by a similar margin to 3.6 %. &nbsp,

For global investors, this news could n’t come at a better time. The second-largest economy in the world has experienced slow growth, mostly as a result of a combination of negative pressures, deflationary pressures, and weak consumer demand.

These rate reduces underscore the necessity of Chinese politicians ‘ efforts to revive a growth trend that has been sluggish for decades. &nbsp,

For traders, this is a pleasant walk. Lower borrowing costs should help businesses and households, bringing in new liquidity and regaining the economic speed that has been severely lacking. &nbsp,

However, while monetary easing will undoubtedly be a powerful lever, it’s increasingly clear that a more potent fiscal response – especially targeting households – will be the key to achieving the country’s year-end target of 5 % GDP growth.

Ripple result

When China’s central bank makes a decisive move to boost its economy, international markets typically sigh a collective sigh of relief. &nbsp,

Many global investors have been watching China’s financial challenges with growing suspicion, and the PBOC’s price reductions may include a rippling effect, boosting optimism among them. &nbsp,

Lower interest rates are anticipated to encourage customer saving and investment in vital businesses, creating a more positive environment for Chinese stocks and bonds.

These actions may also ease worries about China’s troubled property market, which is a major boon for the world economy. &nbsp,

A more affordable payment climate could assist property developers in need and, in turn, stabilize a market that accounts for almost 30 % of China’s GDP. If the new PBOC cuts manage to recover some trust in this field, it could have a significant impact on all major financial markets, starting from commodities to equities.

Moreover, with China being the largest consumer of raw materials and an engine of global demand, a treatment in its property market may possibly result to a broad-based protest in goods, boosting industry worldwide.

Good but inadequate?

However, investors are aware that monetary policy alone may only bring about positive outcomes despite the quick praise these cuts will bring. &nbsp,

Lower interest rates will ease the economic burden on businesses and individuals, but they do little to tackle the deeper structural issues that China faces because they are multidimensional.

Consumer confidence in China is also small, hurt by the continuous property slump and worries about deflation. &nbsp,

Companies, too, have been anxious to ramp up purchase, given the weak demand. This implies that despite the advantages of monetary easing, lower rates may not produce the solid consumption or investment required to ignite a meaningful recovery.

The difficulty lies in the fact that many of the problems that are stifling China’s market are demand-side in nature. &nbsp,

It’s not that consumers and businesses ca n’t borrow – it’s that they’re hesitant to spend and invest. &nbsp,

Fiscal policy must be complemented by striking fiscal measures designed to stimulate consumption and investment in order for China’s growth engine to really revive it.

A significant fiscal response that gives households the cash they need is what China desperately needs right then. &nbsp,

A massive, targeted fiscal item, whether through tax breaks, subsidies or direct cash transfers, did go a long way toward reigniting need.

Additionally, a fiscal push intended to boost household incomes may help to offset the problem of rising living costs and stagnant wages, which have been significant factors in the diminished consumer sentiment. &nbsp,

Households are more likely to invest, especially on enclosure, with more disposable income, which would help relieve pressures on the property field.

China may help create a much stronger recovery, one that will last a long time, by combining fiscal stimulus with the most recent wave of economic easing. &nbsp,

Beijing may increase its chances of meeting its 5 % GDP growth target for 2024 by doing so, as well as comfort the world’s confidence that it has the resources and the will to combat its economic downturn.

deVere Group was founded by Nigel Green as its CEO.

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The Prabowo era is born in Indonesia – Asia Times

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JAKARTA – Prabowo Subianto has been inaugurated as Indonesia’s seventh leader, marking the end of both cheerful President Joko Widodo’s ten years in office and Prabowo’s personal multi-decade search for the best work.

In his inaugural address to Indonesia’s parliament, Prabowo urged lawmakers and the country to be courageous in the face of difficulties and prioritize the needs of the Indian people over those of their own interests, including their own personal interests.

But, what can we truly expect for the next five times? On the campaign trail, Prabowo, when Widodo’s bitter enemy, vowed to be a devout heirs to his counterpart’s policies.

However, some people believe that the renowned former common will have his own plan on a number of fronts. A few key themes emerged in his inaugural address and afterwards cabinet picks, including the need for a strong international policy, an economics lean, a poverty-relief focus, and a potential shift to authoritarian rule.

European legislation

” In facing the global world, Indonesia chooses a free and effective way, non-aligned”, declared Prabowo, speaking to congress. ” So, we want to be associates with all nations, but we have principles, especially anti-colonialism because we have experienced conquest”.

In light of this, he continued to appoint Indonesia’s support for Arab independence, which the parliament greeted with loud cheers.

Indonesia’s theory of non-alignment paired loosely with a Fourth Worldist arrangement is regular fare, suggesting consistency with Widodo, and, indeed, the plans that have guided Indonesia since 1998. However, there are also indications that Prabowo may flame his own road.

Widodo generally let the foreign ministry run its own for ten years, leaving little interest in foreign affairs aside from their economic impact. Jokowi, however, takes a little closer individual interest and will probably seem to perform an active part on the world stage.

This is reflected in the recently appointed foreign secretary, Sugiono, a somewhat little-known secretary to Prabowo. In choosing Sugiono, Prabowo has broken with the post-1998 law of appointing a job minister to mind the government.

Prabowo appears to want a foreign minister with few, if any, ties to the strong government civil service.

Jokowi has urged people to play the role of an honest seller in international issues in his speeches. Most notably, at the Shangri La Dialogue in 2023, he surprised many with a proposed peace prepare for the Russia-Ukraine battle.

Defense geopolitics may also increase. In his capacity as Indonesia’s defence minister from 2019 to 2024, Prabowo oversaw the expansion of Garuda Shield drills with the US and the filing of a new military assistance deal with Australia.

Considerably, his views of the Quad and AUKUS, both seen as aimed at counterbalancing China in the Indo-Pacific, are considerably more comfortable than many in the Indonesian creation.

However, this should n’t be taken as Prabowo leaning toward the US and its allies in its purest form. However, Prabowo’s first overseas visit after his election this year was to China, a representation of both China’s need to judge Indonesia and Indonesia’s needed for Chinese funding to grow its business. His China trip was finally balanced out by subsequent trips to Malaysia and Japan.

Revisionist is anticipated to adopt a careful position on the Israel-Palestine debate. Unlike some in Indonesia, he declined to condemn techniques like Australia’s shift of its embassy from Tel Aviv to Jerusalem.

The Indonesian army has long had silent ties with Israeli rivals, giving the military a more amiable outlook on the nation than many in the foreign government. Public opinion may also give Prabowo a limited amount of room to maneuver.

