HSBC, StanChart May Face Secondary Shockwaves From Evergrande Crisis: Analysts

LONDON—HSBC and Standard Chartered could face spillover damage to their profits and balance sheets from the debt crisis enveloping China Evergrande Group even though the two banks say they have limited their direct exposure, analysts have warned.
Other banks and insurers could also suffer indirect effects such as loss of fees or a devaluation of their investments.
HSBC and StanChart make a big chunk of their profits in China and Hong Kong and they have been the foreign banks most involved in underwriting syndicated loans for developers there. That means they are likely to face the most immediate second-order impacts, analysts at JPMorgan said in a research report.
HSBC and Standard Chartered both declined to comment on the report.
Evergrande has left global investors guessing over whether it will make a key interest payment, adding to fears of big losses for bondholders and sending tremors through China’s property sector and economy.
Hong Kong and mainland China accounted for around 84 percent of HSBC’s profits in 2020 while China, Hong Kong, Taiwan, and North Asia contributed 81 percent of StanChart’s profits last year, according to a Reuters analysis of filings by the two companies—underscoring the region’s importance to their overall businesses.
The two have the most direct lending exposure among foreign banks to China’s property sector—$17 billion or 1.5 percent of group assets for HSBC and $1.3 billion or 0.5 percent of group loans at StanChart, according to JPMorgan.
Pedestrians walking past the logo for HSBC in Hong Kong on Sept. 21, 2020. (Isaac Lawrence/AFP via Getty Images)
The property sector contributes 14 percent of China’s GDP or 25 percent if indirect contributions are included, JPMorgan said, and property loans are worth some 6.6 percent of total loans, meaning a hit to the sector could have significant wider economic impacts.
HSBC and Standard Chartered have both said they have no direct exposure to Evergrande, and that they have taken steps in recent years to carefully manage their exposures to any one sector.
HSBC has already sold all positions in its China bond or Asia credit portfolios with exposure to Evergrande, a source at the bank said.
Citing Dealogic data, JPMorgan said HSBC has been involved in underwriting 39 outstanding syndicated loans for Chinese developers while StanChart has worked on 18 such deals, which could come under pressure if there are wider property sector defaults.
In a syndicated loan banks typically underwrite the deal and then sell the debt to other investors, but may keep some of the exposure on their books.
“There is a risk that this is not an idiosyncratic event but an industry-wide problem which could result in significant spillover damage,” JPMorgan said.
The U.S. bank said it estimates there could be a further 11 defaults worth some $30 billion this year across the Chinese high-yield property sector, amounting to a 23 percent default rate.
Market Chill
Other European financial firms also face a negative impact on business lines such as capital markets, asset management and private banking, said Dierk Brandenburg, head of financial institutions at ratings agency Scope.
A man walks in front of unfinished residential buildings at the Evergrande Oasis, a housing complex developed by Evergrande Group, in Luoyang, China on Sept. 15, 2021. (Carlos Garcia Rawlins/Reuters)
“These will impact the profit and loss figures of Europe’s globally active banks in the coming quarters, as could the ensuing regulatory crackdown by Chinese authorities,” he said.
Chinese real-estate companies have tapped the public U.S. dollar bond market for $274 billion in the past five years, Scope analysts said, citing Bond Radar data, suggesting foreign banks could lose out on fees if such deals dwindle.
Insurers’ investment portfolios could also be affected, said Volker Kudszus, Sector Lead for EMEA Insurance at S&P Global Ratings.
“We are not concerned by direct exposure of European insurers to Evergrande, but indirect exposure, e.g. through investments in the Chinese equity or real estate market, might see some volatility,” Kudszus said.
Insurers Prudential, Ageas, and Swiss Re were likely to have the most exposure to Chinese real estate, Morningstar analysts said this week.
Ageas said its Chinese joint venture company had no direct exposure to Evergrande but around 2 percent of the corporate bond portfolio was invested in highly-rated Chinese real estate debt.
“Only further widespread spillover to the general stock markets would have an impact on our results,” an Ageas spokesperson said.
Prudential Chief Executive Mike Wells told CNBC this week that the insurer’s exposure to Evergrande was “de minimis,” and that less than 5 percent of the insurer’s bond holdings were in Chinese real estate.
Prudential also has a joint venture in China.
Swiss Re did not have direct investments in Chinese property in its real estate portfolio, a spokesperson said.
By Lawrence White and Carolyn Cohn

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Hong Kong Tycoon Richard Li’s FWD Makes US IPO Filing Public

