Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – November 9, 2021

Cainiao, the logistic arm of Alibaba, officially launches its European eWTP hub at Liege Airport
Cainiao Network, the logistics arm of Alibaba, has officially opened and put into service its first warehouse located on the edge of the runways at Liege Airport. The inauguration took place in the presence of Minister Crucke. This cutting-edge eHub thus offers Wallonia and Belgium a unique and high-level logistics platform. Cainiao has just completed construction of the first building and already employs more than 200 people.

What Western Businesses Can Expect From China in 2022
Western brands eyeing China should prepare for a new Xi Jinping era — a more powerful and less forgiving one.  Despite policy changes and the courting of foreign investors, China only wants international companies that can offer it technological leverage.   China’s 20th Party Congress will likely prioritize domestic policies that create a more egalitarian society.

Five consumer trends shaping the next decade of growth in China
China is estimated to be the largest consumer economy today as measured in purchasing power parity (PPP) terms. Over the next decade, it may add more consumption than any other country, and is expected to generate more than one-quarter of all global consumption growth, according to our baseline scenario. Among the drivers of this growth are seven key consumer segments identified in previous research by the McKinsey Global Institute (MGI). But across Asia, consumption is not just rising. It’s also growing into a more complex phenomenon as demographic and social changes collide with significant technological advances. A recent report from MGI notes that across the continent, consumption is segmenting and diversifying, while new pockets of growth are emerging. This article provides a more specific lens on emerging patterns among China’s consumers, who are at the forefront of technology adoption, demographic shifts, and new behaviors. Their evolution has the potential to reshape the entire global consumer market.

Tightfisted consumers are becoming a worry for China’s economy
To understand the changing habits of the Chinese consumer, it’s helpful to read over a series of conversations on spending taking place on Douban, a popular Chinese social media platform. Here people discuss whether it’s shameful to buy leftover cakes, or how to save money by switching from disposable tampons to reusable menstrual cups. As the pandemic ravaged the economy and disrupted lives, the group, named “Have you downgraded consumption today?” has seen its number of users double to 300,000 in a year.

Alipay reacts to China’s restructure order
On 7 November, Alipay renamed its online loan product 借呗(Jie Bei) to 信用贷 (Credit Loan) and prominently stated the names of the loan providers. These were responses to an earlier restructure order made by Chinese regulators this April, asking Ant Group to “cut off” the “improper connections” between its online payment platform and its lending products.

Top Chinese think tank meets mainland developers, banks as property sector’s liquidity crisis deepens
The Development Research Center of the State Council met representatives from developers and lenders including Kaisa Group and Ping An Bank    Fitch Ratings has further downgraded Kaisa to CCC- from CCC+

Evergrande: Crisis-hit developer raises more cash as new deadline looms
Cash-strapped Chinese real estate giant Evergrande has raised around $145m (£107m) just before a deadline for a fresh debt interest payment.

China’s property market debt could weigh on the country for years, economist George Magnus warns
Hong Kong-listed shares of Chinese real estate developer Kaisa Group Holdings were halted on Friday after news that it had missed a payment on a wealth management product.  A research paper by renowned Harvard Professor of Public Policy and Economics Kenneth Rogoff and IMF Economist Yuanchen Yang estimated that the real estate sector accounts for around 29% of China’s GDP.
“If 29% of GDP just marks time, let alone declines, for the next 10 years … you will know all about it,” George Magnus, economist and research associate at the China Centre at Oxford University, said.

US Fed warns China property sector stress could pose ‘risks’ to American economy
Ongoing scrutiny by Beijing of corporate debt could stress highly indebted companies, spillover to financial firms, Fed says     Given size of its economy, stresses in China could strain global financial markets, US central bank says

Evergrande raises US$144 million as it sells down stake in HengTen Networks
World’s most indebted developer, which at one point owned a majority stake in HengTen, has reduced its holding over the course of this year   Evergrande has US$308 billion in total liabilities and is facing a series of payment deadline

In Light of Evergrande, It’s Time to Talk About the ‘Big Four’
Evergrande’s crisis once again calls into question the role of international auditing firms – and raises doubts over what other secrets their seal of approval may be hiding.   Because Evergrande is feared to be “too big to fail” by some observers, the government has every reason to clean house. Beijing’s move to more strictly scrutinize the activities of accounting firms to crack down on fraud is symptomatic and it’s not impossible that the Big Four audit companies, who also dominate China’s market, could be subjected to similar treatments.   Like the Dubai Financial Services Authority (DFSA) in the Abraaj case, Beijing was similarly sluggish in responding to concerns over Evergrande, only warning local authorities of its potential downfall earlier this year. And although the Hong Kong Financial Reporting Council announced its own inquiry into Evergrande and PwC’s role, marking a U-turn in the territory’s approach to the company, the delay implies that a more effective system needs to be put in place if more large-scale crises are to be avoided.    Given that the FRC has also complained that almost three-quarters of auditing firms operating under its jurisdiction are turning in substandard work, it’s clear that the free ride enjoyed by the “Big Four” must now come to a convulsing halt – or else China could suffer unprecedented consequences.

