A Quarter Trillion Dollars Flows Out of China; Taiwan Says Chinese Blockade Would Be Act of War

Welcome to China In Focus. I'm Tiffany Meyer. Our top story. How much money snuck out of China over the past year? The Wall Street Journal reports as the amount could have reached a quarter trillion dollars. Another step closer to war. Taiwan lays out exactly what it would consider an act of war by China. How did Beijing respond? Taiwan is Chinese territory. Senator Tammy Baldwin calls for an investigation into China's alleged role in the fentanyl crisis on how a group of U.S. families played into the appeal. And Apple CEO Tim Cook is in China again. This time he's meeting with the Chinese regime's minister of technology. What's the biggest challenge on the minds of China's wealthy right now? Figuring out how to sneak billions of dollars out of the country under Beijing's nose. The Wall Street Journal tally shows that up to 254 billion dollars may have illicitly left China over the past year, ending June. Although this isn't the first time China has seen a major money outflow, the journey warns that this time is much more severe. The analysis points out China's wealth outflow is closely linked to the country's real estate crisis. The last big wave of Chinese capital flight struck back in 2015 and 2016, following a downturn in the real estate sector. In other words, when housing prices drop drastically, investors get skittish and look to relocate their wealth elsewhere. The trend could spell disaster for China's economy because capital outflow could undermine the value of Chinese currency, the RMB or yuan, and trigger further outflow from China's stock market. To fight that, here's the restriction China imposed. Chinese individuals can purchase no more than $50,000 annually as foreign exchange. Banks in Hong Kong also limit people from making large deposits into their accounts without showing where the money came from. Violating the rule in China means heavy fines or even prison time. But still, getting money out of China isn't mission impossible. Many wealthy Chinese people have set their eyes on one unique method, auctions. To do it, they ship their expensive art collections to Hong Kong and have them sold at auction. Then the funds stay offshore in Hong Kong in U.S. dollars or other foreign currency. In Hong Kong's free capital market, these funds can easily be transferred outside of China's borders. The conflict between Taiwan and communist China is moving another step closer to violence. Taiwan is drawing a line in the sand for China. And China responded saying Taiwan is, quote, a province of China. Taiwan's defense minister said Wednesday that a real Chinese blockade of Taiwan would be an act of war. During a war game last week, China sent naval ships to all sides of Taiwan, effectively surrounding the island. The drill also simulated attacks on Taiwan ports, including assaulting targets on the island. But commercial flights and ships were still able to enter Taiwan. A real blockade would prevent all aircraft and ships from reaching the island. Even communication with other parts of the world could be jeopardized if China were to cut the island's undersea internet cables, leaving Taiwan without internet or phone services. Taiwan's defense minister says any action to blockade Taiwan will be regarded as a form of war, citing United Nations resolutions. China responded to him. Watch. Taiwan is a province of China. There is no ministry of defense. There is no defense minister either. This is not a diplomatic issue. Taiwan is Chinese territory. Taiwan is a de facto independent nation with its own democratically elected president, military and constitution. For decades, the Chinese Communist Party has considered Taiwan a breakaway territory and has vowed to take control of it by force if necessary. Chinese leader Xi Jinping has even set a deadline for that takeover, 2027. All that, even though the Chinese Communist Party has never ruled the island. Taiwan rejects Beijing's claims. Back to the blockade and take strategy. Former U.S. Secretary of State Condoleezza Rice warned about China's threat earlier this month. What I think we have to do is to figure out how we how we deter the all out military attack, but how we also respond when you have something like the exercises that China has just been carrying out around Taiwan. It becomes kind of salami tactics, and that's what I worry about more with Taiwan. As tensions broil between China and Taiwan, the United States is preparing for the worst case scenario, a war against the Chinese Communist Party. The U.S. is reviving airfields during World War Two and upgrading military bases in allied countries in the Indo-Pacific region. One of them is located in Tinian, an island in the northern Mariana Islands. This is where U.S. bombers took off before dropping atomic bombs on Japan, putting an end to World War Two. At the same time, Taiwan is mapping out wartime food plans, while Australia and some other Asian countries are buying missiles and boosting defense spending. Democratic Senator Tammy Baldwin of