October 21st, 2024

Society & Culture 

The Rising Tide of Western Media in China 

By Contributor Lindsey Spain

Amidst a period of inflated media censorship, the Chinese Communist Party permitted American rapper Kanye West to stage two performances in Hainan Province, bringing about the question of China’s future with Western hip-hop figures. 

Performance Bias: In September 2024, American rapper Kanye West, known by the stage name “Ye” staged two sold-out “listening parties” in Haikou, the capital of Hainan Province, located in Southern China. His first performances in the country in over 16 years, the shows  culminated in the announcement of his newest studio album, “Bully.” Furthermore, American musician Mariah Carey held a sold-out concert at the Worker’s Stadium in Beijing the same month. Many people within the PRC were astounded at the allowance of these performances, with both respective artists incorporating varied expletives into their songs, something commonly shunned by the CCP. 

Hip-Hop Censorship: Since taking office in 2013, President Xi Jinping has advocated a movement towards new morality guidelines and traditional Confucian values. In 2018, the CCP issued new regulations on hip-hop music following a dramatic popularity resurgence the previous year. Gao Changli, director of the Propaganda Department of the State Administration of Press, Publication, Radio, Film, and Television, proposed that both radio and television guests adhere to a set of “four absolutely not” standards for appropriate programming, those being tattoo artists, hip-hop culture, subculture, and “mourning culture”. This resulted in the blacklisting of several rising Chinese hip-hop artists, notably Gai and VaVa, due to the rebellious nature of their music. Chan Kwong-Yan, otherwise known as rapper MC Yan from the group LMF, was banned from performing in China 20 years ago due to his controversial lyrics and said, “When it’s out of control or too many people are involved, then the government will come out to re-educate people.”

Media’s Future: As of this year, China is among the lowest-ranked countries in the world in terms of internet freedom, notably impacting the music and entertainment industry. Major metropolitan areas such as Beijing and Shanghai, which once had sprawling cultural centers advertising the local music scene, now find themselves subject to increasing anti-media edicts from the CCP. In 2021, following the initial crackdown on hip-hop music, the Ministry of Culture and Tourism announced that they would ban karaoke songs containing “illegal content.” Media blackballing combined with the confounding green light of controversial artists brings into question the future of media censorship in China and rapid competition with the Western world. 

Defense

China Conducts Large-Scale Military Exercises, Alarming Taiwan

Surya Ambatipudi   

The Chinese People’s Liberation Army organized massive military drills in the Taiwan Strait on Monday, which ruffled the feathers of government officials in Taipei. 

A Record-Breaking Ostentation of Power: On Monday, October 14th, China approved a force of 153 aircraft units, along with naval ships and Coast Guard combat vessels, to engage in military drills in the Taiwan Strait. The number of deployed planes and ships set a one-day record and ventured towards the Matsu Islands, claimed by Taiwan, for the first time. A military spokesperson announced that the PLA was testing blockade strategies and maritime law enforcement. These strategies would allow for the disruption of trade routes and resource supply going to and from Taiwan in the case of war. Zhang Chi, a professor at the PLA’s National Defense University, stated that such blockades would additionally “block external forces from providing support to Taiwan independence forces,” which demonstrated the strategic value of controlling the Taiwan Strait and all economic activity within it. 

Recent Concerns in Taipei: Lai Ching-te, the president of Taiwan, expresses concern regarding the Chinese forces’ proximity to Taiwanese land. The drills come just a week after a fiery speech made by Ching-te, where he asserted that Beijing could never represent the people of Taiwan. In response to his remarks, a spokesperson from the Chinese Foreign Ministry cited historical ties between China and the people of Taiwan and deemed Ching-te to be a troublemaking separatist. The Taiwanese government stresses the fact that its territorial integrity is being breached, as the drills crossed the internationally recognized, but not Chinese-recognized, Median Line. The line essentially marks the maritime border between China and Taiwan, though the recent drills in the area affirm China’s refusal to acknowledge its validity.

Pressure on Taiwan’s Support Network: Important players in the international community have expressed support, whether directly or indirectly, for Taiwan’s sovereignty. Going as far back as the 1979 Taiwan Relations Act, the United States is one of the foremost advocates for Taiwan’s territorial freedom. President Biden has reaffirmed the United States’ commitment to defending Taiwan in the case of an attack by China, though some experts claim that the physical distribution of munitions has fallen short of previously expressed goals. Furthermore, Taiwan opened its third representative office in India on Wednesday amidst a bilateral campaign between China and India to ease tensions on the Himalayan Front. This action was met with a warning from the Chinese Foreign Ministry to consider its involvement with Taiwan carefully so as not to diminish the improvement of Sino-Indian relations. Pressure from China has increased on multiple nations worldwide regarding the Taiwan issue and warrants the need for these countries to examine their stances as armed conflict and war become more palpable.

Economy & Retail 

Luxury Lull 

By Contributor Cristian Abarca

The luxury market faces a severe downturn as Chinese consumer spending contracts, prompting concerns about overvaluation and long-term stability. 

Luxury Market Downturn: In early October, luxury retailers experienced significant share price declines due to poor performance in China following a substantial contraction in consumer discretionary spending. LVMH and Richemont shares dropped over 15% since the start of the month, while Kering shares plummeted over 40% this year amid numerous profit warnings. Luxury brands have seen sales fall by up to 30% in Q3 2023, causing revenue shortfalls of up to 25% and operating income reductions of up to 30%. Domestic ultra-luxury brands in China faced similar challenges, with jeweler Chow Tai Fook experiencing a 20-30% sales slump and high-end liquors suffering even heavier losses. Qualitatively, once-bustling luxury shopping districts across China now stand empty, signaling severe market contraction.

Economic Conditions: Despite recent Chinese economic stimulus announcements, the market outlook remains bleak. The CSI 300 index briefly rallied up to 35% following the stimulus package announcement, but most gains have since eroded. Further analysis reveals the stimulus focuses more on supporting the property sector than boosting consumer spending. This volatility has intensified concerns among financial analysts about the inevitability of Chinese equities due to high volatility exposure and limited upside potential. Chinese equities now rank as international loss-leaders, with the CSI 300 rising just over 25% in the last 15 years while China's nominal GDP quadrupled. However, the luxury spending slump can be partially attributed to luxury retailers' actions. Rapid expansion since 2019 likely oversaturated the market, while some retailers moved further upmarket, potentially alienating previously core affluent customers.

Long-Term Outlook: Larger luxury conglomerates like LVMH and Kering are well-insulated against long-term market instability, possessing resources to weather the storm and strategize for future market expansion. However, smaller luxury firms like Burberry and Hugo Boss have fewer resources to offset immediate revenue losses, prompting their owners to issue profit warnings. This economic crisis is beginning to affect international trade flows. Swiss watch exports fell by 50% in September, contributing to a 7.3% decline in net exports. This rapid decline in Switzerland's current account has led some investors to call for the Swiss National Bank to weaken the strong Swiss franc to boost exports. Despite the downturn, many luxury brand shares, particularly LVMH, trade at high premiums. Combined with the apparent structural decline in luxury spending in China, this suggests a possible overvaluation of international luxury brands, potentially leading to more significant losses in the coming months.