Governmental development

Are we conscious that Indonesians also suffer from excessive hunger? In his annual conversation, Prabowoo asked the legislature. Prabowo made the main component of his plan to be fighting poverty and its effects.

His name promises in this case include free school meals for children and diet assistance for pregnant women. Additionally, he has pledged to construct three million fresh homes.

Some investors and economists are concerned about the potential value of these programs. There have been suggestions that the school meals program alone could end up costing some 400 trillion rupiah ($ 25.8 billion ) annually.

And according to comments made by various figures in the Prabowo camp, his government would be willing to allow the national debt to rise from 39 % to 50 % right now.

But, Prabowo has moved to try and alleviate those worries. Most notable is the request to keep Indonesia’s symbolic finance secretary, Sri Mulyani Indrawati, who excelled under Widodo and his succeeding President Susilo Bambang Yudhoyono, in her position.

Her reinstatement defied expectations that Prabowo may fire her because, according to reports, the two were at odds with one another over the defence budget.

But, if tensions between Prabowo and Sri Mulyani reappear, it is questionable how they will be handled. Widodo apparently played a vital role in persuading Prabowo to maintain her on. But as Widodo’s control wanes, but does Prabowo’s patience with a strong financing minister with a penchant for fiscal prudence.

Importantly, Prabowo’s brother – Thomas Djiwandono – is also staying on as assistant finance minister, a position he was appointed to in July 2024 to help ease the transition to Prabowo’s state. This ostensibly suggests that Prabowo may ultimately want his devoted associate in the finance department.

However, making room for extra saving on social programs may require cuts elsewhere. There have already been indications that Widodo may reduce his name infrastructure spending. And the government’s willingness to commit money to Widodo’s last megaproject, the new investment Nusantara, which is being constructed from scratch in Borneo, is a question mark.

Autarky and isolationism

” Brothers and sisters, I have made the declaration that Indonesia has eat a lot of food within the shortest amount of time. We ca n’t rely on external food sources. In a crisis, in a crucial position no one will help their items for us to buy”, Prabowo told congress.

” We also have to be self-sufficient in power. In a state of tension, in a state of possible battle everyday, we have to be prepared for the worst possible outcome”, he added.

Throughout the course of Prabowo’s presidential campaign, self-sufficiency in food and fuel were important elements. Prabowo’s military service has given him a different perspective on the world than Widodo, who had an entrepreneurial background as a furniture supplier and was more favorable to the development of global trade.

Jokowi has set incredibly ambitious goals, nevertheless with serious query marks about their achievability. In his statement, he suggested Indonesia could obtain food self-sufficiency in 4-5 times. Additionally, Indonesia has plans to increase its percentage of biodiesel blended with regular fuel from 35 % to 50 % or even 60 %.

However, critical questions have been raised about the viability of these objectives. Prabowo’s push for meals property projects as defense minister was somewhat unsuccessful. In Papua, more mega-projects are undergoing intense attention in order to achieve these objectives.

Green goals may suffer as a result of the emphasis on energy independence. As sources of energy self-sufficiency, Prabowo cited volcanic, diesel and fuel. While the first has low emissions, the second may have high emissions if combined with logging to produce biodiesel fuel like sugar or hand oil. Coal, of training, is anything but natural.

Zulkifli Hasan, who has been appointed the recently appointed Coordinating Minister for Food, will be in charge of all of this. As a close social supporter of Jokowi who displayed protectionist impulses as trade minister, the pick suits Prabowo’s interests. Some may be concerned about Hasan’s uneven performance in his past post, despite the fact that it appears to be central to implementation.

However, the new secretary of trade, past civil servant Budi Santoso, is said to be linked to a certain prominent businessman with huge coal and large biodiesel interests.

It’s unknown whether these protectionist instincts will eventually manifest in other sectors of the economy. Airlangga Hartarto, the coordinator of Minister for Economic Affairs, will continue in his current capacity and may serve as a potential counterweight.

Nickel and downstreaming

” We must all have commodities downstream.” In his speech, Prabowo said that the increased economic value of all those goods must help ensure that our people can enjoy a high standard of living.

In Indonesia, the heart of “downstreaming” is the nickel industry. Indonesia is the world’s top nickel producer thanks to a combination of export bans, tax breaks, and Chinese investment. Additionally, efforts are being made and plans to incorporate this into the production of batteries and electric vehicles.

However, Luhut Panjaitan, the Coordinating Minister for Maritime Affairs and Investment ( CMA ) under Widodo, has left with him. Without direction, the policy may change, but Luhut’s centrality depended more on his personal status than his title.

Minister of Energy and Mineral Resources Bahlil Lahadalia, who is now taking the lead in the role he was given in the Widodo administration’s final months, is now the focal point. Although some have questioned how he allegedly finished his PhD dissertation on the nickel industry in just under two years while serving as minister, a title he recently obtained was recently published under his name.

Despite the PhD’s dubious origins, it could provide some indication of Bahlil’s priorities. Four flagged issues include overreliance on foreign workers, lack of opportunities for local entrepreneurs, a paucity of revenue-sharing with local governments and a lack of post-mining diversification plans.

Authoritarianism

” In the midst of such great ideals and dreams, we need an atmosphere of togetherness, unity, collaboration, not prolonged bickering”, declared Prabowo. Let us be aware that our democracy must be one that is unique to Indonesia, he continued.

While the comments may seem innocuous, they’ll put a shiver down Prabowo’s critics ‘ spines. In the past, Prabowo has criticized democracy in particular as a difficult habit to break, like smoking. He has suggested removing direct elections for president and regional leaders.

The key concept here is musyawarah, which broadly means deliberation. It is often invoked to argue Indonesia’s culture means its politics must be centered on consensus-building and not oppositional. In practice, this typically refers to a system that makes little room for criticism and dissention.

Every party that has been elected to the national parliament, aside from the Indonesian Democratic Party of Struggle ( PDI-P), is now a part of Prabowo’s governing coalition. Despite attempts to organize regional elections using nomination thresholds, the idea was pulled out due to a pending Constitutional Court ruling.

This, plus Prabowo’s tendency to blame protests on foreign agitation, has left many worried about the space for opposition under the new government.

Cabinet appointments here provide little reassurance. Attorney General ST Burhanuddin and Minister of Home Affairs Tito Karniavan, who served during Widodo’s second term when the former president increasingly used legal institutions for political purposes, will continue in their positions.

In addition, Prabowo is close to new Attorney General Supratman Andi Agtas and new State Intelligence Agency head Muhamad Herindra. New Minister of Communication and Digital Meutya Hafid, a former journalist, is a potential bright spot.

