China
East Asian economies resist decoupling
Quantifying the effect of supply chain decoupling is difficult. Trade controls, particularly export controls over high-tech products, became a major policy tool for decoupling in the United States and for some US allies, including Japan.
Media on global trade frequently puts forward the narrative that the US–China confrontation will divide the world in two. But East Asian developing economies have a different view of supply chain decoupling since US–China merchandise exports and imports hit a record high in 2022 and East Asian production networks continue to move actively.
Author: Fukunari Kimura, Keio University
Quantifying the effect of supply chain decoupling is difficult. Trade controls, particularly export controls over high-tech products, became a major policy tool for decoupling in the United States and for some US allies, including Japan.
Items subject to export controls are specified in terms of traded goods, used technologies, export destination, importers and end-use. But the coverage is set very wide and only a small portion of exports are actually under strict control. Governments do not disclose information on products that are banned or under investigation. They also do not disclose how long the investigation took, even ex-post. Private firms may refrain from exporting without seeking an official decision. The international trade commodity classification may not match sensitive export items such as high-end semiconductors.
According to my on-going study with Mitsuyo Ando and Kazunobu Hayakawa, monthly international trade data at the industry level does not show any clear evidence of supply chain decoupling or a drastic reorganisation of production networks until the end of 2022. Yet the August 2020 US export controls that targeted Huawei substantially slowed down the company’s production in China and subsequently reduced Japanese exports to China, especially for parts and components used in Huawei’s wireless communication equipment assemblies. Regression analyses find a statistically significant reduction in Japanese exports to China since August 2020, particularly in semiconductor-intensive parts. The on-going study estimates a 3.3 per cent reduction in exports during this period compared to 2019 trade data. Supply chain decoupling is real, but the trade-reducing effect seems to be limited in scale so far.
Supply chain decoupling in the US–China confrontation came into a new phase when the Biden administration endorsed the Chips and Science Act in August 2022 and strengthened US export controls in October 2022. Though the implementation details of these policies have not been disclosed yet, they will likely further disrupt supply chains in terms of parts, materials, production machines and technologies used for supercomputers.
But supply chain decoupling will likely only be partial. International production networks have overall remained active, particularly in East Asia. Globalisation has provided many private firms with global economic opportunities. With the current heated geopolitical debate between the United States and its allies, the expansion of trade controls is inevitable. But the ‘rest’ of the economy outside of effective trade controls should not be neglected in this debate. The world must keep economic dynamism.
For middle powers such as Japan, the government can take several measures to ensure the health of the rest of the economy. The border between the economy, which is placed under strict trade controls, and the rest of the economy, which is not, must be delineated as clearly as possible.
It is important for civilians that military-use technologies do not get lumped in with regular technologies to avoid an adverse effect on the rest of the economy. If the border is not made clear, the private sector will face huge uncertainties that may shrink trade and investment. It is not only middle powers that must mark clear borders between the economy under trade controls and the rest of the economy, but also the United States. Middle-power governments should communicate closely with the United States and provide relevant information to the private sector. The cost of a blurred border will punish small and medium enterprises as well as firms in developing countries.
Middle powers such as Japan must practice economic diplomacy for the Global South — especially ASEAN — by deepening economic and social relationships, rather than being forced to choose a side. The South is interested in promoting a new agenda on digital and green trade and investment. The negotiation over the Indo-Pacific Economic Framework, for example, must enhance multilateral economic relationships, rather than just pushing an economic security agenda.
The rest of the economy must keep to the rules-based trading regime. While the G7…
Business
Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
Gordonstoun school severed ties with Hampton Group over espionage allegations against chairman Yang Tengbo. He denies involvement and claims to be a victim of political tensions between the UK and China.
Allegations Lead to School’s Decision
Gordonstoun School in Moray has cut ties with Hampton Group International after serious allegations surfaced regarding its chairman, Yang Tengbo, who is accused of being a spy for the Chinese government. Known by the alias "H6," Mr. Tengbo was involved in a deal that aimed to establish five new schools in China affiliated with Gordonstoun. However, the recent allegations compelled the school to terminate their agreement.