HONG KONG—Insurance company FWD Group Holdings Ltd., owned by Hong Kong billionaire Richard Li, made its filing for a stock market listing in the United States public on Thursday Sept. 23, revealing a jump in revenue last year.
The insurer, which will list through an initial public offering (IPO), posted revenue of $9.49 billion last year. FWD also said its net loss applicable to shareholders narrowed to $243 million in the year ended Dec. 31, 2020, compared with a $278 million loss a year earlier.
The company had confidentially filed for the listing in June. FWD has not yet set the terms for its IPO, but Reuters  reported it could raise $2 billion to $3 billion, valuing the company at $13 billion to $15 billion.
Richard Li is the son of Hong Kong’s richest man, Li Ka-Shing. FWD’s foundation was laid in 2012 with the acquisition of ING’s Hong Kong, Macau, and Thailand units for $2.1 billion, and it has since continued this bolt-on approach.
Major acquisitions include the $3 billion purchase of Siam Commercial Bank PCL’s life insurance unit in Thailand in 2019, just days after agreeing to buy the Hong Kong operations of U.S. insurer MetLife, Inc.
There has been indicative interest in up to $500 million of the stock being sold in the IPO, according to the filings.
The Li Ka Shing Foundation has indicated it could buy up to $300 million worth of stock, while Richard Li’s PCCW Ltd. could take $100 million, the filings showed.
FWD’s controlling shareholder, Pacific Century Group—another Richard Li firm—has also flagged its interest in investing $100 million.
The indicative orders account for nearly one-quarter of the IPO at the lower end of the proposed raising range.
FWD also said it would raise $400 million from Apollo Global Management Inc. in a private placement, as part of a new asset and investment management agreement.
By Niket Nishant

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Japan Factory Output Seen Down Again in August on Supply Chain Disruption: Poll

TOKYO—Japan’s factory output likely fell again in August as the country’s manufacturing sector faced supply chain disruptions driven by a global chip shortage and the spread of the Delta coronavirus variant in Southeast Asia.
Retail sales also likely eased in August after a sharp rise in July, according to the poll, underscoring the fragility of domestic consumption and shattering policymakers’ hopes that Japan’s export-based recovery from the coronavirus pandemic would become more broad-based.
Separate data is expected to show Japan’s jobless rate inched up in August and job availability eased a tad, also boding ill for consumer spending, which makes up over half of the world’s third-largest economy.
The batch of weak data underscores the challenge the new leader of the ruling Liberal Democratic Party (LDP), and hence the new prime minister, will face as he or she seeks to battle COVID-19 while keeping the economy afloat.
Data from the Ministry of Economy, Trade and Industry is expected to show industrial output fell 0.5 percent in August from the previous month, according to the Reuters poll of 19 economists. Output fell for a second straight month but at a slower pace than in July, when it declined 1.5 percent.
Japan’s recovery has been led by exports of cars and capital goods. Analysts worry a supply crunch in Southeast Asia and a slowing Chinese economy could hurt output and export demand respectively, threatening to derail the Japan’s rebound from the pandemic-led slump.
“Car production remained under pressure for adjustment and China’s pick-up from the COVID pain appeared to be stalling,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Economists in the poll saw retail sales declining 1.0 percent in August from a year earlier, after growing 2.4 percent in July, as the hit to service sector activity from the COVID-19 crisis lingered. It would be the first year-on-year decline in six months.
The Ministry of Economy, Trade and Industry will release both industrial output and retail sales data on Sept. 30 at 8:50 a.m.(Sept. 29 at 2350 GMT).
The country’s unemployment rate was expected to worsen, rising a tad to 2.9 percent in August from 2.8 percent in July, while the jobs-to-applicants ratio was projected to ease slightly to 1.14 from 1.15 in the previous month.
Job figures will be released on Oct. 1 at 8:30 a.m. (Sept. 30 at 2330 GMT).
Housing starts data, due on Sept. 30 at 2 p.m. (0500 GMT), is likely to show a 9.5 percent increase in August, after a 9.9 percent gain in July.