China’s harsh medicine for property sector, local government debt could cause chaos, economists warn
Beijing’s stricter regulation of local government borrowing and real estate developers increase the risks that some of them may run out of cash, analysts say  Defusing financial risk was one of three economic priorities set by Chinese President Xi Jinping four years ago, which has seen scrutiny of hidden local government debts

China: The missing presence at COP26
China has great ambitions when it comes to climate action. However, the currently largest source of carbon dioxide emissions is moving at its own pace, say Barbara Pongratz and Nis Grünberg. China’s President Xi Jinping did not deliver his statement at COP26 in person — he did not even deliver it in a live video speech. In terms of content, his written statement offered little to clarify recently announced national policies, with no elaboration on how China will meet its targets of carbon peaking before 2030 and carbon neutrality by 2060. His statement was unsatisfactory in terms of the level of ambition, potentially blocking the path to achieving the United Nations Framework Convention on Climate Change‘s (UNFCCC) 1.5°C target. It leaves the space for global leadership open for the EU and the US, which have presented somewhat more ambitious targets

China’s new carbon market aims to  substantially reduce its emissions. Here’s how
In July, China launched the world’s largest carbon market.  China expects this tool to contribute half the emissions reductions it needs to meet its 2060 net-zero goal. But while promising, the scheme has some limitations, too.

China offers cheaper green loans
Green loans are now cheaper in China after the central bank changed its framework. Banks are expected to participate actively. Some see this as an indirect cut in interest rates. We see it differently

Climate change: China’s central bank unveils lending facility to spur funding for carbon-reduction projects in net-zero drive
China’s central bank offers a one-year lending facility at 1.75 per cent rate to subsidise funding costs for low-carbon emission projects    Chinese lenders handed out US$1.5 trillion of ‘green loans’ at end of September, according to central bank data

From ‘airpocalypse’ to carbon cutter: China’s road to climate reckoning
In 2013, Beijing was blanketed in smog and relying on fossil fuels to drive its economy   Now the focus is on ‘high-quality development’ and working with other countries to cap   One particular point of contention for China has been the US imposition of sanctions on Chinese companies, including solar equipment suppliers, with links to the Xinjiang region. China rejects Western allegations of human rights abuses in the region.  “You can’t ask China to cut coal production on the one hand, while at the same time imposing sanctions on Chinese photovoltaic enterprises,” Wang said on Tuesday.  The Global Times, part of the Communist Party-run People’s Daily stable of newspapers, said in an editorial on Monday that the United States should not expect to be able to influence Beijing on climate, while attacking it on human rights and other issues.  Washington’s attitude towards China has made it “impossible for China to see any potential to have fair negotiation amid the tensions”, the paper said.    Chinese President Xi Jinping, who is not attending the UN meeting in person, delivered a written statement for Monday’s opening event, featuring speeches by government leaders. Xi offered no additional pledges, while urging other countries to keep their promises and to “strengthen mutual trust and cooperation”.  China said on Tuesday that Xi sent the statement after not being given the chance to make a video address to the delegates. A UK government spokesperson said Britain wanted people to attend COP26 in person, and that leaders could not join virtually but could offer recorded addresses or statements. Some climate activists and negotiators have expressed concern that Xi’s physical absence might mean China would offer no more concessions during this round of climate talks. Beijing has noted it made several major pledges in the past year, promising to reach an emissions peak by 2030 and net-zero emissions by 2060, among other ambitions.

China power crisis: Zhejiang scraps rationing as electricity crunch shows signs of easing
Zhejiang province ended electricity rationing on Monday, but warned cities to watch consumption and reduce energy use    The State Grid Corporation of China, the electric utility provider for most provinces, also says power shortages have eased

