China removes Qin Gang as foreign minister

Qin Gang, who has not been seen in public since June, has been removed as the country’s foreign minister, reports South China Morning Post.

The abrupt announcement of Qin’s removal came after weeks of speculation about his fate.

His absence has dominated domestic political discussions, and evolved into one of the biggest crises for Chinese President Xi Jinping since his unprecedented third term began last year.

Wang Yi, who outranks Qin and serves as Xi’s top foreign policy aide, is the new foreign minister.

Wang, the director of the Office of the Central Foreign Affairs Commission, has been standing in as foreign minister for the past few weeks.

He has been attending a series of diplomatic activities including the BRICS summit under way in South Africa and meetings with former US secretaries of state Henry Kissinger and John Kerry in China last week.

Wang was China’s foreign minister in Xi’s first and second term before Qin was promoted in December

Reportedly, the decision to remove Qin from his post was made at a special session of the National People’s Congress Standing Committee, which took place one day after the top decision-making body, the Politburo, convened on Monday.

According to rules updated in June last year, the NPC Standing Committee holds a session once every two months, but in practice, usually holds them near the end of even-numbered months. An interim session for special cases can be scheduled by the committee’s chairman.

Qin’s removal as foreign minister is in line with the Organic Law of the National People’s Congress, which came into effect in March 2021. The rule empowers the Standing Committee rather than a national congress to appoint or remove from office some members of the State Council.

Qin was last seen in public during a meeting of senior diplomats from Russia, Vietnam and Sri Lanka on June 25, according to China’s foreign ministry.

Despite rumours circulating on social media and among foreign diplomats, Beijing has remained vague about Qin’s status and whereabouts, attributing his prolonged absence to unspecified health reasons since early July.

“China’s diplomatic activities are under way as usual,” foreign ministry spokeswoman Mao Ning said on July 17 when pressed about Qin’s disappearance, while stopping short of denying speculation about his fate.

But Beijing’s secretive handling of the drama has drawn widespread criticism, raising questions about the Chinese government’s credibility and its notoriously opaque decision-making. It has also fuelled uncertainty to China’s troubled relations with the outside world.

Once seen as a trusted aide to the president, Qin rose rapidly through the ranks – from ministry spokesman and deputy foreign minister in charge of protocol and European affairs to the country’s second-ranking diplomat.

Qin was appointed China’s ambassador to the United States in July 2021, and 17 months later was elevated to foreign minister, and then state councillor in March, a position that ranks above a cabinet minister.

 

Chinese economy grows by 4.5% in first quarter

Chinese economy grew by 4.5% in the first quarter of 2023 amid Beijing’s intensive efforts to consolidate the post-pandemic recovery, according to South China Morning Post.

This was above the 4% growth predicted by Wind, a Chinese data provider, and up from the 2.9% growth seen in the fourth quarter of last year.

After its growth slowed to the second worst in nearly five decades at 3% last year, China set a modest growth target for 2023 at around 5%.

All other major economic indicators, released by the National Bureau of Statistics on Tuesday, showed recovery may still be uneven. Retail sales up by 10.6% last month from a year ago, rising from 3.5% growth in combined figures for January and February.

Industrial production, a gauge of activity in the manufacturing, mining and utilities sectors, rose by 3.9%YoY in March.

But fixed-asset investment – a conventional tool for Beijing to drive up growth – rose by just 5.1%YoY in the first three months of 2023, down from a rise of 5.5% in the first two months of the year.

Beijing has also pledged to shore up trade as a pillar for the overall recovery this year and exports surprised the market with strong growth in March despite signs of weak external demand.

The economic recovery may still be uneven as low price indices triggered warnings about the risks of deflation and inadequate demand, while pressure to create enough jobs continued to persist.

The urban surveyed jobless rate, meanwhile, stood at 5.3% in March, down from 5.6% in February.

The jobless rate for the 16-24 age group also remained at an elevated level of 19.6% in March, up from 18.1% in February.

 

 

 

Chinese Zero Covid Policy Hinders Global Supply Chain, says Powell

China’s stringent zero-Covid restrictions have affected the American economy by dragging on global supply chains, the top central banker of the United States said, reports South China Morning Post.

When China has shutdowns in regions that are deeply connected to the world economy, supply chains are less efficient, less effective and the prices of goods manufactured or assembled in the country are affected, said US Federal Reserve chairman Jerome Powell.

“It does have an implication for the US,” he said at an event where he gave a closely watched speech before policymakers enter a quiet period before the December 13-14 gathering on the next interest rate decision.

Powell added, “It’s hard to say how big that will be without knowing how persistent, how long the lockdowns will last”.

He spoke as signs increased that Beijing’s zero-Covid policy was taking a toll on the world’s No 2 economy, leading to weaker consumer demand, disrupted production and sluggish expectations.

The latest official surveys showed that both China’s factory and services activities contracted to seven-month lows and worse than market estimations in November.

Experts warned that the inevitable costs of Chinese cities being forced to impose restrictions amid a surge in coronavirus cases have already started to appear.

The International Monetary Fund last week urged Beijing to recalibrate its Covid-19 policy to the economy while relying on market reforms to raise productivity and deliver medium and long-term growth.

Analysts now expect the Chinese economy to grow only 3.3%YoY in 2022, far below the official target of around 5.5% set by the central authorities in March.

