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World News

India's Modi visits Himalayan border where troops clashed with China

NEW DELHI/SRINAGAR (Reuters) – Indian Prime Minister Narendra Modi flew into the northern Himalayan region of Ladakh on Friday, officials said, weeks after Indian and Chinese troops clashed on their disputed border there, escalating tension between the Asian giants.

Modi, who has been under pressure to respond to what India deems Chinese incursions, met troops at a base in Ladakh’s Nimu area, pictures from Reuters partner ANI showed.

Officials said Modi was accompanied by the chief of defence staff, General Bipin Rawat, and the chief of the army, General Manoj Mukund Naravane.

India and China have traded blame for triggering the high-altitude brawl in the Galwan Valley on June 15, in which 20 Indian soldiers were killed and at least 76 were injured.

China has not disclosed how many casualties its troops suffered.

The nuclear-armed neighbours have amassed troops along the border, most of which remains disputed, and military and diplomatic talks are going on to de-escalate the confrontation.

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Business

GM's China sales drop 5% in second quarter, underperforms industry recovery

BEIJING (Reuters) – General Motors Co’s (GM.N) vehicle sales in China dropped 5.3% between April and June from the corresponding period last year, underperforming the industry average amid a recovery from the coronavirus fallout on the world’s biggest auto market.

China’s overall figure, which includes passenger and commercial vehicles, rose 4.4% in April and 14.5% in May, said the China Association of Automobile Manufacturers (CAAM), adding that it expected auto sales to grow 11% in June.

GM, China’s second-biggest foreign automaker after Volkswagen AG (VOWG_p.DE), delivered 713,600 vehicles in the country in the second quarter, the company said in a statement, after reporting a drop of 43% in sales in the first quarter, due to the pandemic.

GM has a Shanghai-based joint venture in China with SAIC Motor Corp (600104.SS) which makes Buick, Chevrolet and Cadillac vehicles. It has another venture, SGMW, with SAIC and Guangxi Automobile Group that produces no-frills minivans and has started making higher-end cars.

Sales of GM’s mass-market brand Buick rose 7.8% while Chevrolet dropped 27.7% for the latest quarter. Sales of premium brand Cadillac fell 12%, GM said in a statement on Friday.

Sales of the no-frills brand Wuling grew 9.7%, but those of Baojun tumbled 30.7%.

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World News

Pentagon criticizes Chinese military drills in disputed South China Sea

WASHINGTON (Reuters) – The U.S. Defense Department expressed concern on Thursday about China holding military exercises in the South China Sea, saying the move will further destabilize the situation in the disputed waters.

“Conducting military exercises over disputed territory in the South China Sea is counterproductive to efforts at easing tensions and maintaining stability,” the department said in a statement.

China announced last week it had scheduled five days of drills starting July 1 near the Paracel Islands, which are claimed by both Vietnam and China.

“The military exercises are the latest in a long string of PRC actions to assert unlawful maritime claims and disadvantage its Southeast Asian neighbors in the South China Sea,” the statement said, referring to the People’s Republic of China.

The United States accuses China of militarizing the South China Sea and trying to intimidate Asian neighbors who might want to exploit its extensive oil and gas reserves.

China claims 90% of the potentially energy-rich South China Sea, but Brunei, Malaysia, the Philippines, Taiwan and Vietnam also lay claim to parts of it, through which about $3 trillion of trade passes each year.

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Economy

China joins Singapore-New Zealand initiative to keep supply chains open

SINGAPORE – China has pledged to uphold trade and supply chain connections during the coronavirus pandemic, Singapore’s Ministry for Trade and Industry said on Thursday (July 2).

The commitment to maintain cross-border flows of necessities was launched by Singapore and New Zealand in March. Since then several nations from across the world have joined the pact.

China is the 12th nation to ink the statement.

Other signatories include Australia, Brunei, Canada, Chile, Laos, Myanmar, Nauru, the United Arab Emirates and Uruguay.

The statement recognises that maintaining supply chains and trade flows amid disruptions caused by the pandemic is critical in enabling countries to emerge from the crisis stronger.

Signatories commit to refrain from imposing export controls or tariffs and non-tariff barriers and to remove existing trade restrictive measures on essential goods, especially medical supplies, during the virus outbreak.

Singapore Trade and Industry Minister Chan Chun Sing said; “We are encouraged that 12 countries are now on board. It sends a strong signal of our collective commitment to ensure the continuity and interconnectivity of supply chains during the Covid-19 pandemic.”

He added that Singapore along with other signatories to the pact would welcome other like-minded nations to join.

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Business

China's factory activity expands, but job losses quicken amid weak exports: Caixin PMI

BEIJING (Reuters) – China’s factory activity grew at a faster clip in June after the government lifted coronavirus lockdown measures and ramped up support steps, but the health crisis continues to pressure exports and jobs, a private business survey showed on Wednesday.

