Chinese Stock Jump Loses Steam; China, Russia Trying to Influence US Elections

Welcome to China In Focus. I'm Tiffany Meyer. Our top story. China's stocks lost strength sooner than the world expected, following Beijing's failure to push stronger stimulus. We hear from economists about what's happening in the world's second-largest economy. We have to keep in mind that the broader Chinese index, really since the beginning of the century, is about flat. U.S. intelligence officials warning Beijing has tried to influence down-ballot races, including congressional campaigns on both sides of the aisle. Russia confirming joint patrols with China in the Pacific, after the Pentagon spotted their warships near Alaska last week. And Beijing exercising new ways to keep the U.S. reliant on its lithium. A top U.S. official breaks down China's strategy. China's stocks recently caught the world's attention with their best performance in years. But the upswing wasn't here to stay. Despite a short-term trend of large growth, on Tuesday, many major stock indexes saw slides. Soon after, Chinese authorities failed to introduce a new round of stimulus measures, like investors had hoped. Hong Kong's benchmark Henson index endured the most dramatic fall, closing with its heaviest one-day drop since 2008, over 9%. A senior economist based in Singapore weighed in on China's stimulus policies. But what is uncertain also is about how effective will these policies be, and whether there will actually be real improvement in the real estate market. So this is why when we actually see the limited new substance from the press conference this morning, the market has actually reacted by saying that, well, maybe the support is not as large as what I expect. Many Chinese economists have said the major Chinese stock jump was man-made, designed to attract more investments. But they pointed out that the fundamental issues tied to the country's economy weren't solved. Beijing issued some of its greatest stimulus measures at the end of September, including cutting rates to boost consumption and reducing restrictions on the real estate sector to revive house buying. But what's the real impact on highly centralized economies like China's? For many years, the Chinese stock market has been driven by policies every day. It's been manipulated by human intervention. Basically, the central bank has now prepared sufficient funds, so all listed companies, along with state-owned enterprises, to mortgage their equity to banks. This way they get cash and buy back their own stocks using this cash. An expert on the Chinese economy shed more light on what's pushing Beijing to create an artificial paradise for investment. It's due to the economic downturn, recession and fiscal deficits. Today, Chinese officials need to fabricate their economic data as a tribute for the National Day celebrations. They must boost the stock market and pull out the hundreds of trillions of yuan in savings, 300 trillion yuan in total, from citizens' savings accounts and channel them into the stock market. This is the Chinese Communist Party's goal. Zooming out, Bank of America analysts said this week that the buy-everything stage for China's stocks would soon be over. China's stock market appeared to lose steam on Tuesday after rallying for a slew of Beijing's measures to prop up the economy. How will the rise and fall impact the broader economy in China? We spoke to Christopher Balding, a senior fellow at the Henry Jackson Society, for his take. Christopher Balding, thank you so much for joining us. Great to have you back on the show. Thanks for having me. Investors' optimism in China's stock market seems to be petering out after a Tuesday morning conference by China's economic planner. A senior official said the central government will release a 100 billion yuan, around 14 billion USD, investment plan for next year. What will this do for China's economy? Very little. Part of this, when we're talking about the specific numbers, you have to remember at this point, China's economy is probably approaching about 150 trillion yuan size. So when we talk about a 1 trillion or something like that size of stimulus, that's really a very small number. And you also have to put that against the backdrop of a 60 trillion US dollar banking market. So these are actually very, very small numbers when we're talking hard stimulus. And to your point last year, some influential Chinese market commentators were predicting or hoping that China would put in about 10 or over 10 trillion yuan investments. That's about 8% of China's GDP. That seemed to be rallying a lot of investors' hopes there. Given this smaller number that we just saw from today's press conference, what is that telling us about China's economic state? China's policymakers have been gripped by indecision and really not changing anything. So it's hard to say whether or not this is more reflective of the policymakers or the state of the economy. I think everybody at this point is in wide agreement that whatever the exact number