When Will China Get Off Coal?
The State Council and the Central Committee of the Chinese Communist Party recently announced a plan that involves reducing the share of fossil fuels in the primary energy mix to below 20 percent by 2060. The consumption of coal should start declining in 2026. Meanwhile, efforts to exploit unconventional oil and gas resources will be intensified. Security of energy supply remains the top priority, and fossil fuels will continue to occupy a significant share of the energy mix beyond 2060. Presumably, the emissions they produce will be offset by carbon sinks and by carbon capture, usage, and storage (CCUS).     What is striking is that China has been relatively slow to deploy CCUS at scale, despite the size of its carbon emissions. At present, there are no large-scale (1 million tonnes per year or greater) CCUS projects operating. The three projects in commercial operation have capacities of around 100,000 tonnes per year and all use the capture gas for enhanced oil recovery—in other words, to produce more fossil fuels. Six large-scale CCUS projects are due to go into commission in China in the 2020s, mostly linked to power plants. This contrasts with the 14 large-scale projects that were in operation in other countries by 2020 (in the U.S., Canada, Brazil, Australia, and Norway), five of which involve dedicated storage rather than enhanced oil recovery. Unless China massively scales up its CCUS industry and directs it at storage or at uses that do not involve producing more fossil fuels, the nation’s carbon emissions from fossil fuels may not even be quenched by 2100.

Tesla supplier CATL’s inclusion in China’s CSI 300 Index may spur US$2 billion buying frenzy, analysts say
The inclusion may spur local and global fund managers into buying as much as 12.9 billion yuan (US$2.02 billion) of the stock, Shenwan Hongyuan analysts say    CATL stock has already jumped 10-fold over the past two years amid booming EV sales at home and aboard

Chinese auto giant Geely launches electric truck, its rival to Tesla’s Semi
China’s Geely has launched a new electric semi truck called the Homtruck.  Geely’s commercial vehicle group, Farizon Auto, is planning to roll out the vehicles in 2024 and is targeting international markets too.  Geely’s Homtruck launch comes as a number of automakers from Mercedes-owner Daimler to Warren Buffett-backed BYD and Tesla have announced their own electric trucks.

Tesla’s made-in-Shanghai EVs shine at China import expo, could pressure US carmaker’s production capacity
US carmaker’s booth has been the lone bright spot in CIIE automobile hall   Tesla is ‘seriously planning to expand production’, analyst says   “I believe it is seriously planning to expand production,” said Gao Shen, an independent analyst in Shanghai. “More Chinese drivers – impressed by Tesla cars – are willing to buy them.”   The sales of new-energy vehicles, which comprise pure electric, plug-in hybrid and fuel cell-powered cars, jumped 185 per cent year on year to 2.16 million units in the first three quarters of this year, the China Association of Automobile Manufacturers said last month. They have bucked a decline in the overall sales of cars, which were down 11 per cent year on year in this period. As it stands, China’s carmaking industry is heading for a fourth consecutive year of contractions.

Chinese critics express dismay over Taiwan chip maker TSMC’s compliance with Washington’s semiconductor data request
State-owned media and mainland Chinese social networks are rife with speculation about the potential threat posed by TSMC’s response to the US data request    TSMC earlier assured that it would withhold confidential customer information ahead of Washington’s November 8 deadline for submitting data

Chinese social e-commerce app Xiaohongshu raises US$500 million as IPO plans hit roadblock amid regulatory tightening
The platform known as China’s answer to Instagram raised the money from existing investors after being forced to put IPO plans on hold    Xiaohongshu is one of several tech companies that planned to list overseas until Beijing made government probes part of the process

China digital currency: push to ‘prudently advance’, improve design of e-yuan, central bank governor says
Since the roll-out of a pilot programme of the digital yuan in late 2019, digital yuan transactions have reached 62 billion yuan (US$9.7 billion)    About 1.6 million merchants across a wide range of businesses accept China’s central bank digital currency

RCEP FTA Signed: What Can Foreign Investors in China Expect?
For investors, RCEP will deliver substantial new trade and investment opportunities within the participating countries – covering roughly 30 percent of the global GDP (US$26.2 trillion) and 30 percent of the world’s population to form Asia’s largest trade bloc to date.  The Chinese Premier, Li Keqiang, described the deal as “a victory of multilateralism and free trade” and stated that the new agreement is “critical to the region’s response to the COVID-19 pandemic.”

China’s zero-Covid strategy will cause its economy to slow down further, economist warns
 “If China continues to stick to its zero-Covid strategy, I think domestic demand will be under pressure,” said Hao Zhou, senior emerging markets economist at Commerzbank.   Many countries in Asia initially tried to eliminate Covid within their borders. But they have gradually abandoned that strategy as the highly infectious delta variant spreads and lockdowns become less effective in controlling the virus.   China’s economic growth has slowed as a major energy crisis hits production, dragging down industrial activity.

