China debt: local government spending under microscope to protect national economy from ‘systemic risk’
Local Chinese cadres will be held accountable for the rest of their lives if the debt raised during their terms is found to be problematic in the future. Key policies or investment projects that would be funded with public money will have to undergo a ‘fiscal endurance’ evaluation. According to an estimate by Zhongtai Securities, the ratio of outstanding explicit debt to fiscal revenue – a gauge of repayment capability – stood at a national average of 97 per cent last year and could surpass the warning line of 100 per cent in 2021. About 17 of China’s 31 provincial jurisdictions have already set off warning alarms, including Tianjin, where the ratio was 183.5 per cent last year. Many have suggested that solving the funding gap requires a bigger portion of tax revenue ending up in local coffers.
The central government has also reduced the local government special-purpose bond issuance quota to 3.65 trillion yuan (US$557 billion) from 3.75 trillion yuan last year.
China’s digital currency is a threat to dollar dominance
Beijing’s ambitions could spur acceptance of renminbi as main rival to US currency China has also made great strides in invoicing its trade in renminbi. The security and geopolitical rationale for holding renminbi has become stronger through such measures as China’s Belt and Road Initiative financing of projects in developing countries. Covid-19 might also be a catalyst for the greater acceptance of the renminbi as a global reserve currency. The economic carnage of the pandemic has sent already large fiscal deficits ballooning and driven even more accommodative monetary policy in the US. This historically unique combination of impending massive fiscal and vaccine-led growth, where short-term interest rates are anchored at zero, will expand an already large current account deficit, putting further pressure on the value of the dollar. The digitalisation of the renminbi will add to these economic and geopolitical factors. This will have a durable, transformative impact on the international economy.
China saw record 18.7% growth in first quarter: AFP survey
economy grew at a record pace during the first quarter as it rebounded from a historic contraction caused by Covid-19, and boosted by exports and domestic demand, an AFP poll of analysts found. The world’s number two economy is tipped to have expanded 18.7 per cent on-year, according to the average forecast by economists from 15 institutions, having been the only major one to grow at all last year. While the virus first emerged in central China in late 2019, the country was also the quickest to bounce back after authorities imposed strict lockdowns and virus control measures. Analysts forecast China’s gross domestic product (GDP) growth for the whole year will be 8.5 per cent, markedly higher than leaders’ modest target of above six percent.
China’s Economic Rebalancing
China’s growth trajectory in the second decade of the century has been one of a rebalancing toward a new growth pattern. Two major challenges in the rebalancing: First, the transition toward a less investment- and export-dependent growth model has been taking place from a starting point of exceptionally low consumption-to-GDP ratios. Besides high profit-to-wages ratios, low levels of public social protection and spending lead to high household savings. An additional challenge comes from the lack of progress in rebalancing between private- and state-owned enterprises, something that is taking a toll on productivity.
EU’s modernization of VAT will impact Chinese e-commerce companies
On April 8, Poland became the latest member state to introduce a package of EU regulations aimed at modernizing the applicability of value-added tax (VAT). The move will affect operations of Chinese e-commerce B2C platforms such as AliExpress which manages between 2-5 percent of the European e-commerce traffic The new regulation that will apply EU-wide from July 1, aims to target the inflow of untaxed goods from non-EU countries, primarily China, into the EU’s Single Market. Chinese sellers could offer much better prices than their European counterparts thanks to this legal loophole that the EU is now closing. : The new regulations are bound to impact the operations of Chinese e-commerce actors in Europe. The development of Alibaba’s EUR 300 million investment in a logistics center in Belgium’s Liège that was expected to manage over 80 percent of AliExpress’s consignment traffic to Europe will be something to watch. According to estimations by the Polish Post, the new regulations can lead to a 30-40 percent decrease in number of consignments sent from China.
JD.com, Meituan and ByteDance among the first to pledge antitrust compliance after being told by Beijing to learn a lesson from Alibaba
The statements strictly toed the line from Tuesday’s meeting co-hosted by the antitrust watchdog, cyberspace administration, and taxation authority ByteDance, the owner of short video app TikTok and Douyin, made 13 promises in its public statement
China’s antitrust push reaches strictest phase that will reshape entire online sector
China’s antimonopoly push for online platforms reached the strictest phase and is making powerful waves through the industry, with 12 major platform firms including Baidu, JD.com, ByteDance and Pinduoduo publishing their law-abiding compliance operation commitments on Wednesday. With the capital market obsessed with monopoly-induced premiums – platforms with larger market shares tend to get higher valuations – internet businesses have long hinged growth on an expansion move that’s faster than their peers and a resulting work atmosphere of sacrificing work-life balance, the veteran said. “It’s absolutely wrong that the golden days will come to an end for online businesses. Instead, they are set to embrace a truly innovation-centric era as fair competition would prevail in the internet sphere to let the most innovative ones survive.” That would suggest the current capital-centric approach to churning out internet titans will have to be redesigned, with existing valuation models refashioned accordingly, observers said.