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.2 last month, the fastest pace of growth since December, and up from May’s 50.7. The 50-mark separates growth from contraction on a monthly basis.

Analysts polled by Reuters had expected a reading of 50.5.

China’s economy is gradually emerging from a sharp 6.8% contraction in the first quarter, with much of the country reopened after weeks of disruptions early in the year due to strict lockdown measures.

But demand remained subdued, as many manufacturers are still struggling with reduced or cancelled overseas orders amid faltering global demand.

While some of China’s trading partners are easing curbs and re-booting their economies, many are still grappling with the pandemic while a surge of worldwide infections over the past week has raised the risk of a deeper and prolonged global recession.

Consumers have also remained cautious amid job losses and fears of a fresh wave of infections in China as a cluster emerged in Beijing last month.

New export orders stayed firmly in contractionary territory, the survey showed, although the downturn eased from the sharp slump in May.

“Overall manufacturing demand recovered at a fast clip, but overseas demand remained a drag,” said Wang Zhe, senior economist at Caixin Insight Group.

The government has already rolled out a raft of easing steps this year, including reserve requirement cuts and targeted lending support and tax breaks for virus-hit firms. It has also ramped up local bond issuance in the hopes of spurring infrastructure growth.

Despite a pick-up in domestic orders, the uncertain outlook forced factories to cut payrolls for the sixth consecutive month, with the pace of job shedding accelerating. Avoiding mass unemployment is a top government priority, with a target to create over 9 million urban jobs this year.

“We should still pay attention to the pressure on employment. Top policymakers have repeatedly stressed the importance of expanding employment channels. For some time to come, increasing employment will remain an arduous task,” Wang said.

Given the uncertain outlook, the government said in late May it was not setting an annual growth target, for the first time since 2002.

An official survey on Tuesday also showed China’s factory activity grew at a quicker pace in June but smaller firms were still suffering and exporters struggled with shrinking orders, pointing to an uneven recovery.

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World News

China vs India breakthrough? Military commanders make surprising move after border clash

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Commander of the Indian Army’s 14 Corps, Lieutenant General Harinder Singh, and Major Liu Lin, commander of the South Xinjiang military region, met on Tuesday as both sides continued to mass troops on either side of the line. After the meetings took place, the two sides agreed to try to ease tensions inflamed by a deadly clash on June 15. The two sides had previously met just over a week before the fatal skirmish, again on the Chinese side.

During the incident in the Galwan Valley, 20 Indian soldiers were killed and the Chinese suffered casualties, however, they have not yet disclosed the number.

The two countries have a long-running border dispute and even the Line of Actual Control that separates the territory held by each side is undefined, raising the risk of flashpoints.

The incident has fired nationalist sentiment in both countries, which may make it harder to reach a settlement.

Srikanth Kondapalli, a professor of Chinese studies at Jawaharlal Nehru University in New Delhi, said Tuesday’s talks were held slightly earlier than expected, which suggested that last week’s meeting did not end on a positive note.

“The political leadership is not cooling down, and not much has happened in terms of disengagement. Instead, there’s been a massive mobilisation on both sides,” he said.

Following the talks between military leaders, Kondapalli said diplomats from both sides had taken “surprisingly stiff” positions.

Sun Weidong, China’s ambassador to New Delhi, has said India’s troops were to blame for crossing into Chinese territory, telling the Press Trust of India news agency that “the onus is not on China”.

READ MORE: China vs India: China conducts war games in South China Sea

Meanwhile, India’s ambassador Vikram Misri warned of “ripples and repercussions” for the countries’ relationship.

He said it was “entirely the responsibility of China” to decide how it wanted ties between the countries to develop.

Calls for a boycott of Chinese goods are growing across India, and businesses have started to report that imports are being delayed at Indian ports.

The Indian government this week has also banned a total of 59 Chinese apps.

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This includes the popular video-sharing platforms TikTok, Baidu Maps and WeChat.

In an address to the nation on Sunday, Prime Minister Narendra Modi mourned the loss of the soldiers.

“A self-reliant India would be a tribute to our martyrs in the truest, deepest sense.”

Wang Dehua, a South Asia specialist at the Shanghai Municipal Centre for International Studies, said the clash had given a platform to those in India who favoured a hardline approach towards China.

This retaliation added to the difficulty of resolving the dispute.

“Modi has overcommitted himself to an aggressive stance on China, and anti-China sentiment in India is on the rise,” he said.

“It’s impossible to say what they will talk about at the meeting today, but it hopefully will be a slow process of alternating discussion and de-escalation.”