is, the Chinese economy is much weaker than the official 5% growth number that they're continuing to publish. What it says about the broader economy, I think is a very difficult inference to make. Now, Chinese stocks have been languishing since the pandemic, with the post-pandemic rebound never quite manifesting here. With these ways of stimulus, what do you see as the long-term impact on China's economy? I think you've already seen this in some stocks starting to drop. I think the short-term impact to this run-up in the stock market they've had over the past week or two is going to be very muted and it's going to return to, let's say, the downward equilibrium that they've had over the past couple of years. I mean, we have to keep in mind that the broader Chinese index really, since the beginning of the century, is about flat. It's crazy to think of an entire stock index being flat and we're almost a quarter of the way into the entire century, but that's the reality. It really is puzzling why Xi and Chinese policymakers in Beijing are so focused on boosting the stock market with these short-term measures that really have little impact on the broader economy. Christopher Balding, thank you so much for your time. American Intel saying foreign actors are looking to disturb the U.S. November election results. A senior U.S. intelligence official warned about the threat on Monday. U.S. intelligence officials said foreign influence actors would likely work to sow doubt about the results. The report warned that Beijing has sought to influence congressional races as part of their efforts to retaliate against U.S. support for Taiwan. That's on top of China's influence in several other U.S. down-belly races. Russia and Iran have already sought to sway U.S. voters during the presidential campaign. Despite the threats, the intelligence officials said the U.S. voting systems and the election workers were the most prepared they've ever been. Moscow confirmed on Tuesday that Russian and Chinese navies have been patrolling together since last month in the Northwest Pacific Ocean. That includes waters near Alaska and in the Arctic. A statement comes after the Pentagon located their warships near Alaska last week and warned of their growing interests in the Arctic Ocean. Russia's defense ministry said the joint activities highlighted anti-submarine missions. Rescue at sea and other combat training sessions were also on the agenda. The defense ministries of China and Russia both confirmed sending destroyers, among other warships, to the patrols. This is the first time that Chinese coast guard ships have entered the Arctic. The frigid region has become a focus of international attention due to its rich natural resources and strategic position. Waging a price war to kill competition. That's the strategy Beijing is using to keep the U.S. dependent on Chinese lithium. How does it work? Beijing flooded the global market with an oversupply of the chemical element, driving prices low to stifle global competition. Now, a high-ranking State Department official, Jose Fernandez, Undersecretary for Economic Growth, is sending out a warning. Lithium is critical for making electric vehicles batteries and China dominates two-thirds of global production. China's tactic worked to flood the market and drop prices. Coupled with a drop in demand for electric cars, lithium prices plunged over 80 percent last year. Lithium producers around the world have been struggling, scaling back production and cutting jobs. Fernandez said Beijing's move is a response to the Biden administration's Inflation Reduction Act. The bill aims to speed up domestic clean energy manufacturing. China dominates the green energy supply chain. Fernandez noted the low price hurts the U.S. ability to diversify supply chains. It also hurts countries like Portugal as they looked for investment to develop their own lithium industries. Portugal is Europe's biggest lithium producer. Fernandez said the U.S. wants to help struggling lithium mining companies survive the predatory pricing. China is urging Pakistan to quote effectively close security loopholes to protect Chinese workers and projects. This follows a suicide bombing in a port city on Monday that killed two Chinese nationals. A military group called the Balik Liberation Army, or BLA, took responsibility for the attack. Beijing's foreign ministry demanded more targeted measures to safeguard Chinese people, projects and institutions in Pakistan. Pakistan is a key partner of Beijing's Belt and Road Initiative. For nearly a decade, Beijing has invested tens of billions of dollars in the country's infrastructure, building a network of roads, railways and energy facilities. But some critics in Pakistan resent the Chinese-funded projects and see them as having exploited the country. The BLA, which claimed responsibility for Sunday's attack, is known to specifically target Chinese interests. Ever since, the BLA claimed responsibility for a 2018 attack on the Chinese consulate in Karachi that killed four people. It also