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China’s export and import growth beats forecasts

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China’s export and import growth beat forecasts in the January-February period, providing encouragement for policymakers trying to support the economic recovery.

China’s improving export data followed South Korea and Germany, whose shipments beat expectations in the first two months of the year as Asian economies benefited from a surge in demand for semiconductors.

Exports from the world’s second-largest economy rose 7.1 percent in the two months from a year earlier, beating expectations in a Reuters poll for a 1.9 percent increase, customs data showed on Thursday. Imports, however, rose 3.5 percent, compared with expectations for a 1.5 percent increase.

“The better-than-forecast data reflect a recovery in global trade driven by the electronics sector, but also benefit from a low base effect as export growth in January-February was -6.8%,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.

The customs bureau publishes trade data for January and February together to correct for distortions caused by the change in the timing of the Lunar New Year, which falls in February this year.

Chinese PM Li Qiang announced on Tuesday that the economic growth target for 2024 is 5 per cent, similar to last year, and pledged to transform the country’s development model based on exports of manufactured goods and excess industrial capacity.

Policymakers have struggled with low growth rates over the past year as consumers postponed spending, foreign companies divested, manufacturers struggled to find buyers and local governments grappled with huge debt burdens and the housing crisis.

A sustained recovery in exports is also important, although this key growth engine is expected to help support the economy.

“After accounting for changes in export prices and seasonality, we estimate that export volumes rose sharply in January and February, reaching a new high,” Huang Zichun, China economist at Capital Economics, said in a note.

“However, we are sceptical about the sustainability of this strength as exporters’ ability to cut prices to maintain market share is now more limited,” he added.

Exports to the US rose, while shipments to the EU fell

Market reaction to the trade data was largely muted. China’s blue-chip CSI300 index fell 0.32%, while Hong Kong’s Hang Seng index was down 0.47%.

China’s trade surplus widened to $125.16 billion, compared with $103.7 billion in the survey and $75.3 billion in December.

Commodities data released on the same day showed the Asian giant’s crude oil imports rose 5.1% year-on-year in the first two months of 2024, as refiners increased purchases to meet fuel sales during the Lunar New Year holiday, while copper imports rose 2.6%.

China’s total exports to the US returned to growth in January-February, rising 5% year-on-year, compared with a 6.9% fall in December. However, shipments to the EU fell by 1.3% over the same period.

Expectations of global monetary easing may also provide some relief to China’s hopes of boosting exports, but economic conditions in many major developed countries look bleak in the short term. Both Japan and the UK slipped into recession in the second half of last year, while the eurozone economy also stalled.

ASIA

Chinese, Russian troops hold joint exercise targeting cross-border terrorism

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China and Russia have held a joint military exercise focusing on cross-border terrorism, amid growing concern over terrorist attacks in Moscow.

The drill was held on 25 June in a river area near the Heilongjiang Bridge linking Russia’s Blagoveshchensk and China’s Heihe, the Chinese military’s official media outlet PLA Daily reported on Tuesday.

It was the first joint counter-terrorism drill between the neighbouring countries since Russia’s intervention in Ukraine.

It came just days after terrorist attacks in Russia’s southern region of Dagestan on 23 June, in which at least 22 people were killed in shootings at two synagogues, two Orthodox churches and a police station.

In March, more than 140 people were killed in an attack on a concert hall in Moscow, the deadliest terrorist attack in Russia for almost two decades. The Khorosan branch of ISIS claimed responsibility for the attack.

According to the PLA Daily, last week’s joint exercise simulated ‘terrorists trying to cross the border’ to launch an attack.

Chinese and Russian troops used aerial reconnaissance, maritime interception and land ambush to intercept and capture the terrorists during the exercise.

The exercise, which focused on improving intelligence sharing and operational coordination, showed the “firm determination” of both militaries to take effective measures to “combat all forms of terrorism, separatism and extremism” while jointly securing border areas, the report said.

The report also said that the two sides discussed further deepening border cooperation.

This is not the first time the two countries have held joint counter-terrorism exercises. In 2019, China’s People’s Armed Police took part in an exercise with the Russian National Guard in Russia.

According to Tass, Russian Foreign Minister Sergei Lavrov reaffirmed the two countries’ ongoing cooperation in the fight against terrorism, including on multilateral platforms, during a meeting with his Chinese counterpart Wang Yi in April.

