Hello, welcome to “News Perspectives,” I am Lisa.
Today’s focus: Xi Jinping absent from the UN General Assembly, China launches intercontinental missiles! Analysis: Intimidating everyone, promoting the formation of a mini-NATO mechanism! China rolls out heavyweight policies to rescue the market, but fails to address core economic threats, possibly exposing internal crises? Investors seize the opportunity!
China conducted a rare intercontinental ballistic missile (ICBM) test in international waters on Wednesday, sparking protests from many neighboring countries. This ICBM launch by the Chinese Communist Party is the first in over 40 years, with Beijing calling it a “routine arrangement” not directed at any specific country or target. They claim to have notified “relevant countries” in advance.
This launch undoubtedly heightened tensions in the Indo-Pacific region, drawing displeasure from neighboring countries. Japan stated it did not receive any prior warning, while Japan, Australia, and New Zealand collectively expressed concerns. Concern is a diplomatic understatement, as they are quite dissatisfied and shocked.
Beijing announced on Wednesday that it launched a long-range missile at 08:44 local time. The missile was equipped with a dummy warhead and landed in a designated area believed to be in the South Pacific, causing alarm for Australia and New Zealand. Tokyo expressed “serious concern” over Beijing’s military expansion. Australia labeled the action as “destabilizing, increasing the risk of miscalculation in the region” and sought an “explanation” from Beijing. New Zealand deemed it an “unwelcome and concerning development.”
With a range reaching Hawaii and the continental United States, experts view the Chinese military’s move as unusual, indicating heightened requirements for testing with the development and modernization of China’s nuclear capabilities. A U.S. Department of Defense spokesperson confirmed that China actually notified the U.S. before the test. Deputy Pentagon spokesperson Sabrina Singh said on Wednesday, “This is a step in the right direction towards reducing the risk of misunderstanding and miscalculation.” However, they also expressed the expectation for China to establish more regulated bilateral notification mechanisms for ballistic missile and space rocket launches.
The U.S. had previously warned that China had expanded its nuclear arsenal as part of its defense upgrades. The range of intercontinental ballistic missiles exceeds 5,500 kilometers, covering mainland U.S. and Hawaii. The Pentagon estimates that China possesses over 500 operational nuclear warheads, including approximately 350 intercontinental ballistic missiles. Reports predict that by 2030, China’s nuclear arsenal will exceed 1,000 warheads, while the U.S. and Russia each claim to have over 5,000 nuclear warheads.
Taiwan’s Democratic Progressive Party criticized that China’s actions of sending military planes and ships to harass neighboring countries were not enough, launching intercontinental ballistic missiles, disrupting global peace and stability, fully demonstrating being “the bad neighbor” in the Indo-Pacific. Taiwan’s Ministry of National Defense stated they were closely monitoring recent intensive military drills and missile launches by the Chinese military and would respond appropriately.
The Chinese Ministry of National Defense additionally mentioned that this test was a “routine arrangement” and part of its “annual training.” However, analysts pointed out that China’s previous test of intercontinental ballistic missiles outside its territory was in the 1980s. Previously, China typically conducted internal tests and had launched intercontinental ballistic missiles into the Taklamakan Desert in Xinjiang. Hence, such tests are very unusual for China, seemingly indicating a strategic shift by the Chinese Communist Party.
Leif-Eric Easley, a professor of international relations at the Ewha Womans University in South Korea, emphasized to the BBC, “For Washington, the message is that if they get involved in a conflict in the Taiwan Strait, it will expose the U.S. mainland to an attack.” For U.S. allies in Asia, “This provocative test … shows China’s ability to fight on multiple fronts simultaneously.”
Amid the UN General Assembly in New York, senior researcher Drew Thompson from the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore told Bloomberg, “This is a bold and provocative statement, and the timing is crucial.”
China has conveyed to the world that Beijing can launch strategic weapons at any country. “This happened during the UN General Assembly.” “This puts the world in danger.”
Former Pentagon official and senior researcher at the Lee Kuan Yew School of Public Policy in Singapore, Drew Thompson, also analyzed on the X platform that China’s choice of a high-profile test during the UN General Assembly period signals that it is not only a message to the U.S., Japan, the Philippines, and Taiwan, but also to “intimidate everyone.”
During this session of the UN General Assembly, Chinese leader Xi Jinping once again was absent and was represented by Foreign Minister Wang Yi.
Commentator Zhou Xiaohui believes this indicates that China’s purported reform and opening up are for show, and that China has not abandoned its contrary path to the world. He believes there are three factors affecting Xi’s visit to the U.S.: physical reasons and concerns about prophecy; internal power struggles within the CCP persist, and the leadership’s position is unstable; internal Chinese pessimism about improving U.S.-China relations.
This session of the United Nations General Assembly is sure to cover topics such as the Russia-Ukraine conflict, the conflict in Ethiopia, and other hot-button issues. The leader who is reluctant to change his approach naturally does not wish to openly express his true thoughts. This only deepens suspicions about China continuing along the “old path, the wrong path.”
Retired General Yu Zongji, former dean of the Institute of Political Warfare at Taiwan’s National Defense University, stated that China relies on military intimidation to threaten neighboring countries, including Japan, Taiwan, Vietnam, the Philippines, and India. He believes that these countries will more closely work to find common ways of counteraction in light of China’s latest actions as they strive to form a mini-NATO defense mechanism more quickly in Asia.
Regarding the timing of the rocket launch in the strategy of the Southern Theater Command after the commander visited the United States, this shows China’s dual strategies, engaging in communication with the U.S. on one hand while preparing for war on the other.