previously attacked Beijing's consulate in the country. And in 2022, it targeted Chinese nationals on a university campus. The group, in particular, takes aim at the strategic port of Gwadar, which is funded by Beijing. They accuse Beijing of helping Pakistan's government exploit local resources. The last attack happened in March. Coming up, a closer look at where the U.S. stands in the battle with communist China. And is the West really on the decline? Although China and Russia can be considered to be strong, they are by no means resilient. Taiwan's de facto ambassador says the island is ready to fight if Beijing invades. The World Report warns China doesn't have to fire shots to annex Taiwan. We break down the details. A nuclear threat from North Korea. Should we expect provocations from the communist country before the U.S. presidential election? More on that after the break, here on China In Focus. Welcome back to China In Focus. I'm Tiffany Meyer. The head of the Chinese Communist Party said the East is rising and the West is in decline. But how true is the statement, really? And what's the ultimate goal of the CCP? Jan Jekielek with American Thought Leaders sat down with Gordon Chang, senior fellow at the Gatestone Institute, to discuss. He's also the author of the new book, Plan Red, China's Project to Destroy America. Gordon Chang, such a pleasure to have you back on American Thought Leaders. Well, thank you so much, Jan. So back in 2020, the Chinese dictator Xi Jinping said the East is rising and the West is declining. I think what he meant there, at least, was the East being China and the West being USA. How do you read this? Well, I know a lot of people say the U.S. is declining. And if you look at America, let's say, over the last three or four years, yes, we're not as strong as we were. But decline really talks about relative standing. And since that time when Xi Jinping spoke, the Chinese economy has fallen. It is now at a grave state. The Chinese people are leaving the country because they do not see a future for China. And a lot of people are just lying flat, as they say. So the country has so many problems, whether we're talking about the ability of governments to deliver service or just demography. China sits on the edge of the biggest demographic fall in the absence of war or disease. You just run through the list. I don't think that you can say that China is rising. Look at Russia. Russia in that time now is on the ropes. As we can see in the war in Ukraine, unable to achieve its goals. So I'd say that on a relative basis, the U.S. is stronger today than it was three or four years ago when we compare it with what's going on in China and in Russia. And so, basically, you're saying everyone's level has gone down a bit. Yes. But I think this idea of decline, it's a broader thing. I've heard even comparisons to the Roman Empire. This is about Americans talking about America. They talk about our country in that way from time to time. So during the Carter years, during the 1970s, this whole issue of detente was because we felt we couldn't keep up with the Soviet Union. So yes, this is something that afflicts us from time to time. But America is strong because of all the countries we know of, especially when you compare us to China and Russia. We have the ability to solve our problems. As a matter of fact, we're the only of the three that can solve our own problems. And although China and Russia can be considered to be strong, they are by no means resilient. So let's lay out. You, of course, have a new book that you've written, Plan Red, China's Project to Destroy America. Let's just flesh out what that looks like. That's also, for some people still today, a very strong statement to make. Really, China's trying to destroy America? Isn't it dependent on America, like you just said? It is dependent on America. But the Communist Party, People's Daily in May 2019, People's Daily, the most authoritative publication in China, in a landmark editorial declared a people's war against us. And we're American, so we think we can ignore what our enemies say. But for Communist China, people's war is a phrase that has great resonance. Going back to the beginning of the People's Republic, just about a year ago, PLA Daily, PLA is People's Liberation Army, PLA Daily actually defined people's war for us. It said, people's war is total war. And we have seen China wage a campaign of unrestricted warfare against the United States. I think that the Communist Party views the U.S. as an existential threat. And it views us as an existential threat, not because of anything we say or do, but because of who we are. You have an insecure regime, and Beijing is worried about the inspirational impact of America's values and form of governance on the Chinese people. So I believe the Communist Party does not think it will ever be safe as long as the United States exists. The full episode can be found on Epoch TV under American Thought Leaders with Yanya Kellick. That's theepictimes.com slash epictv slash American