CBBC: News Round Up June 2018

This article was published in June 2018, FOCUS Magazine by China-Britain Business Council. To get an access to the full online Focus magazine, download their App on Apple Store or Google Play.

Private space race

A Chinese spaceflight company launched its first rocket last month. The OS-X rocket by OneSpace Technologies reached an altitude of 25 miles and travelled 170 miles before falling back to earth. This is the first time a private Chinese company has launched a rocket into space. After a 2015 government policy that encouraged private enterprise in space, more than 60 private Chinese companies have entered the commercial space industry. Chinese companies hope to compete with the growing number of private companies such as Elon Musk’s Space X and Richard Branson’s Virgin Galactic to push the final frontier.

Closing time

More bars and restaurants frequented by the international community in China have been shut following a crackdown by authorities. Great Leap Brewery’s flagship Beijing venue did not have its lease renewed and a number of other well-known locations around Beijing’s Sanlitun district have also been shuttered. 

Ships deploy

China’s first home-built aircraft carrier hit the waves last month. The aircraft carrier, that is just beginning sea trials, will be the second to enter the Chinese navy following the 2011 launch of a retrofitted, former Soviet carrier.

The ship, known as Type 001A set out from Dalian where it was built. “Construction on the carrier has been carried out as planned since it was launched in April last year, and equipment debugging, outfitting and mooring tests have been completed to make it ready for the trial mission at sea,” Xinhua news agency said.

Anbang goes bang

The head of Anbang Insurance Group, Wu Xiaohui was sentenced to 18 years in prison last month after pleading guilty to defrauding investors. Wu rose to fame after buying the Waldorf Astoria Hotel in New York but was thrust into the spotlight in February when the government seized Anbang as part of a crackdown on companies who have acquired too much debt by buying up too many foreign assets.

The court in Shanghai said he had cheated investors out of more than $10 billion, making it one of China’s biggest cases of financial crime. 

Japanese hot line established

Tense relations between China and Japan were eased somewhat after Chinese Premier Li Keqiang and Japanese leader Shinzo Abe set up a hotline between their two countries and agreed to cooperate on infrastructure during talks in Tokyo last month.

A long history of tension between the two countries nearly came to a head over the control of the uninhabited islets known as the Senkakus in Japan and Diaoyus in China, which are controlled by Tokyo but also claimed by Beijing.

The hotline will be used in case of incidents involving their navies or air forces over disputed waters but not those around the Diaoyu/Senakau islands. 

Oil deal

Following President Trump’s termination of the Iranian nuclear deal, there are fears that new sanctions might be applied to Iranian oil. China has significantly increased its oil purchases from Iran since the deal was struck in 2016 and is currency Iran’s biggest customer for oil.

South Korea has asked for an abstention from the embargoes on Iranian oil and it is expected that Japan will follow suit. China will more likely ignore the embargo or find ways around it by using barter deals or simply avoiding US banks. The price of Iranian oil is expected to decrease as buyers fear American sanctions, making China happy.

Himalayan mining

An article in the South China Morning Post stated that China has begun large-scale mining operations in the disputed border area with India in the Himalayas. It is claimed that Chinese geologists have already declared there is more than US $60 billion worth of gold, silver and other precious metals in the region.

Heavy investment in infrastructure has seen new roads and even an airport open up in the region, also known as South Tibet. The disputed territory is currently under Indian control but China plans to reclaim the area.

Concerns that the region could turn into another South China Sea issue, where rapidly increasing infrastructure into the region acts to stake a claim to an area rich in resources and contested by other nations.

Trump flip flops on ZTE

In April, President Trump banned sales of US technology to Chinese tech company ZTE, which makes mobile phones using the Android system. The ban was imposed because ZTE apparently violated sanctions with North Korea and Iran. The US technology ban led to fears that ZTE would collapse taking with it tens of thousands of Chinese jobs. Trump then tweeted in May that he was “working with President Xi to save” these job, which led many to question his reasoning. China loaned $500 billion loan to a Trump project in Indonesia just two days before Trump’s supportive tweet, but the Whitehouse dismissed claims that this might have influenced his decision.

An alternative narrative is suggested by the fact that ZTE buys a significant amount of US technology, which would mean that its collapse could cause many US manufacturers to also go out of business. Also, supporting China might give Trump some bargaining chips when it comes to the upcoming negotiations with North Korea. Commentators have said that linking trade negotiations and political negotiations is a line rarely crossed and one that’s hard to go back from.

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