China Press Review – August 20, 2019

Press review

Dodgy data and the health of China’s economy
‘Skepticism about the accuracy’ of the official Chinese statistics has intensified To paraphrase the homespun wisdom of Forrest Gump, China’s economy is like a box of chocolates … You never know what you’re gonna get.

Three ways China can use policy freedoms to shore up its economy and lead the world out of the mess
China is in a better position than rivals like the US, Europe or Japan to fend off the looming storm of a global recession Options are to strike a face-saving US trade deal, devalue its currency and offer cheap loans at home. Beijing must use them all

What if everyone’s wrong about China?
the rest of the world getting China wrong yet again? Maybe the country is not doomed to live out unending top-down rule. What is history, after all, but the realization of the wills of countless unpredictable human beings. For myself, I don’t have a coherent story about how the Chinese might move to greater liberty in the next 10 to 15 years. But I do think the actions of the current regime can be read as signs of vulnerability rather than entrenchment. Taiwan and Hong Kong, despite its current crisis, remain strong examples of the benefits of liberalization. Meanwhile, the notion of the internet — even with censorship — as a liberalizing force has been too quickly dismissed, especially in an America that has fallen out of love with Big Tech. Which leads to a reality even deeper than China’s unpredictability: people’s continuing capacity to respond to current events and shape their futures for the better. As you listen, watch and read about China, keep in mind this essential human quality.

China lowers interest rate as part of market-oriented reform amid slowing economy
China lowered its lending reference rate to 4.25 per cent from the one-year official benchmark of 4.35 per cent as part of a long-term modernisation process The People’s Bank of China now requires banks to benchmark their loan rates against the medium-term lending facility instead of the official benchmark rate

China’s small banks push rules to the limit as they tap individuals for short-term funds amid liquidity crunch
Lenders using wealth management app to offer return rates that exceed limits set by Beijing More regional banks face bailouts and state takeovers, analysts say

The Dangerous New US Consensus on China and the Future of US-China Relations
The trade war and technological competition with China are symptomatic of a much larger issue: a dangerous gridlock in US-China relations that may become permanent, with dire consequences not just for the two countries’ economies but also for the global economy and quite possibly East Asia’s and international security. Martin Wolf, Financial Times columnist, is right to conclude: “Across-the-board rivalry with China is becoming an organising principle of US economic, foreign and security policies.” The fact that this conflict has occurred at a time of trade, investment, and security disputes between the US and its major allies, US-Russia tensions, and US military interventions across the Middle East and Central Asia, heightens global instability.

The Dangerous New US Consensus on China and the Future of US-China Relations

Every American Should Hope Trump Prevails Against China
Working on economic policy at the White House, I came to understand that the stakes of the confrontation are far higher than those of trade alone.

A China Syndrome – One Year Later: The Memory Industry And The Emerging Balkanized Global
Given deeply divergent goals, the trade war is not resolvable – there is no win-win. A balkanized world economy is likely to eventuate and is in the United States’ interest though we will bear significant economic costs. Ironically, balkanization will not affect Micron and its DRAM competitors as much given China’s inability to make DRAM. Short-term, Micron’s 2020 results depend on Samsung and SK Hynix cutting capacity.

Wide implications for euro zone as US-China trade war, Brexit leave Germany on edge of recession
Germany saw a 0.1 per cent drop in the April-to-June period, and it appears the slump is continuing, according to the country’s central bank Heavily dependent on exports, the central bank says the US-China trade conflict and Britain’s plan to leave the European Union have taken a toll

Changing economic trends in Taiwan
Taiwan’s economic growth has long been based on exporting intermediate goods to mainland China for final assembly, but this is now showing signs of change. Taiwan’s monthly exports to China and Hong Kong have registered negative growth since November 2018 according to Taiwan’s official statistics.

Changing economic trends in Taiwan

Baidu, Alibaba and Tencent: Investing in China’s AI Revolution
Artificial intelligence (AI) is considered a key piece of the Fourth Industrial Revolution. Many believe AI will one day be as disruptive as the steam engine, electricity, and computing. In terms of its effect, AI will impact all sectors and unlock great wealth for investors. According to a McKinsey report, AI could unlock between US$1.4-2.6 trillion in value in marketing & sales alone

Caught in trade war, Huawei may seize 90-day US trade reprieve to plan next moves
US Commerce Department extends reprieve for Huawei until November 19 Analysts say only a comprehensive deal between US and China will return Huawei to normal operations

Huawei’s smartphone supply chain reveals reliance on US technology
While renewed access to US suppliers has given Huawei more breathing room, a closer look at Huawei’s smartphone supply reveals glaring vulnerabilities. Despite its efforts to find alternative sources or build in-house replacements, the hardware giant still relies heavily on American sourcing.