Looking ahead to Prabowo’s new era, many anticipate challenges to media freedoms, tough crackdowns on any protests, and possible changes to election rules. Constitutional changes to repeal or modify liberalizing amendments introduced post-1998, measures that effectively gave birth to Indonesia’s modern democracy, are also not inconceivable considering Prabowo’s known views.

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Now’s not the time to short the yuan – Asia Times

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As the” Trump business” returns to create fear of political upheaval great once, global hedge funds are racing to little China’s yuan money.

They are betting that Trump’s designed combination of tax and business measures will boost local rise if elected, and that China may seek to become more dynamic.

However, betting on a weaker yuan could prove to be a lot of a mistake if the last several decades of the Xi Jinping age are any link.

Let’s begin with the Trump estimate. Obviously, the November 5 US vote is a true toss-up. One time, polls suggest Kamala Harris ‘ Democrats may emerge. The second, hp emerges to telephone a Trump 2.0 White House is coming.

This year, the speed seems to be on Trump’s part. In the US$ 300 billion dollar options business, hedge funds are placing higher stakes on a weaker renminbi. Yuan uncertainty is currently at its highest level since the middle of 2022.

However, it seems as though Trump’s 2017-2021 phrase will be forgotten due to fears that he might prefer a stronger dollar. Trump was unwaveringly in favor of a lower US transfer rate to benefit American companies and stifle China.

It’s also worth remembering Trump’s abuse on the US Federal Reserve. Trump was angry that his chosen Fed chair, Jerome Powell, continued father Janet Yellen’s price hikes. He then browbeat Powell into cutting rates, adding stimulus in 2019 that the economy did n’t need.

On top of the Fed’s broken trust, the US federal debt soared under Trump and present President Joe Biden, then topping$ 35 trillion.

Include social fragmentation to the picture until January 20, 2025, when the next management will take office. Even if Trump loses, no significant journalist thinks he will go away quietly.

One of the causes of Fitch Ratings ‘ cancellation of its AAA standing on US bill, joining Standard & Poor’s, was the fallout from the uprising on January 6, 2021, which Trump fomented. The next rating agency to assess America AAA is now Moody’s Investors Service, the source of the current query.

The Beijing component of this riddle is more crucial, though. There are at least four causes why Beijing is unlikely to help the yuan to fall very little.

One, a falling yuan may make payment on onshore bill more difficult for very obliged organizations like home builders. That would boost proxy risks in Asia’s biggest market. The last thing Xi wants is to see# ChinaEvergrande trending once more in the internet.

Two, the economic easing needed to sustain the yuan’s declines — especially with the Fed cutting rates, also— could harm Xi’s deleveraging efforts. Xi’s interior group has made significant strides over the past few years in eradicating financial abuse.

This explains why Xi and Premier Li Qiang have been reluctant to permit the People’s Bank of China ( PBOC ) to cut rates more forcefully, despite China Inc.’s reputation for deflationary pressures.

Three, increasing the yuan’s global usage is probably Xi’s biggest economic transformation achievement since 2012. In&nbsp, 2016, China&nbsp, won a place for the yuan in the International Monetary Fund’s” special&nbsp, drawing&nbsp, right” box, joining the dollar, yen, euro and pound.

Since next, the stock’s apply in business and banking has soared. Increased easing then may dent trust in the yuan, slowing its headway toward reserve-currency position.

Fourth, it may produce China a more contentious and important issue during a distinctly divisive US election. Trump’s Republicans and Democrats who are close to Harris concur that they must be strong with Beijing.

Beijing’s claims that it is manipulating the renminbi lower could stoke bipartisan support in Washington. especially in light of the Trump administration’s plan to impose 60 % taxes on all products made in China.

” As well as levies, the badge of ‘ money manipulator’ may be a second red flag for an Eastern economy”, said Robert Carnell, Asia-region head of research at ING Bank.

A weaker renminbi would be used by Xi to sign a sense of anxiety and anguish. Certainly the stories Xi wants international investors to be thinking about as the year 2025 draws near.

Otherwise, Xi and Li have been ratcheting up the signal without triggering sounds of 2015, 2008 and additional past incidents of large pro-growth “bazooka” storms.

Earlier this month, Beijing cut borrowing costs, slashed businesses ‘ supply need numbers, reduced mortgage costs and unveiled market-support resources to put a floor under share costs. Bolder fiscal stimulus steps are being mulled, too.

On Thursday ( October 17 ), Team Xi raised the loan quota for unfinished housing projects to 4 trillion yuan ($ 562 billion ), nearly double the previous amount.

The bump was less than markets wanted, as evidenced by Chinese stocks falling into” correction” territory this week. The&nbsp, CSI 300 Index&nbsp, ended Tuesday down 1.1 %, bringing its declines since an October 8 high to roughly 11 %.

The bigger issue, of course, is repairing the balance sheets of giant property developers.

” They’re still trying to talk the talk, with more noise about stabilizing the property market”, said Stephen Innes, an economist at SPI Asset Management.”

As Thursday’s housing moves were” rolled on, it was clear: traders were not thrilled,” Innes said”. Let’s be honest, though – China’s property mess is n’t something that can be patched up with a few speeches and half-baked measures.”

According to Morgan Stanley economist Robin Xing, “resolving the debt issue is a crucial step in stopping a key deflationary downward spiral,” while adding that direct demand stimulus is equally crucial.

Team Xi has made several commitments over the past few years to develop a method to remove toxic assets from property developers ‘ balance sheets.

Beijing has in fact demonstrated what is required to turn things around: a bold plan to boost the finances of high-quality developers, encouraging mergers and acquisitions, promoting property investment so that more people no longer consider real estate as their only option, and establishing social safety nets to encourage households to spend more and save less.

Indeed, over the past few decades, there have been numerous crises from which to draw lessons. They include Japan’s efforts to remove toxic loans from banks ‘ balance sheets in the early 2000s, as well as the US’s use of the Troubled Asset Relief Program, or TARP, to deal with troubled assets after 2008.

More fundamentally, Xi’s reform team must step up efforts to recalibrate growth engines away from exports toward innovation and high-niche industries.

Investors should be reassured that the brutal crackdowns on tech companies have ended in 2020. China also needs to shed its adversity toward the fundamental level of economic transparency that the world’s funds demand.

But as Xi and Li understand, a weaker yuan wo n’t bring about any of these big-picture reforms. It might give China a little more time to achieve its 5 % growth goal this year, but at a cost that Chinese leaders appear unwilling to pay.

There are myriad other reasons why, in the US, one reason is to believe that the dollar’s outlook will be more red ink than black.

