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Israel bombards Gaza as Putin warns conflict could spread beyond Middle East

PEOPLE react as Palestinians search for casualties at the site of an Israeli strike on a residential building in Gaza City, Oct. 25, 2023. — REUTERS

GAZA/JERUSALEM — Israel bombarded the Gaza Strip as it prepared for a ground invasion it says is aimed at annihilating the Palestinian militant group Hamas as Russia warned the conflict could spread beyond the Middle East.

In besieged Gaza humanitarian supplies were critically low, as world powers failed to agree on a lull to the fighting to deliver aid, and residents buried the dead in mass graves as the civilian toll mounted.

In an indication Israel was widening assaults into Gaza that began at the weekend, the military said ground forces attacked multiple targets in the Hamas-ruled enclave on Thursday before withdrawing, in what Army Radio described as the biggest incursion of the current war.

US President Joseph R. Biden, in remarks looking beyond the war, said on Wednesday that the future should include Israeli and Palestinian states side by side.

“Israelis and Palestinians equally deserve to live side by side in safety, dignity and in peace,” Mr. Biden said at a joint press conference in Washington with visiting Australian Prime Minister Anthony Albanese.

Mr. Biden said he believed one reason Iranian-backed Hamas attacked southern Israel on Oct. 7, killing at least 1,400 people and taking scores of hostages, was to prevent normalizing relations between Israel and Saudi Arabia.

Russian President Vladimir Putin warned the conflict could spread beyond the Middle East and said it was wrong that innocent women, children and old people in Gaza were being punished for other people’s crimes.

“Our task today, our main task, is to stop the bloodshed and violence,” said Mr. Putin in a meeting with Russian religious leaders of different faiths, according to a Kremlin transcript.

“Otherwise, further escalation of the crisis is fraught with grave and extremely dangerous and destructive consequences. And not only for the Middle East region. It could spill over far beyond the borders of the Middle East.”

Reflecting concerns the Gaza war may spread, the Wall Street Journal reported that Israel had agreed to delay invading Gaza until US air defence systems can be placed in the region, as early as this week, to protect American forces.

Asked about the report, US officials told Reuters that Washington has raised its concerns with Israel that Iran and Iranian-backed Islamist groups could escalate the conflict by attacking US troops in the Middle East. An Israeli incursion into Gaza could be a trigger for Iranian proxies, they said.

Gaza’s war has already sparked conflict beyond the Palestinian territories. Israeli warplanes struck Syrian army infrastructure on Wednesday in response to rockets fired from Syria, an ally of Iran. Israel has also targeted Syria’s Aleppo airport and Iranian-backed Hezbollah in Lebanon.

Iran, Israel’s arch-enemy, has sought regional ascendancy for decades and backs armed groups in Syria, Lebanon and elsewhere as well as Hamas. It has warned Israel to stop its onslaught on Gaza.

AID PROPOSALS FAIL IN UN SECURITY COUNCIL VOTES
At the United Nations (UN), Russia and China vetoed a US-drafted Security Council resolution calling for pauses in hostilities to allow food, water and medicine to be delivered to Palestinian civilians. The United Arab Emirates also voted no, while 10 members voted in favour and two abstained.

Russia made a rival proposal that advocated a wider ceasefire, but failed to win the minimum number of votes. Israel has resisted both, arguing that Hamas would only take advantage and create new threats to Gaza civilians.

As the death toll mounts in Gaza, Palestinians are burying the unidentified dead in mass graves, with a number instead of a name, residents say. Some families are using bracelets in the hope of finding their loved ones should they be killed.

Israeli retaliatory strikes have killed over 6,500 people, the health ministry in the Hamas-run strip said on Wednesday. Reuters has been unable to independently verify the casualty figures of either side.

Mr. Biden said on Wednesday he had “no confidence in the number that the Palestinians are using” for the death toll, but he did not say why he was skeptical.

In the US, the Council on American-Islamic Relations (CAIR) said it was “deeply disturbed” by Mr. Biden’s comments on the Gaza figures, and called on the president to apologize.

INVASION PREPARATIONS
Israel has vowed to wipe out Hamas, which rules Gaza.

Prime Minister Benjamin Netanyahu said in a televised statement that Israel was “preparing for a ground invasion. I will not elaborate on when, how or how many.”

Israeli tanks and troops are massed on the border with Gaza awaiting orders. Israel has called up 360,000 reservists.

