China's imports and exports plunged in November to levels not seen since early 2020, official figures showed Wednesday (Dec 7), as severe COVID-19 restrictions hit the economy hard.

The last major economy still wedded to a zero-tolerance virus policy, Beijing's snap lockdowns, travel curbs and mass testing have stifled business activity, disrupted supply chains and dampened consumption.

Imports in November fell 10.6 per cent year-on-year, the biggest drop since May 2020, according to the General Administration of Customs.

Meanwhile, exports fell 8.7 per cent over the same period - the steepest decline since Feb 2020, when the country was mired in the early stages of the pandemic.

"Weakening domestic and foreign demand, COVID disruptions and a rising comparison base lead to a perfect but well-expected storm to China's exports and imports," Bruce Pang, chief economist at Jones Lang LaSalle, told Bloomberg News.

The figures are the latest in a string of gloomy economic indicators as the world's number two economy charts a faltering path out of zero-COVID.

Official data last week showed China's factory activity shrank for a second straight month in November, as large swathes of the country were hit by lockdowns and transport disruptions.

The Purchasing Managers' Index - a key gauge of manufacturing - fell to 48.0 from 49.2 the month prior, well below the 50-point mark separating growth from contraction, according to the National Bureau of Statistics.

"In November, the pandemic had a negative impact on the production and operation of some enterprises, production somewhat slowed, and product order volumes decreased," the bureau's senior statistician Zhao Qinghe said.

Some suppliers had complained of transport and logistics problems, while demand from both the domestic and overseas markets fell, he added.

China's ruling Communist Party has signalled a shift in COVID-19 messaging since the country's largest protests in decades took aim last week at lockdowns and other measures.

Local authorities have begun easing testing requirements and other restrictions, but travel between provinces remains complicated and health measures continue to vary from place to place.

"The zero-COVID policy has been loosened, but mobility has not recovered much on the national level," said Zhiwei Zhang, chief economist of Pinpoint Asset Management.

"I expect exports will stay weak in the next few months as China goes through a bumpy reopening process," he added.

"As global demand weakens in 2023, China will have to rely more on domestic demand."

Chinese leaders have set an annual economic growth target of about 5.5 per cent, but many observers think the country will struggle to hit it, despite announcing a better-than-expected 3.9 per cent expansion in the third quarter.

Alibaba founder Jack Ma Yun has returned to China, ending a stay overseas of more than a year that the industry viewed as reflecting the somber mood of private businesses.

This eventually spurred new Premier Li Qiang to reach out to Ma.

Alibaba's shares saw an initial rise of up to 2.3 percent following news of Ma's return, but they eventually closed at HK$85.25, slightly lower than the previous trading day.

The return of China's best-known entrepreneur may help quell concerns of its private sector.

His reemergence in public offers support for the government's softening tone as leaders try to shore up an economy battered by three years of Covid curbs.

During a school visit, Ma - a former English teacher - discussed topics such as AI-powered chatbot ChatGPT and said he hoped to return to teaching one day, the Yungu School said on its WeChat account.

The school was founded by Ma and other Alibaba founders in his home city of Hangzhou in 2017.

Ma was also seen in a car in Hangzhou talking with Alibaba chief executive Daniel Zhang and senior vice president Shao Xiaofeng.

Ma returned to China last week, two sources said.

Before that Ma said he had retreated from his companies to focus on researching agriculture technology. And he told Ant and Alibaba executives not to obsess over his return to China, stressing that he is committed to their success even at a distance, people familiar with the situation said.

Earlier, another Chinese billionaire entrepreneur, Richard Liu Qiangdong, founder of JD.com, returned to China from the United States. Li has also voiced "unwavering support" for the private sector.

Premier Li, during the National People's Congress meetings, said: "There was an incorrect discourse that led to concerns among private entrepreneurs last year. [Regulators] shouldn't be only stepping on the brakes and not the gas."

Li had recognized Ma's return to the mainland could help boost business confidence among entrepreneurs and since late last year had reportedly begun asking Ma to return.

Some of these efforts involved asking people close to Ma, such as his business associates, to persuade the Alibaba founder in person while he was living in Japan.