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China’s Xi Inspects Secret Space Base, Asks the Military to Prepare for War

Chinese leader Xi Jinping recently inspected a secret space base in western China, and instructed the military officers and soldiers to “prepare for war.” Analysts believe that the Chinese Communist Party (CCP) is in deep crisis, but the real tension comes from internal rather than neighboring countries.
According to Chinese state-run media, during an inspection of the space base in Shaanxi Province on Sept. 15, Xi stated that “space assets” are strategic assets of the CCP that must be “managed and utilized well.” He praised the base for having made a significant contribution to the CCP’s aerospace development, and told the military personnel to focus on “war preparation,” to improve combat readiness, and aim at becoming a “world-class army” as well as “a space superpower.”
Beijing-based DWnews revealed that this was Xi Jinping’s first public inspection of the CCP’s strategic support forces, and the site was very likely the Xi’an Satellite Measurement and Control Center, codenamed the “26th Experimental Training Base (Unit 63750)” in the military. It is the operation, control, and management center of the CCP’s aerospace measurement and control network, mainly responsible for monitoring spacecraft launches, spacecraft tracking and measuring, data transmission, information processing, and recovery.
Established on Dec. 31, 2015, the CCP’s Strategic Support Force is composed of various types of units that play important supporting roles, including battlefield environment protection, information and communication protection, information security protection, and new technology testing, etc, according to DWnews.
War Preparation Is to Divert Attention from Internal Crises
Li Yanming, a political commentator living in the United States, noted that in the run up to the CCP’s 20th National Congress, Beijing is facing both domestic and international crises, and the high-level internal fighting was intensified to the point of approaching a showdown. In an interview with The Epoch Times, Li pointed out that military confrontations in the Taiwan Strait, South China Sea, East China Sea, China-India border, the Korean Peninsula, and other surrounding regions may escalate at any time. This is a new international order resulting from the U.S.-led global comprehensive anti-communist campaign.
Li believes that at the international level, the military tensions around China are related to the CCP’s diplomatic, political, and economic relations with the United States, Russia, and Japan. Within the CCP, it has become increasingly clear that former CCP leader Jiang Zemin’s faction attempts to take advantage of these crises and military conflicts to force Xi to step down.
For Xi Jinping, preparing for war can not only divert attention from internal crises, but at the same time help to shape himself into the image of a national hero who defeats both foreign forces and political enemies.
China has been ever more aggressive in pursuing its territorial and maritime sovereignty claims in the South and East China Seas, along the China-India border, and frequently invading into Taiwan’s airspace.
Gui Yuan, a Chinese current affairs commentator living in Japan, told The Epoch Times that the CCP is now out of control and in the middle of intertwined internal and external crises. It seems that the external conflicts are very tense, but in reality, the regime’s internal crisis is more acute. Behind Xi’s emphasis on war preparation is the urge to resolve internal crises, and Xi’s real goal to strengthen his power, Gui said.
Chong Sheng (pseudonym), an independent commentator in China, also believes that Xi’s true intention is to stabilize his power.
“Xi Jinping has his own sphere of influence, and some second-generation from the top CCP families support him, but the opposition faction seems to be greater,” Chong told The Epoch Times. “That is to say, Jiang Zemin, his political opponent, is still very powerful. In order to consolidate his rule, Xi has been purging officials in Jiang’s faction. For instance, so far he has replaced the commander of the Western Theater Command four times this year!”
Kane Zhang contributed to this report.

Winnie Han
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Winnie Han is currently engaged in reporting Chinese news for The Epoch Times.

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The $31 Billion Bubble Scam and the Nicaraguan Canal Myth

