AFP

Asian stocks made a positive start Wednesday following gains on Wall Street but lost momentum as factory gate prices in China fell for the first time in nearly two years.

Shares in Tokyo and Hong Kong rose at the open, with the United States bracing for a tense night of midterm election results.

But they dipped in mid-morning trade after official data showed the world’s second-largest economy languishing under Beijing’s strict zero-Covid policy.

Markets had climbed in New York and Europe on Tuesday as polls opened in crucial US elections that will shape the political fortunes of President Joe Biden.

Biden’s Democrats are facing a gargantuan struggle to hang onto control of Congress, and a Republican victory could pave the way for a White House comeback bid by Donald Trump.

Such a result could also lead to political deadlock in Washington — a prospect welcomed by investors “as it prevents any significant shifts in policy,” according to Scope Markets analyst James Hughes.

At the same time, market players are eying US inflation data due on Thursday, causing the dollar to retreat, said Edward Moya, senior market analyst at OANDA.

“The dollar got crushed today as a short-covering move accelerated as investors embraced risk appetite ahead of the midterm elections and Thursday’s pivotal inflation report,” he said in a note late Tuesday.

Tokyo was down 0.2 percent at the break, while Hong Kong lost 0.1 percent in morning trade, with Shanghai up 0.3 percent.

Other Asian markets were mostly higher, with Taipei up 1.4 percent, Seoul gaining 1.1 percent and Singapore up 0.3 percent. Sydney rose 0.6 percent while Jakarta was flat.

Speculation over how long Beijing will stick with its harsh lockdown-and-testing policies designed to stamp out Covid-19 has fuelled volatility in Chinese markets in recent days.

Official data showed Wednesday that China’s producer price index (PPI) fell by 1.3 percent on-year in October, pushing it into negative territory for the first time since December 2020.

The consumer price index (CPI) — the main gauge for retail inflation — rose by 2.1 percent on-year in October, moderating slightly from September’s two-year high of 2.8 percent.

Some stocks turned negative after “China inflation data printed a rather gloomy picture, with PPI remaining deflationary and CPI much weaker than expected, pointing to waning demand,” Stephen Innes of SPI Asset Management said in a note.

“Rolling lockdowns in China, as Covid cases rebound, are catching oil traders leaning the wrong way,” he added. Both main crude indexes were down more than 2.5 percent.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.2 percent at 27,827.16 (break)

Hong Kong – Hang Seng Index: DOWN 0.1 percent at 16,539.83

Shanghai – Composite: UP 0.3 percent at 3,072.68

Pound/dollar: UP at $1.1544 from $1.1468 on Tuesday

Euro/dollar: UP at $1.0074 from $1.0005

Dollar/yen: DOWN at 145.465 yen from 146.26 yen

Euro/pound: UP at 87.28 pence from 87.23 pence

West Texas Intermediate: DOWN 3.3 percent at $88.79 per barrel

Brent North Sea crude: DOWN 2.6 percent at $95.32 per barrel

New York – Dow: UP 1.0 percent at 33,160.83 (close)

London – FTSE 100: UP 0.1 percent at 7,306.14 (close)

Trafficked, beaten and locked up far from his family in China, Lu was one of thousands of people in Cambodia forced to operate online scams to line their captors’ pockets.

Covid shutdowns had left the builder out of work, so when he heard he could earn $2,000 a month on a construction project in Cambodia, he jumped at the chance.

But he soon realised he had been lured by a scamming gang to a compound in the seaside resort of Sihanoukville, along with hundreds of others.

There he was forced to work 12 to 16 hour shifts, trawling social media and dating apps on a hunt for victims to scam out of huge sums.

“Once I arrived it was too late to escape,” Lu told AFP. “But as long as I was alive, I would keep trying.”

People from countries around Asia — including Vietnam, the Philippines, Thailand, Malaysia, China, Taiwan, Hong Kong, Bangladesh and India — have been sucked into similar operations.

Some, like 34-year-old Lu, have made it out, though thousands of others are feared still trapped.

In August, the UN special rapporteur on the situation of human rights in Cambodia, Vitit Muntarbhorn, said the trafficking victims “were experiencing a living hell often resulting in torture and even death”.

– Metal bars and barbed wire – 

Sihanoukville was once a sleepy resort town, but it was transformed by a vast influx of Chinese investment.