International pressure is growing to delay any invasion of Gaza, not least because of hostages. More than half the estimated 220 hostages held by Hamas have foreign passports from 25 different countries, the Israeli government said. Many were believed to have had dual Israeli nationality. — Reuters

South Korea Halloween crush: Seoul tests crowd safety plan

POLICE OFFICERS walk at the scene where many people died and were injured in a stampede during a Halloween festival in Seoul, South Korea, Oct. 30, 2022. — REUTERS

SEOUL — A knot of people jostled and shoved each other on Wednesday in a narrow alleyway in Seoul, before filing patiently past a barricade of police officers in a crowd control drill held ahead of the one-year anniversary of a deadly Halloween crush.

The exercise, showcasing an artificial intelligence-backed network of nearly 1,000 closed-circuit TV cameras designed to detect and alert against dangerous crowding, was displayed on banks of large screens watched by officials ready to swing into action.

The effort comes after a crowd surge last year led to a crush in a narrow alley in the Itaewon nightlife district, killing 159 people in a disaster blamed on a lack of preparation and crowd control measures, with early calls for help going unanswered.

This year, officials in the South Korean capital said they would work with police, emergency services and local officials to ensure “not a single person gets hurt” during Halloween celebrations.

“The drill focused on how to ensure the safety of citizens by monitoring the situation in real time with the help of cutting-edge science and technology,” said the city’s mayor, Oh Se-hoon.

About 150 volunteers participated in the dry run of an early warning system that will include 909 CCTV cameras in 71 locations by yearend, aiming to analyze crowd movement and density before alerting authorities to signs of danger.

Sixteen areas will be specially monitored by officials ready to intervene and disperse people in response to warnings triggered when three or more individuals are counted in every square meter of any given space.

“It used to be visual assessment in the past, but now we’re operating CCTV… which enables video analysis,” said city safety official Ahn Hyoung-jun, adding that the information gathered would compensate for human error.

The effort was “positive,” said Paek Seung-joo, a specialist in fire and disaster protection at the Open Cyber University of Korea, while warning that preventing large gatherings was critical.

“The fundamental solution is to prevent it from happening in the first place.”

The plan unveiled this week covers just Seoul, rather than the entire nation, he added.

“For that, the central government, not a local government, has to take the lead and come up with a plan to anticipate crowding, manage it, and respond in the event of an emergency.”

Many families of the victims of last year’s disaster say the police investigation left many questions unanswered, while deploring that nobody had been held responsible for the deaths.

The government, which rejected calls to dismiss top officials, has said it had worked hard to set up a system to prevent such disasters and which needed to be properly implemented.

The Seoul anniversary has unnerved authorities elsewhere in the run-up to this year’s celebrations.

In Tokyo, foreign tourists and locals have been urged not to gather at the famed Shibuya scramble crossing in the Japanese capital, which had been a popular spot for Halloween revelers to meet up prior to the COVID-19 pandemic.

“Officials have grown fearful of a disastrous crowd crush similar to the one in the Itaewon district in Seoul, South Korea,” Shibuya city officials said in a statement.

The safety campaign has involved a ban on street drinking over the Halloween weekend, while videos posted on social media urge: “On Halloween night, everyone should stay away from Shibuya.” — Reuters

Police scour Maine for man sought in Maine mass shootings

STOCK PHOTO | Image by kjpargeter from Freepik

HUNDREDS of police fanned out across the state of Maine hunting for a man wanted in connection with mass shootings at a bar and a bowling alley in the town of Lewiston, as news outlets reported a death toll ranging from 16 to 22, with dozens more wounded.

Officials said there were multiple casualties but declined to provide figures.

State and local police identified Robert R. Card, 40, who reportedly had been committed to a mental health facility over the summer, as a person of interest in the case. Earlier, they posted on Facebook photographs of a bearded man in a brown hoodie and jeans at one of the crime scenes, holding what appeared to be a semi-automatic rifle in the firing position.

“We have literally hundreds of police officers working around the state of Maine to investigate this case to locate Mr. Card, who is a person of interest,” Maine Public Safety Commissioner Mike Sauschuck told a news conference.

Police found a white SUV they believe Robert R. Card drove to the town of Lisbon, about 7 miles (11 km) to the southeast, and Mr. Sauschuck said people were asked to remain indoors in both Lewiston and Lisbon.

Several media reported that a Maine law enforcement bulletin identified Mr. Card as a trained firearms instructor and member of the US Army reserve who recently reported that he had mental health issues, including hearing voices. It also said he threatened to shoot up a National Guard base. “Card was also reported to have been committed to mental health facility for two weeks during summer 2023 and subsequently released,” said the notice from the Maine Information & Analysis Center.