Wisconsin is urging an investigation into China's alleged role in the fentanyl crisis. She made a plea Wednesday to U.S. Trade Representative Catherine Tai. The arrest request comes after a group of families filed a petition last week asking for tariffs on Chinese goods. The families all had loved ones who died of overdoses from the synthetic opioid. The families are seeking trade measures that include tariffs of at least 50 billion dollars on Chinese merchandise. The petition alleged that China has failed to rein in exports of chemicals used by traffickers to manufacture illicit fentanyl. It says this has cost the U.S. trillions of dollars in lost productivity, higher health care spending and other harms. The U.S. added six more Chinese companies to an export blacklist earlier this week. Washington says it's because they're boosting Iran's weapons of mass destruction program and the Chinese military. This blacklist is known as the entity list. Foreign companies get added to it when the U.S. deems them a threat to national security. Being on the list means getting blocked from accessing American technology without a special permit, making it more difficult for foreign companies to obtain American know-how, but not entirely impossible. Last month, the U.S. also sanctioned companies in China and Russia for supporting the war on Ukraine. Apple CEO Tim Cook is in China this week for a meeting with the country's Minister for Industry and Information Technology. This is his second China trip within eight months. Let's dive in. During the meeting, the Chinese minister told Cook that he hoped Apple would continue to deepen its presence in China, increase investment in innovation as well, and grow with Chinese companies and share the benefits coming out of high-quality development. These details are included in China's statement. Cook's trip also sparked speculation about whether Apple will partner with a Chinese AI service for its new system, iOS 18.1. Earlier this year, South Korea's Samsung announced that it had chosen China's Baidu as the AI model for its latest flagship products. In early January, an article from the South China Morning Post reported that China's military used Baidu's AI bot to generate simulated defense plans, framed around a scenario where China tries to fend off a U.S. military attack. In terms of iPhone sales, China is the world's biggest smartphone market, but in recent quarters, Apple has been losing market share to domestic rivals. According to data analysis from CounterPoint, iPhone sales in China fell 2% year-on-year. Coming up, it's day two of three for the BRICS Summit in Russia. We welcome China expert Gordon Chang to break down the Russia-China friendship and their pitch for a new world order. We should be sanctioning everybody that's involved in here, including China. The European Union is readying to welcome its new chief of foreign affairs, the new commander's priority, addressing threats posed by Russia and China. And U.S. researchers have just revealed a potential massive lithium reserve in southwestern Arkansas. If confirmed, it could shatter China's position as the world's top source. More on that after the break. Here on China In Focus. Welcome back to China In Focus. I'm Tiffany Meyer. The leaders from BRICS member countries gathered in Russia Wednesday for the second day of an annual summit. Russian President Vladimir Putin is using the BRICS Summit to increase relations with the Chinese Communist regime, calling Chinese leader Xi Jinping his dear friend. Take a listen. I would like to once again congratulate you, dear friend, this time in person, for the 75th anniversary of the founding of the People's Republic of China. In May, Xi and Putin pledged a new era for the China-Russian partnership. The two nations are the most powerful rivals to the United States. U.S. President Joe Biden has referred to Xi as a, quote, dictator and called Putin a, quote, killer. Moscow said Putin and Xi discussed their partnership as well as the war in Ukraine and outlined plans for future cooperation. The State Department on Tuesday suggested that the U.S. isn't looking for conflict with BRICS member nations, including China. When it comes to China, our goal and our intent is to continue to manage that relationship and manage that relationship responsibly. U.N. Secretary General António Guterres also attended the BRICS Summit. Ukraine's foreign ministry criticized him this week for choosing the BRICS Summit over a peace summit focused on the war in Ukraine. Definitely, it would be wrong to ignore the unprecedented interest of countries of global south and east to strengthen contacts with BRICS. During the meeting, Putin said over 30 countries are eager to join BRICS, proclaiming the start of what he called a new world order. He proposed setting up a BRICS grain exchange, which could eventually expand trade to other important goods. On top of that, Brazil's president said it's time for BRICS to develop new payment methods among member countries. South Africa's president also chimed in, stressing the need for BRICS nations to work