Dozens of casinos sprang up in recent years, making it a hub for Chinese gamblers and drawing in international crime groups.

As travel restrictions bit during the pandemic, these groups shifted their focus.

Jeremy Douglas, of the United Nations Office for Drugs and Crime (UNODC), said “criminal groups moved casino businesses online, and some then did a pivot and added online and phone scams”.

One gang member told AFP on condition of anonymity that the first people to fall prey to operations like his were Chinese nationals already in Cambodia.

Then gangs started trafficking people into the country.

Douglas of the UNODC said “thousands, and some have estimated possibly tens of thousands” of people have been ensnared.

To stop victims from escaping, compounds were installed with metal window bars and barbed wire.

“Once they arrived in the compound, they could not leave,” the gang member said.

“People were beaten or tortured and sold if they refused to scam others.”

Within Cambodia, some were sold on to other gangs, the source said. Those with good IT or English-language skills could be sold for up to $50,000.

– ‘The real mafia’ – 

AFP interviewed four trafficking victims who said they too received lucrative job offers during the pandemic.

A 38-year-old Malaysian Chinese man called Roy described flying to Phnom Penh and being met by a woman in smart office wear who whisked him through immigration and into a car for the five-hour drive to Sihanoukville.

There, he was taken to a complex of apartment blocks a dozen or so storeys tall, housing a mix of accommodation and office rooms.

“It just looked like a normal office, with three rows of tables with monitors and keyboards, just like a cybercafe,” Roy told AFP.

But he said “once you get in you know you’re not doing customer service”.

Roy and others like him had their passports taken away, and were instructed to set up fake profiles on apps and dating sites including TikTok, Facebook, Instagram and WhatsApp.

Under the constant threat of violence, they would groom targets to pour money into crypto currency or other investment platforms.

Others were forced to build online “love” relationships with their targets and to scam them under the guise of needing help to pay debts off.

There are no reliable figures on how much money the gangs have netted from the scams, though the UN’s Douglas said the numbers are “staggering”.

It is not clear where the money ends up, he added, though criminal proceeds are often bundled together with online betting profits, with many of the scam compounds located near legal gambling businesses.

The gang member in Sihanoukville told AFP he did not know who he was ultimately working for.

“We don’t know who is who,” he said. “They are the real mafia.”

– ‘Shock, kick, shock’ –

Forced scammers who resisted paid a high price. Construction worker Lu said he was “beaten quite often” because he was caught trying to escape.

Others said gang members used electric batons to inflict shocks, or forced workers into rooms too small to stand in, depriving them of water, food and light for hours.

“They ask someone to lie down and then kick them, like a dog,” Roy said.

“Sometimes (they would) get an electric shock, kick and shock. They would get a five-minute to 10-minute beating.”

Some, like Roy, were fortunate.

After being told he would have to buy his way out for $20,000, he was rescued after contacting Taiwanese victims group the Global Anti-Trafficking Organisation (GASO).

The group works with Cambodian officials to facilitate rescues and repatriate citizens.

Others have taken a more dramatic approach — in August dozens of Vietnamese workers escaped a casino in southern Kandal province and swam across a river back to their homeland.

Attention on the issue has grown: in July the United States downgraded Cambodia in its annual human trafficking report.

After months of official denials, Prime Minister Hun Sen ordered a hunt for ringleaders and authorities launched a string of high-profile raids in August.

In September, police freed more than 1,000 foreigners from three Sihanoukville compounds.

At one site, a swoop netted nearly 9,000 mobile phones, 800 computers — and chillingly, handcuffs and electric shock instruments.

It was during one such raid that Lu was released.

– Crackdown or relocation? – 

Still, international observers and rights groups are sceptical of the depth of the government’s crackdown.

Jacob Sims, International Justice Mission’s Cambodia director, said the efforts need to go further than raids and rescues.

“Criminal accountability for the ringleaders of the transnational organised crime networks is absolutely essential if we hope to eradicate this issue,” he said.

There are fears that rather than shutting down, the groups are simply relocating.

“Today it is an operation in Cambodia, but tomorrow a gang under pressure uproots and shifts to Myanmar, Laos or the Philippines — and this has happened,” the UN’s Douglas said.