Aiming to strengthen law enforcement cooperation

Last week’s joint exercise follows an agreement between Chinese and Russian leaders during Russian President Vladimir Putin’s visit to Beijing in May to strengthen cooperation in law enforcement and defence, including by expanding joint training and exercises.

The Chinese and Russian coast guards also signed a memorandum of understanding on maritime law enforcement cooperation in April last year.

In March, China and Russia organised a naval exercise with Iran focusing on anti-piracy efforts. China and Russia also held joint naval and air exercises in the Sea of Japan, or East Sea, in July last year.

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Controversial military operations and ethnic dynamics in Pakistan’s fight against terrorism

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In a recent high-level meeting, the federal government of Pakistan announced its intention to launch a new military operation against terrorist organizations. This decision is aimed at eradicating militancy under the banner of Azm-i-Istehkam. Surprisingly, the military leadership has remained silent on this proposed operation, leaving the advocacy to political figures, notably Defense Minister Khawaja Asif of the Pakistan Muslim League (PML-N).

The Pakistan People’s Party (PPP), a significant coalition partner in the federal government, has maintained a conspicuous silence on the matter. Meanwhile, despite the approval from Khyber Pakhtunkhwa’s Chief Minister Ali Amin Gandapur, factions within Pakistan Tehreek-e-Insaf (PTI) and the Sunni Ittehad Council have openly opposed the operation. This divergence in political opinion highlights the complex dynamics at play in Pakistan’s approach to counter-terrorism.

The opposition from various regional and ethnic parties, including the Pashtun Protection Movement (PTM), Pakhtunkhwa Milli Awami Party (PkMAP), and the Awami National Party (ANP), stems from deep-seated concerns about the operation’s focus and its implications. Historically, PTI and PkMAP have not been staunchly anti-Taliban. PTI’s leader, Imran Khan, has consistently opposed military actions against Taliban militants, advocating instead for dialogue. Similarly, PkMAP leader Mehmood Khan Achakzai, while ostensibly opposing terrorism, is perceived to have friendly relations with the Taliban, as evidenced by the relative safety of his party members from Taliban attacks.

Significant religious-political entities have complex stances on militancy in Pakistan

The relative safety of certain political groups, like PTM and the National Democratic Movement, from Taliban violence raises questions. Critics argue that this perceived immunity could suggest covert alliances or understandings, casting doubt on the motivations behind their opposition to the military operation.

Jamiat Ulama-e-Islam (JUI-F) and Jamaat-e-Islami (JI), both significant religious-political entities, have complex stances on militancy. JUI-F’s position has been ambiguous since the Soviet invasion of Afghanistan in 1979. In contrast, JI, having reaped substantial benefits from the Afghan war, now finds itself sidelined and is striving to reassert its relevance by attempting to align with nationalist sentiments.

The media and sections of the government, particularly those influenced by Punjabi and Urdu-speaking elites, have often portrayed the Taliban as predominantly Pashtun. This narrative has led to the proposed military operation being focused on Pashtun-majority areas, such as Khyber Pakhtunkhwa and Balochistan. Defense Minister Khawaja Asif’s statement that the operation will target these regions reinforces this perception.

Pashtun-dominated regions reject the notion that terrorism is a Pashtun phenomenon

However, leaders from Pashtun-dominated regions, like Khan Muhammad Wazir of the ANP, reject the notion that terrorism is a Pashtun phenomenon. Wazir points to the involvement of non-Pashtun militants in numerous terror attacks across Pakistan. He highlights the role of Punjabi militants in groups like the Punjabi Taliban, Lashkar-e-Jhangvi, and Jamaat-ul-Ahrar, who have orchestrated some of the deadliest attacks in recent years. Wazir’s argument underscores the ethnic diversity of militant groups in Pakistan, challenging the stereotype of the Pashtun terrorist.

Wazir’s emotional plea for an operation starting in Punjab, rather than Pashtun areas, aims to shift the focus to the diverse origins of militancy. He names several key figures from Punjab involved in terrorist activities, such as Tariq Lahori of Daesh and Maulana Qasmi of Jamaat-ul-Ahrar. By highlighting these figures, Wazir seeks to demonstrate that terrorism in Pakistan is not confined to any single ethnic group.

