Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – January 3, 2022

2021 Was China’s Best Year Ever. Here’s Why.
Amidst global gloom, 2021 was the best year in contemporary Chinese history. Here’s what they accomplished.

China’s carbon neutral goal: Beijing cracks the whip, directs its worst polluting firms to get house in order
SOEs ‘should play demonstrative and leading roles in promoting carbon peaking and carbon-neutrality’, regulator says   State-owned Assets Supervision and Administration Commission of the State Council oversees some of China’s most power-hungry and heavy polluting firms

Climate change is driving capitalism’s need to change to survive
The world can no longer afford stock markets having a free ride while governments do the heavy lifting of financing essential needs    Circumstances emerging around the world make it likely that capitalism will evolve into something closer to China’s brand of state capitalism

Climate Change: Typhoons in coastal Asia and China could be twice as powerful by 2100, says Chinese University of Hong Kong study
Their overall destructive power could double by the end of the century in the worst-case climate change scenario     The projection also suggests that an average typhoon by then will last 56 per cent longer and travel 50 per cent further inland

China to remain renewable energy leader with strong capacity growth in 2022, despite subsidies phase-out
With strong supply and demand for renewables, China will continue to see strong capacity growth over the next five years, analysts say      Phasing out industry subsidies and a heavy reliance on coal are countered by government policies requiring investment in renewable energy    For now, China continues to rely heavily on coal for power generation, making it the world’s largest emitter of greenhouse gases. The country has faced severe power shortages since September resulting from a coal shortage and inflexible electricity prices. The central government has ordered power companies to secure winter power at any cost. Coal is expected to remain the mainstay power source in China to maintain energy security, government officials said at the central economic work conference in Beijing in December. Zhang Xiaoqiang, a former senior official with the National Development and Reform Commission, underscored the role of coal at the meeting. Even if China reached its carbon peak in 2030, he said, thermal power generation would still make up 60 per cent of national capacity. The meeting also reiterated the importance of developing renewable energy. The government concluded that it should accelerate the adoption of renewable energy and promote wind and solar power. State-owned companies, under pressure to transition from fossil fuels and meet renewable energy targets, will be the main drivers of renewable capacity growth in 2022, according to Xiamen University’s Lin.   Energy regulations will continue to play a role in this, as well, according to Refinitiv’s Qin. The “green certificate” trading scheme, launched by the National Development and Reform Commission in 2017, incentivises the use of renewables with regional minimum renewable power consumption targets. It requires polluters that do not meet certain thresholds to buy certificates from qualified renewable power plants. The scheme requires more than 100GW of additional wind and solar capacity per year to meet a 2030 target of 25 per cent of capacity coming from non-fossil fuel sources, according to Lauri Myllyvirta, lead analyst at the Helsinki-based Centre for Research on Energy and Clean Air.   “The economic priorities of stabilising growth, which likely means more generous lending for new projects, as well as the carbon neutrality policies, will also support clean energy,” he said.  Analysts at Haitong Securities projected that China could see around 75GW of new solar capacity in 2022. The China Photovoltaic Industry Association also projected 75GW of newly added solar capacity this year. “Renewable volumes are already sold out for 2022, thanks to strong demand from industrial users with ESG needs.” said Fishman. “So I think we’ll see builders becoming quite active in 2022, once the winter heating season ends and coal prices return to some longer-term baseline.”

Will Beijing’s ‘green Olympics’ really be green?
China wants to use the Beijing Winter Olympics to showcase its green credentials but there are concerns over the environmental cost of a Games relying on artificial snow in one of the driest places in the country.

China’s ‘artificial sun’ hits new high in clean energy boost
World’s oldest person celebrates 119th birthday in Japan nursing home    Research facility in Anhui ran at 70 million degrees Celsius for more than 17 minutes, Xinhua reports   The achievement ‘lays a solid scientific and experimental foundation towards the running of a fusion reactor’, scientist in charge says

China 2022 Outlook: The Economy, Covid, Business, and Regulatory Landscape
China’s economic outlook for 2022 is predicted to be relatively bright with GDP growth forecast at over 5 percent – higher than the global average. However, sustained pressure from Covid-19 outbreaks and supply chain bottlenecks will continue to have an impact. To counter the economic pressures, China will place particular importance on economic stability and recovery, adopting fiscal and monetary policies to spur growth in strategic portions of the economy. China is also expected to continue its ‘zero-Covid’ strategy in 2022, with quarantine-free travel to the country unlikely. Despite the relative economic slowdown and closed borders, international trade is reaching record highs, and foreign companies maintain an optimistic outlook.