Back in Cambodia, those rescued by police, like Lu, face an uncertain future.

While he has evaded immigration detention, he told AFP he cannot afford to return to his wife and nine-year-old child in China.

A spokesperson for China’s foreign ministry told AFP the government was working with Cambodia and other countries to fight transnational crime, and that it “resolutely upholds both the safety and legal rights and privileges of Chinese citizens abroad”.

Lu said he had received no help from the Chinese embassy.

“The Chinese embassy only has one thing to say: ‘Adults have to pay for their decisions,'” he said.

burs-rbu/pdw/ser

The wealth of China’s billionaires this year dropped by the largest amount in more than two decades, according to an annual ranking, as zero-Covid curbs and a property market crisis stall the world’s second-largest economy.

The Hurun China Rich List, released Tuesday, said the total wealth of all individuals with a minimum net worth of 5 billion yuan ($691 million) dropped by 18 percent to $3.5 trillion.

Only 1,305 people made it onto the list — an 11 percent net decrease compared with last year, and the biggest drop in 24 years. 

The fortunes of China’s ultra-rich have been battered by Beijing’s harsh zero-Covid policy, which has heavily disrupted production and supply chains.

They have also taken a hit from stock market routs during a two-year crackdown on the tech industry, and suffered from geopolitical volatility caused by events such as the war in Ukraine.

The property and healthcare sectors were hit especially hard, according to the list.

Property developer Yang Huiyan of Country Garden Holdings lost the most personal wealth at $15.7 billion this year, while Pony Ma, founder of tech and gaming giant Tencent, lost $14.6 billion after a sweeping crackdown on the gaming industry last year.

China’s three richest people stayed the same as last year, with Zhong Shanshan, founder of bottled water company Nongfu Spring, increasing his wealth by 17 percent to $65 billion.

Zhang Yiming, the founder of TikTok parent ByteDance, retained second place but saw his wealth drop by 28 percent to $35 billion after the company’s valuation dropped.

Alibaba founder Jack Ma fell from fifth to ninth place after losing 29 percent of his wealth to $25.7 billion, while Pony Ma slipped from fourth place to fifth.

Nearly 300 individuals listed last year were absent from this year’s list, most from the property industry, which has faced a spiralling debt crisis after the government imposed borrowing curbs in 2020. 

The chairman of property giant Evergrande, Xu Jiayin, fell out of the 100 richest to 172nd place as his company sagged under over $300 billion of debt.

The International Monetary Fund has predicted that China’s annual GDP growth will only reach 3.2 percent this year.

Factory gate prices in China were down for the first time in nearly two years last month, official data showed Wednesday, as falling global commodity prices made their mark on an economy ailing under strict Covid controls.

The producer price index (PPI) fell by 1.3 percent on-year in October, according to the National Bureau of Statistics (NBS), pushing it into negative territory for the first time since December 2020.

The figure represented a reduction from September’s 0.9 percent rise.

“In October, demand in some industries rose, and the national PPI rose slightly month-on-month,” said NBS statistician Dong Lijuan.

“But owing to the high comparison base from the same period last year, the year-on-year figure went from growth into decline.”

“Factory-gate inflation is likely to continue falling over the coming quarters due to a further decline in global commodity prices and a higher base for comparison,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“We expect it to stay in negative territory through the final months of the year and much of 2023.”

The consumer price index — the main gauge for retail inflation — rose by 2.1 percent on-year in October, the NBS said, moderating slightly from September’s two-year high of 2.8 percent.

Consumers in China have been largely spared the impact of a global surge in food and energy costs following Russia’s invasion of Ukraine.

“Under the impact of factors including a drop in consumer demand after the (National Day) holiday and last year’s high base of comparison, the rise in consumer prices somewhat fell back,” Dong said.

– Zero-Covid impact –

China is the last major economy wedded to a zero-Covid strategy, stamping out emerging outbreaks as they occur through snap lockdowns, mass testing and strict quarantines.

Authorities in areas where cases arise frequently invoke the policy to shut down businesses and confine people to their homes at short notice.

Much of the country also remains under a patchwork of travel restrictions, roiling international supply chains and hammering domestic demand.

The Chinese economy beat expectations to grow 3.9 percent in the third quarter, but analysts expect that it will fall well below this year’s official growth target of around 5.5 percent.