Reuters could not authenticate the bulletin. The Associated Press reported it was circulated to law enforcement officials.

The army did not immediately respond to requests for information about Mr. Card, including details on his service record.

The bloodshed rocked the largely rural state of Maine in the northeastern corner of the US bordering Canada.

Police said gunfire first broke out shortly before 7 p.m. local time. The bar and the bowling alley are about four miles (6.5 km) apart.

Lewiston is a former textile hub and town of 38,000 people in Androscoggin County about 35 miles (56 km) north of Maine’s largest city, Portland.

“A recreation center. A bowling alley. A neighborhood bar. Places Americans frequent and should feel safe… these are the crime scenes of multiple shootings tonight in Maine,” said Kris Brown, president of Brady, a gun safety advocacy group, in a statement.

Maine lacks several major types of gun safety laws, including assault weapons regulation, universal background checks, and “red flag” laws that allow law enforcement to temporarily disarm people legally deemed dangerous, according to Brady.

At a reunification center in Lewiston’s “sister city” Auburn, just across the Androscoggin River, some families were discovering that relatives who had been at the bar and bowling alley had been killed in the shooting, Auburn Mayor Jason Levesque told reporters.

Officials were interviewing witnesses of the shooting “of all ages” at an undisclosed safe location on Wednesday night, Levesque said.

President Joseph R. Biden was been briefed and will continue to receive updates, a US official said in Washington.

The president spoke by phone individually to Maine Governor Janet Mills, Senators Angus King and Susan Collins, and Congressman Jared Golden about the shooting in Lewiston and offered full federal support in the wake of the attack, the White House said.

The range of estimated fatalities would be on par with the number of homicides that normally occur in Maine in any given year. The number of annual homicides in the state has fluctuated between 16 and 29 since 2012, according to Maine State Police.

The number of US shootings in which four or more people were shot has surged since the COVID-19 pandemic began in 2020, with 647 occurring in 2022 and 679 projected to occur in 2023, based on trends as of July, according to data from the Gun Violence Archive.

The deadliest modern US mass shooting on record is the massacre of 58 people by a gunman firing on a Las Vegas country music festival from a high-rise hotel perch in 2017. — Reuters

China says US has no right to get involved in problems between it and Philippines 

PRESIDENT Ferdinand R. Marcos, Jr. and US President Joseph R. Biden hold a bilateral meeting on September 22, 2022 in New York, USA. — OFFICE OF THE PRESS SECRETARY

BEIJING — The United States does not have the right to get involved in problems between China and the Philippines, the Chinese foreign ministry said on Thursday at a regular press briefing.

“The US is not party to the South China Sea issue, it has no right to get involved in a problem between China and the Philippines,” said ministry spokesperson Mao Ning in addressing a question on the US saying it will defend the Philippines.

“The US promise of defending the Philippines must not hurt China’s sovereignty and maritime interests in the South China Sea, and it also must not enable and encourage the illegal claims of the Philippines,” Ms. Mao said.

US President Joe Biden said on Wednesday at the White House that America’s commitment to Philippines defense remains “iron-clad,” after accusing China of acting “dangerously and unlawfully” in the South China Sea.

“Any attack on the Filipino aircraft, vessels, or armed forces will invoke … our Mutual Defense Treaty with the Philippines,” Mr. Biden said in remarks during a joint meeting with Australia’s prime minister.

China and the Philippines recently have had several high-profile skirmishes in the South China Sea, most notably in disputed waters around the Second Thomas Shoal, part of the Spratly Islands.

Last Sunday, a Chinese vessel collided with a Philippine boat, with Manila condemning “in the strongest degree” the “dangerous blocking maneuvers” of the vessel. — Reuters

BSP delivers off-cycle 25-bps rate hike

BANGKO SENTRAL ng Pilipinas Governor Eli M. Remolona, Jr. — BANGKO SENTRAL NG PILIPINAS

The Bangko Sentral ng Pilipinas (BSP) took off-cycle action today, hiking benchmark interest rates by 25 basis points (bps) to 6.5% to re-anchor inflation expectations.

BSP Governor Eli M. Remolona Jr. said the Monetary Board raised its target repurchase rate to 6.50%, effective immediately, from 6.25%.

Rates on the overnight deposit and lending facilities were also hiked by 25 bps to 6% (from 5.75%) and 7% (from 6.75%), respectively.

The BSP’s off-cycle rate hike came ahead of its regular policy meeting scheduled on Nov. 16.