Huawei’s smartphone supply chain reveals reliance on US technology

JD and Its Peers: Is It Time to Bet on China’s Tech Giants?
Shares of Chinese tech giant (JD) are up 12% in the last week. JD shares were up close to 2% in early market trading today as well, bringing its total gains to almost 15% since August 9. saw a massive boost last week after the company announced its second-quarter results, which beat estimates.

Will the Trade War Offer a Turning Point for Chinese Luxury Brands?
As domestic luxury brands grow within the country this will mean a bigger market for them, resulting in less reliance on money earned through exports. After being banned from trading with American companies, the initial forecasts for China’s sixth most valuable company, Huawei, were that it would be devastated by the U.S.-China trade war. But now, that outlook has changed thanks to the idea that greater Chinese self-reliance may make it possible for the tech giant to grow on its own terms — trade war or not.

Will the Trade War Offer a Turning Point for Chinese Luxury Brands?

US-China trade war uncertainty could cost global economy $585 billion by 2021
According to a Bloomberg Economics report, uncertainty over trade could lower world gross domestic product by 0.6 per cent in 2021 compared to a no-trade-war scenario, which translates to $585 billion shaved off the IMF’s estimated world GDP of $97 trillion for that year

Chinese M&A activity to be dominated by domestic deals amid heavier scrutiny abroad, PwC says
Domestic M&A activity will be a bright spot going forward David Brown, deals leader for Asia-Pacific at PwC, said with China focusing on stimulating its domestic economy, and a general realisation of the increasing importance of developing self-sufficiency in strategic sectors such as technology, domestic M&A activity will be a bright spot going forward. forward Bank restructurings will also boost overall mergers and buyouts

China’s central bank unveils de facto rate cut with new benchmark
Revamped 4.25% rate aims to address elevated funding costs for small businesses

How to Hire a Foreign Intern in China
Foreigners need to enter China with a proper visa if they want to undertake an internship in the country. Otherwise, the internship will be regarded as illegal and the foreigner might be deported. Currently, there are two visa classes that can be used by foreigners wanting to undertake an internship in China.

Privacy vs social good: AI must balance responsibilities, China governance expert says
Tsinghu University’s Xue Lan chairs a committee of experts advising China’s Ministry of Science and Technology on AI governance AI poses question of how to balance individual and societal benefits against privacy concerns, Xue says

Electric Car Gold Rush: The Auto Industry Charges Into China
Global carmakers like Volkswagen are betting that electric vehicles are the future. But to win in the world’s largest EV market, they will have to battle a host of fierce new Chinese competitors. Oh, and Tesla. But China’s electric-car effort hasn’t just been about pushing tech boundaries. It also has involved manipulating consumer behavior. In big Chinese cities such as Beijing, Shanghai, and Shenzhen, municipal policies have severely constrained people’s ability to obtain license plates for combustion cars—but have made it easy for them to get plates for electric vehicles. China has also capitalized on several characteristics that Ouyang contends make it more suitable than the U.S. for large-scale electric-car use. China has relatively cheap electricity. It has a history of widespread electric-vehicle use, in the form of scooters. And, thanks largely to extensive state-sponsored high-speed rail for distant journeys, it has a consumer driving pattern that skews heavily toward short city trips, which are easier than long rides to build an infrastructure of car-charging stations around. For all these reasons, Ouyang says, “I think the United States is not the best application” for electric cars. “China is.”

China’s soaring renewables
In the last ten years China’ wind power electricity generating capacity grew 22x and its solar power capacity grew 700x, says the International Renewable Energy Agency (IRENA).

China’s soaring renewables

Why China is the ‘critical flaw’ in the Regional Comprehensive Economic Partnership
It is a mistake for the world’s biggest trade bloc to include China, a bad actor with little regard for the rule of law. Also, trade blocs can be cumbersome, and it is better to strike bilateral deals with trusted partners such as the US

Beijing’s Belt and Road plans could boost the Islamic banking sector
China’s pursuit of Belt and Road Initiative projects in predominantly Islamic countries is expected to spur growth in the Islamic finance sector. Chinese issuers have, however, recently pulled away due to the complexities involved in rolling out such products, particularly as standards differ across various regulatory regimes, says Mohamed Damak, global head of Islamic finance at S&P Global Ratings.