Inflation or pollution? Tough choice facing China steel industry
Beijing wants to curb heavily polluting steel output but that has sent prices surging, adding to inflation concerns
US climate envoy John Kerry to meet officials in China this week to discuss environmental crisis concerns
Kerry is expected to arrive in Shanghai on Wednesday, ahead of meetings with officials on Thursday and Friday, Reuters reports Those meetings will include discussions with Kerry’s Chinese counterpart, Xie Zhenhua
Chinese premier calls for more communication between China, US
China and the United States should step up their communication while managing their differences and respecting each other’s core interests, Chinese Premier Li Keqiang told a group of senior US executives on Tuesday, reported Reuters. China hopes the United States could work with China to meet each other halfway, said Li at a virtual conference with presidents and chief executives from more than 20 large US companies, including Intel, Johnson & Johnson and IBM. “(We need to) step up dialogue and communication, and expand practical cooperation, properly manage differences, and push Sino-US relations towards the direction of overall stability,” Li was quoted as saying by state television.
“If you believe you’ve been harmed or bullied in China, tell us first,” Zhang Huanteng, vice director of the Department of National Economy at the NDRC. “We’d feel very wronged if we aren’t aware of things and the US government tells us first,” said Zhang, adding that Chinese regulators were baffled when they first read the US Section 301 Report, which set off the Sino-US trade war.
Calls for US, China to work together and ‘set example’ on climate change
Experts at virtual talks say cooperation on climate, energy and green finance will benefit everyone The countries are the two biggest emitters of carbon dioxide in the world
US-China tech war: Beijing can ‘stay cool’ on Biden’s US semiconductor push, analysts say
Biden on Monday highlighted the need for the US to increase spending on domestic chip production Analysts say bigger problem for China is current ban on export of advanced US-origin technology
Alibaba fined, delivery service price dumping: Retailheads
Regulators fined Alibaba a record-breaking penalty while Shanghai-based English-language food delivery service Sherpa’s is penalized for dominating a niche market. Authorities punished package delivery service firms Baishi Express and J&T Express for price dumping. Trip.com filed for a secondary listing in Hong Kong. Produce e-commerce platform MissFresh prepares for a June public listing in the US.
Why China’s next big tech leap is faltering, even with financial muscle and talent to spare
China can do more to polish its appeal as a home for global tech talent, but must ultimately rely on its own, which it has in abundance The obstacle lies in persuading them that China’s restrictive environment offers them the best opportunities for creative growth
Taiwan chip maker halts business with US-blacklisted Phytium
A major Taiwanese chip designer has suspended business with Phytium Technology after Washington blacklisted the Chinese company over alleged military links, underscoring how global companies continue to be caught up in the US-China tech war, reported the Nikkei Asia. Taipei-listed Alchip Technologies provided chip design services and intellectual property to Phytium and helped it outsource chip production to Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker. Phytium develops central processing units for use in supercomputers as well as personal computing devices and is one of the companies at the heart of China’s campaign to boost its self-reliance on critical chip components. “This is the first time a client of ours has been added to the Entity List,” Alchip CEO and President Johnny Shen told investors on Tuesday, referring to Washington’s trade blacklist. “All of our business with Phytium … including chip production with [TSMC], has been put on hold,” reported the Nikkei.“I must admit that Alchip is facing a very big challenge,” he added.
China is going after tech companies. Tesla is trying to keep out of the way
An executive at the electric carmaker told Chinese authorities this week that Tesla will store any data it collects in China within the country’s borders, Chinese state media reported Tuesday night.
The remarks from Grace Tao Lin, vice president for external affairs at Tesla China, follow recent reports in several media outlets that the country’s military had banned Tesla (TSLA) vehicles from its complexes over concerns that onboard cameras could be used for spying. The company has also faced criticism recently for a series of problems involving its cars. In February, Tesla was summoned by regulators to answer questions about the quality of its Shanghai-made vehicles.