With the latest hike, the Monetary Board has raised benchmark interest rates by a total of 450 bps since May 2022.

This was also the central bank’s second unscheduled policy move during this tightening cycle.

Under the leadership of then-BSP Governor Felipe M. Medalla, the Monetary Board surprised markets by raising rates by 75 bps to 3.25% on July 14, 2022. — Keisha B. Ta-asan

Emerging markets need $1.5 trillion to make buildings greener — IFC

VICTOR-UNSPLASH

LONDON — Emerging markets will need $1.5 trillion in investment before 2035 to make new and existing buildings environmentally friendly and avoid a jump in climate-damaging emissions, a top economist at the World Bank’s private finance arm told Reuters.

Of that $1.5 trillion, China accounts for $1.33 trillion, reflecting its size and urbanisation, and Latin America and the Caribbean, Asia, Europe and Africa most of the rest, the International Finance Corporation said in a new report.

The funds would be used for investments in electrification of older inefficient buildings with cleaner energy, and the construction of energy-efficient new buildings, with low- emission material.

The construction industry globally generates about two-fifths of all carbon emissions and that number is rising amid a building boom, making it central to efforts to curb carbon emissions and limit global warming to 1.5 degrees Celsius. 

Speaking ahead of the release of the IFC’s report on Wednesday suggesting ways to accelerate efforts, Susan Lund, Vice President for Economics and Private Sector Development, said there were “low-hanging fruit” technologies to cut emissions. 

Adopting them could reduce construction-related emissions 13% from current levels, or 23% below where they would otherwise be, IFC said the report.

More than half the reductions would come from emerging markets, through solutions such as powering buildings using cleaner energy, making them more energy-efficient and using low-emission materials in their construction. 

While many technologies exist to slash construction-related emissions, Lund said weak policy incentives, limited finance and poor information about energy efficiency have prevented broader adoption in developing countries.

“They are in the midst of a massive construction boom that is only going to get bigger in the next 10 to 15 years,” Lund told Reuters.

“Here is an opportunity to do things differently,” she said, noting that it was better to build greener buildings today than retrofit later, as happens in richer countries.

Limited information about the efficiency of buildings is a major problem, she said, pointing to 110 countries without energy efficiency building codes.

Unlike other hard-to-abate activities, however, building more responsibly was “achievable” and required “very negligible” costs to GDP, Lund added, although decarbonizing construction value chains fully would be much tougher.

IFC has invested $10 billion into construction projects in the developing world that meet its energy efficiency criteria, while leveraging another $60 billion from investors including development finance institutions and project developers, Lund said. — Reuters

Ford, UAW reach tentative deal to end strike including record pay raise

New vehicle sales climbed by 22% in August. — REUTERS

The United Auto Workers (UAW) union reached a tentative labor deal on Wednesday with Ford Motor, the first of Detroit’s Big Three car manufacturers to negotiate a settlement to strikes joined by 45,000 workers since mid-September.

The proposed accord, which UAW‘s leadership must still approve, provides a 25% wage hike over the 4-1/2-year contract, starting with an initial increase of 11%.

The Ford deal, which could help create a template for settlements of parallel UAW strikes against General Motors and Chrysler parent Stellantis, would amount to total pay hikes of more than 33% when compounding and cost-of-living mechanisms are factored in, the UAW said.

“We told Ford to pony up and they did,” Fain said in a video post on Facebook, adding that the strike at Ford “has delivered”.

In addition to the general wage hike, Fain said the lowest-paid temporary workers would see raises of more than 150% over the contract term and employees would reach top pay after three years. The union also won the right to strike over future plant closures, he said.

The UAW also succeeded in eliminating lower-pay tiers for workers in certain parts operations at Ford – an issue Fain highlighted from the start of the bargaining process, wearing T-shirts with the slogan “End Tiers.”

The Ford contract would reverse concessions the union agreed to in a series of contracts since 2007, when GM and the former Chrysler were skidding toward bankruptcy, and Ford was mortgaging assets to stay afloat.

“We know it breaks records,” Fain said in a video address Wednesday night. “We know it will change lives. But what happens next is up to you all.”

The Detroit automakers have argued that the UAW‘s demands will significantly raise costs and hobble their electric vehicle ambitions, putting them at a disadvantage when compared to EV leader Tesla and foreign brands such as Toyota Motor, which are non-unionized.

The UAW was preparing to strike at a key Ford facility in Dearborn this week if it had not reached agreement after striking at additional GM and Stellantis facilities this week.