China’s Core Economic Issues in 2022
The real estate downturn and inflation will cause headaches in the new year, while the emphasis on common prosperity continues.    The Chinese government has prioritized economic stability for 2022. Han Wenxiu, deputy director of the Office of the Central Committee of Finance and Economics, stated after the Central Economic Work Conference that officials must be cautious in introducing policies that have an economic tightening effect. The World Bank has set China’s 2022 growth forecast to 5.1 percent, a much slower pace of growth than China averaged in previous decades. China is likely to shore up GDP by investing, once again, in fixed assets. Infrastructure investment will comprise a large part of this. The country will probably issue more special bonds in order to partly finance fiscal spending.The Beijing Winter Olympics to be held in February will also stimulate the economy to some extent. New technology industries such as new energy vehicles and industrial robots will continue to provide a source of economic growth. Technologies that help China to move closer to carbon neutrality will also provide growth support. Even so, China’s economy will continue to face headwinds as it battles a flagging real estate sector and inflation, coupled with geopolitical forces such as the China-U.S. trade war and technology tensions.

Ten economic trends that could define 2022
For the second year running the pandemic has reshaped the world — not changing everything, but accelerating many things, from population decline to digital revolution. Here is how these trends could define 2022.

How to predict the unpredictable: Doing business in China in 2022
To say that 2021 has been an eventful year for businesses in China would be an understatement. Apart from the ongoing consequences of the Covid-19 pandemic, a constant flow of regulatory changes from Beijing rocked countless industries from real estate to gaming, ecommerce, edtech and many more. Given the speed and seemingly arbitrary nature at which new laws have been introduced, it can be difficult to understand what is happening in China and what the future may look like. Verdict has spoken to business executives and analysts focusing on China to discuss what the coming year may bring for the Middle Kingdom. In 2022 two major national events will dominate the narrative — first, the Winter Olympics in Beijing in February. Then, after that global spectacle wraps up, the Chinese People’s Political Consultative Conference (CPPCC) will meet in March to start with preparations for the Chinese Communist Party’s (CCP) most important event in 2022: the 20th Congress in November.

podcast Outlook for China’s Economy in 2022
Peiqian Liu, China economist at NatWest Markets, discusses Chinese growth and her outlook for the economy in 2022. She speaks on “Bloomberg Daybreak: Asia.”

China’s smallest firms failing at historic pace as 4.37 million close up shop and registrations plummet
Ex-finance minister has said official economic indicators failed to paint accurate picture of economy, and publicly available data did not show how many firms vanished    Only 1.32 million new micro and small firms opened in China during the first 11 months of this year, compared with 6.13 million last year

Recalibrating the EU’s research and innovation engagement with China
Until recently, European policy makers and academics were generally uncritical of science, technology, and innovation (STI) cooperation with China. In the context of China’s growing strength and ambitions in STI and the challenges its political system poses for cooperation, the EU and its member states have undergone a change of heart, taking measures to protect their research security and integrity. But a more coherent and informed strategy is still needed.

Charting the Global Economy: Factory output improving in Asia
China’s manufacturing sector continued to expand in December, providing some relief to Beijing as the world’s second-largest economy continues to struggle with the ongoing property market slump.

Climate tech investment is soaring this year — but might not be going to the right areas, PwC says
The average size of a climate tech deal almost quadrupled to $96 million in the first half of 2021, up from $27 million one year prior, PwC said.  It added that the number of active climate tech investors rose from less than 900 in the first half of 2020 to over 1,600 in the first half of 2021. While overall investment is up, PwC says investors are neglecting some of the most important climate tech areas.

China Spells Out Rules for Overseas IPOs of Domestic Companies, VIEs
China has released new rules for domestic companies listing IPOs overseas, including companies that are structured as variable interest entities or VIE. This puts an end to months of speculation over Beijing’s stance on these issues. China’s top securities regulator has also previously denied that the country will end the VIE structure, in a sign that it is avoiding financial decoupling with the US. Nevertheless, Chinese companies going the overseas IPO route should expect greater scrutiny. The introduction of fleshed-out rules underline Beijing’s growing concerns over its national security amid a volatile external political environment.

Days after go-ahead for VIE structures, Beijing releases ‘negative list’ to tighten grip on overseas IPOs by strategically sensitive firms
Firms in industries on the list will have to obtain a waiver from regulators before proceeding with IPOs overseas   The negative list ‘will play a bigger role than the CSRC’s registration system’ in companies’ listing plans, Shanghai lawyer says

Intel apologises to China over supplier advice
US microchip maker Intel has apologised following a backlash over its letter urging suppliers not to source products or labour from China’s Xinjiang region.