News Analysis
In May of this year, the Shanghai Stock Exchange (SSE) imposed disciplinary sanctions on the Beijing Xinwei Technology Group Co., Ltd. (Xinwei Group), and its chairman, Wang Jing. The sanctions included the delisting of the company’s shares and disallowing Wang to serve in any managerial capacity of listed companies for 10 years.
Subsequent to the sanctions being imposed, the Xinwei Group’s assets became negative $2.3 billion and created significant financial turmoil for over 100,000 of its shareholders.
The Nicaraguan Canal Hype
Xinwei Group created a sensational scandal when it failed in its promise to build a navigable waterway through Nicaragua that would have rivaled the Panama Canal in size.
In 2012, Wang initiated contact with Nicaraguan authorities to discuss getting permission to build a Nicaraguan canal. Meanwhile, Xinwei Group formed a private company in Hong Kong, HKND Group, which would oversee the build of this major canal.
In July of 2013, The Telegraph reported on Wang’s plans to build the 170-mile Nicaragua Grand Canal, which would connect the Pacific Ocean and the Caribbean Sea. The $40 billion venture was touted to challenge the eighth wonder of the world—the Panama Canal’s monopoly on shipping in Central America—and forever change international shipping routes.
Wang’s canal idea was not new. In 1567, King Philip II of Spain proposed the same idea and conducted site surveys for the project. Then during the early part of the 19th century, the French Emperor Napoleon III proposed a similar project for the region.
Even the U.S. government considered building a canal through Nicaragua at the start of the 20th century, but then abandoned those plans after negotiating with the French to purchase and complete their work on the Panama Canal. There would be no further talk about a Nicaraguan canal until Wang’s canal route plan was approved in 2014.
Wang’s plan was to complete the Nicaraguan canal within 5 years. After which, the main investor HKND Group would be granted rights to use the canal and its facilities for 100 years. In the meantime, over 400,000 jobs would be created, but this would not prevent local members of the South Atlantic Autonomous Region from protesting and saying: “Our land is not for sale and will not be given away,” “Chinese people get out,” and “No canal.”
Despite the public protests, the Nicaraguan government agreed to proceed. Wang increased the canal’s total investment to $50 billion. On the day construction began, the world watched as Wang and Nicaraguan President Daniel Ortega were photographed cutting the ceremonial ribbon.
The project did not evolve as was initially hyped. A few years later, BBC reported the $50 billion project employed fewer than 30 people and had only built a dusty trail of about 10 kilometers. What was once an engineering phenomenon had become the scam of the century.
Exposing the Scam
After concluding the Nicaraguan canal agreement in June 2013, the Xinwei Group began to leverage the project’s growing prestige to attract investors and shell listings. In September 2013, it announced a shell listing of the Beijing Zhongchuang Telecom Test Co., Ltd. for a total consideration of $4.2 billion. Over the next two years, its market value exceeded $31 billion and it was listed on the SSE 50 Index.
Wang profited handsomely as well. According to Forbes China, Wang’s 1.01 billion shares in the Xinwei Group grew to $6.6 billion in 2014, making him one of China’s top billionaires. The Xinwei Group enabled three additional Chinese investors to become billionaires, including Jiang Ning, Wang Yongping, and Wang Qinghui.
The Xinwei Group’s initial appeal would eventually evaporate due to its weak foundation, mysterious dealings, and lack of transparency. The group was originally formed in 1995 by Datang Telecom, a Chinese state-owned entity. It didn’t do well financially and was then acquired by Bonade Investment Company, which declared Wang as the principal shareholder. Since then, the owner of Beijing Changping Bathhouse, a drop-out from Jiangxi University of Traditional Chinese Medicine, transformed into the chairman of Xinwei Group.
After taking over as chairman for the Xinwei Group, Wang claimed the company had turned a loss into an $88.4 million profit due to a large order of $466 million from Cambodia. But an investigation report by NetEase Finance in 2016 “Xinwei Group’s Surprising Game: Hiding Huge Debts and Mysterious People Cashing Out,” said Wang’s report was fraudulent. The profits he reported were based on an illusion created by Xinwei Group and its subsidiary, Cambodia Xinwei.
The investigation discovered the subsidiary (Cambodia Xinwei) agreed to order $466 million in products from the parent (Xinwei Group). The parent used the order as collateral to obtain a $466 million loan from the China Development Bank. The borrowed funds were then used by the subsidiary to fund its order from the parent. This is equivalent to using the guarantee for revenue.
Relying on the same fraudulent business model used in Cambodia, Xinwei Group began expanding its operations into Ukraine, Russia, Tanzania, Nicaragua, and others.
Meanwhile, Wang used international hot projects to grab public attention within China. For example, Wang was instrumental in forming Beijing Skyrizon Aviation, a company that was sanctioned by the United States for attempting to acquire a Ukrainian aviation engine company. Other projects included building a deep-water port in Crimea, acquiring an Israeli satellite company, and getting involved in overseas security. Wang even threw out the idea of an “air and space information network,” with the intent to launch one rocket that can carry four satellites within three years, and by 2019, to launch 32 or more satellites to form a satellite communication system covering the world. These hot projects and dreams made media and investors excited and helped the company to obtain new loans to pay back the old debt.
NetEase Finance confirmed that Xinwei Group’s apparent growth was based on lies and fraudulent practices. In fact, the company was heavily indebted and had enabled many of its mysterious shareholders to reduce their holdings or cash out their shares before any problems were exposed. Specifically mentioned were investors Wang Yongping, who salvaged $35.38 million; Wang Qinghui, who obtained $26.85 million; and Lu Dalong, who picked up $19.24 million. Wang Jing had personally received at least $1.6 billion in cash in 2017.
On July 12 of 2019, Xinwei Group’s trading was overturned after more than 900 days of suspension. After falling for 36 consecutive days, the company set a record for consecutive A-share losses, with market value evaporating nearly $29.5 billion. Over 150,000 of its shareholders were hurt by a per capita loss of $37,000, yet 120,000 shareholders remained on Xinwei Group’s list of investors as of the end of March 2021.
It’s alleged that Wang has disappeared after pledging 35 percent of his Xinwei Group shares to major Chinese financial and securities companies, including China Development Bank and Shengjing Bank.
The scams perpetrated by Wang created havoc and financial ruin for thousands of people in China and around the world. It also brought suffering for the Nicaraguan people. The Nicaraguan government still holds the land and land development rights that were forcibly expropriated for the canal construction, and local residents are still upset with having been evicted from their property. Many landowners were incarcerated, injured, or killed during conflicts with the police and government authorities.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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Evergrande Investors on Hold After Payment Deadline Passes

