China’s common prosperity push is long overdue, but the rich don’t need to worry about their wealth
Xi Jinping’s rhetoric on common prosperity, which calls for the people to share in the opportunity to be wealthy, has surged this year. Notion of common prosperity dates back to the 1950s and Mao Zedong, before fellow former leader Deng Xiaoping repeatedly mentioned the idea in the 1980s. Beijing’s push for so-called common prosperity has fanned concerns whether China’s own Gilded Age of massive wealth creation is coming to end. While it is probably true that money cannot have its way like it used to, it would be wrong to worry about a state-sanctioned wave of redistribution of wealth. To start with, the goal of common prosperity is long overdue. The search for a fair society is deeply rooted in communism and China’s traditions, the two sources of official Chinese ideology. It is a Confucian ideal of a community shared by all, and while it has never really been achieved, it has never faded as a pursuit. Mao Zedong tried to create an egalitarian society by eliminating private property, but this only made everyone poor. Deng Xiaoping then unleashed China’s economic potential partly by telling people “to get rich is glorious”, but this created one of the world’s widest wealth gaps. Common prosperity became an empty slogan in a country that has more billionaires than the United States, but also has around 200 million people living on a monthly income of less than 2,000 yuan (US$309). There is no wonder that Wall Street bankers feel China is more capitalist than the US. These comments are definitely not compliments for Beijing. Secondly, China’s pursuit is through high quality growth, instead of a class struggle. In other words, it is not targeting the rich, but placing a priority on helping low-income groups. One particular concern is whether the government will force the rich to hand out wealth by encouraging so-called third distribution or charity, but such a worry is unnecessary. As the party secretary of Zhejiang, the province designated to showcase how this will all work, said in July, the new drive does not mean to “kill the rich to help the poor”. It will also be achieved through institutional arrangements instead of campaigns, and tax could play an important part. China’s current tax regime is, roughly speaking, a friend of Big Tech and the rich, but not a friend of wage-earners and small businesses, and this must change. More importantly, it is a whole-society project instead of pure economic policy, although the common prosperity push has far-reaching implications for China’s economic prospects. The outcome of China’s common prosperity will decide whether the country’s economic growth can be put on a sustainable track.
China targets jobs, wages and training in new 5-year economic blueprint
State Council aims to expand vocational education and ensure wages keep pace with productivity Plan part of renewed push drive domestic demand and move manufacturing up the value chain
China manufacturing data under the microscope, with Asian currencies braced for more bad news
China will release August’s official purchasing managers’ indices (PMI) for manufacturing and services on Tuesday Traders are looking to Chinese factory data for clues on the global outlook after the world’s second-largest economy slowed more sharply than expected in July Chinese exports, retail sales and industrial production growth all missed economists’ estimates in July as a new wave of virus infections hurt consumption and global growth. The central bank has since pledged to stabilise the supply of credit and boost the amount of money supporting smaller firms and the real economy. “For Asia, the most growth-sensitive currencies are the more open trade economies such as [South] Korea, Taiwan, Singapore and China,” said TD Securities’ Kotecha. “These have outperformed through the Covid crisis, but weaker growth prospects and slowing trade could limit gains in these currencies.” The pandemic has hurt Southeast Asian currencies particularly hard, with the baht tumbling to a three-year low in August. The Malaysian ringgit dropped to the weakest in more than a year while the Philippine peso slid to a 15-month trough. It may be worthwhile noting that even if China’s manufacturing sector surprises on the upside, the bout of relief for Asian currencies could be brief. Attention will quickly turn to US non-farm payrolls data due on Friday, with the US dollar expected to resume its advance if a strong report delivers another boost to US Treasury yields.
Why the Chinese Decade of Luxury Is Just Starting
Does the latest government crackdown in China prove that the country’s luxury bubble is about to burst? Not so fast. During the last two and a half years, practically all luxury growth came from China. And the country’s wealthy, highly educated, and entrepreneurial young Chinese Gen-Z and millennial consumers have been the driving force behind this boom. An additional 400 million Chinese consumers will transition from low-income to middle-class or higher over the next 10-15 years. Hainan has become a second Dubai, reflecting the massive domestic infrastructure measures that should have a big impact on the future of Chinese tourism and spending.