China will increase manufacturing automation, sets out goals
Several Chinese government agencies have jointly released a set of ambitious goals to increase automation in manufacturing, as the country targets global leadership in bringing robots on to the factory floor, reports the South China Morning Post. In a five-year plan the agencies, including the Ministry of Industry and Information Technology, state that China aims to achieve a minimum annual growth of 20% in robotics sales, and develop a group of industry champions to double the “robot density” of the world’s most populous country.
China has become one of the most aggressive countries in replacing human labor with machines, partly to cope with the country’s aging and shrinking workforce. According to a report from the International Federation of Robotics this month, China last year ranked 9th in robot density—measured by the number of robot units per 10,000 employees—up from 25th five years earlier.
With a robot density of 246 per 10,000 employees, China still lagged behind South Korea, which has a current density of 932 and has ranked first since 2010. Still, China’s level was well above the global average of 126, and close to the United States’ 255.

Can Huawei reinvent itself as a successful car brand with its smartphone business still reeling from US trade sanctions?
Huawei needs to find new revenue drivers after its once lucrative smartphone business was hobbled by US trade sanctions     Smart vehicles is one area that Huawei has chosen to pursue, betting on its own operating system and intelligent automotive solutions

Huawei sees 29 per cent drop in 2021 sales after two years of US trade sanctions, as it moves deeper into digital services
Rotating chairman says ‘politicisation of technology’ and a ‘deglobalisation trend’ pose major challenges for Huawei in future    The telecoms giant will step up investment in HarmonyOS and EulerOS, another ecosystem for digital infrastructures, in 2022

China tech crackdown: in 2021, technology giants came under intense scrutiny after sleeping watchdogs awakened
Almost overnight, China’s anti-monopoly bureaucrats became a force feared by Big Tech, as they issued hefty fines for deals struck without official approval    As regulators jostled for control over the tech sector, there were signs of ‘regulatory competition’ and inconsistency, according to industry observers

China’s tech crackdown: Antitrust body signals tighter enforcement in 2022 while promoting market development
The State Administration for Market Regulation will strengthen supervision of the platform economy, said agency head Zhang Gong   Authorities will also increase efforts to combat copyright infringement and counterfeiting

China tech crackdown: Beijing no longer among top 10 world cities with best-paid programmers
China’s capital city no longer among the 10 top-paying cities for programmers after ranking 10th in 2020     TikTok owner ByteDance, which employs US workers, offers the most generous salaries among Chinese firms

A year into China’s tech crackdown, the sky is no longer the limit for China’s Big Tech
Under a forceful clampdown by Beijing, China’s tech giants fell in line with new national priorities that emphasised hard technologies and common prosperity     As Big Tech companies came under pressure to reform their business models, an era of exceptional growth drew to a close

China 2021 tech crackdown: once seen as the golden ticket, Big Tech has shed jobs and lost its allure among the young
The change of mood in China’s tech industry is tangible and sudden after a decade of exceptional growth      Chinese users of internet services have also had to modify their behaviour in 2021 to comply with a barrage of new regulations

podcast China tech crackdown: after a trillion-dollar rout, has the stock market drubbing gone too far?
China’s internet companies have lost an estimated US$1 trillion in value in the past 14 months     Most Chinese tech giants are now trading close to historic lows

How Alibaba’s Taobao Deals Is Gaining Popularity Among China’s Army of Bargain Hunters
– More than 600 million internet users in China have a per capita monthly income between RMB1,000 (US$157.12) and RMB8,000    – Taobao Deal’s manufacturer-to-consumer model offers users quality products at affordable prices

Alibaba Group’s 2021 Highlights
As we look back across a challenging year, we found plenty to celebrate in Alibaba Group’s initiatives to make its ecosystem greener, its support for local communities and merchants, as well as nurturing business growth.

China ride-hailing giant Didi sees losses deepen after crackdown
Chinese ride-hailing giant Didi Global has seen its losses deepen after Beijing ordered online stores not to offer the company’s app.

Top 10 E-Commerce Trends in China For 2022
Sustainability, Gen Z Consumers and Livestreaming Are E-Commerce Watchwords For the Year Ahead

E-commerce giant Alibaba Group promises carbon neutrality in its operations by 2030
The company also introduced what it called its “Scope 3+” target to eliminate 1.5 gigatons of carbon emissions across its entire ecosystem by 2035   Alibaba said it will leverage its influence to mobilise behavioural changes among its consumers, merchants and partners in China and around the world

Chinese EV makers Xpeng, Li Auto, NIO report surge in deliveries in December to cap banner year
Xpeng and Li Auto each posted a record for monthly sales, while NIO once again reported deliveries of more than 10,000 units in December      The three EV start-ups reported their strong sales figures ahead of Beijing’s implementation of a 30 per cent reduction of EV subsidies on January 1

China: Evergrande suspends shares in Hong Kong as firm tries to raise cash
Crisis-hit Chinese real estate giant Evergrande has suspended trade in its shares in Hong Kong as investors await news on its restructuring plan.

