China Press Review – August 21, 2019

Press review

China at 70 faces three challenges: Taiwan, the US and Hong Kong. Can Xi Jinping deliver?
China’s relationships with Taiwan, the US and Hong Kong threaten not only the stability of the nation, but its very survival It remains to be seen whether President Xi can resolve these inherited problems and make China strong again

China may need more than a new interest rate to stimulate its economy
Chinese authorities have repeatedly emphasized the need to improve financing to the country’s privately run, smaller companies, which account for much of the economic growth. The key point of the new “loan prime rate” is to increase the role of market forces in determining rates, and lower financing costs to the real economy, says Liu Guoqiang, deputy governor of the People’s Bank of China. Analysts are generally skeptical about how effective the new rate will be in helping smaller businesses, especially since there is a greater problem of spurring demand for new loans.

Why Chinese overseas investment growth is set to slow further
The growth of Chinese overseas investment will likely slow or even decline in the next few years as risks around the world increase, according to new research by Moody’s Investors Service. “Overseas investments will remain at a solid level, but companies will take a more cautious approach to these investments, especially in emerging and frontier markets,” Moody’s said in a report. Still, overseas investments offer financial and strategic benefits for Chinese companies and will remain at a solid level overall, authors of the report said.

Beijing appeals to US to ‘meet China halfway’ on trade
Beijing appealed to Washington on Wednesday to “meet China halfway” and end a tariff war after President Donald Trump said Americans might need to endure economic pain to achieve longer-term benefits.A foreign ministry spokesman, Geng Shuang, expressed hope Washington can “get along with us” and restore “mutually beneficial” trade.

Trump acknowledges China policies may mean US economic pain
President Donald Trump acknowledged his aggressive China trade policies may mean economic pain for Americans but insisted they’re needed for more important long-term benefits. He contended he does not fear a recession but is nonetheless considering new tax cuts to promote growth.

As Trump Presses Trade War, Farmers Feel the Squeeze
Many Midwestern farmers decided last winter to plant soybeans in spring assuming that, by now, President Donald Trump’s trade war with China would be over and China would be back to buying about a third of soybeans grown in the United States

China to throw huge public relations bash to woo global investors turned off by US trade war
Beijing launches big global multinational forum in Qingdao in October to show the world that China remains open for business US firms such as Hewlett-Packard, Honeywell and Dow Chemical on initial guest list, with Shandong government saying 178 foreign companies have signed up

The US-China Trade Dispute: What Impact on the Circular Economy?
With no end in sight for the trade tensions between the US and China, efforts to advance the circular economy in both economies are seemingly under threat.

China increases minimum monthly wages despite soaring costs of US trade war
Beijing increased its base by 80 yuan (US$11) to 2,200 yuan (US$311) per month from July 1, after Shanghai’s increase to 2,480 yuan per month from April 1 China still lags behind the likes of the United States, but is still well ahead of the likes of regional rival Vietnam

Huawei founder Ren Zhengfei doesn’t want relief from US sanctions if it means China must make concessions in trade war
Ren says company cannot ask for favours that might hurt interests of country’s poor majority, despite Trump seeing telecoms giant as possible bargaining chip Founder says firm unlikely to be removed from US trade blacklist, but is confident Huawei will do well without relying on American companies

Huawei founder details reform plan to beat US blacklisting
China’s Huawei will spend more on production equipment this year to ensure supply continuity, cut redundant roles and demote inefficient managers as its grapples with a “live-or-die moment” in the wake of US export curbs, said founder Ren Zhengfei, reported Reuters.

Huawei founder details reform plan to beat US blacklisting

Severe China economic downturn could put Asian banks at risk, Fitch warns
Fitch looked at what would happen if Trump launched another 25 per cent tariff on Chinese goods – it wasn’t pretty A big slowdown in China would result in even slower growth in Hong Kong, Singapore, Fitch says

China mobilizes aid for failing banks as local economies slow
Beijing shifts strategy in bid to quell mounting financial risks

E-commerce transactions on WeChat mini-programs grew by 27 times in H1 2019
The number of e-commerce transactions on WeChat mini-programs increased by 27 times year-on-year in the first half of 2019, according to an official Tencent report. The top age groups of retail e-commerce mini-programs on WeChat are 30-39, 20-29, and 40-49.

P2P lending platform PPDai posts solids results in Q2, turns to institutional funding
New York-listed PPDai, an online financing marketplace headquartered in Shanghai, posted net profits of RMB 660.5 million (around $96.2 million) in the second quarter, despite a “dynamic and volatile” market environment, the company said during an earnings call on Tuesday.

P2P lending platform PPDai posts solids results in Q2, turns to institutional funding

Nation to intensify robotics upgrade
“But as robots become increasingly smart with the help of artificial intelligence, the market for service robots will grow exponentially. The demand for companion robots and healthcare robots will be huge in the future, given China’s growing pool of senior citizens,” Ren said. According to him, robots will also see wider application in sectors featuring non-standard products. The market size of China’s robotics sector is expected to hit $8.68 billion this year, It will mark an average annual growth rate of 20.9 percent from 2014 to 2019, the Chinese Institute of Electronics forecast in a report.