China’s belt and road cargo to Europe under scrutiny as operator admits to moving empty containers
China Railway admitted the existence of the problem in an interview with the state-run ‘Global Times’ last week but insists it has improved recently Cities and provinces were looking to benefit from subsidies offered by both the local and national government as part of Xi Jinping’s plan to boost global trade

Club Med owner Fosun Tourism is boosted by Chinese tourists, reports US$69.5 million first-half profit
Effects of slowing global economy not felt ‘very strongly’ by tourism industry in China, chairman says Revenue of Club Med resorts rises by 5 per cent to 6.9 billion yuan

Creditors sell dragon shaped Pangu office tower on Taobao for a steep discount to recover debt owed by fugitive Guo Wengui
Pangu Plaza Tower 5 houses a luxury hotel and IBM China’s office next to the Bird’s Nest Olympic Stadium in the Chinese capital The 39-storey tower was put on the auction block for a starting price of 5.18 billion yuan and valued at 7.92 billion yuan, about half the average price of comparable Grade A offices in the neighbourhood

More banks predicting Hong Kong home prices to decline, as persistent public unrest sours moods and crimps transactions
Home prices may drop by 10 per cent through to March 2020 as Hong Kong’s economy shrinks this year, said Morgan Stanley, the first bank to predict a contraction in the city’s economy Prices may drop by as much as 30 per cent next year, in the worst of three economic scenarios outlined by DBS

Some Chinese buyers are hitting the panic button, selling their homes for losses as Hong Kong rallies extend into the 12th week
Relatives of one Chinese billionaire took a US$2.29 million loss on a retail spot at Causeway Place shopping centre Number of such loss-making cases may increase if local political turmoil, economic downturn continue

Hong Kong protests deal blow to Asia’s hub airport
Nearby Shenzhen is beneficiary as travelers look to sidestep chaos

Donald Trump has no deep convictions about Hong Kong or democracy, he just wants to win an election
The US president has changed his mind about the Hong Kong protests because taking Xi Jinping’s side would hurt his re-election chances His flip-flop on Hong Kong is also indicative of his failing trade war with China

Beijing won’t make trade concessions if US plays Hong Kong card, Chinese state media says
People’s Daily commentary follows Donald Trump’s suggestion that trade talks could be hampered if Beijing used violent means to suppress protests

The rule of law: Hong Kong vs China
How far apart are the two systems in how they apply the rule of law? The Rule of Law Index is an internationally respected ranking of how countries around the world apply laws. This year the World Justice Project’s annual report was published in February. Here we compare China and Hong Kong, which have separate legal systems

Chinese state media labels Hong Kong pro-democracy figures ‘new Gang of Four’ in fresh attacks
Articles target Jimmy Lai, Martin Lee, Anson Chan and Albert Ho, calling them ‘traitors’ who act as agents for ‘Western anti-China forces’ Lee, Chan and Ho dismiss the allegations, with the former chief secretary saying she deplored the ‘unwarranted smear campaign’

Carrie Lam says Hong Kong economy faces ‘risk of downturn’ amid protests
Hong Kong’s Chief Executive Carrie Lam said she was willing to talk to peaceful protesters to narrow current differences. She also reiterated the risks of the impact that months of protests will have on Hong Kong, saying that data from the first half of the year has yet to fully reflect the seriousness of the territory’s economic situation.Last week, Hong Kong’s government announced that it was lowering its 2019 GDP growth forecast to between 0% and 1%, from the original range of 2% to 3%.

Employee at UK’s consulate in Hong Kong detained in China
Detention comes amid more than two months of pro-democracy protests in Hong Kong

Facebook takes down anti-Hong Kong protest accounts ‘because of Chinese government links, not content’
Association with Beijing, not content, behind decision to close seven pages, three groups and five accounts, Facebook says Deceptive tactics and coordination between accounts also identified

The US-China problem in the South China Sea: one man’s militarisation is another man’s self-defence
The US accuses China of militarising the South China Sea, but to Beijing, it is the Pentagon that has aggressively projected power in the region. The US also has a troubling policy of taking pre-emptive action against perceived threats

China’s First Commercially Cloned Cat Unveiled in Beijing
The British shorthair, named Garlic after its progenitor, was born from a surrogate mother a month ago.

Alain Gillard
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