China property crisis: if last year was bad for the likes of Evergrande, Kaisa and Fantasia, just wait for 2022 as more pain predicted for investors
The outlook for China’s developers appears bleak amid looming debt maturities, falling home sales and uncertainty over the proposed property tax   Home sales are likely to drop between 5 and 10 per cent this year, according to forecasts by analysts, rating companies

Evergrande crisis: developer revises payment plan for wealth management investors as debt deadlines pile up
Evergrande Wealth Management says it will pay investors 8,000 yuan (US$1,259) each for December, January and February    Under the revised plan for the wealth management products, all interest payments will be paused from today.

Hong Kong’s blight of nano flats will withstand minimum-size rule as affordability remains the top barrier in the world’s priciest city
The 280-square feet minimum would wipe out many flats priced below HK$6 million, which are eligible for 90 per cent loans, pushing affordability beyond reach for many buyers   The minimum size will also be a hindrance in land-scarce areas like Hong Kong Island, pushing developers and buyers further afield to the New Territories for larger homes

China steps up crackdown on financial products promoted on social media, requires industry licence
A draft regulation in China would bar unlicensed sales of banking, insurance and securities services through live-streaming and social media    The booming live-streaming e-commerce market has led to influencers selling all kinds of products, including highly regulated financial services like loans     Last April, regulators summoned 13 fintech platform operators including Tencent, BaiduMeituan and TikTok owner ByteDance, ordering them to rectify online payment services, which included taking measures to “disconnect payment tools and other financial products” and ensuring the “prudent development” of loans and insurance businesses.    Last Tuesday, Ant Group said it will cease operations this month of Xianghubao, the world’s largest mutual aid platform, which has provided financial aid to about 180,000 sick people over the past three years while operating in China without a licence.

Mainland Chinese house prices expected to fall in 2022 as rest of world sees growth
Housing shortages, moderate mortgage rates and rising construction costs are seen boosting home prices globally    In China, the government is likely to implement even stricter measures to tame the property market, say analysts

Why inflation, not pandemic recovery, is likely to be the biggest story for investors in 2022
As pandemic-inspired price rises ripple through economies worldwide, the focus is shifting to supply chains, money supply and slowing growth     With classical finance all but useless, the need to identify stories in modern finance has never been so important

China’s Negative List for Foreign Investment Access in FTZs (New Edition): English Version Available
The latest edition of the negative list for foreign investment in China free trade zones has been released. The new list cuts down the number of items restricted or prohibited to foreign investors from 30 to just 27, widening access to more industries and fields.

11 New Laws That May Affect Your Business in China Starting January 1, 2022
Multiple new laws and regulations that affect doing business in China will come in force on January 1, 2022. Foreign investors and businesses engaging in cosmetics, food and beverage, import and export, and elder care should pay special attention.

2022 Import-Export Taxes and Duties in China
This article explains three types of taxes – value-added tax (VAT), consumption tax, and customs duties – that foreign companies exporting to or importing from China must understand.     Starting January 1, 2022, China has further adjusted parts of its customs duties, including most-favored-nation (MFN) duty rates, conventional duty rates, and provisional duty rates for some import products. Read the section on customs duties in this article for more information.

Expat Tax-Exempt Allowances Extended to End of 2023
Big news on the expat tax situation that has been the conversation du jour, and source of panic, for many a month now. For those not in the know, a proposed change to Individual Income Tax Law (IIT) would have seen the end of exemption allowances for foreign residents in China. Well good news, as it has been postponed until the end of 2023. On December 31, 2021 – the very eve of implementation – the Ministry of Finance and the State Administration of Taxation issued Circular No. 43 on the Continuation of the Preferential Policies on Individual Income Taxes such as Foreign Personal Allowances and Subsidies, declaring that the tax-exempt benefits for foreign nationals will be extended to December 31, 2023.

Can the EU really re-engage with China?
After a difficult year, Brussels appears to be attempting to mend fences with China and reestablish a dialogue.