One of the issues with the US national debt, which is now twice the size of China’s annual gross domestic product, is that it is two times that large. However, there are a good chance that Trump will backtrack on some of the financial planning moves he made during the first, only to have them halted by economic advisers in a second term.

One was Trump considering canceling large sums of the US owed to Beijing in order to punish Xi’s economy in the midst of trade negotiations. These considerations were hardly ever out of the blue.

In May 2016, six months before he was first elected, &nbsp, Trump, a serial bankruptcy offender as a businessman, floated reneging on US debt in a&nbsp, CNBC&nbsp, interview.

” I would borrow, knowing that if the economy crashed, you could make a deal,” &nbsp, Trump&nbsp, said”. And if the economy was good, it was good. So therefore, you ca n’t lose.”

Moody’s Analytics economist Mark Zandi spoke for many when he called the idea of reneging on US debt” complete craziness” that” would be financial Armageddon.”

Trump&nbsp, 1.0 considered a dollar-to-yuan devaluation of the kind that Argentina or Vietnam might employ. In April, for example, Politico&nbsp, reported that Trump 2.0’s inner circle is” actively debating” an Argentina-like pivot at the behest of advisors like&nbsp, Robert&nbsp, Lighthizer, Trump’s former international trade representative.

Yet, instead of” America first,” such a detour might do more to advantage China in the longer run. Buenos Aires would be operating a Group of Seven economy if devaluation were a method for prosperity. Turkey and Zimbabwe would be booming. As Asia’s largest economy, Indonesia would be giving China a run for its money.

To China’s advantage, the US trying this gambit would increase inflationary pressures and expose the dollar’s status as a reserve currency.

Investors generally believe that the policies they are proposing to promote US reindustrialization, such as steep tariffs on goods imported, will tend to result in dollar strength in comparison to other currencies, according to a note from Global Analysts.

But, they added, the” likely consequences of this disconnect include a potential conflict between the White House and Fed, and a diplomatic drive to&nbsp, weaken the US dollar, possibly involving a new version of the 1985 &nbsp, Plaza&nbsp, Accord.”

Trying such a gambit in 2024 would be extraordinarily destabilizing. The odds are very low that Xi would choose to pursue it. China recalls how Japan’s acceptance of a stronger yen ravaged its economy for decades to come, aside from the Communist Party’s aversion to being pushed around.

Even so, hedge funds that are betting on a weaker yuan in the months ahead might be ignoring the bigger picture of the Xi era.

Follow William Pesek on X at @WilliamPesek

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US doubles down on Patriot to hold China, Russia at bay – Asia Times

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The US Army has halted plans to replace its Patriot missile system, opting to enhance the Patriot Advanced Capability-3 Missile Segment Enhancement ( PAC-3 MSE ) interceptor instead.

Despite being successful in battling Russian fast missiles, the PAC-3 MSE also faces challenges in retaliation for superior weapon threats and absorption attacks. The decision, announced during the Association of the US Army’s quarterly meeting, was taken due to the alternative agency’s high prices, Defense News reported.

The Integrated Air and Missile Defense ( IAMD) system, which includes the Lower Tier Air and Missile Defense Sensor ( LTAMDS ) and the Integrated Battle Command System, will continue to evolve, according to the report.

It will concentrate on improving the PAC-3 MSE to withstand future challenges, including the anticipated fast and agile nuclear weapons by 2040.

According to Defense News, the US Army is considering ensuring greater integration between the Patriot and Terminal High Altitude Systems in order to improve combat space management. This will allow the use of both interceptors in the face of superior threats.

The Missile Defense Agency ( MDA ) has already carried out some integration work in the Indo-Pacific theater, demonstrating the potential advantages of this strategy.

The Patriot weapon has a combined fight record in Ukraine, showing usefulness against Russian fast missiles&nbsp, while also exhibiting risks.

For example, The New York Times reported that six Russian Kinzhal hypersonic missiles were properly intercepted over Kiev by Ukrainian-operated Patriot weapon air defense systems in May 2023.

That victory, noted by&nbsp, Peter Mitchell in a May 2023 Modern War Institute article, perhaps plant from&nbsp, the Kinzhal’s limits. For sustained high-speed flexibility, Mitchell claims that the Kinzhal uses a solid-fuel jet engine, but the Kinzhal uses scramjet or different sophisticated propulsion systems.

Mitchell claims that the design raises questions about its ability to maintain fast speeds throughout its journey, especially during the terminal phase, making it prone to intercept.

He mentions that professional analysis suggests Kinzhal lacks the flexibility and agility needed for hypersonic weapons, referring to it as a “giant garden arrow” with explosives rather than a powerful weapon.

However, Moscow Times, an independent Russian media outlet, reported this month that Russia had targeted and struck two US-made Patriot missile launchers, a control station and a radar integral to the system with an Iskander ballistic missile in the central Dnipropetrovsk region, specifically in Pavlohrad, Ukraine.

In an article this month for Russian state media outlet TASS, Viktor Bodrov discusses how improvements in Russia’s reconnaissance-strike complex in identifying and dismantling these air defense systems, as well as Ukraine’s propensity to place them close to the front line to conceal its troops, may have led to their destruction.

The Patriot PAC-3 MSE may not be adequate defense against a lot of missiles in a saturation attack, despite having hit-to-kill capability to precisely destroy incoming missiles. Further, the Patriot PAC-3’s high cost of US$ 3.7 million per interceptor and extended production period of nearly 20 months may hinder its ability to perform in this scenario.

Jonathan Panter mentions in a Council on Foreign Relations ( CFR ) article this month that despite Israel’s support of close military allies like the US and its neutralization of Iran’s direct missile attacks in April and October 2024, the increasing sophistication and frequency of attacks may put strain on these defenses.

He makes the point that the US faces potential security conflicts because it continues to support Israel, which could have an impact on its strategic goals in other countries.

According to the Associated Press ( AP ), the US Army’s air defense forces are under strain from US Patriot missile donations to Ukraine and the recent decision to send a THAAD missile battery to Israel, which has caused delays in updating its missile systems.

These actions, according to AP, add to the strain of troop deployments because the US Army tries to ensure that troops in the continental US have enough time to rest and train. Recurrent deployments, according to the report, also make it challenging to transport these systems into depots where they can be upgraded.

In the Indo-Pacific region, where China has more missiles and technological advancements than either Russia or Iran, those issues may become even more pressing.

China operates the DF-21D” carrier killer” medium-range, road-mobile anti-ship ballistic missile, designed to target ships at sea with a range of 1, 450 to 1, 550 kilometers and an accuracy of 20 meters Circular Error Probable ( CEP ).