It is vital and necessary for the Communist Party to keep its grip on data, writes boss of Chinese central enterprise
Article appears amid Beijing’s ongoing crackdown on Big Tech and broader efforts to tighten its grip on data through new legislation and rules Opinion piece was written by boss of China Hualu Group, based in the northeastern port city of Dalian and which specialises in audio recordings n a notice posted online last Friday, authorities in Tianjin said that data currently stored on private platforms must be moved to digital infrastructure controlled by the State-owned Assets Supervision and Administration Commission (SASAC) within two months of the expiration of existing leases, with the final deadline at the end of September next year. In his opinion piece on Monday, Ou praised the coming Data Security Law for protecting China’s data. He wrote that Hualu will enhance protection of its data and data infrastructure facilities. “The political nature is the fundamental nature of central enterprises. Only when we are aware politically, can we have an accurate mental understanding, which in turn allows us to execute thoroughly when we are in action,” Ou said. Ou wrote that central enterprises must insist that they are led by the party and establish a high bar for themselves. By taking advantage of the close ties central enterprises have with the party, companies can continue to help the party to unify its rule on data security and information as well as build tools for the party to control data.“We have to deeply comprehend, study and execute the political meaning of the Data Security Law and list data security and development as an important item on the party committee’s agenda,” he wrote.
With new privacy law, China could reshape cross-border data rules similar to Europe’s GDPR
China’s Personal Information Protection Law establishes mutually incompatible data governance standards that could put multinational companies at risk With stricter standards and penalties than the EU’s General Data Protection Regulation, China may be looking to set international standards
Critical Information Infrastructure in China – New Cybersecurity Regulations
New regulations on the security and protection of critical information infrastructure in China will come into force starting September 1. We look at which companies are most likely to be designated as critical information infrastructure operators, what are their compliance obligations, and the new opportunities that may arise from the additional requirements.
US Commerce Department denies easing trade restrictions on Huawei Technologies
‘The policy has not been eased or amended,’ a department spokesman says An outcry followed reports that Huawei has won approval to purchase American-made automotive chips
China’s Electric-Vehicle Ambitions Are No Pipe Dream
Chinese language electric-vehicle gross sales are shifting again into excessive gear after a interval of stagnant progress. Its homegrown EV makers are additionally turning into extra formidable rivals: After struggling for many years to match international experience within the inside combustion engine, China has an actual probability to place international manufacturers on the again foot within the electrical period.
What’s the end game for China’s crackdown on private tutoring? Beijing wants a fair and sustainable society
The growing necessity for private tutoring challenges Beijing, as it represents a disruption to the country’s state education system Beijing’s grand plan to revamp the country’s education system is one piece of the Chinese leadership’s bigger goal to engineer a fairer society
China’s largest bad-debt manager Huarong posts a record US$15.9 billion loss, underscoring massive bailout ahead
Huarong reported a 102.9 billion yuan (US$15.9 billion) loss for all of last year, slashing its shareholder equity by nearly 85 per cent The company booked 107.8 billion yuan in impairments and suffered a 12.5 billion yuan loss on financial assets
ByteDance makes another move into metaverse with acquisition of VR start-up Pico Interactive
ByteDance said the purchase of Pico will support its long-term investment in VR
Pico ranked third in global VR headset sales in the first quarter of this year
Lower provisions help Bocom, ICBC, CCB and Postal Savings Bank post strong first-half profit
Postal Savings Bank of China topped the first-half profit charts among state-owned lenders reporting earnings on Friday Bank of Communications president optimistic about the full-year outlook as China’s normalising growth provides a supportive environment for banks
SenseTime, artificial intelligence platform founded by CUHK professors, files to raise at least US$2 billion in Hong Kong IPO
Founded in 2014, Hong Kong start-up has quickly become China’s biggest artificial intelligence company SenseTime warned it is subject to ‘complex and evolving’ rules on privacy and data protection
China has carbon neutral goals, but at local level old habits die hard