‘Phase one’ US–China trade deal better than no deal
The ‘phase one’ trade deal between the United States and China entered into force on 14 February 2020. As part of this agreement, China agreed to make structural reforms, open up its financial services and strengthen intellectual property. China also pledged to buy at least US$200 billion in additional US goods and services over 2020 and 2021.    Opening the phase one deal to re-adjustment and negotiations is the most plausible option in the short term. Despite its flaws, the deal has had some success. For example, China pledged to strengthen the enforcement of intellectual property law violationsremove technical barriers to trade and expand opportunities for foreign investment. China was willing to import from the United States in increased quantities, making the sentiments behind the deal valid.    Washington should re-attempt to establish diplomacy and negotiations. Not only would the United States benefit from having intellectual property protections honoured in China, but the deal would provide more US investment opportunities in the future and help alleviate the impact of the trade war

China to America: No way to treat the guy who saved your life
I would never have guessed that reading Marx’s Capital would help me understand China’s rise and its two corollaries: how it worked to maintain the profitability of the capitalist West, especially the American economy, and then its survival after the 2007-08 financial crisis    Lenin thought Western imperialism was essential to finding new markets and keeping up profits. But after decolonisation, the West discovered it was much easier, more peaceful and more profitable to outsource production and exploit foreign workers with the full blessings of foreign governments, especially if they were authoritarian and/or communist.   Outsourcing production to China was one way corporate America kept up profitability, while the new economy of the internet and other technologies would take care of domestic worker productivity, which was what Marx meant by squeezing more and more surplus value out of their labour. Meantime, the genius of American financial capitalism meant you could make money from money or rather credits without producing anything, onshore or off. All that came crashing down in 2007-08.   China came to the rescue of global capitalism again. For much of the past decade, it single-handedly kept up global demands and growth. But all that looks like ancient history now, forgotten, unacknowledged or suppressed in the West currently on a warpath.

How China and the United States might find a way to collaborate around strategic competition
Heightened US–China tensions and strategic competition and China’s recent weaponisation of trade against countries like Canada and Australia have encouraged calls to drastically divert economic ties away from China. Some switching of trade is inevitable because lower trust and increased uncertainties increase the risk-adjusted costs of doing business.

Three Questions for China’s Neighbors
China was, is, and will always be a good neighbor,” China’s leader Xi Jinping told ASEAN representatives in a November 2021 virtual meeting, after a series of conflicts over Beijing’s territorial claims in the South China Sea had raised tensions.
Three Questions for China’s Neighbors | ChinaFile

3 Challenges for Chinese Foreign Policy in 2022
Mostly importantly, China must effectively manage deteriorating China-U.S. relations.    Of course, behind the Taiwan issue is the larger context of the new U.S. strategy toward China – a strategy often described as “strategic competition,” but the contents of which were never clearly articulated by administration officials or major U.S. think tanks. In the end, the United States still needs to define the end game of strategic competition as competition is simply, in the final analysis, a tool that must meet a purpose. Facing increasing competition from the U.S., China’s task becomes more difficult as it still needs the United States’ cooperation on many fronts before China becomes a true number one power. How to stabilize China-U.S. relations in 2022 and not let things deteriorate more thus will be a huge challenge for Chinese foreign policy.       That being said, there are good reasons to believe that Chinese foreign policy will do a good job in 2022. For example, China’s economy will continue to grow around 5-6 percent, the battle against COVID-19 might achieve an eventual victory in 2022, and, above all, the Chinese leadership will be cool-headed and not make major strategic mistakes.

Balancing US–China strategic competition and collaboration
The Asia Pacific has entered a period of profound change characterised by a shifting power balance and increasingly contentious great power rivalry. Key questions that loom large on the strategic horizon for the region and beyond are to what extent peace, stability and prosperity in the region can be maintained? And what steps need to be taken to strike the right balance between strategic competition and collaboration?

U.S.-China technology competition
The scale and speed of China’s technological advancements in recent years have raised concerns in Washington and elsewhere over the implications for the United States’ overall economic competitiveness and its national security, as well as the impact on liberal values and good governance globally. There also has been growing concern about the fragmentation of the global technology sector, including the rise of divergent standards and norms, as the Chinese technology market increasingly decouples from those of the United States and the West more broadly.To evaluate the merits of these concerns and identify potential policy remedies to them, Ryan Hass, Patricia M. Kim, and Emilie Kimball, the co-leads of the Brookings Foreign Policy project “Global China: Assessing China’s Growing Role in the World,” convened 10 additional Brookings scholars – Jessica Brandt, David Dollar, Cameron F. Kerry, Aaron Klein, Joshua P. Meltzer, Chris Meserole, Amy J. Nelson, Pavneet Singh, Melanie W. Sisson, and Thomas Wright – for a written exchange on the role of technology in U.S.-China competition. These experts, drawn from a range of disciplines, were asked to offer their best judgments on the implications of China’s growing technological capabilities and steps the United States could take to strengthen its own technological competitiveness and protect its values. The following are a few key takeaways from their exchange:

US-China tech war: ‘tech progress’ law to be amended to emphasise state’s role in innovation, add support for women
The proposed amendments provide a legal framework to boost spending on ‘frontier technologies’ like artificial intelligence and semiconductors      This is only the second time the 1993 law has been amended, and marks a shift from the 2007 changes that emphasised more corporate engagement