Due to its maneuverable warhead and precision, it is a significant threat to naval assets, particularly aircraft carriers, underscoring China’s advancing anti-access/area denial ( A2/AD ) capabilities.

Apart from the DF-21D, China also has the DF-26″ Guam killer” intermediate-range ballistic missile ( IRBM ) with a range of 4, 000 kilometers. The missile has a range of conventional and nuclear warheads, and its modular design makes it simple to swap out components quickly. As with the DF-21D, the DF-26B variant has anti-ship capability.

In conjunction with missile attacks, China may choose to use weaknesses in the&nbsp, US kill chains, and launch attacks from multiple domains such as space, cyber, and the electromagnetic spectrum in conjunction with missile attacks to defeat US missile defenses, according to Asia Times ‘ report from September 2024.

Integrating various missile defense systems, such as Patriot and THAAD, might be challenging. In August 2023, Asia Times pointed out that disjointed systems might not effectively counter an enemy in a saturation attack&nbsp, using various advanced weapons, such as drones, cruise missiles, ballistic missiles and hypersonic weapons.

Given the limitations of US missile defense systems, the US and its allies may need to adopt a different deterrence strategy, focusing on  the ability to respond to an adversary.

In line with that, Melanie Sisson asserts in a May 2022 Brookings article that the US should adopt a deterrence by punishment approach to stop China from using force against Taiwan.

Sisson points out that deterrence by denial, which aims to convince China it would lose a military conflict, is deemed costly and risky, potentially leading to immediate war with a nuclear-armed adversary.

In contrast, she says deterrence by punishment seeks to make China’s costs of aggression prohibitively high, leveraging economic sanctions, diplomatic measures and military support for Taiwan. According to her, the latter approach is more pragmatic, flexible and less likely to escalate into full-scale war.

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Commentary: Anticipating the first moves of Indonesia president-elect Prabowo

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RISK OF Ineffectual Cooperation

There have been rumors about the content of the Cabinet, which are reportedly difficult because it is believed that Prabowo’s will be much bigger than Jokowi’s.

News reports speculate that as many as 44 to 46 ministers ( and ministries ) might take office. Future presidents have now had complete control over the number of Cabinet opportunities thanks to the new Ministerial Law, which was ratified on September 20.

There are also rumors that new ministers and organizations may be established while the already existing ones will be expanded or disbanded.

New coordinating ministers mentioned include one for Society, while fresh ministers may include policy areas like Education, Research and Technology, Environment, Forestry, Creative Economy, Law, and Immigration and Penitentiary, and fresh agencies handle National Communication, Nutrition, and State Revenue.

This expansion might lead to inefficient cooperation in the Cabinet. Interestingly, any new or actually restructured state institution administrative design will require a lot of time.

The new Cabinet wo n’t be able to begin working on the programs Prabowo has promised because of this. A larger Cabinet dils plan emphasis, with officials pursuing their own goals rather than national priorities, at the substantial or technical levels.

However, Prabowo may be able to win political favors and form a more united front in parliament by appointing key political figures to his Cabinet, especially if he offers positions to the Indonesian Democratic Party of Struggle ( PDI-P). &nbsp,

Before Inauguration Day, we might be aware of the Cabinet’s content, but some fanciful reports mention a number of loyalists who might play significant roles.

The brands include Setyo Hadi, Sugiono, Rachmat Pambudi, Sjafrie Sjamsoeddin, Anggito Abimanyu, Burhanuddin Abdullah, and present Cabinet members like Pratikno, Azwar Anas, Airlangga Hartarto, Budi G Sadikin, and Erick Thohir.

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China, Russia subs surface in unison while keeping a distance – Asia Times

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China and Russia are flaunting their respective underwater skills in the Pacific while territorial disputes roil the South China Sea, the South China Sea, and a potential Taiwan combat beckons.

This month, Naval News reported that a new image of China’s Type 09IIIB nuclear-powered attack submarine ( SSN) has surfaced on Chinese social media, revealing more details about the advanced vessel. Naval News says the pictures, taken&nbsp, from a southern area, shows a refined style that improves on earlier variants.

The Type 09IIIB, produced at the Bohai shipyard in Huludao, features a vertical launch system (VLS ) and a pump-jet propulsor. The factory has the capacity to produce two to three SSNs yearly, making the submarine a part of China’s wider effort to modernize its navy.

Since 2022, the factory has launched three to six Model 09IIIBs, based on satellite imagery. In the forthcoming years, China’s Type 09IIIB submarine may be replaced by the next-generation Type 09V SSN, according to Naval News, underscoring China’s commitment to enhancing its underground war functions in the midst of rising regional conflicts.

At the same time, Naval News reported this month that Russia’s Admiralty Shipyards in Saint Petersburg launched the” Yakutsk”, the sixth and final Project 636.3 diesel-electric underwater for Russia’s Pacific Fleet. The vehicle, part of the Superior Kilo II course, is 90 % finish and will have factory trials before its first ocean voyage by year-end.

The Project 636.3 boats, known for their innovative methods and Kalibr-PL weapon features, are a current incarnation of the Soviet-era Project 877 Paltus. Naval News notes that the” Yakutsk” will meet the 19th Submarine Brigade, enhancing Russia’s naval power in the Far East.

The next shipment of six boats contracted in 2016 is now complete with this release. The Naval News report also makes a point about how significant these ships are to Russian naval activities, including their employ in Ukraine’s ongoing issue.

The continuous advancements of Chinese and Russian submarine technology are tactical moves to challenge US naval dominance in critical areas as well as displays of their particular naval modernization.

Edward Feltham mentions energy forecast and ocean power in a report for the Naval Association of Canada’s issue of an&nbsp, October 2023 issue.

Feltham notes that the People’s Liberation Army Navy ( PLAN ) has built its strategy around advanced submarines, including SSNs, conventional diesel-electric submarines ( SSKs ), and nuclear-powered ballistic missile submarines ( SSBNs ).

He claims that SSKs are used to control the waters around Taiwan, SSNs protect sea pathways and expand China’s reach into the Indian Ocean, and SSBNs provide second-strike nuclear capability, giving China flexibility when defending its territorial claims and projecting strength beyond its local waters.

As for Russia’s underwater strategy in the Pacific, Nicholas Compton mentions in his March 2021 doctoral thesis that Russia’s underwater fleet plays a key role in its Pacific strategy, mainly through proper posturing.

The Russian Navy has reportedly switched from the Soviet-era submarine fleet to more technologically advanced nuclear-powered submarines, such as the Borei SSBN and Yasen nuclear cruise missile submarine ( SSGN ) classes. In the Pacific, these boats perform a number of functions, including nuclear deterrent and energy forecast.