SINGAPORE/SHANGHAI—China’s Evergrande Group has left global investors guessing over whether it will make a key interest payment, adding to fears that Beijing will let overseas bondholders swallow large losses as a liquidity crisis deepens for the world’s most indebted property company.
Evergrande owes $305 billion, has run short of cash, and investors are worried a collapse could pose systemic risks to the Chinese regime’s financial system and reverberate around the world.
A Thursday deadline for paying $83.5 million in interest on a dollar bond passed without remark from Evergrande.
The firm has a 30-day grace period and will default if that passes without payment.
Evergrande’s behavior on the dollar bond interest payment and another $47.5 million payment due next week contrasts with its treatment of its domestic investors. The company this week resolved one coupon payment on a domestic bond.
“This is part of the tactics of any sovereign driven restructuring process—keeping people in the dark or guessing,” said Karl Clowry, a partner at Addleshaw Goddard in London.
“The view from Beijing is offshore bondholders are largely Western institutions and so can justifiably be given different treatment. I think people think it’s still a falling knife,” said Clowry.
The Chinese regime’s central bank again injected cash into the banking system on Friday, Sept. 24, seen as a signal of support for markets. But authorities have been silent on Evergrande’s predicament, and the regime’s state media has offered no clues on a rescue package.
“These are periods of eerie silence as no-one wants to take massive risks at this stage,” said Howe Chung Wan, head of Asia fixed income at Principal Global Investors in Singapore.
“There’s no precedent to this at the size of Evergrande … we have to see in the next ten days or so, before China goes into holiday, how this is going to play out,” said Wan.
Evergrande appointed financial advisers and warned of default last week and world markets fell heavily on Sept. 20 amid fears of contagion, though they have since stabilized.
An Evergrande collapse could crush a property market that accounts for 40 percent of Chinese household wealth.
Protests by disgruntled suppliers, home buyers, and investors last week, illustrated discontent that could spiral in the event a default sparks crises at other developers.
Global markets on Friday seemed rattled by the missed payment and regulatory silence.
Play for Time
Only some $20 billion of Evergrande’s debts are owed offshore. Yet the risks at home are considerable because of the threat to China’s property sector and because the company’s liabilities spread across bank balance sheets and beyond.
So far there have been few signs of official intervention. The People’s Bank of China’s $42 billion cash injection this week is the largest weekly sum since January.
Some banks, insurers, and shadow banks have begun urgent checks on their exposure to the troubled sector.
“We are concerned about the spillovers into the real economy and broader credit conditions,” said analysts at Societe Generale in a note. “The longer policymakers wait before acting, the higher the hard-landing risk.”
Evergrande’s shares handed back some Thursday gains on Friday and fell 13 percent, while stock of its electric-vehicle unit dropped 20 percent to a four-year low. Its bonds fell slightly on Friday.
“It is clear now that Evergrande will make use of the 30-day grace period, to see if there is any further development” said Jackson Chan, assistant manager of fixed income research at research portal Bondsupermart.

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Special Live Q&A Webinar: China’s Information War to Subvert the U.S.