Central government criticises some provinces for racing ahead with high-energy and high-emissions projects, and others for empty talk As the country’s low-carbon aspirations take time to filter down, regions struggle to balance climate targets with economic need
China’s carbon neutral goal: Sinopec plans to spend US$4.6 billion over five years on a supply chain to promote hydrogen
Sinopec plans to set up 1,000 hydrogen refuelling stations with 200,000 tonnes of annual refuelling capacity China’s biggest oil refiner also plans to build facilities run by renewable energy that can produce over 1 million tonnes of hydrogen every year
China air cargo disruptions advance ‘super peak’ as prices soar after Shanghai freight terminal closure
Seven coronavirus cases were detected at Shanghai Pudong International Airport, forcing authorities to suspend cargo aircraft operations Goods shipping in China had already been disrupted by the partial closure of a terminal at Ningbo-Zhoushan Port for two weeks earlier this month
Far East sea freight rates to increase again shortly
Ocean freight rates on the Far East-Middle East sector will increase again by the end of the month in anticipation of a surge in year-end cargo volumes
China’s Lou Jiwei decries ‘996’ culture of overwork and says ambitious green targets risk economic ‘dangers’
Outspoken former finance minister Lou says forcing employees to work excessive overtime not only violates labour law, it also destroys work-life balance and reduces available jobs Comments pre-empted a ruling by the Supreme People’s Court that the controversial and highly demanding schedules commonly seen at internet and tech giants are illegal
Alibaba’s home province first to issue competition compliance guidelines for online platform operators
The Zhejiang provincial government’s guidelines combine multiple antitrust rules and regulations This initiative has come months after the State Council Antitrust Committee issued the final version of the country’s new anti-monopoly guidelines The Zhejiang guidelines specify the factors to be considered when determining whether an online platform enterprise has a dominant market position, the definition of which is relatively vague in the country’s Anti-Monopoly Law. For example, the amount and volume of transactions, the number of active users and clicks, duration of use and the time span of its market share must be taken into account under the provincial guidelines. The guidelines also warn online platforms that “highly sensitive” behaviour could set off an antitrust alarm. These include discriminatory pricing based on big data and algorithms, price dumping to seize greater market share and mandatory collection of unnecessary user information. It recommends the establishment of a competition compliance management department and a system that encourages whistle-blowers at each company. In a separate announcement, the Zhejiang provincial government on Sunday started promoting a digital regulation system for food delivery, dubbed Zhejiang Takeaway Online. The platform, which enables better cooperation between different government agencies – including those responsible for market regulation, public security and health care – is expected to support “the comprehensive regulation” of the online food delivery industry, “from kitchens to tables, from online to offline, from merchants to food delivery riders”. The platform already has more than 200,000 restaurants registered since its official launch in July. Consumers are now able to check online information about merchants and their business licences. Through the platform, regulators and consumers can also watch the food preparation process at these restaurants via live streaming in real time.
Bye-bye, US bonds? China’s sovereign wealth fund trims overseas equities, bonds amid ‘stresses and challenges’
China Investment Corporation releases annual report as all eyes turn to US Fed chairman Jerome Powell’s Jackson Hole symposium on America’s economic outlook CIC seeking ‘new ways to deploy capital overseas’, citing uncertainties in post-pandemic international landscape
Bitcoin Has No Value: People Bank’s Of China Official Announces Further Crackdown
Bitcoin (CRYPTO: BTC) and other cryptocurrencies “are not legal tenders and have no actual value support,” according to Deputy Director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China (PBoC) Yin Youping. According to a report by local news outlet People’s Daily Online, Youping said that cryptocurrencies are purely speculative assets. He also advised the public to increase its risk awareness and stay away from the crypto market to “protect their pockets.”
China Electric Vehicle Leader BYD Reports 29% Drop In 1st Half Profit Amid Rising Costs
Net profit in the first six months of the year at BYD, China’s biggest maker of electric vehicles, fell by 29% to 1.17 billion yuan, or $180 million, amid rising material costs, the company reported in a filing Friday evening. Revenue at the Warren Buffet-backed business increased by 53.6% to 89.1 billion yuan. (Click here for announcement.)