Alibaba’s Singles’ Day shopping bonanza loses lustre amid China’s Big Tech crackdown, competition from live streaming
China’s tech and antitrust crackdowns have added pressure on e-commerce platforms as the world’s biggest shopping festival faces declining popularity   Live-streaming e-commerce has emerged as a popular alternative for deals, boosting the year-round popularity of ByteDance’s Douyin and Kuaishou     China’s economic growth in the third quarter slowed to 4.9 per cent, while retail sales, a barometer of consumer spending, rose just 4.4 per cent from a year ago in September, according to China’s statistics bureau.   Beijing’s antitrust crackdown, which has targeted several Big Tech companies, has also forced a shift in business practices. A ban on monopolistic practices such as forced exclusivity – a once-popular tactic used to lock merchants into one platform – has made competition more fierce this year.  Regulators have also started to require that internet platforms tear down their notorious walled gardens that prevent interoperability of companies’ products.
Tencent Holdings’ WeChat, China’s largest social media platform with 1.25 billion monthly active users, has started allowing links to rival platforms in one-to-one chats, including those for Alibaba, to comply with regulations.  Alibaba also now allows users to pay with WeChat Pay on some of its platforms, such as the food-delivery service, video-streaming platform Youku, online ticketing platform Damai and cross-border e-commerce platform Kaola.  libaba has long used Singles’ Day to showcase its sales and marketing prowess. It has typically been accompanied by elaborate countdown galas in the hours ahead of November 11, with international superstars like Taylor Swift and Katy Perry making appearances. It would then broadcast the eye-popping sales figures on a giant screen at the end of the marathon event.  This year, in contrast, the Hangzhou-based tech giant has highlighted a slew of initiatives in line with Beijing’s increasing focus on environmental sustainability and social equality. Last year, President Xi Jinping announced that China aims to achieve carbon neutrality by 2060. In April this year, the government also asked businesses to redesign their websites and apps to cater to the country’s ageing population. Xi has repeatedly emphasised the need for China to promote common prosperity, as well, urging high-income businesses and individuals to give back to society. Alibaba has several initiatives tying into these goals.  Tmall is issuing 100 million yuan worth of “green vouchers” to encourage purchasing decisions that “contribute to an environmentally friendly lifestyle”, while Alibaba’s logistics arm Cainiao Network started opening recycling stations for packaging materials at 10,000 distribution stations across 20 cities this month.

China reiterates ban on online and offline advertising for off-campus tutoring as it keeps up pressure on industry
The ban is part of wider government efforts to implement a July policy that prohibits anyone from making a profit from tutoring for school curriculum classes    SAMR has already uncovered 1,570 illegal advertising cases, and fines totalling a combined 30.6 million yuan have been issued       However, local media outlet Caixin reported that the new licensing regime should not be seen as a relaxation of the overall policy to ban profits from tutoring.  According to the notice published on Tuesday, which is also joined by the Ministry of Education and the Cyberspace Administration of China, the advertising ban – which also covers extra curriculum training such as dancing and painting – must be carried out without any leniency. Sponsored content, or “soft articles”, paid for by such training programmes will also be subject to the ban.   Yu Minhong, founder of leading tutoring firm New Oriental Education & Technology Group, said over the weekend that the company will close nearly 1,500 training centres and donate some 80,000 sets of desks and chairs to rural public schools.

How war fever could become a major headache for China
A simple notice about ensuring food supplies quickly devolved into online speculation about an attack on Taiwan  Rhetoric over the island has seeped into the psyche of the public
Who Wants to See a War Over Taiwan?

Will China Really Invade Taiwan?
In March, one senior U.S. admiral warned that it could happen “in the next six years,” setting off a freakout among some in D.C. But how likely is it?

Who Wants to See a War Over Taiwan?
China is not about to invade Taiwan, but there are those in China, Taiwan, and the U.S. who benefit from pushing in that direction.  China is not about to invade Taiwan, but there are those in China, Taiwan, and the U.S. who benefit from pushing in that direction.  I think Beijing, Washington, Taipei, and other parties all need to calm down. There should be a mediator to coordinate positions with all parties to cool the situation and relax the severe atmosphere. Similar to the Iranian nuclear issue, a platform for exchanges between all parties is needed, and this could possibly even result in an agreement.     This would require finding a mediator that has connections with all parties and can gain the trust of all parties. Perhaps Singapore is an option. After all, in the 1990s, representatives from Beijing and Taipei reached “the 1992 Consensus” in Singapore, which allowed cross-strait security to be kept steady for decades. Moreover, Singapore Prime Minister Lee Hsien Loong has repeatedly reminded the world of the risks in the Taiwan Strait in the past, which shows Singapore probably also has the motivation to make efforts to ease the situation.  Of course, this is just a suggestion. It is unknown whether all parties (including Singapore) can accept it. But in any case, I still believe China is pursuing a policy of maximum pressure rather than preparing for war. Whether there will be war in the future depends on Taiwan and the West’s response to that pressure.

Alain Gillard
Information Officer
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