more closely. We have called for the recalibration of trade rules to enable industrialization. The WTO must be reformed. He urged emerging economies to work together on exports, industrial cooperation and technology exchange. The European Union on Wednesday urged countries attending the BRICS Summit to call for peace, encouraging them to ask Putin to end Moscow's war in Ukraine. The BRICS forum was founded 15 years ago by four major emerging economies, Brazil, Russia, India and China. It has since expanded to include South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. A geopolitical bloc of the world's most powerful nations outside of the West, now inviting more partner countries to join, was China and Russia pushing for a new world order. What threats is America facing? NTD's Jack Bradley spoke with Gordon Chang, China expert and author of The Coming Collapse of China, for more. Gordon Chang, thank you very much for joining us here today. Well, thank you. Now, the BRICS Summit is being held this week where Russia, President Vladimir Putin, Chinese leader Xi Jinping and leaders from India, Iran and Turkey are meeting. What's the significance of holding this now and what can we expect to come out of it? I expect very little to come out of the BRICS Summit, largely because the BRICS nations, now nine of them, have very disparate interests. And in the middle of BRICS, you have India. Now, India is not a Western nation, but it doesn't want to be anti-Western. And China and Russia want the BRICS to be an anti-Western organization. So as long as India is in the mix, it sort of makes BRICS ineffective. The problem also with BRICS is that as it gets larger—remember, it started with four and now it's up to nine—the larger it gets, it becomes like the G20, which, yes, it has a lot of people in the room, but it becomes just impractical to do anything. The issue here, though, is that you have China and Russia talking to each other, along with Iran, and they're very dangerous actors. So anytime these countries get together, whether it's a BRICS grouping or something else, it's always a time for us to be concerned. One other quick thing. China needs to export more to what it calls the Global South. The BRICS group is basically Global South. And so China is going to use this to try to penetrate markets. And the stronger the Chinese economy is, the worse it is for us. Now, the G7 defense ministers met on Saturday, where they expressed concern over the Chinese regime's increasingly aggressive behavior, like military drills near Taiwan. Is there a growing concern of a possible invasion? And how should the U.S. and its allies respond? I'm one who does not believe that China will initiate hostilities by an invasion of the main island of Taiwan. Xi Jinping doesn't trust his generals and admirals. The Chinese people certainly don't want war. And the regime, as a result, is casualty-averse. But I'm concerned about, for instance, two other things. Authorities in Taiwan believe that the Chinese will impose a quarantine on the island within six months. Quarantine is not an act of war, but it can slowly become a blockade, which is an act of war. And because right now in Beijing, only the most hostile answers are considered to be politically acceptable, Xi Jinping can't back down. So I worry about that. I worry more about what China is doing in the South China Sea against the Philippines, because there we see belligerent activities, some of which are acts of war. And we know they're doing this in just ignoring warnings written and oral from the Biden administration that we're prepared to use force against China to discharge our obligations pursuant to our 1951 Mutual Defense Treaty with Manila. So that's extremely volatile and extremely dangerous as well. And by the way, China's lashing out at Japan and India at the same time. So this is not a good story. It shows strategic incoherence in Beijing, which means something is terribly wrong inside the Communist Party. Gordon, can you tell us now about your new book, Plan Red, China's Project to Destroy America? Tell us what readers can expect when they order it and what they can get out of it. American policy analysts, policy elites, American leaders, they fundamentally do not understand China's assault on the American Republic. You have all sorts of people in New York and Washington who say, oh, we can cooperate with the Chinese on certain things. Well, you really can't because the Communist Party believes it is in an existential struggle with the U.S. And they believe that not because of anything we say or do, but because of who we are. An insecure regime in Beijing is worried about the inspirational impact of America's values in form of governance on the Chinese people. So we will never have amicable relations with China. We will never have acceptable relations with China, as long as the Communist Party rules it. We can lose our country. China is far weaker than us, but we're not defending ourselves against its malicious attacks. Gordon Chang, thank you very much for your insight here today. Thank you. The European