From China to Germany, why industrial policy is on the agenda
Industrial policy, which fell out of favour with economists by the end of the 20th century, is making a comeback    Developing countries need manufacturing and industrial policies more than ever to close the technology gap with developed nations  The mixed performance of country industrial policy is not surprising. Government is a human construct conducting its business through resource allocation decisions. On the other side of the policy equation is the private sector.  In the successful episodes of industrial policy, the target is the manufacturing sector, along with complementary public investment in education, health and sustainable infrastructure. To the extent that governments learn by doing and make the necessary investments to improve institutional quality, industry policymaking will yield better outcomes. The private sector covers not only industrial firms but the industrial layer consisting of industrial entrepreneurs (such as Steve Jobs), industrial labour and industrial finance.
Lord Nicholas Kaldor’s claim in the 1960s that “manufacturing is the engine of growth” is more relevant today than ever. An accumulating number of studies show that advances of technology and productivity growth start in manufacturing and then permeate to other sectors.  History has shown that successful industrialisation does not come by accident. Developing countries need manufacturing and industrial policy more than before as the technological gap between developed and developing countries is widening in strategic sectors.

Full steam ahead for Chinese rail diplomacy?
A freight rail link to Laos that opened earlier this month is the latest effort to boost land connectivity with Southeast Asia and other important trading partners    Observers say such networks can help China boost its international profile – but may also help bypass increasing tensions in major shipping routes

What is RCEP, the world’s largest free trade deal that is under way?
Regional Comprehensive Economic Partnership (RCEP) trade agreement took effect for most of the 15 member countries on January 1    It is the world’s largest free trade agreement, as it covers nearly a third of the global population and about 30 per cent of its global gross domestic product

China looms behind regional trade agreements
As its economic weight grows, China’s growing participation in bilateral and mega-regional trade agreements will pull countries closer into its orbit, cement its position in regional and global supply chains, and bolster its growing dominance in the Asia Pacific region. Such initiatives will also accelerate the shift in global economic power from the United States and Europe to China. Not only has China become the world’s largest trading nation, but two-thirds of the world now trade more with China than the United States.

China, Cyprus Builds Strategic Partnership, Promote China-EU Cooperation and BRI
China and Cyprus have upgraded their relations to a strategic partnership. With an advanced geographical location connecting three continents and as an EU member and a strong transshipment hub, the Mediterranean island nation is expected to become an additional node on the China-initiated maritime silk road

Infrastructure battle between global powers is a waste of money and resources
From the US’ Build Back Better to the EU’s Global Gateway, the world’s major powers are gearing up to compete with China’s Belt and Road Initiative    Yet such rivalry is both petty and irresponsible when what is really needed is global cooperation

Putin and Xi’s evolving disinformation playbooks pose new threats
The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics. As the information domain becomes an increasingly active and consequential realm of state competition, two countries have gone all in. Both China and Russia have developed sophisticated information strategies to advance their geopolitical interests, and their playbooks are evolving. No longer primarily relying on proxy troll farms to generate large quantities of polarizing content, the Kremlin has turned to military intelligence assets to carry out more targeted information operations designed to circumvent platform-detection mechanisms. And motivated by concern that it might be blamed for a pandemic that has claimed the lives of more than five million people worldwide, Beijing has become considerably less risk-averse in its use of “wolf warrior” diplomats to push conspiracy theories

Russia eyeing Australia’s place as China’s top iron ore supplier
China is searching for alternative sources to Australian iron ore, looking to India, Myanmar, Mongolia and Guinea, among others    Russia could be the answer given its proximity to China, its large iron ore reserves and the increasingly close political relations between the two

Steadying Taiwan for a storm on the horizon
The year 2021 began with triumphal statements from Chinese leaders about “time and momentum” working in China’s favor. The year ends with American power in Asia on the rise and China’s power falling, according to the Asia Power Index, an annual data-driven assessment of relative power of states in the Indo-Pacific conducted by the Lowy Institute. These findings undercut China’s preferred strategic narrative. Beijing’s goal is to generate broad acceptance that China represents the future, America is in decline, and other countries would be wise to tether themselves to China’s rise rather than get pulled down by the United States. Chinese officials’ efforts to sell a narrative of America’s decline are likely to enjoy less purchase (outside of China) than they might have one year ago. The United States has made measurable progress over the past year in curbing COVID-19; reinvigorating international alliances and partnerships; restoring global leadership on climate, human rights, and public health issues; investing in infrastructure at home; and lifting the U.S. economy. As Michael Fullilove and Hervé Lemahieu observed in Foreign Affairs, the United States is now the only major global economy forecast to be larger in 2030 than was predicted prior to the pandemic. And with the Summit for Democracy, the Biden administration reasserted America’s unrivaled convening capacity on the world stage.