Public Denial and Legal Action
In response to the spying claims, Mr. Tengbo publicly revealed his identity, asserting that he has committed no wrongdoing. A close associate of Prince Andrew and a former Gordonstoun student himself, Mr. Tengbo has strenuously denied the accusations, stating that he is a target of the escalating tensions between the UK and China. He has claimed that his mistreatment is politically motivated.
Immigration Challenges and Legal Responses
Yang Tengbo, also known as Chris Yang, has faced additional challenges regarding his immigration status in the UK. After losing an appeal against a ban enacted last year, he reiterated his innocence, condemning media speculation while emphasizing his commitment to clear his name. Gordonstoun, on its part, stated its inability to divulge further details due to legal constraints.
Source : Gordonstoun cuts ties with business chaired by man accused of spying for China
Business
China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
The Chinese government demolished the Rebiya Kadeer Trade Center in Xinjiang, affecting Uyghur culture and commerce, prompting criticism from activists amid concerns over cultural erasure and human rights violations.
Demolition of a Cultural Landmark
The Chinese government recently demolished the Rebiya Kadeer Trade Center in Urumqi, Xinjiang, a vital hub for Uyghur culture and commerce, as reported by VOA. This center, once inhabited by more than 800 predominantly Uyghur-owned businesses, has been deserted since 2009. Authorities forcibly ordered local business owners to vacate the premises before proceeding with the demolition, which took place without any public notice.
Condemnation from Activists
Uyghur rights activists have condemned this demolition, perceiving it as part of China’s broader strategy to undermine Uyghur identity and heritage. The event has sparked heightened international concern regarding China’s policies in Xinjiang, which have been characterized by allegations of mass detentions and cultural suppression, prompting claims of crimes against humanity.
Rebiya Kadeer’s Response
Rebiya Kadeer, the center’s namesake and a notable Uyghur rights advocate, criticized the demolition as a deliberate attempt to erase her legacy. Kadeer, who has been living in exile in the U.S. since her release from imprisonment in 2005, continues to advocate for Uyghur rights. She has expressed that her family members have suffered persecution due to her activism, while the Chinese government has yet to comment on the legal ramifications of the demolition.
Source : China Demolishes Uyghur Business Landmark in Xinjiang – Shia Waves
China
China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
China’s private pension scheme, previously piloted in 36 cities, will roll out nationwide on December 15, 2024, enabling workers to open tax-deferred accounts. The initiative aims to enhance retirement savings, address aging population challenges, and stimulate financial sector growth.
After a two-year pilot program, China has officially expanded its private pension scheme nationwide. Starting December 15, 2024, workers covered by urban employee basic pension insurance or urban-rural resident basic pension insurance across the country can participate in this supplementary pension scheme. This nationwide rollout represents a significant milestone in China’s efforts to build a comprehensive pension system, addressing the challenges of a rapidly aging population.
On December 12, 2024, the Ministry of Human Resources and Social Security, together with four other departments including the Ministry of Finance, the State Taxation Administration, the Financial Regulatory Administration, and the China Securities Regulatory Commission, announced the nationwide implementation of China’s private pension scheme effective December 15, 2024. The initiative extends eligibility to all workers enrolled in urban employee basic pension insurance or urban-rural resident basic pension insurance.
A notable development is the expansion of tax incentives for private pensions, previously limited to pilot cities, to a national scale. Participants can now enjoy these benefits across China, with government agencies collaborating to ensure seamless implementation and to encourage broad participation through these enhanced incentives.
China first introduced its private pension scheme in November 2022 as a pilot program covering 36 cities and regions, including major hubs like Beijing, Shanghai, Guangzhou, Xi’an, and Chengdu. Under the program, individuals were allowed to open tax-deferred private pension accounts, contributing up to RMB 12,000 (approximately $1,654) annually to invest in a range of retirement products such as bank deposits, mutual funds, commercial pension insurance, and wealth management products.
Read more about China’s private pension pilot program launched two years ago: China Officially Launches New Private Pension Scheme – Who Can Take Part?
The nationwide implementation underscores the Chinese government’s commitment to addressing demographic challenges and promoting economic resilience. By providing tax advantages and expanding access, the scheme aims to incentivize long-term savings and foster greater participation in personal retirement planning.
The reform is expected to catalyze growth in China’s financial and insurance sectors while offering individuals a reliable mechanism to enhance their retirement security.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
Read the rest of the original article.
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- China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
- China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
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