But in an unexpected move that adds pressure on GM and Stellantis, the UAW told Ford workers now on strike to return to their jobs during the ratification process. That means production of Ford Super Duty pickups, Ford Bronco and Explorer SUVs and Ranger trucks could restart this week.

Ford, confirmed the news. “We are pleased to have reached a tentative agreement on a new labor contract with the UAW covering our U.S. operations,” Ford CEO and President Jim Farley said in a statement. Ford shares rose 2% in after-hours trade.

In statements, GM and Stellantis said Wednesday they are working to secure agreements as soon as possible.

“This lays the groundwork for the next two contracts and they should fall in line fairly quickly because all three were within a narrow gap of each other,” Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.

The UAW ratcheted up pressure on the automakers by striking at each company’s most profitable plant – GM’s Arlington, Texas assembly plant, Ford‘s Kentucky heavy-duty pickup factory and Stellantis’ Ram pickup plant in Sterling Heights, Michigan.

The total economic loss from the auto workers’ strike has reached $9.3 billon, the Anderson Economic Group said earlier this week.

“I think this will be a positive for the stocks,” said portfolio manager Tim Piechowski at ACR Alpine Capital Research, which has $250 million in investment in GM. Detroit Three shares currently reflect a scenario worse than the terms of the tentative agreement, he said.

 

BARGAINING TABLE

The UAW‘s campaign for a record contract converged with union efforts in Hollywood and at delivery giant UPS to win big pay increases. It also became the focus of attention by U.S. President Joe Biden and Republican rivals who see Michigan and other auto states as pivotal to their 2024 campaign strategies.

Biden joined Fain on a picket line last month, and praised the tentative agreement in a statement Wednesday night as a “testament to the power of employers and employees coming together to work out their differences at the bargaining table.”

Absent from Fain and Browning’s summary of the contract terms Wednesday was mention of future pay and unionization at new joint-venture electric vehicle battery factories the Detroit Three are building with Asian partners.

Because they are owned by separate corporate entities, the automakers did not have to include those factories in this round of bargaining. Fain had pushed for assurances that battery plant wages would be comparable to wages at assembly plants, and expressed concern that UAW jobs at Detroit Three combustion powertrain plants would be lost over time to non-union battery operations.

Nonetheless, Harley Shaiken, labor professor at the University of California, Berkeley, saw the deal as one with far-reaching implications. “This is a set of negotiations, historically, where gains made in Detroit would be viewed and adapted by many other industries across the economy,” he said.

Former GM shareholder Jeffrey Scharf of Act Two Investors said the bottom line for union chief Fain depended on his ability to expand the union.

“If they can use this as a lever to organize Tesla and companies like that, he’s brilliant. If they fail to organize the other companies and the differential causes jobs to go out of Detroit and to the other companies, then he’s a failure,” Mr. Scharf said. – Reuters

 

Australian retailers add security tech amid rising theft, aggression

STOCK PHOTO | Image by 12019 from Pixabay

Australian retailers are ramping up their tech security initiatives, including placing cameras at self-checkouts and body-worn cameras on staff, to combat a surge in stock theft and customer aggression aggravated by the cost of living crisis.

Top supermarket chains like Woolworths and Coles have flagged a pickup in store theft and hostile behavior, in line with global trends, as higher fuel, housing and grocery costs squeeze shopper budgets and tempers.

Customer-facing staff at Coles and Woolworths, which together make up two-thirds of Australian grocery sales, have started wearing body cameras to record threatening behavior, while trolleys are being fitted with wheels which automatically lock if a shopper tries to leave without paying.

“Any rise in threatening behavior towards retail workers is a deeply concerning trend for our retail partners and our communities,” said Phil Thomson, CEO of New Zealand security software provider Auror, which is used by retail staff to share reports of suspicious customer behavior.

“Unfortunately the data suggests it’s continuing to occur,” added Thomson, whose firm counts Coles and Woolworths as clients.

Executives at Coles, which clocked a 20% increase in “stock loss” in the year to June 2023, said on an Oct. 26 sales call that it was rolling out the new security technology in about one-third of its 800 stores by the end of the calendar year.

“Threatening situations arise … as the cost of living pressures have exacerbated,” Coles CEO Leah Weckert said.

Ms. Weckert didn’t disclose how many stores had the surveillance tech so far, and Coles didn’t give updated stock loss numbers in the limited quarterly update but she said the company “would expect to see benefits … starting to come through in H2.”