Ma's return "boosts the sentiment of the broader platform and internet industry," said Zhang Zihua chief investment officer at Beijing Yunyi Asset Management.

The “Global Security Initiative” (GSI) announced by Xi Jinping in April 2022 was finally elaborated nine months later in the form of a concept note after the start of his unprecedented third mandate as the leader of the Chinese Communist Party (CCP) and as the Supreme leader of China. The initiative is supposed to present a new plan for a “common, comprehensive, cooperative and sustainable security.” Instead of a new plan and vision, the GSI seems repackaged from Xi’s speeches on a global Sinocentric order at the Conference on Interaction and confidence building measures in Asia (CICA) and other past statements.

On the surface the basic principles of the GSI include China’s offer of itself as an honest broker in conflicts while respecting the sovereignty and territorial integrity of all nations and upholding the principles of the United Nations Charter. Noble ambitions which are not followed through by actual Chinese policy. In the South China sea, China is a regional bully which ignores the interests of Vietnam and Philippines in the South China sea with the People’s Liberation Army and the Coast guard encroaching on local fishermen’s activities. China also inhibits these small countries from oil exploration in their own territorial seas due to such intimidation with also illegal military installations on artificial islands aimed at absolute control and insecurity. The same insecurity which China offers to protect against in the GSI. China does not respect the UN Convention on Laws of the Sea (UNCLOS) in the South China sea, neither does it heed to the 2016 ruling of the arbitral tribunal. Such unilateral actions show its contempt for the UN Charter and UN entities when they are contrary to China’s needs. Another point in the GSI that China doesn’t respect in practice where it seeks to replace UN institutions with those that it can control or dominate. An example is its attempt to control ASEAN and its consensus-based decisions. Two years where ASEAN has been deadlocked in its 56-year history were 2012 and 2016 when the declaration mentioned the South China sea. ASEAN was unable to issue a statement due to veto by Cambodia, a close Chinese ally.

According to the concept paper, China also wants to build international platforms and mechanisms for exchange and cooperation to address challenges in areas like counter terrorism, cyber and information security and bio security.

China had put forward a Global Initiative on Data Security a few years back which made a lot of news. But what does not make it to the news often is how Beijing backed hackers have for years been stealing data from a number of countries. According to a cyber security firm called TeamT5, government and military units in South and Southeast Asia have become a common target for China’s hackers. In the second half of 2022, there was a 20 per cent increase in China linked cyber-attacks against Southeast Asian countries compared to 2021. Countries like Sri Lanka, Bangladesh, Indonesia and India have all had to face increasing frequency of cyber- attacks over the past few years.

Besides cyber-attacks, sensitive data of many countries is also at risk of finding its way to China. Let us not forget the case of African Union where from 2012 to 2017, sensitive data from the servers of AU headquarters in Addis Ababa found its way every night to servers in Shanghai. AU officials were unaware until this data theft was revealed in 2017. The incident made it to the news only in 2018 revealing the lengths to which China would go to spy on countries and organizations it seeks to manipulate for its own interests.

Coming to addressing the challenges in areas of counter terrorism, China practices the placing of technical holds and blocks on listing of terrorists by the UNSC 1267 Committee. Between June and October 2022, China placed technical hold on listing of at least five terrorists, undermining not only the multilateral resolve to combat terrorism but also the legitimacy of a UN body. Similarly on biosecurity, we all know how important it is to find the origins of the Covid-19 pandemic so that all of humanity can benefit and the world does not have to face a shock of this scale again. The investigations into the origin of the pandemic are, however, held up because China failed to cooperate and provide unrestricted access to the WHO team that was given this task. What is even more disturbing is that China systematically destroyed data that could have been useful for the investigation.

The list of such examples can be endless but let us look at one last aspect. The paper claims that ‘Humanity is an indivisible security community. Security of one country should not come at the expense of that of other.’ But recent revelations show that the principle of indivisible security means that China’s security cannot be compromised even at the expense of that of other countries. According to a report in September and December 2022 by human rights organization Safeguard Defenders, China operates a network of over 100 overseas police stations based on bilateral security arrangements and joint policing initiatives to monitor, harass and repatriate Chinese citizens and silence protestors against China. Several countries are now investigating how China managed to set up these police stations without their knowledge and what loopholes were missed out in the bilateral security cooperation agreements they signed with China.

