China Press Review – August 2, 2018

Press review

US slaps export controls on dozens of Chinese firms over ‘threat to national security’ as trade tensions escalate
Washington’s latest move targets key elements of Made in China 2025 policy

Senate passes massive US defence bill with less-strict China provisions
US President Donald Trump is expected to sign the bill, which puts controls on contracts with ZTE and Huawei – albeit weaker restrictions than were previously propose

Apple warns trade war could raise costs, damp consumer confidence

The political uncertainty surrounding trade disputes and protectionist measures could also “have a negative effect on consumer confidence and spending,” Apple said in a filing with the US Securities and Exchange Commission

Why China’s pork producers can survive without US soybean imports
Although the crop is a vital product for the world’s biggest pork producer, China has many ways to reduce its reliance on American output

Trade war another blow for US beef exporters trying to regain foothold in China
After Beijing ended nearly 14-year ban on imports, tariffs may put pressure on US cattle farmers and meatpackers at ‘fragile time in Chinese market’

Chinese Tech Isn’t the Enemy
America is rightly concerned about spying and intellectual-property theft. But it risks overcompensating—to the detriment of U.S. companies.

podcast video : Why the US-China trade dispute has experts worried
The world’s two biggest economies are at loggerheads. “If someone wants a trade war,” China’s commerce minister has said, “we will fight to the end.” President Trump is bullish, threatening further tariffs and tweeting: “Trade wars are good, and easy to win.”

Air cargo: Perishables technologies transforming logistics
The global pharmaceuticals market has more than doubled in the past ten years. Like the demand for fresh foods, global pharmaceutical sales are expected to show healthy growth into the future, reaching $1.3 trillion in a couple of years, and, also like the perishables business, it’s expected to be fueled to a significant degree by emerging countries. China, India, Brazil, Russia, and Mexico are expected to account for nearly 50 percent of the growth in drug spending globally by the end of next year

Air cargo: Perishables technologies transforming logistics

Trump’s infrastructure dream for the Indo-Pacific lacks one crucial element – money
Anthony Rowley says the US’ recently launched Indo-Pacific Business Forum pales in comparison to China’s Belt and Road Initiative because of its lack of funding and vague institutional structure

For Asian firms wanting to get in on the action, China’s belt and road is not only about trade and infrastructure
Why China’s belt and road is not only about trade and infrastructure

China’s Empire of Money Is Reshaping Global Trade
Xi Jinping’s new “Belt and Road” initiative is designed to promote economic development and extend China’s influence. Bloomberg Markets reports on the massive project’s impact along the Silk Road.

China’s big tech project hiding in plain sight

So while today’s headlines are focused on trade disputes, the longer-lasting story is how China is building out its global influence, through trade infrastructure and technology. China wants the countries it invests in to follow its standards on everything from cybersecurity to artificial intelligence to construction, according to Andrew Polk, co-founder of research firm Trivium China. For instance, China is translating its domestic high-speed rail documents into English so they can be exported ..

China wants free-trade talks with Norway to be accelerated

State Councillor Wang Yi says relations between two nations are getting back on track

China agrees US$2 billion loan to Pakistan, report says, as Beijing seeks to keep Imran Khan close

Announcement causes Pakistan’s rupee to jump most in nearly a decade as cricket legend takes power with economy in chaos

Opinion: Get on Board with Chinese Luxury Spenders – or Miss the Boat
When I speak to someone that doubts the luxury spending power of affluent Chinese travelers, it seems that they may have their head stuck in the sand—or at least somewhere else that the sun doesn’t shine. First and foremost, Chinese consumers lead luxury spending, and they lead the way in not only the growth of their spend but also total spend. I was recently told by someone in a reasonably high position at a multinational company (MNC) that he ‘believed they spend on shopping—but maybe not on luxury accommodation’. I politely queried this by asking where he thought that someone stayed after they had flown first-class (or on a private jet) when they arrived at their destination—other than the most luxurious options?

Opinion: Get on Board with Chinese Luxury Spenders – or Miss the Boat

China’s internet sector continues steady growth, new official figures show
With a fast-growing netizen population, China’s internet industry is one of the largest and most exciting in the world. China’s Ministry of Industry and Information Technology (MIIT) released new numbers (in Chinese) on the internet industry’s first half of the year performance on Monday. The official figures show the overall internet industry maintained steady growth, and business revenue as well as operating profit both posted positive growth. For mobile apps, MIIT noted that online gaming and video/music live streaming are the two categories that see brighter prospects.

China’s internet sector continues steady growth, new official figures show

Starbucks enters strategic partnership with Alibaba to fend off Luckin rivalry
China’s caffeine war is percolating. Starbucks announced today that it has entered a strategic “New Retail” partnership with Chinese tech giant Alibaba in a move to strengthen foothold in its second-largest market.

Starbucks enters strategic partnership with Alibaba to fend off Luckin rivalry

Starbucks, Alibaba’s forge coffee delivery tie-up in China to take on growing competition

Starbucks flagged in June that it was pursuing such a tie-up after reporting a sudden slowdown in China sales growth, which it partly blamed on a government crackdown on third-party delivery firms that had previously helped drive orders at its cafes.

Alibaba to roll out Hema Xiansheng 2.0
Hema Xiansheng (盒马鲜生), the Alibaba-owned online-to-offline supermarket chain, will roll out upgraded versions of its physical stores in the near future, according to a Sina report. Li Bing, general manager of Alibaba Cloud’s new retail supermarket division, revealed at the recent 2018 China Smart Retail Conference that Hema will open new “Hema 2.0” supermarkets in Shenzhen after some internal upgrades. Li said, on average, Hema supermarket’s online sales surpass offline sales after 3 months of operation. Hema’s current priority is the internal system upgrade. Since digitization is key to new retail, Hema will focus on putting data first.