He claims that Russia intends to create a strong naval presence in the Pacific and Arctic parts by using modern ships to proclaim power over disputed areas and protect its interests, particularly in the resource-rich Arctic.

Moreover, he mentions Russia’s rely on hybrid war, which includes the potential use of submarines to destroy or touch undersea cables, demonstrating their versatility in conventional and unconventional operations.

China and Russia’s shared focus on the importance of superior standard and nuclear-powered submarines&nbsp, for their marine strategies in the Pacific suggests a potential for participation in underwater design, strategy and tactics.

In October 2023, China and Russia announced their partnership to create the Type 096 SSBN, a next-generation vessel, to strengthen China’s strategic ties with the US and its Pacific allies. This collaboration makes use of Russian expertise to enhance China’s stealth and operational viability of its submarines.

Russia’s proficiency in hybrid warfare, which includes using submarines to disrupt undersea infrastructure, could benefit China as it extends its influence into the Indian Ocean and beyond. China would have a strategic advantage if it had the capability to conduct unconventional naval operations.

Both nations have interests in enraging strategic maritime areas, including Russia’s Arctic and China’s Taiwan Strait. Their submarine fleets help them prevent adversaries from entering these disputed areas, while collaborative drills strengthen their capabilities to operate in these areas and extend their reach beyond their waters.

China and Russia are treading carefully due to underlying tensions over strategic autonomy and technology transfer, which prevent them from fully committing to a formal alliance despite their expanding naval cooperation.

In a June 2022 article for Trends Research &amp, Advisory, Ash Rossiter mentions that Russia is concerned about China reverse-engineering its military equipment. Russia is unsure whether China can copy its technology, undermining its arms sales, or potentially surpassing it, according to Rosenstein.

For instance, he mentions that China’s Yuan-class submarine, which was sold to Pakistan, undoubtedly had elements from Russia’s Kilo-class submarine.

He points out that this dynamic complicates China and Russia’s strategic partnership because Russia must balance the advantages of cooperation with the potential long-term drawbacks of empowering a technologically advanced China.

In a report from the China Aerospace Studies Institute ( CASI) in October 2022, Elizabeth Wishnick mentions that Chinese and Russian officials have shied away from a full-fledged alliance because they are concerned about the restrictions that a relationship might place on their strategic autonomy.

Wishnick claims that the disparate viewpoints on the benefits of a formal alliance are reinforced by this ambiguity. She points out that China emphasizes “partnerships rather than alliances” in its official documents. While Russia echoes this sentiment, Wishnick notes, it has occasionally hinted at the possibility of deeper cooperation.

She argues that China and Russia’s strategic collaboration is dynamic but cautious, with no intention to form an official alliance to protect each country’s strategic autonomy.

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Smart money’s looking beyond China stimulus debate – Asia Times

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Businesses are resonating as a result of tension between President Xi Jinping’s long-term policy objectives and investor demand for short-term signal as Chinese securities recover.

The fight between the long and short viewpoints is not novel. For years, the” Washington Consensus” group has advised Beijing to adjust its unstable economy, which free market activists see as very reliant on giant, opaque state-owned companies and the vast incentives that sustain them.

However, restless investors who appear increasingly unwilling to give Beijing the room it needs to re-enter and overhaul its US$ 17 trillion market have frequently clashed with Xi’s work to do just that.

Until then, apparently. The conflict between Team Xi and anxious industry was clearly visible over the weekend.

Unplanned press conference by Xi’s Ministry of Finance ( MOF ) on Saturday ( 12 October ) sparked a frenzy with markets anticipating a potential significant new stimulus boost to help China reach its 20 % economic growth target for 2024 and new measures to combat the country’s increasingly ingrained deflation.

Futures markets sagged when MOF focused on larger transformation designs and declined to provide a certain amount label on the hung signal. But by Monday, companies rose.

Investors came to the conclusion that the MOF’s most recent statements reflect the pragmatism markets have long-craved from Xi’s inner circle, even if Beijing is n’t using its massive stimulus “bazooka.”

The trip news, according to economist Harry Murphy Cruise at Moody’s Analytics, “tied most of the appropriate boxes, but it lacked information on the size and range of new spending,” noting that” we anticipate more supports to be announced through the remainder of the year.”

Economist Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, says,” these policies are in the right direction”.

There is still a strong argument that Chinese stock valuations are now fairly valued despite the recent rally, which was buoyant from the US$ 6.5 trillion rout dating back to 2021. In addition, Chinese shares are currently trading at significantly lower multiples than those in the US, where new market highs are being made daily.

The MOF press conference was still a surprise to us, according to economist Jing Liu from HSBC Holdings, despite the lack of significant fiscal stimulus. ” The policy pivot looks very much here to stay, with the rising risk appetite having a significant impact on both the stock and property markets.”

Odds are, though, that this is a trust-but-verify moment for markets. Bullish investors are partially reacting to Beijing’s hints of further support for the troubled housing market and highly indebted local governments with new, targeted fiscal-spending jolts.

More and more stimulus is becoming more popular. In September, Chinese exports and imports came in weaker than expected, raising new doubts about the economy’s main bright spot. Overseas shipments, for example, rose just 2.4 % year on year, a sharp fall from August’s 8.7 % increase.

According to Capital Economics ‘ economist Zichun Huang, “further ahead… growing trade barriers are likely to become an increasing constraint” on export and economic growth.

Although the move from Washington to Seoul may cause more demand to be made in some of China’s key trading partners, according to economists, political restrictions on products like electric cars and other green technologies are causing new headwinds.

However, punters are beginning to realize that Xi’s inner circle is almost blatantly focused on bringing China into the so-called Fourth Industrial Revolution by accelerating the transition from the high-end to highly-value technology-driven industries.

Team Xi is more interested in the long-term benefits of tech-driven economic reinvention and future dominance of the industries. Although annual growth targets matter in the short run.

Investors are digging deeper into Chinese stock valuations in comparison to other top global markets and recognizing new value as a result of these caveats.

In the most recent Global Risk-Reward Monitor newsletter, Asia Times business editor David Goldman argues that with a price-earnings ( P/E ) ratio of 11, China’s stock market “is a bit too low”.

But at the same time, he notes,” there is no reason to expect Chinese valuations to approach the S&amp, P ( 500’s ) valuation of 22 times ( forward ) earnings”.

One reason, he argues, is that China’s government has gone out of its way to prevent and reverse the formation of market-skewing tech monopolies like Google, Microsoft or Amazon.