Taiwan’s global prominence grows in 2021
Taiwan is living in an unprecedented time. At the end of 2020, it was still one of the few places in the world not ravaged by COVID-19. President Tsai Ing-wen’s government enjoyed broad support, but people were nervous about the transition of power in the United States from former US president Donald Trump to Joe Biden and how the transition could impact Taiwan.

An examination of the 2035 Vision for China-Africa Cooperation
The November FOCAC Ministerial Meeting in Dakar adopted four documents: The Dakar Action Plan (2022–2024); the 2035 Vision for China-Africa Cooperation; the Sino-African Declaration on Climate Change; and the Declaration of the Eighth Ministerial Conference of FOCAC. There is considerable overlap in terms of coverage and substance in the four documents. All of them present long, exhaustive lists of issues and areas of cooperation between China and Africa.     The 2035 Vision for China-Africa Cooperation particularly stands out as the first mid- to long-term cooperation plan jointly developed by China and Africa. The Vision defines the overall framework of China-Africa cooperation for the next 15 years. The timing of its release, the framing of the issues, as well as the specifics of economic cooperation are of particular interest and worthy of examination.

Japan needs to navigate a pathway between the United States and China
Japan’s Fast Retailing CEO Tadashi Yanai, who runs the Uniqlo clothing chain, declared that his company wouldn’t be choosing between the United States and China in an interview with financial daily Nikkei Asia last week. ‘Japan can’t survive without being an open country’, Yanai said. Japanese companies caught between the United States and China ‘need to acknowledge that Japan has nothing. Japan has no choice but to make money in markets across the world’.

Why China could win the new global arms race
China is building up its armed forces at a rapid pace.   Its advances in missile technology, nuclear weapons and artificial intelligence have triggered serious concern among many Western observers, who believe a profound shift in the global balance of military power is under way.    President Xi Jinping has ordered China’s armed forces to modernise by 2035. They should, he says, become a “world-class” military power, capable of “fighting and winning wars” by 2049.  It is a huge undertaking, but the country is on target.

China-Lithuania tension: German firms may have to shut factories in Baltic state amid Beijing retaliation
China denies it is targeting multinational companies to discourage them from using Lithuanian-produced parts, but business groups report a ‘trade boycott’       German industries group warns it could be a ‘devastating own goal’ that shows China is willing to decouple itself economically from politically disagreeable partners

China: Public shaming returns amid Covid fears
Police in southern China have been captured on camera parading four alleged offenders through the streets in a public shaming exercise.

More Visibility for Xi Jinping’s Point Man on Ideology: Jiang Jinquan
A year into the job as director of the top party-affiliated think tank, Jiang Jinquan is appearing more frequently to boldly champion Xi’s positions on ideology, party governance and unity.  As Xi prepares for the 20th Party Congress to be held in the second half of next year, he will probably continue to rely on Jiang and other carefully installed allies to further consolidate power for a third term as leader, many commentators agree.

Analysis: China’s mandarins face 25% pay cut as ‘alchemy’ fades
Local governments can no longer sell land rights for easy cash   China is a strange country. No official announcement has been made about reductions in public servants’ pay. But similar sharp pay cuts in affluent regions such as Guangdong, Jiangsu, Shanghai and Tianjin have also come to light. Pay cuts in Tianjin are around 20%. Shanghai has a case with a reduction of more than 30%. Unconfirmed reports have said that a police station chief is expected to see a significant reduction from the current pay of 350,000 yuan.   A 20% cut in public servants’ salary with no explanation would be a huge issue in countries other than China. But that does not happen in China — partly because of the grip of the Communist Party, but also due to China’s unique pay system. In China, public servants’ salaries are divided into two parts. One is fixed pay, for which there are uniform national standards. The other is merit-based pay plus welfare benefits.