China’s imports from US set record in first quarter, but their trade imbalance grows on strong Chinese exports
Analysts tie China’s broader import rise to higher global commodity prices and stronger domestic demand, particularly in construction sectorChina’s overall export growth stayed high in first quarter and ‘may now be peaking’, analyst says, as policy support is removed and vaccine roll-outs start to reverse pandemic-induced demand for Chinese goods
China to speed up intercity railway service
China will speed up the planning and construction of intercity railway networks in key urban city and metropolis clusters, the country’s top economic regulator said. The government will accelerate interurban railway construction in the Beijing-Tianjin-Hebei region, the Yangtze River Delta region and the Guangdong-Hong Kong-Macao Greater Bay Area, according to the National Development and Reform Commission. Interurban railway is a type of electric railway, with streetcar-like electric self-propelled rail cars which run within and between cities or towns.
BMW’s Chinese partner reveals unauthorized loan guarantees for parent
Substantial bank deposits also missing from Brilliance Auto subsidiary BMW’s Chinese joint venture partner Brilliance China Automotive said Wednesday that a subsidiary has provided unauthorized guarantees for bank loans made to their parent, Huachen Automotive Group Holdings.
China defends its US$944 million loan to Montenegro for motorway project
Sum is less than 25 per cent of Balkan nation’s total debt, and relatively high cost of project due to ‘unfavourable geological conditions’, Chinese embassy in Podgorica says EU said earlier it would not pay off Montenegro’s debts
London overtakes Hong Kong as world’s busiest super prime property market as French, Hongkongers fuel purchases
London recorded a 3 per cent increase to US$3.75 billion worth of deals in 2020, toppling Hong Kong as the busiest market for luxury homes French and Hongkongers contributed 23 per cent of the purchases in London while mainland Chinese and Americans also chipped in
China warns of military action against Taiwan to block relations with US on eve of American visit
Former US senator Chris Dodd and former deputy secretaries of state Richard Armitage and James Steinberg head to Taiwan at Biden’s request Beijing’s Taiwan Affairs Office of the State Council says China is ‘determined to stop Taiwan independence … we are doing it with action’
Beijing shows it’s ‘not taking its foot off the gas’ with latest incursion into Taiwan airspace
PLA sent 25 warplanes into the island’s air defence identification zone on Monday Analysts say it was a bid to put further strain on the Taiwanese military and a message for Washington
China’s military to hold live-fire drills off Taiwan as US delegation visits the island
Six-day exercise begins on Thursday, as former American officials are due to meet President Tsai Ing-wen in Taipei Drills will be conducted near disputed Pratas Islands in what is seen as a ‘declaration of sovereignty’ and warning to foreign nations
US-China ties: Washington funded terrorists in Xinjiang, Beijing says
Foreign ministry spokesman uses video of interview with sacked FBI contract translator Sibel Edmonds to support claim People’s Daily, Chinese diplomats share footage on social media around the world
China looks set to reopen border with North Korea
The city authorities in Dandong appear to be preparing to open a long-delayed bridge across the Yalu river that connects it with the city of Sinujiu Trade between the two countries had been badly hit by UN sanctions and then ground to a halt last year following the start of the Covid-19 pandemic
Why is Japan going to dump radioactive water from Fukushima nuclear plant in the sea? What are the risks and is there an alternative?
Decision to release waste water from the nuclear plant hit by a devastating earthquake and tsunami in 2011 has triggered a backlash from neighbouring countries any scientists believe it is the only realistic option, but governments, fishing groups and environmentalists have also expressed concern
Coronavirus: China has cheaper vaccine technologies joining the race to beat the pandemic
Protein subunit vaccines are considered safe and cheaper than inactivated vaccines and could fill the production gap China considers combining vaccines or extending intervals to increase protection against Covid-19
China’s Canton Fair losing its lustre among export manufacturers and buyers who bemoan virtual forum
The rise of the digital economy and e-commerce, coupled with mounting geopolitical tensions and the coronavirus pandemic, have diminished some expectations for the biannual event that begins on Thursday Chinese manufacturers, increasingly cautious about expanding operations amid global uncertainties, have scaled back plans for the long-running exhibition
‘Edible beauty’: Hyaluronic acid foods are taking off in China
In the near future, Chinese consumers browsing the shelves of physical and digital markets can expect to find dairy, liquor, cocoa products, candies and frozen foods featuring a common dermal filler. The boom of HA foods has a lot to do with a recent update in government policy, said Chen Li, associate director of Mintel Food & Drink. “In early 2021, China’s National Health Commission approved hyaluronic acid for use as an ingredient in food and drink,” she said. “Before, it was only approved in 2008 to be used in dietary supplements.” In the U.S., HA is approved by the Food and Drug Administration as a dermal filler, but HA supplement products, like all supplement products, do not need to go through review before being marketed.
Pets: The New Code To China’s Luxury Fashion Consumers
Pet fashion sales have been booming in China, and luxury brands need to be ready to take full advantage of this trend.
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