” No surprise, then, that Alibaba trades at a P/E of 27 after the run-up of the past month, versus Amazon’s 43″, Goldman writes. We have long argued that given subdued but consistent economic growth, China’s equity market valuation was too low. The Chinese market’s valuation seems more reasonable than that of the United States after the rally last month.

That’s not to say Beijing is n’t cognizant of the moment’s sensitivity. In a note to clients, economists at Morgan Stanley say this moment represents” Beijing’s second chance to convince the market” after a rough several days.

However, Xi may have found the balance between acting as a facilitator and a facilitator while also showing restraint.

According to Hui Shan, an economist at Goldman Sachs,” the most recent round of China stimulus clearly indicates that policymakers have turned to cyclical policy management and increased their focus on the economy.”

China will increase by 4.9 % this year, according to the US investment bank, up from an earlier forecast of 4.7 %. For 2025, Goldman Sachs sees growth of 4.7 %, up from an earlier 4.3 % forecast.

One source of Goldman Sachs ‘ optimism: MOF officials plan to deploy 2.3 trillion yuan ($ 325 billion ) of special local government bond funds in the fourth quarter of this year.

This, Hui says, suggests a more “back-loaded” public spending plan, paving the way for a bigger rebound than his bank had previously expected.

Last week, China ‘s&nbsp, National Development and Reform Commission announced pre-approval of&nbsp, 200 billion yuan&nbsp, ($ 28.2 billion ) worth of 2025 investment projects. It is seen by Huawei’s team as a clear government effort to help China meet its 5 % GDP goal this year.

Carlos&nbsp, Casanova, economist at Union Bancaire Privée, notes that investors are taking solace in Finance Minister Lan Fo’an highlighting that officials have a “fairly large” capacity to increase spending if needed.

That includes “implementing some of the most ambitious measures in years aimed at revitalizing the struggling property market, recapitalizing large banks,” according to Casanova, “everyone of which is crucial for addressing China’s ongoing structural challenges.”

However, Casanova adds,” the timeline for fiscal measures remains uncertain. The upcoming National People’s Congress Standing Committee meeting, scheduled for late October or early November, may require significant announcements to wait until.

The MOF “has given as strong a signal as possible while waiting for the NPC approval,” according to economist Shirley Ze Yu of the London School of Economics.

Larry Hu, Macquarie Capital’s chief China economist, doubts that Xi’s policymakers will be too specific about dollar amounts.

” First, they do n’t need to come up with such a number for the NPC to approve”, Hu says. ” Second, it’s hard to come up with such a number, as the line between fiscal, monetary and industrial policies is often blurred in China”.

Hu adds that, given the global financial crisis, it would go against Xi’s deleveraging goals of supplying the economy with stimulus the way Beijing did in 2008 and 2009.

Investors will be keenly focused on Beijing’s implementation of structural reforms, according to Hui of Goldman Sachs. &nbsp,

” The’ 3D ‘ challenges – deteriorating demographics, a multi-year debt deleveraging trend and the global supply chain de-risking push — are unlikely to be reversed by the latest round of policy easing”, Hui argues.

However, Oxford University’s China Center economist George Magnus is concerned that Beijing may continue to implement outdated policies.

” A solution would involve the sustainable expansion of the income and consumer demand shares of the economy, an end to deflation risk, more income redistribution, the promotion of private enterprise, and extensive tax and local government reforms”, Magnus writes in an op-ed for The Guardian.

Magnus adds that” Xi’s more Leninist agenda emphasizes supply and production, and what he calls’ high-quality development,’ which is essentially about state- and party-led industrial policies to allocate capital to lead and dominate modern science, technology and innovation in the global system”.

” China already has and wants to expand advanced industrial expertise and leadership in some key firms and sectors,” according to Magnus. These technologically dominant islands are found in a sea of macroeconomic imbalances and issues that can only be actually addressed by more liberal and open economic reforms.

Bottom line: According to Magnus,” the current focus on economic policy is important not for some decimal points on GDP but as a signal whether the government can, or wants to grasp the nettle.”

Magnus is not the only one who is concerned that policy tinkering wo n’t be sufficient. China will become a more dynamic and competitive economy over the long term if only the government sector is reforming, the capital markets are deepened, and households are encouraged to save less and spend more.

On the other hand, half measures will likely leave China vulnerable to boom/bust cycles brought on by the imbalanced allocation of resources, weak debt, and misalignments between household income and spending.

Investors will want to bereassured that big-picture reforms are on the horizon with the upcoming NPC. For now, though, an increasing number of investors are already getting the memo on China’s grand plan.

Follow William Pesek on X at @WilliamPesek

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The dangers of China’s fervent cyber-nationalism

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BBC Image of a woman from a Chinese Cultural Revolution revolutionary poster in front of the Gate of Heavenly Peace in BeijingBBC

A 10-year-old child was approaching the walls of a Chinese class in Shenzhen, southern China, when a man came up and stabbed him.

He died of his injuries. The killing shocked Japan and China, and sparked a diplomatic furore.

The Chinese government claimed that it had been influenced by xenophobia, and the international secretary put the blame on “malicious and anti-Japanese” social media posts.

Online observers have noted the shooting happened on a politically sensitive day – 18 September, which is the celebration of an incident that led to the Chinese occupation of Manchuria in China in the early 1930s.

What transpired for some as a sign of virtual nationalism, which has been sprang up as rising anti-foreign rhetoric in recent years, transferring into the real world.

Articles about World War Two events have proliferated on the Chinese online for years, with the Chinese war enduring as a contentious subject for separatists on both sides. In China, Japan’s military atrocities have long been a tender point as Beijing maintains that Tokyo has not entirely apologised.

The online postings are a part of a larger trend that includes strikes on Chinese citizens for being anti-patriotic and xenophobia. Experts ‘ claims that this online nationalism has mostly been unchecked by the Chinese government, with on-line patriotism stoking anti-foreign mood as well as charges against Chinese officials as one explanation.

Getty Images The Chinese flag on a laptop screenGetty Images

Some people wonder if this has gone to far. The most recent in a line of efforts to ensure philosophical beauty has been dubbed the” Cultural Revolution 2.0″ by them as the online attacks that portray Chinese people as being anti-patriotic. They see echoes of the violent, state-sponsored campaign against so-called enemies of the Chinese Communist Party (CCP ) that traumatised the country in the 1960 and 1970s. In massacres carried out by young militias like the Red Guards, hundreds of thousands of people died. Neighborhoods and communities turned on one another.

In a recent article, author and university teacher Zhang Sheng noted that “in the past persons summoned the Red Guards, then persons summon the ‘ little pinks ‘” – a popular name for the virtual troops of online separatists.

anti-foreigner content

Some cyber-nationalists had a very unique take on the tragic death of the Chinese student on Taiwanese social media.

