China’s youth unemployment rate decreased in September, according to data released by China’s National Bureau of Statistics on October 22. The unemployment rate for 16-24 year-olds, excluding students, stood at 17.6%, down from 18.8% in the previous month, but it remains at a relatively high level.

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It is worth noting that after the youth unemployment rate for the 16-24 age group reached a historic high in June 2023, Chinese authorities temporarily halted the release of this data and revised the statistical method to exclude students. However, this adjustment has raised concerns in the market regarding the credibility of the data.

Before the release of this unemployment figure, the National Bureau of Statistics reported that the economy grew by 4.6% in the third quarter, slightly higher than market expectations but marking the lowest growth rate in the past six months.

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Amid a prolonged period of economic weakness, the Chinese government finally introduced a significant and detailed monetary easing policy in September, followed by policies in October aimed at boosting economic growth and stabilizing the real estate market. The market is now closely watching to see if these policies will effectively revive the Chinese economy.

Apple CEO Tim Cook visited China for the second time this year. According to a report from Commercial Times, his visit may be aimed at boosting Apple’s business in the region, particularly given that Apple Intelligence currently does not support the China version of the new iPhone 16.

A report from South China Morning Post noted that Chinese Android smartphone vendors are already incorporating new AI features into their devices. On the other hand, Apple’s major rival in smartphones, Samsung, has also found an ally in the local market, as the report pointed out that earlier this year, Baidu’s AI model would be integrated into Samsung’s latest flagship smartphone series, the Galaxy S24.

The report also mentioned that during an earnings call in August, Cook stated that he was advocating the launch of Apple Intelligence in China, aiming to provide AI services to all Apple users.

According to Commercial Times, citing Cook’s official account on the social media platform Weibo, during his trip, Cook met with Chinese university students to discuss how Apple products can support sustainable farming practices.

Notably, according to a report from Reuters, Cook also met with Jin Zhuanglong, China’s Minister of Industry and Information Technology, on Wednesday in Beijing.

The report from Commercial Times also noted that this is Cook’s second visit to China this year. During his trip in March, he reaffirmed the company’s long-term commitment to the Chinese market. On that visit, Cook visited Apple’s new store in Shanghai, met with China’s Minister of Commerce, Wang Wentao, and connected with several major Chinese suppliers.

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• [News] Insiders Reportedly Claim Apple to be Two Years behind in AI Development
• [News] A Comparison between Apple iPhone 16 and Huawei Mate XT

(Photo credit: Tim Cook’s Weibo)

China has been in the spotlight lately with its breakthroughs in semiconductors. Following the buzz that SMIC is said to produce 5nm chips for Huawei this year, Xiaomi is rumored to have taped out its first 3nm SoC. China’s efforts can also been seen by the surge of semiconductor patent applications, with the country’s filing in 2023-24 soaring by 42%, according to a report by The Register.

Citing the data from IP firm Mathys & Squire, the report notes that there is a 22% global increase in semiconductor patent applications, rising from 66,416 in 2022-23 to 80,892 in 2023-24.

It is worth noting that China’s semiconductor sector is rapidly advancing in response to U.S. export controls, while its semiconductor patent applications during 2023-24 showed the strongest growth among all regions, rising from 32,840 to 46,591 with a 42% year-over-year increase, according to The Register.

However, China’s surge in patent applications is not solely influenced by geopolitical factors. AI accelerators and high-performance chips have become highly sought after amid the AI boom, leading chipmakers around the world, including those in China, to rush to file patents for the next breakthrough in AI hardware, the report states.

An expert from Mathys & Squire cited by the report states that as the U.S.-China chip war intensifies, export restrictions are prompting China to increase its investment in domestic semiconductor research and development, and this is now evident in their rising patent applications.

On the other hand, the U.S. is also making great strides in semiconductors. The data from IP firm Mathys & Squire reveals that the hometown of chip giants Intel, Qualcomm and NVIDIA experienced a 9 percent increase in patent filings, reaching 21,269 in 2023-24.

With government policies channeling funds into domestic chip production—TSMC’s Arizona plant being a notable example—the U.S. is eager to strengthen its supply chain while intensifying its research and development initiatives, which is in line with the trend, the report suggests.

Nevertheless, China is still years behind the most cutting-edge chip technologies, the report points out. For instance, the report notes that the CPU released by Chinese chip firm Loongson last week, 3B6600, though claiming to rival 7nm x86 processors, would be similar to match the performance of AMD and Intel’s products from five years ago.

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• [News] Xiaomi Rumored to Have Taped out its First 3nm Chipset, Which Might be Launched Next Year
• [News] SMIC Reportedly to Manufacture 5nm Chips for Huawei Without EUV Machinery

According to a report from Reuters, the U.S. government is finalizing regulations that will prohibit investments in AI in China, as indicated by a recent government update. The regulation will restrict specific outbound investments to China in areas such as AI, semiconductors, microelectronics, and quantum computing.

According to the report, the rule is currently under review at the Office of Management and Budget, suggesting that it is expected to be released within the next week or so.

The rules will reportedly require U.S. investors to notify the Treasury Department about certain investments in AI and other sensitive technologies in China.

The report highlighted that the rules are based on President Joe Biden’s executive order from August 2023, aimed at safeguarding American knowledge and preventing its application in China’s military advancements.

According to the proposals released last year, the U.S. Treasury Department highlighted that the military, intelligence, surveillance, and cyber-enabled uses of these technologies and products pose risks to U.S. national security, particularly when developed by countries of concern such as the PRC.

Citing former Treasury official Laura Black, the report suggested that the rule is expected to be released before the U.S. election. Black also noted that the Treasury office responsible for overseeing regulations typically allows for a minimum 30-day period before the actual implementation of the rule.

According to the report, the Treasury Department released proposed rules, including some exceptions, and invited public comments in June. Black expected that the final rules will provide further clarity on the scope of coverage for AI and the thresholds for limited partners.

Additionally, the report noted that the proposed exceptions include publicly traded securities such as index funds and mutual funds, along with certain limited partnership investments and specific syndicated debt financings.

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• [News] U.S. Urges South Korea to Tighten Chip Export Controls to China
• [News] China Bypasses Restrictions to Acquire NVIDIA Chips, with Cloud Service Costs Even Lower Than in the U.S.

(Photo credit: istock)

The People’s Bank of China (PBoC) announced on October 21 a reduction of both the 1-year and 5-year Loan Prime Rates (LPR) by 25 basis points each, bringing them to 3.1% and 3.6%, respectively.

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In mid-September, the PBoC launched a series of large-scale monetary easing measures, including interest rate cuts, reserve requirement ratio reductions, and mortgage rate cuts to support economic growth. Additionally, the 7-day reverse repo rate was lowered by 20 basis points at the end of September, providing guidance for the latest LPR adjustments.

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The September monthly economic data did showed some initial signs of improvement, with retail sales rising by 3.2% year-over-year (previous: 2.1%), exceeding market expectations of 2.5%, and industrial output increasing by 5.4% year-over-year (previous: 4.1%), also above market expectations of 4.6%. Neverthess, the current stimulus plans seem unable to boost the economy.

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China’s third-quarter GDP growth came in at 4.6% year-over-year (previous: 4.7%), with cumulative GDP growth for the first three quarters at 4.8%, still below the annual target of 5.0%, highlighting the increasing urgency for the Chinese government to strengthen policy stimulus.

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