The investment bank Nomura said that weaker demand from China would exacerbate the export downturn and add to disinflationary pressures for the rest of Asia.

On November 23, Nomura cut its forecast for China’s fourth quarter growth rate to 2.4% from its previous estimate of 2.8%. It also trimmed the forecast for China’s annual economic growth rate in 2023 to 4.0% from 4.3%.

After protests in several major Chinese cities over the weekend, the country’s central and local authorities appeared to have taken steps to improve their coronavirus strategy.

The cities of Guangzhou and Chongqing announced an easing of Covid restrictions on Wednesday; a move also seen in Shijiazhuang, which at one point was expected to be a pilot city for reopening.

When meeting with health officials and experts on Wednesday, Chinese Vice-Premier Sun Chunlan, the most senior official in-charge of Covid response, uncommonly highlighted that the pathogenicity of the Omicron variant weakens and said the country was facing a new situation and new tasks in pandemic controls.

 

China-Israel aim to sign a free trade deal

China and Israel aim to sign a free-trade agreement by the end of 2022 in a breakthrough that would give Beijing its first deal in the Middle East plus a boost after years of trade friction with Australia and the United States.

Chinese Commerce Minister Wang Wentao and Orna Barbivay, the Israeli Minister of Economy and Industry, raised hopes in a chat earlier this year of signing their agreement within 2022, Amir Lati, Consul General of Israel in Hong Kong, told The Jerusalem Post.

The two sides have held trade talks online since the start of the pandemic to follow up on discussions that began in 2016, the consulate representative said.

Meanwhile, Esti Ayalon-Kovo, head of the Israeli economic mission to China in Beijing, said, “Both sides are conducting regular online meetings and are striving to reach an agreement as soon as possible. This agreement is expected to enhance and simplify trade between the two countries.”

Chinese state media had reported in April that negotiations toward a China-Israel trade pact were accelerated following a call between Foreign Minister Wang Yi and his then-counterpart from Israel, Yair Lapid, but no timetable was given.

China has been smarting from tariffs on US$550 billion worth of its exports to the United States since Washington launched a trade dispute in 2018. Sino-Australian relations also have soured over the past five years, especially after Canberra called for a probe into the origins of Covid-19 and Beijing imposed punitive sanctions on Australian imports.

Over the past two decades, Beijing has pursued stronger economic ties in the Middle East, landing comprehensive strategic partnerships with Iran and Saudi Arabia while trying for a trade pact with six oil-rich countries known as the Gulf Cooperation Council. China is interested in the region for its oil, gas and hi-tech investment opportunities.

The deal with Israel would show that the two sides can work together economically despite differences over Palestine, said Victor Gao, Vice-President of the Centre for China and Globalisation in Beijing. China recognized the state of Palestine in 1988. Israel occupies Palestinian land.

 “China hasn’t signed any FTAs in the Middle East, so I hope after this one it can get more in west Asia, the Middle East and Eastern Europe and hold this one up as a model” when seeking trade deals with other countries, Gao said.

A trade pact would make it easier for China to work with Middle Eastern nations on broader issues by showing it does not align only with Arab nations as in the past, said James Chin, a professor of Asian studies at the University of Tasmania in Australia.

“China has always tried to be a player in the Middle East, but the reason they haven’t gotten any traction is that they’re usually perceived as leaning toward Arab nations,” Chin said. “The signal is ‘We can talk to both sides’.”

In November 2019, the two countries discussed trade in goods, rules of origin, customs procedures and intellectual property rights, among other topics, the Ministry of Commerce in Beijing said at the time.

The ministry noted “positive progress” after that round, which was the seventh between the two countries.

Annual trade between Israel and China stood at US$250 million 30 years ago and had reached US$22.8 billion by 2021, according to China customs data, China accounts for about 11% of Israel’s international trade.

China is Israel’s biggest trade partner in Asia, accounting for 39% of its total export of goods to Asia, Lati added. Israel’s chief China-bound exports are medical devices, agricultural technology and other machinery and chemicals, including fertilizer. The trade deal would mark Israel’s second in Asia after South Korea, and would become China’s 16th bilateral trade agreement.

China might leverage the trade pact to access Israel’s hi-tech scene, which is led by innovation and venture capital, Gao said. Israeli tech firms raised US$25.6 billion in capital last year, The Times of Israel reported.

A “foothold” in Israel’s advanced hi-tech would dovetail with China’s giant tech hardware manufacturing sector, Chin said.

We see this agreement will allow new Israeli exporters to export to China, said Esti Ayalon-Kovo, Head of Israeli Economic Mission to China

Israel already has a framework to promote connections among 15 government ministries and agencies from both countries, with the intent of deepening economic cooperation.

This week, Israeli ambassador to China Irit Ben-Abba Vitale said in a speech that China values its start-up accelerators and incubators but cautioned that “academic research” should be converted to “industry research”, domestic media outlets reported.

The Chinese side could tap the trade deal as well, to adopt some of Israel’s agricultural technology, including ways of using water in an arid climate like that of the Middle East, Gao said. Parts of China have been devastated by drought this year.

If it manifests as expected, the agreement will focus largely on trade in goods rather than services, according to Ayalon-Kovo, and Israel’s tariffs are already low overall. She described the agreement as being in its last stages, with the chief hurdle being how to sign it online, rather than in person.

“We see this agreement will allow new Israeli exporters to export to China,” Ayalon-Kovo said.