” I have no opinion on how Japanese die if they do n’t apologise for history”, read one popular comment on Weibo, while another pointed out that the Japanese had killed many Chinese during World War Two” and have n’t apologised till this day. How could they even come close to being referred to as” civilized”?

A Chinese official reportedly wrote texts in a private group chat informing members that it was okay to shoot a Chinese child and that it was against our laws to kill Chinese. He has since been placed under investigation, according to local media outlet Phoenix News.

Beijing heavily censoring discussion of the incident online and calling it an “accidental, individual case” and an “isolated incident” as Japanese officials demanded answers for the “despicable” crime.

This is the third highly public attack on foreigners in recent months, which China has described as “isolated incidents.”

In June, a Japanese mother and her son were attacked at a bus stop outside a Japanese school, and a Chinese woman died while trying to shield them. This happened just weeks after four US university tutors were stabbed in a park in Jilin. While the motives for both attacks were also unclear, they spurred anxious discussion that they were linked to xenophobic rhetoric online.

Online campaigns

Not just foreigners are facing the ire of cyber-nationalists. Chinese business and public figures have also been subject to criticism in recent months for being insufficiently patriotic.

Beverage giant Nongfu Spring is considered a Chinese business success story, with its mineral water bottles a ubiquitous sight across the country’s convenience stores and restaurant tables. Nationalists, however, attacked the business in March for using Japanese elements in its product design. The iconic mineral water bottle’s red cap was thought to be a reference to the Japanese flag, while one of its logos was said to resemble a Shinto temple.

It resulted in a brief but intense online campaign: some called for a boycott, while videos of people angrily stamping on Nongfu Spring bottles and chucking their drinks down the toilet were all over social media.

Getty Images A photo of the Japanese flag next to a photo of Nongfu Spring water bottlesGetty Images

In the same way, a nationalist blogger accused the author, who won the Nobel Prize for literature, of “beautifying” Japanese soldiers and writing insensitive poetry. The blogger later filed a controversial lawsuit against him for insulting China.

These actions have sparked a lot of concern. Hu Xijin, the former editor of state-run newspaper Global Times, warned that nationalistic attacks on creatives like Mo Yan could have a chilling effect.

And the outspoken liberal intellectual Yu Jianrong claimed that “dangerous populist tendencies, which deserve our utmost vigilance” were to blame for the recent stabbings of foreigners.

Even the state media has accused online nationalists of “making patriotism a business.” One commentary by CCP mouthpiece People’s Daily said those who” stir up public opinion and add fuel to the flames in order to… gain traffic and make personal gains, should be severely punished”.

Some claim that the ruling party contributed to the ignominy.

What fuels the fire, exactly?

” State-endorsed patriotism” and Beijing’s constant warnings about foreign influence has contributed to the “intense nationalism” we see today, says Rose Luqiu, an associate professor at Hong Kong Baptist University’s communication school. The legal risk of being deemed unpatriotic, she claims, has made things worse.

The Chinese government has now made the “distortion and smearing ] of ] heroes and martyrs” a crime, as demonstrated in the lawsuit against the author Mo Yan. It has also passed a sweeping anti-espionage law and launched a campaign encouraging the public to report suspicious activity by foreigners.

It has intensified efforts to foster patriotism in schools, where Chinese children are taught from a young age that they must love both their country and the CCP, to legitimize its rule.

Meanwhile, a global surge in Sinophobic sentiment during the Covid pandemic and growing suspicion of China in the West due to trade tensions has fed a sense among some Chinese that their country is being unfairly discriminated against by foreigners.

China’s slowing economy and a spreading social malaise have also played a role. “Many people in China are confronted with severe social and economic worries. Inflation, housing crises, youth unemployment, and evaporating pensions are all causing anxieties. Nationalism is a readily available and highly potent framework for venting those frustrations,” says Florian Schneider, an expert in online Chinese nationalism at Leiden University.

All these factors have resulted in nationalist bloggers becoming a prominent fixture of the Chinese internet in the last few years. Well-known influencers can amass millions of followers – and potentially earn income from the traffic – by pumping out patriotic content extolling the virtues of China and the CCP while denouncing their enemies.

While they often act in the name of revolutionary leftist fervour, their behaviour is actually more similar to the far right found in other countries who lead xenophobic and reactionary movements, Professor Schneider tells the BBC.

They “have hopes of returning society to some imagined former glory,” and they see all manner of elites and foreign powers as obstacles to this goal because they are “populists who are trying to make China great again.”

A delicate balance

Sometimes authorities appear to listen to concerns.

After a public outcry in July, they quietly dropped a contentious amendment to a national security law. They made it clear that a proposed ban on “hurting Chinese people’s feelings” could “violate the legitimate rights and the general life of the public.”

Chinese social media platforms have tried to rein in online nationalists by periodically suspending their accounts.

Sima Nan and Guyanmuchan, two well-known nationalist influencers, have been subjected to censorship without warning. The blogger who attempted to sue Mo Yan, whose lawsuit was also rejected by the courts, was also at odds with them.

One vlogger, who shot to notoriety this year after he posted a video accusing a shopping mall of putting up decorations that resembled the Japanese flag, was similarly shut down. His video was described as” a malicious report that rides on the online traffic of patriotism,” according to a scathing state media commentary.

Authorities still appear to have a tight grip on online nationalists.

While dissenters are swiftly shut down or in some cases arrested in the name of social stability, nationalist bloggers are allowed a freer rein, despite their sometimes inflammatory rhetoric. These voices have even been boosted by state media’s republishing of their content.

The BBC has contacted the Chinese government to ask why nationalist content does n’t appear to be censored as much as other sensitive content.

That could be down to the fact the state views online nationalism as a useful safety valve to “dissipate dissent in a way that does not undermine its authority”, particularly during its current economic troubles, where” society really needs an outlet to express frustration”, says Dr Luqiu.

The government “harnesses nationalism to its advantage, only intervening when it risks spilling over” into an uncontrollable situation by encouraging nationalists and then occasionally reining them in.

Beijing may seem risky, but it has successfully fended off significant obstacles to its authority in recent years, such as the pro-democracy movement in Hong Kong in 2019 and the White Paper protests in 2022 against strict zero-Covid policies.

The government is thus confident it can manage the dangers, and it means nationalism is likely to stay despite the backlash, analysts say.

Nationalism is a mixed blessing for China’s leaders, and at the moment, Professor Schneider says,” We are witnessing the costs of that.”

” But will the leadership reevaluate or even give up its nationalism in favor of something less harmful?” I would n’t hold my breath”.

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