Reports of store theft surged 23% in Australia’s three largest states of New South Wales, Victoria and Queensland, home to three-quarters of the population, in the year to March 2023, according to the latest available government statistics, as COVID-related restrictions ended.

Reports of threatening behavior by shoppers rose to 17% of all security reports logged by Australian store staff in 2023, from 10% three years earlier, according to Auror data reviewed by Reuters. Reports of “discriminatory harassment” targeting a store worker’s race or gender were up 50% over the same period.

Store theft and customer aggression are both higher, but “we are more concerned with ensuring the continued wellbeing and safety of our team”, Woolworths CEO Brad Banducci said on an Oct. 25 sales call, in which he linked changing shopper behavior with living cost pressures.

“Aggression towards our team continues and it is frankly unacceptable,” added Mr. Banducci.

Gerard Dwyer, National Secretary of the Shop Distributive & Allied Employees Association, the country’s main retail union, said while security technology was being upgraded it was up to the justice system to act as a deterrent by imposing tougher penalties.

“If enforced, the new tougher penalties will help businesses immensely and reduce the pressure on police,” he said. – Reuters

S.Korea, Japan, US condemn North Korea’s supply of arms to Russia

RUSSIA’s President Vladimir Putin shakes hands with North Korea’s leader Kim Jong Un during a meeting at the Vostochny Cosmodrome in the far eastern Amur region, Russia, Sept. 13, 2023. — SPUTNIK/MIKHAIL METZEL/KREMLIN VIA REUTERS

 – South Korea, Japan and the United States strongly condemned the supply of arms and military equipment by North Korea to Russia and said they had confirmed “several” deliveries of such weapons, a joint statement issued on Thursday said.

Russia and North Korea have denied the transfer of arms from the North for use in Russia’s war against Ukraine amid reports that Washington and researchers said showed movement of vessels carrying containers likely with weapons between the two countries’ ports.

While it was not possible to confirm the contents of the shipments, reports said containers from the North were later seen delivered to a Russian munitions storage facility near the border with Ukraine.

“The Republic of Korea, United States, and Japan strongly condemn the provision of military equipment and munitions by the Democratic People’s Republic of Korea (DPRK) to the Russian Federation for use against the government and people of Ukraine,” the statement said.

The Democratic People’s Republic of Korea is North Korea’s official name.

“Such weapons deliveries, several of which we now confirm have been completed, will significantly increase the human toll of Russia’s war of aggression,” the statement issued by the foreign ministers of the three countries said.

North Korea is seeking military assistance from Russia to advance its own military capabilities in return for its arms support for Moscow, it said.

“We are monitoring closely for any materials that Russia provides to the DPRK in support of Pyongyang’s military objectives,” it said, adding any arms transaction with North Korea violated multiple UN Security Council resolutions that Moscow itself voted for.

North Korea and Russia pledged closer military cooperation when their leaders met in September in Russia’s far east. Russian Foreign Minister Sergei Lavrov met North Korean leader Kim Jong Un this month and discussed implementing the agreements made at the summit. – Reuters

China rushes to swap Western tech with domestic options as US cracks down

A GENERAL VIEW shows Beijing’s skyline on a sunny day in this file photo. — REUTERS

 – China has stepped up spending to replace Western-made technology with domestic alternatives as Washington tightens curbs on high-tech exports to its rival, according to government tenders, research documents and four people familiar with the matter.

Reuters is reporting for the first time details of tenders from the government, military and state-linked entities, which show an acceleration in domestic substitution since last year.

China has spent heavily on replacing computer equipment, and the telecom and financial sectors are probably the next target, said two people familiar with the industries. State-backed researchers also identified digital payments as particularly vulnerable to possible Western hacking, according to a review of their work, making a push to indigenize such technology likely.

The number of tenders from state-owned enterprises (SOEs), government and military bodies to nationalize equipment doubled to 235 from 119 in the 12 months after September 2022, according to a finance ministry database seen by Reuters.

In the same period, the value of awarded projects listed on the database totaled 156.9 million yuan, or more than triple the previous year.

While the database represents only a fraction of tender bids nationwide, it is the largest collection of state tenders publicly available and mirrors third-party data. China spent 1.4 trillion yuan ($191 billion) replacing foreign hardware and software in 2022, marking a year-on-year increase of 16.2%, according to IT research firm First New Voice.

But Beijing’s lack of advanced chip-manufacturing capabilities prevents it from completely substituting products with alternatives that are entirely locally made, analysts say.