Thought Leaders. Or click the link down below if you're watching online. A warning from Taiwan's de facto ambassador to the U.S., Beijing is upping its aggression. But Taiwan is ready to fight. Here's more. Alexander Yue, Taiwan's de facto envoy to the U.S., said the island is ready to fight if Beijing were to invade Taiwan. That's in an interview with Fox News last Thursday. He noted Taiwan has been watching how Ukraine battles Russian forces. Though Beijing may not annex Taiwan using military force, according to a think tank report, Beijing could instead try to choke out Taiwan economically. Over 70 percent of the island's GDP comes from exports, and China is its largest trading partner. The report said the Chinese regime could restrict or ban Taiwanese imports, block payments and wage cyberattacks to cripple the island's critical infrastructure. Beyond that, Beijing could send ships to cut undersea cables and use missile tests to disrupt commercial traffic. The Chinese Communist Party sees Taiwan as part of China, despite never having ruled it. The U.S. doesn't have formal diplomatic relations with Taiwan, but sells weapons to the island to help defend itself. North Korean leader Kim Jong-un is again warning he could use nuclear weapons in potential conflicts with South Korea and the U.S. Here's a closer look. According to state media, Kim said he would not rule out nuclear weapons if North Korea's enemies attempted to use armed forces against it. This isn't the first time Kim has issued nuclear threats. South Korea's President Yun Su-kyo said his North neighbor would likely stage provocations before the U.S. presidential election. This comes as South Korea and the Philippines are strengthening ties, including on defense and security cooperation. The allies face increasing hostility from regional rivals North Korea and China. What makes South Korea such an important strategic partner to Washington in the Pacific? Because the country is key to keeping two nearby communist countries in check, China and North Korea. Plus, it's not far from Taiwan either. During a summit last year, President Joe Biden and South Korean President Yun Su-kyo pledged to strengthen mutual defense. Both leaders agreed that the alliance is crucial for peace in the Indo-Pacific. They also pledged to deepen tech and trade partnerships to counter China's influence. What's more, South Korea is a leading force in microchip manufacturing, with one-eighth of global market share. Right now, about 30,000 U.S. troops are stationed in South Korea, tasked with maintaining regional stability. Is China getting closer to a military base in Cambodia? A series of satellite images are igniting concerns. The Reem Naval Base is located in Cambodia. China helped upgrade the facilities there. Cambodia denies the site doubles as a Chinese military outpost, though satellite images may hint at a different story. They show two Chinese warships docking at the base throughout most of 2024. The Chinese presence at the base is stoking fears that a global Chinese military base could be taking shape. While China has more warships than the U.S., it only operates one official overseas military base, located in Africa. The U.S. has around 750 around the world, allowing Washington to project power around the globe. But a shift is underway. China already controls two additional ports, one in Pakistan, the other in Sri Lanka. And it's building another deep-sea port in Myanmar. If Beijing manages to transform them into fully functional bases, plus the port in Cambodia, it could project power across the Indian Ocean. Trade tensions between China and the European Union are ramping up again. Beijing imposed temporary anti-dumping measures on brandy imports from the bloc on Tuesday. The move is primed to hit top spirits brands like Hennessey and Remy Martin. Here's more. It comes after the EU voted last week for tariffs on Chinese-made electric vehicles. That set tariff rates ranging from almost 8% for Tesla to just over 35% for Chinese auto giant Saic. Brussels has said it is willing to continue negotiating an alternative even after tariffs are imposed. But China has this week decreed the dumping of brandy from the EU threatens China's own sector with substantial damage. Beijing hinted at more to come and said its anti-dumping and anti-subsidy investigation into EU port products was ongoing. Beijing said that as of October 11th, Importers of brandy originating in the EU will have to put down security deposits, mostly ranging up to 39%. France was seen as the target of Beijing's brandy probe due to its support of tariffs on China-made EVs. It accounted for 99% of China's brandy imports last year, with shipments reaching $1.7 billion. That's all for today's China In Focus. I'm Tiffany Meyer. If you have any feedback on the show or have something you'd like to see us cover, send us an email at chinainfocusantd.com. We'd love to hear from you. For round-the-clock original news coverage, visit us at ntd.com or download our NTD app. Thanks for watching. See you soon.