The Semiconductor Heist Of The Century | Arm China Has Gone Completely Rogue, Operating As An Independent Company With Inhouse IP/R&D
Arm is widely regarded as the most important semiconductor IP firm. Their IP ships in billions of new chips every year from phones, cars, microcontrollers, Amazon servers, and even Intel’s latest IPU. Originally it was a British owned and headquartered company, but SoftBank acquired the firm in 2016. They proceeded to plow money into Arm Holdings to develop deep pushes into the internet of things, automotive, and server. Part of their push was also to go hard into China and become the dominant CPU supplier in all segments of the market.
Chinese developers to focus on debt reduction until 2023 to meet ‘three red lines’ deadline
China introduced the ‘three red lines’ deleveraging campaign in August last year to improve the financial health of the real estate sector China Resources Land and Logan Group have successfully met all three criteria, according to Beike Research Institute
Meituan posts 77 per cent quarterly revenue growth despite concerns over antitrust investigation
China’s largest food delivery and on-demand local services provider posted second-quarter revenue of US$6.8 billion The company incurred a net loss of US$525 million yuan, as its new initiatives and others segment continued to rack up losses
George Soros: Investors In Xi’s China Face A Rude Awakening
Xi Jinping, China’s leader, has collided with economic reality. His crackdown on private enterprise has been a significant drag on the economy. The most vulnerable sector is real estate, particularly housing. China has enjoyed an extended property boom over the past two decades, but that is now coming to an end. Evergrande, the largest real estate company, is over-indebted and in danger of default. This could cause a crash. One of the reasons why middle-class families are unwilling to have more than one child is that they want to make sure that their children will have a bright future. As a result, a large tutoring industry has grown up, dominated by Chinese companies backed by US investors. Such for-profit tutoring companies were recently banned from China and this became an important element in the sell-off in New York-listed Chinese companies and shell companies. The crackdown by the Chinese government is real. Unnoticed by the financial markets, the Chinese government quietly took a stake and a board seat in TikTok owner ByteDance in April. The move gives Beijing one seat on a three-person board of directors and first-hand access to the inner workings of a company that has one of the world’s largest troves of personal data. The market is more aware that the Chinese government is taking influential stakes in Alibaba and its subsidiaries. SEC chair Gary Gensler has repeatedly warned the public of the risks they take by investing in China. But foreign investors who choose to invest in China find it remarkably difficult to recognise these risks. They have seen China confront many difficulties and always come through with flying colours. But Xi’s China is not the China they know. He is putting in place an updated version of Mao Zedong’s party. No investor has any experience of that China because there were no stock markets in Mao’s time. Hence the rude awakening that awaits them.
Shenzhen’s ‘made in China, sold on Amazon’ dreams undercut by merciless crackdown
Patozon’s recent decision to put all of its research and development employees on suspension for six months has created uncertainty over its viability In 2020, China’s cross-border e-commerce exports surged 40 per cent, far exceeding the general export growth rate of 4 per cent
Australia’s Recession Is As Much A Problem For Biden As Sydney
More troublesome may be what Australia is telegraphing about China. Hopes for a “V-shaped” recovery in Asia’s biggest economy have long since been dashed. Is Australia’s stumble indicative of bigger troubles to come? For 20 years now, resource-rich Australia has arguably been the globe’s biggest leveraged bet on Chinese demand. A succession of governments enthusiastically sent more and more aluminum, beef, coal, copper, gold, iron ore, petroleum gasses, wine and other products China’s way.
Now, slowing Chinese demand is leaving Australia in harm’s way. It’s more complicated than that. Canberra and Beijing are trading barbs over the origins of the coronavirus. Morrison’s government has enraged President Xi Jinping’s by demanding an investigation into how the virus started and China’s slow and opaque response. Yet the flashing red lights emanating from Australia are a warning for leaders everywhere that the global revival isn’t as grand as hoped. And that’s as much of a warning for Biden as anyone.
How China Overreached in Australia
Australia is not the first, and will not be the last economy, to endure Chinese displeasure. But Australia is showing that smaller nations still have agency and options, and that it is no easy matter for China to cow liberal democracies into subservience.