Italy’s government has activated the Italian Anti-Mafia Commission to investigate and clean up the Chinese Communist infiltration in Italian society and collusion with officials and gangsters to manipulate illegal activities organized by Chinese gangsters. The Commission also investigates China’s overseas police stations, Chinese truck cases, and underground banks.

The Mysterious Bank

According to a report by the Italian news magazine Le Formiche on March 16, the Florence court has arrested two Chinese people involved in illegal money launching. In addition, 13 people were listed as suspects. The case involved a secretive Chinese bank with branches in Rome, Florence, Prato and other places that transferred billions of euros to China. Italian investigators dubbed the bank a “Chinese underground bank.”

The “bank” provides a hidden remittance service and charges 2.5 per cent of the transfer amount as a commission. There are mainly two ways to transfer money – small amounts transfers from one or more credit cards to an account through apps such as WeChat or Alipay.

Larger amounts are prepaid to the “underground bank” designated by the customer through the account and bank card opened in China, and then the cash is withdrawn at the branches of the underground bank in Florence and Prato and then transferred to other Chinese to be shipped back to China in other ways.

Prato, near Florence, has a concentration of textile and accessories factories and is also a city inhabited by Chinese in Italy. The Italian police discovered that this city has become a stronghold for illegal infiltration by the Chinese underworld.

The “Chinese Mafia” in Italy

The crime of money laundering run by the “Chinese Mafia” in Italy has a long history. In December 2014, the AFP news agency quoted the Roman police as saying that some Chinese business owners and businessmen sent income from smuggling and selling counterfeit products and tax evasion to China through a British financial company named Sigue.

Sigue has seven branches in Rome, mainly engaged in the remittance business of local Chinese people. Most of the remittances use false names, some are fabricated, and there are names of the deceased, and there are even customers who do not know.

The official banks of the Chinese Communist Party are involved in these illegal operations. In June 2015, the Italian Prosecutor submitted an indictment against 297 people and the Bank of China to the court. Bank of China’s Italian branch was accused of assisting Italian Chinese in money laundering. The 297 people included 4 Bank of China’s Milan branch senior managers. The Florence police found that in less than four years, as of 2010, more than 4.5 billion euros from fraud, prostitution, labour exploitation and tax evasion were transferred to China through remittance services. Among them, 2.2 billion euros were remitted through the Milan branch of the Bank of China.

The Italian prosecutors’ indictment is based on an investigation started in 2008 called “Money River” that the money was sent to China through a remittance intermediary called Money2Money, from which the Bank of China received a middle fee of 758,000 euros. Prosecutors have sought help from the Chinese authorities but to no avail. The Italian authorities restarted the Anti-Mafia Committee this time, with an obvious goal of targeting the infiltration of the Chinese Communist Party (CCP).

China Set up Highest Number of Overseas Police Stations

According to a survey published by the Spanish human rights group Safeguard Defenders in December 2022, China had established 54 police stations worldwide by September 2021 and added 48 “overseas police and overseas Chinese service stations”.

“In name, it is to assist the Chinese overseas Chinese in administrative affairs. It uses the bilateral security agreement signed with the host country to set up a “police station” to monitor Chinese overseas Chinese and wait for opportunities to repatriate dissidents. Giuseppe Morabito, Director of the NATO Defence Academy Foundation (NDCF), told to L’Espresso, an Italian weekly news magazine, on 19 December 2022 that Italy has the most overseas police bases set up by the CCP, with 11.

At present, Rome, Milan, Venice, Florence, Sicily, and Prato, the city with the largest Chinese community in Italy, all have so-called “service stations” by the CCP’s overseas police. According to a report by RFI in December 2022, Italian Interior Minister Matteo Piantedosi stated that sanctions against the CCP’s illegal actions in Italy would not be ruled out. Italy has not authorized the CCP regime to care about police affairs.

The 'Russia-India Business Forum: Strategic Partnership for Development and Growth', as part of the St. Petersburg International Economic Forum, targeted the most prominent sector of India - the IT sector and plans to push bilateral trade to USD 50 billion this year.