Previous domestic substitution efforts stalled because China did not have the “technical chops to pull off localization until now, and to a certain extent they still kind of don’t,” said Kendra Schaefer, head of tech policy research at Beijing-based consultancy Trivium China.

 

FEAR OF DEPENDENCE

SOEs were instructed last year to replace office software systems with domestic products by 2027, the first time such specific deadlines were imposed, according to five brokerage firms that cited a September 2022 order from China’s state asset regulator. Reuters could not independently verify the order.

Domestic replacement projects this year have targeted markedly sensitive infrastructure, the tenders show.

One partially redacted tender for a “certain government department in Gansu province” assigned 4.4 million yuan to replace an intelligence-gathering system’s equipment, without providing specifics.

People’s Liberation Army units in the northeastern city of Harbin and Xiamen in the south last December meanwhile issued tenders to replace foreign-made computers.

Tech researchers such as Mo Jianlei of the Chinese Academy of Sciences, the country’s largest state-run research organization, said the Chinese government was increasingly concerned about Western equipment being hacked by foreign powers.

The state asset regulator did not return a request for comment.

Over the past year, state-linked researchers also called on Beijing to strengthen anti-hacking defenses in its financial infrastructure due to geopolitical concerns.

One March research paper highlighted the dependence of China’s UnionPay credit card system on US software firm BMC for settlements.

“Beware of security vulnerabilities in hardware and software set by the U.S. side … build a financial security ‘firewall’,” the researchers wrote.

BMC declined to comment.

An article published this year in the journal Cyberspace Security by researchers from the state-run China Telecommunications Corporation concluded the country was overdependent on chips made by U.S. giant Qualcomm QCOM.O for back-end management, as well as on the iOS and Android systems.

“(They) are all firmly controlled by American companies,” the researchers wrote.

As China has not signed World Trade Organization clauses governing public procurement, the substitution effort does not appear to violate international accords, according to the US Treasury. The US has implemented similar rules barring Chinese companies from public sector bids.

Qualcomm, Google and Apple did not immediately return requests for comment.

 

WINNERS AND LOSERS

China’s effort to build an independent computing system dates back to at least its 2006 five-year plan for science and technology development, which listed the semiconductor and software systems sectors as national priorities.

This effort spawned state-owned companies that are increasingly winning major contracts. Two firms awarded the Harbin tenders were subsidiaries of China Electronics Corporation and China Electronics Technology Group Corporation – both heavily targeted by US sanctions.

The state regulator’s 2022 order pushed SOEs away from US companies such as Microsoft and Adobe, according to an employee of a Beijing-based firm that develops domestic office-processing software

China Tobacco, for example, in July began switching some subsidiaries from Microsoft Windows to Huawei’s EulerOS, according to an employee of a software vendor that services the state-owned manufacturer.

The people spoke on condition of anonymity because they were not authorized to discuss clients and competitors.

For years, Western tech companies have shared their source code and entered into partnerships with domestic firms to address Beijing’s concerns, but prominent computer scientists such as Ni Guangnan of the Chinese Academy of Engineering have said such measures are not sufficient for China’s security needs.

China Tobacco, Microsoft and Adobe did not respond to requests for comment.

In September, Reuters and other outlets reported that some employees of central government agencies were banned from using iPhones at work.

“In certain sectors, customers … are opting for domestic suppliers, with foreign suppliers frequently facing informal barriers,” the European Union Chamber of Commerce in Beijing said in response to Reuters questions.

In a 2023 American Chamber of Commerce (AmCham) in Shanghai report, 89% of the organization’s tech business members named procurement practices favoring domestic competitors as a regulatory obstacle. It was the highest percentage of any sector.

AmCham Shanghai President Eric Zheng acknowledged China’s national security concerns but said he hoped “normal procurement procedures will not be politicized so that US companies can compete fairly and pursue commercial opportunities … to benefit both countries.”

The US Department of Commerce, China Electronics Corporation and China Electronics Technology Group Corporation did not return requests for comment.

 

HUAWEI PRIZED

Chinese tech conglomerate Huawei has emerged as the leading firm in this replacement cycle, according to three people familiar with China’s enterprise tech industry, who spoke on condition of anonymity given the sensitivity of the issue.

In 2022, Huawei’s enterprise business, which includes software and cloud computing operations, reported 133 billion yuan in sales, up 30% on the previous year.

One of the people said privately-held Huawei was seen as more nimble than state-owned groups in rolling out products and executing projects.

The other two sources highlighted Huawei’s broad product suite – spanning chips to software – as an advantage.