Explainer | US-China trade war timeline: key dates and events since July 2018
The US-China trade war began in July 2018, eventually leading to tariffs on some US$550 billion of Chinese goods and US$185 billion of US goods A phase-one trade deal was signed in January 2020, although relations have not significantly improved under the administration of US President Joe Biden
U.S.-China Cancer Collaboration Could Open Door For New “Ping-Pong Diplomacy”: Kevin Rudd
A joint effort by the U.S. and China to fight cancer could represent a latter-day equivalent of the exchange of table tennis players between the two countries that led to a historic thaw in bilateral relations in the 1970s, former Australia Prime Minister Kevin Rudd said at a global online healthcare summit organized by Forbes China on Saturday.
Canada’s China relationship edges toward strategic clarity
This is a febrile moment in Canada–China relations. Diplomatic interactions are on ice, trade in goods is hot, public feelings are sour, the ‘3Ms’ dispute over detained citizens remains unresolved, and a federal election campaign has just been launched. As Canadians assess that future, Australia will be invoked frequently. For some it is a source of inspiration and a plucky example of how to stand tall, push back, and prepare for long-term contestation. For others it presents a cautionary tale of overreaction to an exaggerated threat and reckless rhetoric that provokes a more powerful country, increases reliance on the United States and undermines the fabric of its multi-cultural society. If there is a golden mean in between, by inclination and instinct Ottawa will seek to find it.
Australia’s ‘China-has-changed’ narrative doesn’t explain damagingly bad ties
The Australia–China relationship has been in the deep doldrums for some time now. Australian commentary pins the blame for the deterioration of bilateral ties on ‘China’s aggressive attempt to expand the domestic authoritarianism of [Chinese] President Xi Jinping into the Indo-Pacific region’. In the dominant narrative the contention that the Australian national security establishment’s sledging transformed China into the enemy gets short shrift. But Australia’s 2020 Defence Strategic Update is more-or-less premised on this reading of China.
South China Sea: China demands foreign vessels report before entering ‘its territorial waters’
From Wednesday, foreign vessels must declare ship’s name, call sign, position and dangerous cargo It comes amid escalating tension between China and rival claimants, as well as Western nations led by the US and its expanded military presence in the region
What is the Wakhan Corridor and why is China worried about it?
China has always been wary of narrow, isolated strip of Afghan land high in the mountains becoming a conduit for Uygur militancy in Xinjiang The Taliban’s coming to power in Afghanistan has compounded China’s worries of a spillover, given the militant Islamic group’s ties with the ETIM
China holds firm on Xinjiang as neighbouring Afghanistan poses security concerns
Counterterrorism and stability measures will continue in the remote region which shares a border with the war-torn country Beijing has sought assurances from the Taliban that it will cut ties with terrorist groups, including ETIM
Will China’s demands on US block cooperation on Afghanistan?
Afghanistan and the Taliban were on the agenda of phone call between US Secretary of State Blinken and Chinese Foreign Minister Wang Yi on Sunday Wang insists demands be heard before China considers working with the US even though both have an interest in countering extremism and aiding reconstruction But he said that if Beijing thought the US was continuing to harm its interests, future cooperation on Afghanistan would be affected. “China’s position is that the US cannot ask for China’s help on the one hand, and then damage Chinese interests on the other,” he said. “The Chinese side also believes that since the US already treats China as a strategic rival, and has adopted various preventative measures and checks and balances, then China has to return the favour and cannot blindly make concessions, and will fight when it needs to fight.”
Kamala Harris, Southeast Asia and the balancing act nations face between US and China
Both Washington and Beijing used the US vice-president’s visit to offer Covid-19 vaccine support for Vietnam Hanoi and other governments in the region may be able to use the growing US-China rivalry to their advantage, observers say
Political rows hamper Covid-19 origins hunt but more China research is a top priority, says senior WHO official
The global health body’s Covid-19 lead Maria Van Kerkhove says it wants to get ‘back to the science’ as Washington and Beijing continue to trade barbs The WHO wants to do more investigation in China even though Beijing vetoed its latest proposal, which included further investigation of the lab leak theory
Sino Weibo sacks censor over online attack on bereaved user
Ji Haoyang falsely accused a woman of lying online about her mother’s death to gain traffic His actions triggered a backlash and he lost his job
What China’s Parents Really Think About the Three-Child Policy
China has introduced a higher birth limit in an attempt to stave off a looming demographic crisis. But families say they have zero interest in having a third kid.