Special Live Q&A Webinar: China’s Information War to Subvert the U.S.
Chinese Communist Party (CCP) leader Xi Jinping recently announced a new propaganda assault, meant to promote the regime’s system of government as a global model. Under this campaign, it seeks to both promote the image of the CCP as a responsible and fair player on the global stage, while also decrying and tearing down the image of its main rival, the United States.
The CCP employs many systems to control information domestically and overseas, including its Great Firewall for internet censorship, its “50 Cent Army” of paid internet trolls, and its tight controls over the film and entertainment industry. Its efforts in the West, however, often go under the radar, such as its long-running campaign to influence foreign elites to manage public opinion on China. Targets include journalists, researchers, business owners, and politicians.
In this upcoming Live Q&A webinar of The Epoch Times, we’ll explore the topic of CCP subversion and its systems to control global narratives. Join host Joshua Philipp and guests speakers Natalie Winters, Chris Fenton, and Antonio Graceffo for this special online event.
Join the event on Epoch TV: 
September 29, 7:30pm ET, on EpochTV.com
Moderated by:Joshua PhilippHost of Crossroads, Senior Investigative Reporter at The Epoch Times
Panelists:Natalie WintersInvestigative Reporter with The National Pulse
Chris FentonAuthor of “Feeding the Dragon: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA & American Business” 
Antonio GraceffoEconomics ProfessorAuthor of “Beyond the Belt and Road: China’s Global Economic Expansion”
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Alibaba Plans to Drop Domestic Broadcaster Amid Beijing’s Regulatory Crackdown

Chinese e-commerce giant Alibaba is seeking to sell its entire stake in Mango Excellent Media, less than a year after buying stock shares from the company. The move comes as Beijing has tightened its grip over various industries, including e-commerce.
Television-based service provider Mango Excellent Media, headquartered in Hunan Province, announced on Sept. 24 that an investment arm of Alibaba Group Holding Ltd. proposed to sell the entire 5.01 percent shares of the broadcaster, according to the company’s filing to Shenzhen Stock Exchange.
The shares were valued at about $600 million based on Thursday’s closing price. However, the tech giant paid $960 million when it bought the shares nine months ago.
Alibaba is seeking a waiver from a one-year lockup agreement, the filing showed. The agreed period ends on Dec. 26, 2021.
The document didn’t reveal the proposed selling price, yet shares of the media company have fallen roughly 40 percent since Alibaba’s investment proposal was disclosed last year.
Alibaba built a portfolio of media holdings under its founder Jack Ma, covering print media, social media, advertising, and movies. The company has stocks in media outlets, including Hong Kong-based South China Morning Post and China’s Twitter-equivalent platform Weibo, in addition to its own filmmaking division, Alibaba Pictures.
A copy (C) of the South China Morning Post is displayed at a newsstand in Hong Kong on Dec. 12, 2015. (Anthony Wallace/AFP via Getty Images)
Ma and his empire have been targeted in a regulatory crackdown since the past year. The billionaire criticized China’s regulatory system in a speech last October for having “too many prohibitions and limitations with too few policies.”
Soon after, Ma disappeared for three months. Meanwhile, regulators rolled out sweeping punishments, including a record $2.8 billion antitrust penalty in April and halting its affiliate company Ant Group’s $37 billion listing in Shanghai and Hong Kong last November.
Moreover, Beijing ordered Alibaba to liquidate its media assets for challenging the state-controlled media propaganda, according to a March report by The Wall Street Journal.
Alibaba said in a statement that it did not “intervene or get involved in the [media] companies’ day-to-day operations or editorial decisions,” The Journal reported.
As of date, Alibaba’s stock price has fallen by nearly half over the past year.
In recent months, the Chinese Communist Party has implemented regulatory crackdowns that have targeted several big companies and organizations, as well as influential individuals, in a bid to solidify its rule in the mainland, according to China watchers.

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Rita Li is a reporter with The Epoch Times, focusing on China-related topics. She began writing for the Chinese-language edition in 2018.

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Xi Jinping Readying to Counter a Military Coup