Union's next foreign policy chief is outlining a key focus, preventing Russia and partly China from undermining Europe's security. Kayakalos responded to EU lawmakers in a letter published Tuesday. She said her short-term priority must be to address the pressing global concerns, that's Russia's war against Ukraine and strengthening the EU's security and defense. And according to her, China's support for Russia is definitely a challenge. Kalas said the bloc must be prepared to manage threats, adding that, quote, Russia, Iran, North Korea and partly China aim at weaponizing and exploiting the openness of Western societies. Before her new role, Kalas served as Estonia's prime minister. The International Monetary Fund upgraded its outlook for the U.S. economy this year. At the same time, it lowered its expectations for growth in Europe and China. Here's more on why. The battle against inflation is almost won. After peaking at 9.4 percent year-on-year in the third quarter of 2022, we now project headline inflation will fall to 3.5 percent by the end of next year. In most countries, inflation is now hovering close to central bank targets. Inflation came down while the global economy remained resilient. U.S. growth has been led by strong consumer spending and healthy gains in inflation-adjusted wages. But the IMF expects the U.S. economy to decelerate next year with a new presidential administration and Congress in place. China's economic growth is expected to slow from last year, still hobbled by a collapsing housing market and weak consumer confidence. As for the 20 European countries that share the euro collectively, they're expected to see minor growth this year. The IMF also warned that lowering borrowing costs aids the world's economies, but the need to contain enormous government deficits will likely put a brake on growth. U.S. Geological Survey researchers estimate between five and 19 million tons of lithium reserves are present beneath southwestern Arkansas, far surpassing current worldwide demand. That's according to a study published on Monday in Science Advances. The lead researcher said they estimate there is enough dissolved lithium present in that region to replace U.S. imports of lithium and more. If commercially recoverable, the supply could potentially meet the projected 2030 world's demand for lithium in car batteries nine times over. China currently processes around 70 percent of the world's lithium. U.S. automakers are speeding up the competition with China, the goal to reduce America's dependence on China for battery-making materials. As China and the West battle for clean energy dominance, critical materials like lithium are becoming as precious as gold. The latest battleground, the South American Lithium Triangle, where billions of dollars and the future of electric cars, smartphones and renewable energy are at stake. NTD's Sean Marshall brings us more. The South American Lithium Triangle is made up of Argentina, Bolivia and Chile. They hold nearly two-thirds of the world's lithium reserves and could surpass Australia and China as the world's top producer of what some call the new white gold. According to an CME group, the triangle is forecast to attract over $30 billion in five years from Chinese, North American and Australian investors. Looking ahead in each country, the CME report states $10 billion to $20 billion is expected to pour into Argentina by 2029. That's the world's second largest estimated lithium reserves holder. At least six plants are currently under construction. In Chile, Chinese carmaker BYD plans to build a $290 million battery materials plant. And Texas-based EnergyX plans to build a production plant with its proprietary direct lithium extraction technology. Bolivia holds the world's largest lithium reserves. The country is set to bring in billions of dollars in the coming years. But production timelines have been delayed due to feasibility studies, making battery production increasingly difficult. CME groups said a key component of small device batteries used in phones, cars and more, lithium demand is growing and creating an increased need to manage a fluctuating price risk. The financial group went on to state that as a result, market participants are turning to their lithium futures market in record numbers. And in just the first half of 2024, trading in their lithium hydroxide futures contract has already surpassed a full year 2023 totals. Sean Marshall, NTD News. 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 chinainfocusntd.com. We'd love to hear from you. For around the clock original news coverage, visit us at ntd.com or download our NTD app. Coming up on NTD, stay tuned for America's Hope with Kelly Wright. Tonight, a discussion about the race for the Oval Office with two men familiar with the candidates. Former President Trump's speechwriter F.H. Buckley shares his insights. Then successful attorney Timothy Allen Simon, who has known Vice President Kamala Harris for 30 years, shares his perspective. That's tonight at 10 p.m. after China In Focus. Thanks for watching. See you tomorrow.