China’s ‘Common Prosperity’ Puts Tax-Dodging Celebrities On Notice
The new focus on wealth redistribution comes alongside a crackdown on celebrity fan culture. Celebrities are an early and easy target of the “common prosperity” drive, according to California-based journalist and YouTuber Wong Kim. “They really do have a lot of money. They earn more in a year than most companies make. For a treasury that is short on revenue, they are an ideal target. Besides, they all have some aspect of their financial dealings that can be picked apart as being not up to scratch.” As China’s economy takes a hit from the spread of the Delta variant, that progress can’t come fast enough. Wen sees an ulterior purpose to the new drive, a policy of distraction recalling Mao Zedong’s orchestration of various campaigns against “bad elements.” Wen writes: “As the virus becomes an issue again, ‘common prosperity’ can be used to redirect anger away from political leaders and scapegoat the rich.”
No more celebrity lists: NetEase joins Weibo and Tencent in pulling rankings as Beijing bears down on fan clubs
NetEase Music has removed celebrity ranking lists from its platform and limited purchases of digital albums to one per user Move comes after country’s internet watchdog told local authorities to cancel celebrity rankings and tighten oversight of celebrity marketing agencies Scrutiny of the entertainment industry reached boiling point last week. In an article posted on its website on Saturday, the Central Commission for Discipline Inspection, the Communist Party’s top anti-corruption watchdog, said the country was determined to continue with its “heavy-handed” crackdown, in the interests of protecting the nation’s youth. On Friday, the CAC detailed 10 areas for rectification among fan communities. The authority also requires online fan communities to be authorised by agencies associated with the celebrity. Platforms that fail to quickly stamp out verbal attacks among fans of different stars will be penalised. The CAC has been trying since June to stamp out the “chaos” of online fan clubs. The People’s Daily, the Chinese Communist Party’s mouthpiece, said earlier this month that “deformed fan circles must be regulated”
China targets fake news and citizen journalists with new campaign from internet watchdog
The Cyberspace Administration of China published guidelines for a new campaign targeting ‘misinterpretations’ of financial and economic policies Citizen journalists and the platforms that host them are being singled out after other recent campaigns against fake news and recommendation algorithms
WeChat, Chinese Social Media to Pare Content That ‘Bad Mouths’ Chinese Economy
The Chinese government is cracking down on financial journalists and commentators who aren’t officially registered with the government, the Global Times, an English-language newspaper controlled by the country’s Communist Party, reported.
Explainer | What difference will China’s new legal aid law make for its citizens?
The new legislation, to come into effect in January, is touted as another major step towards China becoming a rule-of-law country by 2035 It expands the types of eligible cases and seeks to improve pay for lawyers but local authorities will be able to rule on how legal aid will be granted
With Seven Floors in 12 Days, China Builds Hotel in Record Time
Instead of on-site procedures, 80 percent of the construction was completed in a factory.
Beijing Cancels Actress Zhao Wei. Is No Star Safe?
China has weathered a series of idol and celebrity scandals, and the reactions have been swift and strong. Where does that leave luxury ambassadorships?
China’s Generation N: the young nationalists who have Beijing’s back
Nationalism has been on the rise, encouraged by the Communist Party and put to effective use by President Xi Jinping Younger generations’ perceptions and expectations of their country differ from those of the past, offering the government support but also challenges
“Left-Behind” Children: How China turns a social problem into moral failings
In June 2015, the news of four siblings who committed suicide in Guizhou Province shocked China. The suicides exposed the hardship of the “left-behind” children — children who stayed behind in rural villages while their parents moved to the cities for work. My recent article in the journal Current Sociology argues that the problem is rooted in the state’s neoliberal-authoritarian approach towards the rural migrant population. The hukou system enables urban local governments to keep rural migrants as a “floating population” rather than as settlers, which necessitates the split-household arrangements of rural migrant families. At the same time, both the mainstream media and public policies pathologize the social issues of this population.
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