Rajiv Singh Thakur, additional secretary, Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, said at the Forum, "Current state of the Indian economy is performing well achieving 6-7 per cent. Indian economy is robust because of measures taken by the govt. In terms of investment, the latest data shows 85 billion FDI goes into the country. India has been a digital leader since millions of IT professionals are serving. This IT boom can be taken higher by Russia and India. Collaboration and cooperation between India and Russia are much needed, especially in the technical part given mobile payment success. We can learn from each other and take it forward."

The forum discussion started on March 29 and will continue till March 30, Thursday. The purpose of the meeting is to strengthen Indian-Russian business ties and support the entry of Russian companies into the Indian market.

The main focus of the forum is IT, cybersecurity, technological sovereignty, smart cities, transport and logistics, healthcare and pharmaceuticals, with the focal point of the forum on 'Technological Alliances in the Greater Eurasia'.

"We consider India not as a market, but strategic partner...If we combine your human potential, your economy is growing and our potential in making tech sovereignty and creating new technologies -- together we may be leaders in new tech setup," said Valentin Makarov, Russoft Association.
The trade target for 2025 was earlier fixed at USD 30 billion. But the figure was surpassed in 2022 due to India's oil imports from Russia, and there are expectations that the figure will touch USD 50 billion in 2023.

Sergey Cheryomin, Russian minister, head of the department for External Economic and International Relations of Moscow and chairman of the Board, Business Council for Cooperation with India, said, "We have a huge platform for cooperation. We have the same appreciation and understanding of political as well as economic bilateral relationships. A few years ago, we imagined a turnover of USD 25 billion with India. I am happy USD 30 billion turnovers and this year will have USD 50 billion turnovers. Banks are happy. We have a huge reserve in Indian local currency, which can be used. Indian investment is USD 5-6 billion in oil and gas."

Cheryomin further stated that Indian companies can have access to Russian banks.

The minister also stressed that banks in both countries should promote more trade in Rupee and Ruble.

"Our banks should be more active in establishing a relationship with each other and we've to promote trades in rupees and rubles as it creates a more stable platform for our companies," he said.

The RBI had last year put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in Indian currency. This mechanism will help in internationalising the Indian currency in the long run. A currency can be termed "international" if it is widely accepted worldwide as a medium of exchange.

At a time when Russia is facing sanctions, its tech companies can offer solutions to India and Indian companies. Together the two countries can chart an independent path unaffected by external factors, participants at the opening session of the Russia India Business Forum said here on Wednesday.

"Today, it all depends on financial systems. They (the West) find it convenient to trade in Euro or Dollars, these trade rules were written by the West. We have to rewrite such rules. We can talk of Digital Rouble, Digital Rupee and we should have collaborations on our terms," said Aleksandr Babakov, deputy chairman of the State Duma of the Federal Assembly of the Russian Federation.

"We are close in the financial system field. India, Russia and China are forming multipolar systems. Some people may say it is convenient to trade in Dollars and Euro, but it was written by West countries. Now Russia, India and China will rewrite the financial system. We will have more active collaboration on our terms. In this multipolar system, micro-regionalism is developed. This model can develop a secure and safe partnership," he added.

Meanwhile, Tigran Sargsyan, deputy chairman of the Board, of Eurasian Development Bank, rued the fact that there has not been "satisfactory progress" during the last five years over the international North-South Corridor that Russia and India should have pursued faster. "We started parallel trade discussions with China and India. With China, we have an agreement. With India, the process started 20 years ago but there is no agreement and the question is still being discussed," he said.

Inna Svyatenko, chairman of the Committee on Social Policy, Federation Council of the Federal Assembly of the Russian Federation, said: "Moscow has developed its own platform that is not dependent on any foreign collaboration. It would be great to share digital solutions as we have in Moscow, with India."

Skannd Tyagi, Founder, chief executive officer, of Starshot Ventures, spoke about how Indian IT companies can benefit from Russia's expertise in cyber securities, while Sergey Cheryomin said, "When Russia is under severe sanctions by the USA and EU, we have to find out how to deliver good and one of the solutions is the North-South Corridor. India and Russia work on building better ties in this sector." (ANI)