China’s hidden debt: ‘corruption problem’ at local levels threatens political, economic stability
Debt issued by local government financing vehicles (LGFVs) is kept off the balance sheets and thus more susceptible to corruption than relatively transparent government bonds     But analysts say LGFVs are poised to play bigger role next year in filling local government funding gaps, despite risks to national economy    LGFV-issued debt, which the central government often refers to as implicit local government debt or “hidden debt”, has been one of the main targets of Beijing’s debt-reduction efforts. There is no official data on the total amount of hidden debt in China. But Lu Ting, chief China economist at Nomura, estimated that it reached 45 trillion yuan (US$7 trillion) at the end of 2020 – equivalent to 44 per cent of China’s gross domestic product (GDP).   Economists at Goldman Sachs said in a late-September report that the total debt of China’s LGFVs rose to around 53 trillion yuan (US$8.3 trillion) at the end of last year – equal to about 52 per cent of GDP, and up from 16 trillion yuan in 2013.  Meanwhile, local governments’ ability to pay off their debts has been a long-standing concern among China’s policymakers, and the coronavirus pandemic has exacerbated their financial woes. LGFVs are likely to play a bigger role next year in filling local governments’ funding gaps, as land-sale-related revenue looks to drop amid the property downturn and infrastructure spending increases, but the pace of growth could be moderate due to the ongoing deleveraging campaign, according to a note from Moody’s last week. “Chinese regional and local governments’ measures will help relieve some pressure on LGFVs from weak provinces or regions, which have experienced net redemption in LGFV bonds and rising funding costs in the onshore market because of investors’ continued risk aversion toward LGFVs from these locations,” said Ivan Chung, an associate managing director at Moody’s. “However, it is uncertain how long these LGFVs can maintain their credit quality if they solely rely on government support to repay debt coming due without refinancing.”

Chinese rust belt city falls victim to squeeze on local government spending
The authorities in Hegang, a former mining city in Heilongjiang, have been forced to stop recruiting after being hit by plunging revenues and growing debts     The city’s problems highlight the growing pressure on local governments to balance their books as Beijing becomes increasingly concerned about risky debts

Hong Kong: The last day of the Stand News pro-democracy website
On Wednesday morning more than 200 Hong Kong police officers swooped into the office of Stand News to conduct a raid. By the end of the day, one of the few remaining pro-democracy websites in Hong Kong announced it was closing down immediately.

An Introduction to Doing Business in China 2022 – New Publication from Dezan Shira & Associates
China continues to be an attractive and reliable investment destination despite multiple external headwinds like the ongoing pandemic and geopolitical tensions. In 2020, China overtook the US to become the world’s largest foreign direct investment (FDI) recipient and the country expects FDI to rise 10.8 percent year-on-year to RMB 1 trillion (US$160 billion) in 2021. Indicative of business optimism, 41,600 foreign-invested enterprises were newly established in the first three quarters of 2021.    There are, however, some downward pressures affecting China’s economy – uncertainties in the real estate sector, the roll-out of carbon reduction policies in various industries, and comparatively weak consumption trends. Compliance for businesses has also been complicated by a slew of new laws and regulations in 2021, including the long-awaited data and privacy protection laws.    Under these circumstances, it is increasingly important for foreign investors to get familiar with the changes in China’s business landscape, identify areas of risk in advance, and take steps to prepare for new market opportunities. This is the only way investors can stay nimble in an otherwise challenging time.

China Travel Restrictions 2021/2022: An Explainer (Updated)
China Briefing continues its coverage of updates on China travel restrictions on foreign nationals during the COVID-19 pandemic.In this article, we provide an overview of the latest China travel restrictions, including the latest regulations on flights to China, how to obtain a Chinese visa, China entry requirements during COVID, and current China quarantine rules.For regular COVID-19 updates, you can check our COVID-19 tracker, which is updated every weekday.

China: Why some think “small eyes” are not beautiful
“Do I not deserve to be Chinese just because I have small eyes?”

webinar Toward Xi’s third term: China’s 20th Party Congress and beyond January 20th
As the world looks ahead to China’s 20th Party Congress in late 2022, many questions remain about the future makeup of the top echelon of Chinese leadership. As Chinese leaders confront a year of unknowns ahead — from the deterioration of U.S.-China relations to economic structural changes — any move could affect the outcome of the leadership change. Having led the country for almost a decade, Xi has undertaken unprecedented campaigns to fight corruption, reform the military, and eliminate poverty. But what plans, priorities, and challenges lie ahead for his anticipated third term? Will this round of leadership change reveal the future process of political succession? How will factional politics and new elite groups play into the selection of the next generation of leaders?   On Thursday, January 20, the John L. Thornton China Center at Brookings will host two panel discussions featuring top China scholars, who will discuss the evolution of norms in Chinese elite politics, predictions of the outcomes of the 20th Party Congress, and what the future holds for Xi Jinping. Viewers can submit questions via email to or on Twitter using #20thPartyCongress.

WEBINAR – Doing Business in China – Looking Ahead to 2022 (January 26, 2022) 5:00 PM China Time / 4:00 PM Vietnam / 10:00 AM CET
Join our China investment experts Guilherme Campos, International Business Advisory Manager, and Viktor Rojkov, International Business Advisory Senior Associate, as they discuss key changes that happened in 2021 and the impact these will have on doing business in China in 2022. You’ll also learn about regional highlights from North, Central, and Southern China as well as how to tackle possible challenges you might encounter in the new year.

Alain Gillard
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