CiCM 28th March 2024

NEWS IN CHINA

China Urges Asian Collaboration for IMF Quota Reform at Boao Forum: Pan Gongsheng, Governor of the People's Bank of China, urged Asian countries to unite in pushing for reforms to the International Monetary Fund (IMF) quota system during the Boao Forum for Asia Annual Conference 2024. Stressing the need for fair representation, Pan advocated for adjustments to reflect the evolving global economic landscape and to empower emerging markets and developing nations. He emphasized the significance of quota adjustments in enhancing the IMF's governance and crisis relief capabilities. Pan also highlighted the importance of refining the Chiang Mai Initiative to bolster global financial market resilience against external risks. Moreover, he underscored the role of bilateral currency swaps in facilitating trade and investment while providing a supplementary global financial safety net. Pan revealed that China's bilateral currency swap agreements with 29 countries and regions exceed 4 trillion yuan ($553.4 billion). Eddie Yue Wai-man, Chief Executive of the Hong Kong Monetary Authority, also discussed advancements in central bank digital currencies, anticipating smoother cross-border settlement systems through pilot programs like mBridge.

Counter-Espionage Agency Warns of Foreign Espionage Using Consulting as a Cover: China's Ministry of State Security issued a stern warning regarding foreign entities exploiting consulting activities to acquire sensitive information, emphasizing heightened risks to national security. According to the agency's WeChat post, overseas spy agencies have been utilizing consulting as a façade to pilfer classified data. The ministry underscored the gravity of the situation by sharing a video depicting a real case where a consultancy colluded with foreign agencies to extract confidential information from a Chinese company planning overseas investments. The ministry condemned such activities as illegal acquisition of commercial secrets, endangering China's key industries. It highlighted the broadened scope of espionage under revised laws, extending beyond direct cooperation with spy agencies. Notably, recent raids on foreign consulting firms signal China's proactive stance against espionage. With cybersecurity concerns escalating, the public is urged to remain vigilant against foreign infiltration, reflecting China's stringent stance on national security threats.

China Asset Management Association Revokes Registrations of Six Firms: The Asset Management Association of China has intensified its crackdown on irregularities in the private equity sector, issuing 21 disciplinary decisions in March. Targeting six private equity institutions and 15 responsible individuals, all six firms have had their administrator registrations revoked. Among the punished entities are Shenzhen Huakang Guangdong Investment Co., Hebei Jianbang Equity Investment Fund Management Co., and Hefei Wojia Investment Management Co. Violations include operating in conjunction with group companies, failing to meet administrator registration requirements, and making illegal promises to investors. The penalties reflect the tightening regulatory environment in China's private equity market, with recent measures requiring higher paid-up capital and stricter qualifications for managers. The move underscores efforts to enhance professionalism, standardization, and transparency in the industry. So far this year, over 100 fines have been issued by the China Fund Management Association, signaling a "zero tolerance" stance against problematic practices.

China Condemns Deadly Bombing in Pakistan, Vows to Uphold Economic Corridor Amid Tragedy: Beijing strongly denounced a suicide bombing in Pakistan that claimed the lives of five Chinese nationals working on Dasu hydropower project in Khyber Pakhtunkhwa province. The attack, which occurred on Tuesday, resulted in the deaths of six individuals, including five Chinese engineers and their Pakistani driver. China's Ministry of Foreign Affairs reaffirmed its stance against terrorism and pledged unwavering support to Pakistan in combating such acts. The Chinese government emphasized the enduring partnership between the two countries and the significance of the China-Pakistan Economic Corridor (CPEC) in fostering economic and social progress in Pakistan. While demanding a swift investigation and justice for the victims, Chinese officials urged heightened security measures to protect Chinese personnel, projects and institutions in Pakistan. Despite concerns over security, analysts believe the attack is unlikely to significantly hinder the robust economic cooperation between Beijing and Islamabad.

Former Chinese National Men's Football Team Coach Faces Bribery Charges in First Public Hearing: The Intermediate People's Court of Xianning City, Hubei Province, conducted a first-instance public hearing on March 28, against Li Tie, the former head coach of the Chinese National Men's Football Team, accused of bribery-related charges. Li Tie allegedly exploited his coaching positions to influence player selections, game outcomes, and club agreements, illicitly accruing over 50.89 million yuan in bribes from 2019 to 2021. The prosecution revealed that Li Tie solicited and received monetary benefits for coaching appointments and match results. During the trial, both prosecution and defense presented evidence and arguments, with Li Tie expressing remorse for his actions. The court adjourned without delivering a verdict, scheduling it for a later date. The trial attracted over 40 attendees, including NPC deputies, CPPCC members, journalists, and individuals from various sectors. This trial was part of a broader crackdown on corruption within Chinese football, with similar cases heard concurrently in other Hubei courts.

India Asserts Uncompromising Border Security Stance Amidst Ongoing Talks with China: India's External Affairs Minister S. Jaishankar emphasized his unwavering commitment to securing borders during the latest round of talks with China in Beijing. Mr. Jaishankar's assertion came amidst ongoing efforts to resolve border disputes, with both sides expressing optimism about progress. According to the Chinese Foreign Ministry, the 29th meeting of the Working Mechanism for Consultation and Coordination on India-China Border Affairs was held on Wednesday and it discussed achieving a mutually acceptable plan to maintain peace along the border. Jaishankar's comments, including those made during a meeting with the Indian community in Malaysia, underscored India's stance on border security. Chinese analysts viewed Jaishankar's remarks as a strategic move to shift responsibility to China and strengthen India's bargaining position. Despite tensions, trade between the two nations surged by 15.8 percent in early 2024. However, Chinese analysts warn against provocative actions exacerbating the situation. Amidst calls for cautious diplomacy, Hu Zhiyong stressed the importance of respecting historical facts to ensure healthy bilateral relations.