Doubt on the narration of the proposed military operation “Azm-i-Istekham”

The insistence on a military operation in Pashtun regions, driven by a media narrative dominated by Punjabi and Urdu-speaking elites, risks alienating the Pashtun community. Wazir’s call for international intervention by entities like China, the United States, Russia, the United Nations, and the Organization of Islamic Cooperation (OIC) underscores the severity of this perceived ethnic targeting. If the government and media continue to frame terrorism as a predominantly Pashtun issue, it may lead to increased ethnic tensions and further marginalize the Pashtun population.

The proposed military operation “Azm-i-Istehkam” and the political dynamics surrounding it reveal deep-seated ethnic and regional tensions within Pakistan. While the operation aims to eradicate terrorism, its focus on Pashtun areas risks reinforcing harmful stereotypes and overlooking the broader ethnic diversity of militant groups. A more equitable approach, recognizing the involvement of non-Pashtun militants and addressing the root causes of militancy across all regions, is crucial for fostering national unity and effectively combating terrorism. Only through such an inclusive strategy can Pakistan hope to achieve lasting peace and stability.

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Huawei Harmony aims to end China’s reliance on Windows and Android

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While Chinese tech giant Huawei’s recent smartphone launches have been closely watched for signs of progress in China’s chip supply chain, the company has also developed expertise in sectors vital to Beijing’s vision of technological self-sufficiency, from operating systems to car software.

Chinese President Xi Jinping told the CPC Politburo last year that China must fight hard to localise operating systems and other technologies “as soon as possible” as the US restricts exports of advanced chips and other components.

OpenHarmony, developed by Huawei, is widely promoted in China as the “national operating system”.

“This strategic move is likely to erode the market share of Western operating systems such as Android and Windows in China as local products gain traction,” Sunny Cheung, an associate fellow at the Jamestown Foundation, a US defence policy group, told Reuters.

In the first quarter of 2024, Huawei’s own version of the HarmonyOS operating system overtook Apple’s iOS to become the second best-selling mobile operating system in China after Android, according to research firm Counterpoint. It has not yet been released on smartphones outside China.

“Harmony has created a strong core operating system for the future of China’s devices,” Richard Yu, president of Huawei’s consumer business group, said at the opening of a developer conference last week.

Self-sufficiency

Huawei first introduced Harmony in August 2019, three months after Washington imposed trade restrictions over alleged security concerns. Huawei denies that its equipment poses a risk.

Since then, China has stepped up its self-sufficiency efforts, pulling out of the main code-sharing centre Github and supporting a local version, Gitee.

China banned the use of Windows on government computers in 2014 and now uses mostly Linux-based operating systems.

Microsoft derives only 1.5 per cent of its revenue from China, its chief executive said this month.

Originally built on an open-source Android system, Huawei this year released the first “pure” version of HarmonyOS, which no longer supports Android-based apps, further separating China’s app ecosystem from the rest of the world.

Huawei said in its 2023 annual report that OpenHarmony was the fastest-growing open source operating system for smart devices last year, with more than 70 organisations contributing to it and more than 460 hardware and software products produced in the financial, education, aerospace and industrial sectors.

Visited by Reuters, Charlie Cheng, deputy director of the Harmony Ecosystem Innovation Centre, said the aim of making it open-source was to replicate Android’s success in eliminating licensing costs for users and provide companies with a customisable springboard for their own products.

“Harmony will definitely become a mainstream operating system and give the world a new choice of operating systems besides iOS and Android,” he said.

Google, Apple and Microsoft did not respond to requests for comment.

China’s previous efforts to build large open source projects have struggled to gain traction among developers, but Huawei’s growing smartphone market share and extra work to develop a broader ecosystem gives Harmony an edge, analysts said.

Huawei’s Yu said this month that more than 900 million devices, including smartphones, watches and car systems, were running HarmonyOS and that 2.4 million developers were coding in the ecosystem.

“OpenHarmony will need more time and iterations for these developers to feel more confident about working with OpenHarmony,” Emma Xu, an analyst at research firm Canalys, told Reuters, adding: “But the reputation, behaviour and trust that HarmonyOS has achieved will certainly have a positive impact.”

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