Clients also prize Huawei for its ability to process data on internal company servers and external cloud networks, as well as its wide offering of cybersecurity products, according to the employee of a China Tobacco tech supplier.

Huawei declined to comment.

The replacement drive has re-drawn entire sub-sectors of the software industry. The combined China market share held by five major foreign makers of database management systems – the majority of which are American – dropped from 57.3% in 2018 to 27.3% by the end of 2022, according to industry group IDC.

Despite heavy spending on domestic substitution, however, foreign firms are still dominant suppliers for banking and telecoms database management. Non-Chinese companies held 90% of market share for banking database systems at the end of 2022, according to EqualOcean, a tech consultancy.

Financial institutions are generally reluctant to switch database systems despite government pressure, said one of the industry sources, adding that they have higher stability requirements than many other sectors and local players cannot yet match their needs.

Even for personal computers, banks that switch from an international brand to China’s dominant supplier Lenovo would still be reliant on critical chip components provided by Western firms, one of the industry sources said. – Reuters

US antisemitic, Islamophobic incidents surge with war, advocates say

STOCK PHOTO | Image by Mohamed Hassan from Pixabay

 – Antisemitic and Islamophobic incidents including violent assaults and online harassment have spiked in the US since the Israel-Hamas conflict erupted on Oct. 7, two advocacy groups said Wednesday.

The Council on American-Islamic Relations (CAIR) said it received 774 complaints of incidents motivated by Islamophobia and bias against Palestinians and Arabs from Oct. 7 to Tuesday. The group said this was the highest level since 2015.

The total was almost triple 2022’s average number of complaints for a period of the same duration.

The Anti-Defamation League (ADL) said its preliminary data showed a 388% rise in antisemitic incidents in the U.S. from Oct. 7 to Monday over the prior year. The group reported 312 incidents including harassment, vandalism and assault. About 190 of those were directly linked to the war between Israel and Hamas, ADL said.

CAIR cited an 18-year-old Palestinian man allegedly assaulted in Brooklyn; death threats against a mosque and a fatal stabbing of a 6-year-old Muslim boy in Illinois, who U.S. authorities said was targeted for being Palestinian American.

ADL said complaints included violent messages, especially on online platform Telegram, and rallies where “ADL found explicit or strong implicit support for Hamas and/or violence against Jews in Israel.”

The US Justice Department has said it is monitoring rising threats against Jews and Muslims amid the conflict. President Joe Biden has condemned antisemitism and Islamophobia.

Palestinian Islamist group Hamas’ Oct. 7 attack killed over 1,400 people, Israel has said. Israel’s air strikes since on Hamas-controlled Gaza have killed over 6,500 as of Wednesday, according to the health ministry in Gaza. Reuters was unable to verify those figures independently. – Reuters

Biden warns China not to attack Philippine ships after incidents

REUTERS

President Joe Biden warned China that the US would be forced to intervene if Beijing attacks Philippine vessels in the South China Sea, after two separate collisions in the disputed waterway over the weekend.

“Just this past week, the PRC vessels acted dangerously and unlawfully as our Philippine friends conducted a routine resupply mission within their own exclusive economic zone in the South China Sea,” Mr. Biden said at the White House on Wednesday during a joint news conference with Australian Prime Minister Anthony Albanese.

“I want to be very clear: The United States’ defense commitment to the Philippines is ironclad,” he said. “Any attack on the Filipino aircraft, vessels, or armed forces will invoke our Mutual Defense Treaty with the Philippines.”

A China Coast Guard vessel collided with a Philippines-contracted resupply boat early Sunday as it made its way to a rusting World War II-era ship grounded in Second Thomas Shoal more than two decades ago. Two hours later, a Chinese maritime militia boat ran into a Philippine coast guard ship during the same operation to deliver supplies.

The remarks from the US president come as Chinese Foreign Minister Wang Yi visits Washington this week for high-level meetings, including one with Biden on Friday. Meetings are also scheduled with Secretary of State Antony Blinken and National Security Advisor Jake Sullivan as the US and China continue a series of diplomatic engagements intended to manage tensions.

Wang’s trip is seen as part of an effort that could lay the groundwork for a Biden-Xi meeting next month in California.

China has repeatedly urged the Philippines to remove the ship known as the BRP Sierra Madre that it said was “illegally” and “deliberately” ran aground at the shoal — a move Manila took in response to China’s occupation of nearby Mischief Reef. Beijing also considers Second Thomas Shoal, which it calls Ren’ai Jiao, as part of its territory. — Bloomberg