China Lifts Anti-Dumping Tariffs on Australian Wine: China's Ministry of Commerce (MOFCOM) has announced the cancellation of anti-dumping and anti-subsidy tariffs on Australian wine, effective immediately, signaling a promising turn in trade relations. The decision, declared on Thursday, comes following shifts in China's wine market dynamics. The move follows an application by the Australian Grape & Wine on October 31, 2023, urging a review of the imposed tariffs. MOFCOM had initiated a review of the anti-dumping and countervailing duties on Australian wine from November 30, 2023. MOFCOM spokesperson He Yadong cited evolving market conditions as a rationale for the move. This decision marks an early end of a five-year anti-dumping tariff imposed on Australian wine imports since March 28, 2021. The Australian government lauded the decision, particularly for its timing amidst challenges in the local wine industry. Analysts note the significance of this decision, given Australia's substantial share in China's wine market before tariffs were imposed. In 2019, Australian wine dominated with a 35.54% market share. The removal of tariffs is expected to revitalize this market position. Bilateral trade data underscores the importance of this development. Despite previous tensions, bilateral trade surged by 9.8% in yuan terms last year. The decision augurs well for broader economic cooperation, provided both nations continue constructive dialogue.

Lianlian Digital Debuts on Hong Kong Stock Exchange, Marks a Milestone for Cross-Border Payments: Lianlian Digital (2598.HK) made history on March 28 by becoming China's inaugural listed payment institution emphasizing "cross-border payment" on the main board of the Hong Kong Stock Exchange. Despite a sluggish market debut, with shares closing down 7.63% at HK$9.44, the company's listing marks a significant stride in international capital markets. Chairman Zhang Zhengyu highlighted the listing as a pivotal moment as it aims to expand its global footprint and foster long-term value growth. The company's global offering, revealed on March 27, raised HK$548 million with a final offer price of HK$10.22 per share. Notably, Hangzhou State-owned Assets secured a substantial stake in the international offering. Analyst Wang Pengbo emphasized the capital-intensive nature of the cross-border payment industry, stressing the importance of continual investment in technology and compliance to sustain market leadership amidst increasing competition, including from industry giants like Tencent. Despite potential market growth moderation post-pandemic, Lianlian Digital's listing is anticipated to enhance its visibility, governance, and profitability in the evolving financial landscape.

SOCIAL MEDIA CHATTER IN CHINA

Sichuan Court Sentences Influencers for Fabricating Rural Hardship in Online Fraud Case: Eight individuals, including prominent live streamers and executives of a multichannel network agency, have been convicted in Sichuan for exploiting rural hardship to sell products online, resulting in jail sentences ranging from nine to 14 months. The influencers, such as Liangshan Mengyang and Liangshan Aze, amassed millions of followers by portraying fabricated tales of rural struggle, urging viewers to purchase endorsed goods. Liangshan Mengyang, presenting herself as a rural orphan caring for her siblings, gained fame on Douyin (Chinese TikTok) by showcasing herself in dilapidated conditions while selling agricultural products. However, complaints about product quality and revelations of her actual family circumstances sparked an investigation into the MCN agency's operations. Authorities discovered that merchandise was sourced from wholesale markets, and false marketing tactics, like hiring individuals to feign interest in products, were employed. This incident follows previous investigations into similar fraudulent practices in the region, signaling ongoing efforts to combat deceptive marketing in China's burgeoning influencer economy.

INDIA WATCH

India has consistently advocated for reforms within the International Monetary Fund (IMF) to rectify its obsolete governance structures and biases towards advanced economies. At the 16th General Review of Quotas last year, Finance Minister Sitharaman reiterated India's commitment to a quota-based and adequately resourced IMF at the core of the global financial safety net and climate action. She stressed the necessity for enhanced representation of developing economies in IMF decision-making processes. The quota system within the IMF holds a pivotal role in its financing and governance structures, determining financial resources, voting power, and access to borrowing for member countries. Similarly, RBI Governor Das has previously emphasized the imperative for a stronger and more responsive IMF to aid countries facing financial distress, highlighting the reluctance of South Asian nations to approach the IMF due to perceived stigma or limited access. Quota reforms, including both quota increases and realignment, are essential to restructuring the IMF's ownership to reflect the growing significance of emerging markets and developing economies (EMDEs). Without a substantial increase in lending capacity through permanent, quota-based resources, the IMF risks losing its position as the anchor of the Global Financial Safety Net (GFSN), necessitating a predominant reliance on quota subscriptions rather than temporary arrangements. Furthermore, the reform agenda encompasses demands for emerging markets and developing economies to receive voting rights beyond their quotas, alongside ensuring accountability in the Fund's decisions and decision-makers. Unlike the United Nations General Assembly, where each country holds one vote, the IMF's voting rights are tied to quota shares, disproportionately favoring advanced economies. With a projected GDP growth between 6.8 to 7.2% in FY 2024, India seeks greater representation and influence in global financial matters. By championing quota reforms and increased inclusivity within the IMF, India endeavors to foster a more equitable international financial architecture that addresses the needs of all member countries.

Prepared By

Aliza Mehdi

Aliza Mehdi is a final year student of Political Science at Indraprastha College for Women. Her academic areas of interest include Comparative Politics, Conflict Studies, Developmental Economics and Film and Television Studies, and is currently working as an Associate (Training and Development) at Pratarka - an education startup specialising in soft-skill development and pedagogical research for students. She is interested in politics, policy, design and writing, and is an active member of the DU varsity debating circuit.