Alibaba to roll out Hema Xiansheng 2.0

JD.Com Launches First Cashier-Free Store Overseas In Indonesia
Chinese e-commerce firm Inc has opened its first cashier-free retail store overseas in Indonesia. The JD.ID X-Mart, newly opened in Jakarta, looks and operates similarly to cashier-free stores opened earlier by its rival Alibaba and many Chinese unmanned convenience store start-ups that emerged last year.

JD.Com Launches First Cashier-Free Store Overseas In Indonesia

Chinese local convenience store in suspicion of P2P-led capital shortage and bankrupt
What happened: Linjia, a convenience store chain in Beijing, has closed several stores in the city in one day yesterday. A staff working at one store says that the company has shut down over 200 stores and that some high-level officers from the company left the business without informing anyone, due to the large debt they owe suppliers. A source familiar with the issue suspects Linjia’s funding from peer-to-peer (P2P) lending platforms is cut. Linjia’s CEO, in response to media requests for comments, says, “It’s a long story,” and he “feels sad”

Chinese local convenience store in suspicion of P2P-led capital shortage and bankrupt

The rise and fall of China’s online P2P lending
Default rates have been soaring since June, 2-18. In May, only 10 platforms were considered in trouble. In June, that number increased to 63. Since then, by the end of July, 163 platforms are on that list. Home of Online Lending (网贷之家), a platform that compiles the data, defines “troubled” as companies that are having difficulty in paying off investors, having been investigated by national economic crime investigation department, or whose owners have run away with investors’ money.

The rise and fall of China’s online P2P lending

Shanghai’s New Startup Visa
A new “business startup visa” has been piloted across select districts in Shanghai, giving foreign entrepreneurs the ability to live in China as they establish a business.

Hong Kong receives 80 per cent of China’s outbound property investment in second quarter
China’s financial tightening has crippled outbound real estate investment this year to its lowest level since 2015, even as investment towards Hong Kong outperformed and the city emerged as the only bright spot.

China’s second-tier cities set for rapid house price inflation in coming decade, overshadowing Hong Kong, says DBS
Hong Kong’s soaring housing market is beginning to show signs of fatigue, an indication that it is likely to be overtaken by other Chinese cities in terms of price appreciation in the years to come, according to investment bank DBS.

China says lull in home sales led to slower consumer spending growth in first six months
Per capita consumption by urban residents rose 4.7pc year on year in the first half of 2018, down from 5.1pc a year earlier

Greater China Luxury Continues to Grow
Sales of jewelry and other luxury items rose in greater China in the first half of the year amid continued positive consumer sentiment and increased tourism to Hong Kong. In China, retail sales of gold, silver and jewelry grew 7% to $20.26 billion (CNY 138.3 billion) in the six months ending June 30, the National Bureau of Statistics of China reported recently. Sales in June climbed 8% to $3.24 billion (CNY 22.1 billion).

Baidu shares tumble most since May on report Google to launch censored search app in China
Baidu’s 7.7 per cent slump in New York trading is the steepest since the announcement in May that chief operating officer Lu Qi was stepping down

Leaked plans for censored Google search in China shows how a strong economy gives Beijing
To counter this economic flexing, U.S. lawmakers and the White House must both support companies that take a stand against Beijing and increase pressure on China. Additionally, the American public should make it clear that they do not support U.S. firms that are complicit in censorship and human rights violations.

Is Google partnering with Tencent for its China comeback?
It is safe to assume at this point that both Google and Facebook are prioritizing re-entry into the China market. There is also a growing amount of evidence to suggest that they are doing so with the assistance of Tencent, and possibly even Alibaba.

Is Google partnering with Tencent for its China comeback?

Google said to plan AI-powered news-aggregation app along with search engine for China market
Reports of Google’s plans underline how important the China market is for US tech companies despite strict censorship hurdles

Ten years, 27,000km: China celebrates a decade of high-speed
CHINA marked a decade of high-speed rail development on August 1, when celebrations were held to mark the 10th anniversary of the opening of the country’s first railway designed for operation at speeds of more than 250km/h.

China and Asean reach ‘milestone’ draft deal on South China Sea code of conduct
Chinese foreign minister says consensus will speed up talks on a formal agreement for the resource-rich waters

Tesla flags path towards profit as Model 3 worries steady, to tap Asian debt markets to fund China factory
Car maker is now back on track to retake the title of most valuable US carmaker from General Motors Co. “Given the Chinese new energy vehicle laws in place, I would expect the terms of the debt to promote an electric vehicle factory and battery factory to be more accommodating than the US markets right now,

HNA Group reshuffles managers as it unwinds its asset acquisition spree after co-founder’s death
HNA revamps management as unwinding from aggressive investment

Tourism takeover: Chinese travelers changing the industry
An unremarkable Days Inn sits on the raw end of New York Avenue, where it feeds into highways and a quick exit out of town. An accurate online description calls it a “cheap alternative to central Washington, D.C., hotels.” Without tourism, those pundits are missing one of China’s greatest expressions of global leadership. The travel numbers are astonishing. For the fourth year in a row, the Chinese are the world’s biggest group of international travelers, taking 142 million international trips in 2017. In the next decade, that number is projected to jump to 390 million, according to the China Outbound Tourism Research Institute (Cotri).

China’s Summer of Discontent
Five months ago, when the Communist Party of China freed President Xi Jinping from term limits, the conventional wisdom was that his dominance within the Chinese party-state was so strong that his authority could not possibly come under attack. How things have changed.

Alain Gillard
Information Officer
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