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World News

Democracy under attack! Hong Kong reveals details of China’s new security law

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These new rules will also be overseen and enforced by a new mainland agency with the powers of the state behind it. The idea is that with these new powers, the agency would be able to take over some cases and operate in the city without falling under local jurisdiction. Released late on Tuesday night was a six-chapter (66 articles) full draft of the controversial legislation.

The full text was released only after it became effective in the city amid widespread concerns about its implications, despite official reassurances that only a small minority would be targeted.

It lists four categories of offences:

Secession – breaking away from the country
Subversion – undermining the power or authority of the central government
Terrorism – using violence or intimidation against people
Collusion with foreign or external forces or external elements to endanger national security.

Although the suggested sentence for some minor offences is less than three years’ in jail, the maximum penalty for each crime is life imprisonment.

However, some suspects can also be extradited to mainland China, but only for cases that involve “complicated situations”.

This is usually to do with interference by foreign forces; cases in which the local government cannot effectively enforce the law and ones where national security is under “serious and realistic threats”.

For those cases in which Beijing exercises jurisdiction, a mainland agency that will be established in Hong Kong to enforce national security will carry out investigations and the Supreme People’s Procuratorate will assign authorities to lead the prosecution.

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The Supreme People’s Court will assign courts to hear those cases.

Article 54 in the 66 article text, states the new agency, alongside the Office of the Commissioner of the Ministry of Foreign Affairs in Hong Kong and the local government, must adopt measures to “strengthen the management” of foreign non-governmental organisations and media agencies.

Furthermore, any details about a new national security commission and its operation will not be disclosed and its decisions are not subject to any judicial review.

If departments or local administration refused to cooperate with the new mainland agency, then severe questions will be raised.

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The law also grants wide powers to mainland agents stationed in Hong Kong.

Under Article 60, the officers and the vehicles they use to carry out their duties are not subject to checks by local law enforcement.

Professor Fu Hualing, law dean at the University of Hong Kong, said the provisions concerning Beijing’s jurisdictions over “very few cases” allowed for a large degree of discretion, which remained to be clearly defined.

“Once the central government takes over [jurisdiction], it takes away everything,” Fu said.

“There is a ‘nationalisation’ of certain crimes.”

“For the first time, national laws on criminal matters apply in Hong Kong and there is a built-in rendition.”

Critics across the world are viewing these developments as further attempts for China’s Communist Party (CCP) to enforce their laws on the people of Hong Kong and remove their autonomy and democratic right to freedom of expression.

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Business

China's factory activity quickens, but pandemic drags on exporters and recovery

BEIJING (Reuters) – China’s factory activity expanded at a stronger pace in June in a boost to hopes for a quick economic recovery globally and at home, but the persistent weakness in export orders suggests the coronavirus crisis will remain a drag on growth for some time.

The official manufacturing Purchasing Manager’s Index (PMI) came in at 50.9 in June, compared with May’s 50.6, National Bureau of Statistics (NBS) data showed on Tuesday, and was above the 50.4 forecast in a Reuters poll of analysts.

The 50-point mark separates expansion from contraction on a monthly basis.

The uptick was underpinned by the quickening pace of expansion in production. The forward-looking total new orders gauge also brightened, rising to 51.4 from May’s 50.9, suggesting domestic demand is picking up as industries from non-ferrous metals to general equipment and electrical machinery all showed an improvement.

But export orders continued to contract, albeit at a slower pace, with a sub-index standing at 42.6 compared to 35.3 in May, well below the 50-point mark.

“Despite the strong recovery between March and mid-June, we believe a full economic recovery remains distant. In our view, it is too early for Beijing to reverse its easing stance,” Nomura analysts wrote in a note to clients.

In a statement, NBS official Zhao Qinghe underscored the prevailing uncertainty about the outlook, noting that small firms in China are suffering more than their larger peers.

Indeed, despite a flurry of government measures to support smaller companies, the PMI survey showed activity in these firms contracting last month.

Shanghai prime machinery (2345.HK), a Chinese manufacturer of fasteners that has been forced to close a factory in Germany this year due to the pandemic, said on Monday it expects to record a net loss of up to 40 million yuan in the first half of 2020, compared to a net profit of 114.7 million yuan in year-ago period.

DOWNWARD PRESSURE

Beijing has stepped up support measures this year to revive the economy, which contracted sharply in the first quarter.

High frequency Chinese data tracked by Nomura showed a flurry of better-than-expected indicators recently, including power production, property and auto sales, while higher spending – particularly in infrastructure – was expected to boost economic activity for the rest of this year.

A separate official survey on China’s services sector showed activity expanded at a faster clip in June. The non-manufacturing Purchasing Managers’ Index rose to 54.4, from 53.6 in May, suggesting steadily stabilising business confidence.