News Analysis
Before discussing what’s happening with Party leader Xi Jinping, we need to look at a similar situation in China’s history.
On Sept. 13, 1971, a plane crashed in Wendul Khan, Mongolia, killing all nine people on board. The Chinese Communist Party (CCP) said that Lin Biao, Mao Zedong’s successor, together with his wife and son, were victims of the deadly crash as they fled to the Soviet Union. Soon thereafter, the authorities further clarified that Lin had been planning a military coup to assassinate Chairman Mao.
Lin Biao had a notable military career during wartime and also played an important role as Mao’s right-hand man after the CCP seized power in China. In April 1969, when the CCP’s 9th National Congress adopted a new Party constitution, it named Lin as Mao Zedong’s “intimate comrade-in-arms and successor.”
Lin and his close followers in the military were therefore labeled a “counter-revolutionary group.” As a result, thousands of high-ranking military officials were purged. In addition to implicated subordinates, tens of thousands of military personnel were affected.
Efforts to Pardon Lin
Before Xi Jinping took over as head of the CCP, the Party had made some gestures to restore Lin’s reputation. For instance, in Chinese war movies produced in the 1990s, Lin was portrayed as a military genius. In the 2007 amended version of the Chinese Military Encyclopedia, Lin was described as “one of China’s 36 contemporary military strategists.” And in March 2008, state-run Xinhua News Agency published a commentary, saying Lin’s historical merits needed to be affirmed.
Lin was indeed the key strategist in several of the CCP’s decisive battles against Japanese troops and China’s national Kuomintang army, and was highly acclaimed for his military talents.
The Party Commands the Gun
However, on Sept. 16, the CCP’s leading theoretical journal Qiushi published an article condemning Lin for “plotting a military coup” in the 1970s. The article emphasized that the history of the CCP’s founding is about “the Party commanding the gun.” In other words, the Party has always controlled the military.
Although Lin’s main sphere of influence was in the military, the Quishi article stated that the reason Lin’s coup plot failed was that, “the entire People’s Liberation Army (PLA) resolutely listened to the Party and followed the Party’s instructions.”
The article also criticized Zhang Guotao, a founding member of the CCP, for “attempting to use guns to command the Party,” and another early CCP leader, Wang Ming, for advocating that every decision must be approved by the “United Front.” Zhang and Wang were both purged in the CCP’s political ideology struggles when Mao gradually rose to power.
The article was widely republished by other Chinese state media.
Xi’s Warning
U.S.-based current affairs commentator Chen Pokong told The Epoch Times that the Qiushi article seems to suggest that right now there is likely a coup plan in the PLA, and the central authorities have great difficulty controlling the military. The article, when stressing that it is the Party that commands the guns, intends to warn the military that Xi, who is also the Chairman of the Military Commission, has the highest authority over the PLA.
Chong Sheng (pseudonym), an independent political commentator inside China, shares similar views. Chong told The Epoch Times that Xi has already purged many communist officials with allegiance to former Party secretary Jiang Zemin, and has been up against opposing forces inside the CCP all these years.
Xi inspected a secret military base in Shaanxi Province on Sept. 15, and the Qiushi article came out the next day. That indicates, Xi wants to give the military a clear message: when he has the final showdown with the Jiang faction, the military must listen to the central authorities. In other words, the military must listen to Xi’s instructions, Chong said.

Jessica Mao
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China Places Southeastern City in Hard Lockdown as COVID-19 Cases Surge

A coastal Chinese city has tightened lockdown restrictions by barring hundreds of thousands of residents from leaving and punishing those who do, amid a widening Delta variant outbreak.
The Fujian Provincial Health Commission confirmed 15 cases on Sept. 24, with 11 in Xiamen city. As of Friday, the city totaled 222 cases in the past two weeks, more than the official infection figures reported in Putian city, the latest COVID-19 outbreak’s epicenter.
Given that the Chinese regime is known to underreport the number of infections, the official counts are unlikely to represent the total, but they reflect a high infection rate in Xiamen city.
The scenic coastal city of Xiamen closed major tourist spots, issued travel restrictions, and shut all non-essential locations at the beginning of the new outbreak.
The regime’s top health authorities required the city to step up efforts to monitor and control people’s movements, launch mass testing, and place more close contacts under quarantine, Sun Chunyang, the deputy director of the National Bureau of Disease Control and Prevention, said at a conference on Sept. 21.
Tong’an district, an area that accounted for 90 percent of cases reported in the city, told residents “not to leave home other than in exceptional circumstances” and that “gatherings are prohibited” in a Thursday notice.
Over 660,000 residents in Tong’an district are currently on their seventh day of lockdown after authorities ordered them to stay at home on Sept. 16. The official panel tasked with controlling and preventing the spread of the CCP (Chinese Communist Party) virus had closed off residential compounds and villages affected by the outbreak.
Xiamen police said in another Thursday notice that they gave two men five-day administrative detention sentences as punishment after the two tried to cross a fence to leave Tong’an district, according to state media Xinhua.
Staff guarding at the entrance to the district stopped the two when they tried to walk out of the area for the first time on Sept. 22. Police arrested them later while they were crossing the fence to detour around checkpoints.
A medical worker collects samples to be tested for the Covid-19 coronavirus in Xiamen, in China’s eastern Fujian province on Sept. 18, 2021. (STR/AFP via Getty Images)
The leadership of Tong’an vowed to complete its fifth round of mass testing on Thursday. Yang Hua (pseudonym), a resident from Guanxun village in the district, told The Epoch Times that residents are afraid of receiving tests as the site is too crowded.
She started to queue for a nucleic acid test from 4 a.m. Sept. 20, but didn’t receive a test until 9 p.m., she said. Over 50,000 residents in the village had to receive the nucleic acid test at one site.
“You won’t know [the real situation] from the official report, ” she said.
Another resident from Panxu town in Tong’an said a couple of fights broke out in the queue as everyone hoped to be tested first.
The outbreak in Xiamen city has prompted other cities across the country to issue travel warnings ahead of tourist season beginning in late September.
A major national holiday starts from China’s Mid-autumn Autumn Festival. Generally, millions of people are expected to travel across the country.
Hong Ning and Zhang Yujie contributed to this report.