Yesterday on the show, I discussed how the Chinese government has introduced large-scale economic stimulus measures. Today, American media has revealed the underlying motives. Insider sources revealed that these measures were hurriedly arranged 48 hours before a joint press conference by the three major financial regulatory bodies. Why the rush? Recently, the Chinese economy has fallen into distress, and China, specifically Xi Jinping, has found it increasingly difficult to achieve the 5% GDP growth target he set, which directly impacts Xi Jinping’s reputation and poses a serious challenge to his governance capability.
According to Bloomberg’s report on Wednesday (September 25), on Tuesday, at a rare high-level press conference held in Beijing, People’s Bank of China Governor Pan Gongsheng and other senior financial officials announced a series of easing measures. Informants disclosed that the press conference was hastily arranged 48 hours earlier due to high-level anxiety over the economy, as it has become increasingly evident that this year’s growth target is becoming unattainable.
Especially concerning is a warning from at least one major coastal province official stating that the province will struggle to meet its GDP target.
Bloomberg reported that the swift transition of Chinese senior leaders has surprised many officials who waited for months to hear feedback on policy suggestions they made to revitalize the economy.
Anonymous regulatory officials revealed that they received requests last week to provide more information, forcing some officials to work overnight before the press conference on Tuesday.
In recent weeks, from Goldman Sachs to UBS and other banks, revisions to China’s economic growth expectations downwards have been made due to a series of bad economic data releases signaling falling prices.
The 5% GDP growth target for China this year was set by Xi Jinping and is crucial for the Chinese Communist Party’s reputation. Chinese Premier Li Keqiang has repeatedly made political statements vowing to achieve this goal. On August 16, Li emphasized the need to “resolutely complete the annual economic and social development goals” at a State Council meeting. At the National People’s Congress on July 31, Li expressed the determination to “resolutely complete the annual economic and social development goals.” Li’s repeated resolves on the same issue suggest a persistent anxiety.
Under Xi Jinping’s rule, social monitoring and internet controls have intensified, with even a deputy director of a top Chinese think tank falling out of favor for his speech. However, the angers of the shrinking wealth of ordinary Chinese citizens seem to be on the rise, with protests increasing.
According to Barclays’ estimate, the real estate crisis since 2021 has destroyed around 12.7 trillion yuan (equivalent to $1.8 trillion) in household wealth, with an average loss of about 420,000 yuan (equivalent to $60,000) per household.
A study surveyed tens of thousands of Chinese participants revealing that public confidence in Xi Jinping’s economic leadership is weakening, and a growing sense of pessimism pervades Chinese society. The impact of the economic downturn and persistent high unemployment rates is particularly severe on the younger population, who have lost avenues for upward mobility, confidence, and hope, resulting in a rising trend of suicide pacts.
This policy is the most significant economic stimulus measure announced by the People’s Bank of China since the outbreak of the pandemic. However, several analysts believe that the policy does not address the fundamental issues of China’s economy: weak consumption and private investment.
Duncan Wrigley, Chief China Economist at Pantheon Macroeconomics, believes that the significant easing measures by the Chinese Communist Party are insufficient to resolve the underlying issues leading China into a tightening spiral.
Nomura economists noted in a report on Tuesday that China’s economy faces a real bottleneck due to a lack of effective demand rather than available lending funds.
Economists point out that additional measures are necessary to prevent tightening, meaning how to restore consumer confidence and increase spending for China’s 1.4 billion people remains a missing key part in the current coherent strategy.
Nomura analysts noted in a report: “We believe that these monetary and financial policies alone are not enough to stop the deteriorating economic slowdown.”
On Wednesday, Reuters wrote an article under the headline “China’s monetary policy fails to address key threats to economic growth,” stating that central bank policies have not targeted the main threat to economic growth: sustained weak consumption demand.
In a report, analysts from Gavekal Dragonomics stated, “Each of the major monetary policy measures announced by the People’s Bank of China has been used in the past and had minimal impact on the economy.” “Therefore, the significance of this plan lies mainly in whether it paves the way for other measures.”
PBOC Governor Pan Gongsheng also announced the establishment of a 500 billion yuan swap facility, allowing insurance companies and asset management firms to use the mechanism for equity investment and lend to listed companies and major shareholders for stock repurchases, with an initial quota of 300 billion yuan. Authorities are also discussing establishing a “stock market stabilization fund.”
Driven by this wave of policy, on Tuesday (24th), the Shanghai and Shenzhen stock market indices rose by 4.3% and the Hang Seng Index in Hong Kong rose by 4.1%. However, the Shanghai and Shenzhen 300 Index has accumulated a 9% decline year-to-date, dropping nearly 40% from its peak at the beginning of 2021.
Despite the rebound in A-shares, analysts do not believe this round of stimulus policies is sufficient to boost the Chinese economy and sustain a continued rise in the stock market. Rory Green, Chief China Economist at London-based financial research firm TS Lombard, pointed out that given the persistently weak macroeconomic environment in China, this rebound should be regarded as a “trade” rather than an “investment,” and handled with caution. The pressure-relief rebound of A-shares since 2021 has been “swift and violent, but ultimately unsustainable.”
In my view, continuously injecting economic adrenaline like this causing a temporary stock market recovery is likely only a short-lived effect. As fundamental economic and political policy issues remain unresolved, the economy cannot sustain healthy and benign growth. For the common people and those trapped in the stock market’s downturn, this may be their final opportunity to escape.
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“News Perspectives” Production Team