Still, a sub-index for construction activity, a key driver of growth, fell to 59.8 from 60.8 the previous month, highlighting the uneven nature of the recovery both in the sector and the overall economy.

Some analysts have warned against being overly optimistic about the outlook given uncertainties around the COVID-19 pandemic.

While the improvement this month might be due to easing in restrictions across some countries, export demand has remained weak overall with infections steadily rising across the world.

Some fear a worldwide recession might turn out to be more pronounced than expected in the event a second wave of coronavirus cases force many countries to reimpose strict lockdowns.

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  • China service sector grows at fastest pace in seven months in June: official PMI

Adding to the worries domestically is a cluster found earlier this month in a food market in Beijing, underscoring the ever present economic threat posed by the virus.

Despite stronger demand, factories reduced headcount for the second time in June since they reopened, with the survey’s sub-index falling to 49.1 from 49.4 in May.

“The contrast between rising new orders and more job-shedding shows companies were still cautious about demand recovering in the short term,” Huatai securities macro analyst Yang Chang said.

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Business

China's June factory activity quickens, but exporters struggle amid pandemic

BEIJING (Reuters) – China’s factory activity expanded at a stronger pace in June, as the economy continues to recover after the government lifted strict lockdowns and ramped up investment, but export orders remained weak as the global coronavirus crisis shatters demand.

The official manufacturing Purchasing Manager’s Index (PMI) came in at 50.9 in June, compared with May’s 50.6, National Bureau of Statistics (NBS) data showed on Tuesday, and was above the 50.4 forecast in a Reuters poll of analysts.

The 50-point mark separates expansion from contraction on a monthly basis.

The uptick was underpinned by the quickening pace of expansion in production, which grew to 53.9 in June from 53.2 the previous month.

The forward-looking total new orders gauge also brightened, rising to 51.4 from May’s 50.9, suggesting domestic demand is picking up as industries from non-ferrous metals to general equipment and electrical machinery all showed an improvement.

But export orders continued to contract, albeit at a slower pace, with a sub-index standing at 42.6 compared to 35.3 in May, well below the 50-point mark.

“Although the PMI index picked up this month and the manufacturing sector recovered steadily, it is also important to see that uncertainty remains,” NBS official Zhao Qinghe said in a statement accompanying the data.

DOWNWARD PRESSURE

High frequency Chinese data tracked by Nomura showed a flurry of better-than-expected indicators recently, including power production, property and auto sales, prompting the brokerage to raise its GDP growth forecast for the second quarter to 2.6% from 1.2%.

While higher spending, particularly in infrastructure, was expected to boost economic activity for the rest of this year, some analysts have warned against being overly optimistic about the outlook given uncertainties around the COVID-19 pandemic.

Export demand has remained weak with infections steadily rising across the world. Some fear a worldwide recession might turn out to be more pronounced than expected in the event a second wave of coronavirus cases force many countries to reimpose strict lockdowns.

Adding to the worries domestically is a cluster found earlier this month, which has steadily grown to more than 200 cases associated with a food market emerged in Beijing, underscoring the ever present economic threat posed by the virus.

Beijing has announced a range of measures to bolster the economy and support jobs, but the global downturn has meant activity remains patchy in most sectors.

Related Coverage

  • China service sector grows at fastest pace in seven months in June: official PMI

Despite stronger demand, factories reduced headcount for the second time in June since they reopened, with a sub-index falling to 49.1 from 49.4 in May, the survey showed.

A separate official survey on China’s services sector showed activity expanded at a faster clip in June. The non-manufacturing Purchasing Managers’ Index rose to 54.4, from 53.6 in May, suggesting steadily stabilising business confidence.

Still, a sub-index for construction activity, a key driver of growth, fell to 59.8 from 60.8 the previous month, the survey showed, highlighting the uneven nature of the recovery.

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Categories
Business

China's June factory activity quickens to three-month high: official PMI

BEIJING (Reuters) – China’s factory activity expanded at a faster pace in June, beating expectations, as the economy continues to recover after the government lifted strict lockdowns and ramped up investment, but weak global demand is likely to be a drag on growth.

The official manufacturing Purchasing Manager’s Index (PMI) rose to a three-month high of 50.9 in June from 50.6 in May, above the 50-point mark that separates growth from contraction on a monthly basis. Analysts had expected it to slow to 50.4.

While most of the economy has reopened, many manufacturers are still struggling due to weak overseas orders as global demand falters. Domestic recovery also remains mild and below historic levels, amid renewed worries about a second wave of infections.

“We believe the economy is still far from a full recovery and Beijing cannot afford to reverse its easing stance,” Nomura analysts wrote Monday.

Related Coverage

  • China service sector grows at fastest pace in seven months in June: official PMI

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