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China Promotes IVF to Combat Rising Infertility Rates in its Aging Population

After the Chinese Communist Party (CCP) introduced the “three-child policy” in May, local governments started various incentives to encourage people to have more children, including the use of in vitro fertilization (IVF). Analysts believe that the CCP would go as far as using technological means to increase China’s birthrate in an aging population.
On Sept. 14,  Chinese state-controlled media CCTV said that, in recent years, more families are choosing assisted reproductive technology with infertility on the rise.
In the CCTV program, some experts recommended IVF as the most common method among the various  techniques, commonly referred to as test-tube babies. According to the report, about 300,000 test-tube babies are born in China every year.
However, assisted reproduction is costly. Including examination and treatment, an IVF procedure costs between $5,873 and $7,728, and more than half of the couples require the procedure more than once before it succeeds.
Meanwhile, China has limited medical institutions that offer assisted reproduction procedures, most of which are in its first-tier or second-tier cities. Patients in certain regions would need to travel to other provinces for each treatment, incurring considerable expenses.
According to China’s National Bureau of Statistics, there are currently 50 to 60 million infertile couples of childbearing age in China, and the infertility rate has doubled six times in the last 30 years. The latest data showed that the infertility rate of couples of childbearing age has risen to 12 to 18 percent.
Jinxin Fertility, a Chinese assisted reproductive medical company, said in its 2019 prospectus that the prevalence of infertility in China is expected to rise from 16 percent in 2018 to 18.2 percent in 2023. According to its estimation, China’s infertility rate has long been higher than the global average, and it is projected to be even higher in the future.
“Childbirth is one of the most important natural processes of human life. What caused such a big change in 30 years?” Dr. Cui Hong said to the Epoch Times reporter. Dr. Cui is a former Chinese obstetrician and gynecologist who has practiced medicine for nearly 30 years.
“There are many reasons [for the rising infertility rate]: increased pollution of the living environment, chemicals in food, fast paced work and life, increased stress and so on, coupled with people marrying late and giving birth later in the modern age, missing their best childbearing age. In addition, various modern diseases cause the quality of sperm or eggs to decline,” Dr. Cui said.
She said that the rate of congenital infertility is extremely low, so it is primarily due to acquired causes. If a person’s body has undergone surgery and is substantially damaged, it may also lead to infertility.
“In the past, people focused more on self-cultivation and vitality. At that time, the fertility rate was very high. Whereas, in the modern age, people are more prone to nervousness and anxiety,” Dr. Cui said while emphasizing that the human mind plays a critical role in fertility.
Dr. Cui said that as a doctor, she is not opposed to IVF, “If you are still infertile after common fertility treatments, you can try assisted reproduction procedures, but the success rate is at most half.” She suggests that the majority of unsuccessful IVF cases are related to the mother’s health. During IVF, an egg is removed from the woman’s ovaries and fertilized with sperm in a laboratory. The fertilized egg, called an embryo, is then returned to the woman’s womb to grow and develop. However, some women have weaker bodies, and are unable to bear the process.
Although most parents want their own children, sometimes, if one of the couples cannot provide qualified sperm or ova and still want to use IVF, they can have the hospital provide donor sperm or the egg. In this case, the child born will have no blood relations with one of the parents, adding complexity to their relationship.
“At this time, the CCP is propagating test-tube babies and is eager to increase the fertility rate through technical means to curb the trend of population decline. However, distant water won’t quench [their] immediate thirst; the technology may not be mature enough,” Zhuge Mingyang, an independent journalist, told The Epoch Times.
The world’s first test-tube baby, Louise Brown, was born in England on July 25, 1978. She is 43 years old this year. She was married in 2004 and gave birth to a baby boy in 2006 through a natural pregnancy.
The ethical and moral controversies of test-tube babies have existed since its inception.

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Shawn Lin is a Chinese expatriate living in New Zealand. He has contributed to The Epoch Times since 2009, with a focus on China-related topics.

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