EV fleets will accelerate ride-hailing companies towards profitability: report
In spite of no clear timetable for profitability, ride-hailing companies could significantly reduce costs from investing in electric vehicles fleets, as growth continues to decelerate in China’s mobility market, according to a recent report by management consultants Bain & Company

EV fleets will accelerate ride-hailing companies towards profitability: report

In Depth: How Internet Celebrities Changed China E-commerce
E-commerce billionaire and Alibaba founder Jack Ma isn’t used to losing, but that’s exactly what happened one day last year. The date was the day before Nov. 11, known as Single’s Day in China, which Alibaba has transformed over the last decade into a shopping extravaganza even bigger than Black Friday in the U.S

Male cosmetic surgery in China: men seek treatment to help get a job, find a date, or feel more confident
Hair transplants, eye bag removal, acne treatment and dental work are the procedures most commonly requested by men Men make up 15 per cent of China’s US$70 billion-a-year aesthetic medicine industry, and more young men every year are getting treatments

China’s parliament rules out allowing same-sex marriage
Union of a man and a woman ‘suits our country’s national condition’, says spokesman Equality campaigner says gay rights are not a consideration for Chinese policymakers

China to speed up subsidies for pigs culled due to African swine fever
China’s cabinet said on Wednesday it will speed up the distribution of subsidies for pigs culled because of African swine fever as part of a plan to stabilise the country’s pig production and pork supply. China’s rules stipulate that farmers must receive 1,200 yuan ($170) for each pig culled to stop the spread of the deadly disease that has devastated the country’s pig industry.

China Rules Out Blanket Production Curbs in Fight Against Smog This Winter
Winter historically brings heavy smog to much of northern and eastern China. Photo: VCG
China’s environment ministry has vowed not to take a “one-size-fits-all” approach to industrial production cuts aimed at reducing pollution in the coming winter, after heavy production curbs in previous years disrupted local economies.

China’s ‘military-civil’ partnerships could hurt its AI ambitions: report
Chinese policies governing civil-military fusion could limit the country’s plans to become a world leader in artificial intelligence (AI), according to a new report, as distrust of companies linked to the Chinese government grows amid US-China tensions. China has set ambitious goals to become a world leader in AI by 2030 in order to move the country up the industrial value chain.

China’s ‘military-civil’ partnerships could hurt its AI ambitions: report

What Would a Larger Chinese Presence Mean for the Middle East?
China’s steady expansion of its Middle East footprint and influence poses significant questions for U.S. policymakers. The Middle East has long been a battleground for strategic competition between both regional and global powers. Is it poised to again emerge as a zone of great-power competition, between the United States and China? Or as U.S. policymakers debate how to bring stability to the Middle East, should the United States encourage China’s more active engagement and presence in the region? What are the security implications of China taking a more direct role in Middle Eastern security, or conversely, free-riding on international stabilization efforts

China’s Belt and Road ‘Reboot’ Is Really a Foreign Influence Campaign
Of the many paradoxes surrounding China today, the trajectory of its massive Belt and Road Initiative has become one of the most puzzling. Even as the expansive plan has become essentially synonymous with Chinese foreign policy in general, it remains increasingly difficult to nail down with precision what, exactly, it is.

How Politics in China Will Shape Luxury’s Future
Despite some semi-rosy forecasts that have seen companies like LVMH remain cautiously optimistic about their near-future prospects in the Greater China region, recent political events have proven that luxury brands will likely have a tough road ahead in mainland China (as well as Hong Kong) for quite some time. Brands and luxury groups shouldn’t expect things to get significantly better soon, not just in terms of spending by shoppers in China, but also in previously reliable markets like Western Europe or North America. According to Forbes, Hong Kong accounts for 11 percent of Richemont’s total global sales, while the city accounts for 9 percent of Burberry’s sales, 8 percent of Kering’s, and 6 percent of LVMH’s. It also provides around 6 percent of total sales for brands like Moncler, Tod’s, and Prada, driven primarily by purchases from mainland Chinese day-trippers or tourist shoppers.One of the biggest question marks for major brands is what the long-term effects of the ongoing Hong Kong protests will be. While Hong Kong will always be a major market for luxury brands, they are undoubtedly feeling the sting of store closures due to mainland Chinese shoppers opting to do their high-end shopping in other cities. And the lingering sense of uncertainty about how long the protests will last certainly isn’t helping matters.

How Politics in China Will Shape Luxury’s Future

Why Expensive Luxury Brands are Often Priced Too Low
For luxury brands, estimating the Added Luxury Value — for both for the category and the brand — is an important consideration when making pricing decisions.

Why Expensive Luxury Brands are Often Priced Too Low

Beijing’s non-Tiananmen response: build up Shenzhen, forget Hong Kong
In the near future, unless it changes course, Hong Kong will be more unsafe and unstable, while Shenzhen will be less unfree and more prosperous Hong Kong was China’s prodigal son. Now, it’s fast becoming the family’s black sheep. It was supposed to take Shenzhen under its wing. But the younger brother has proved to be far more successful and reliable.

Are Hong Kong’s protests crushing the city’s role in China’s Greater Bay Area plan?
Greater flow of people, capital and goods across southern China would improve competition and bolster growth as trade war continues to bite To narrow gap with Hong Kong, Beijing has introduced preferential policies for taxation and foreign investment this year

Shenzhen needs to attract overseas talent to fuel Greater Bay Area’s hi-tech ambitions
A new government plan will have Shenzhen implement flexible policies to attract highly skilled talent from around the world

Hong Kong protests could hammer city’s economy, Bank of East Asia warns, as its profit falls 75 per cent in first half
Hong Kong’s largest independent bank earlier warned it expected ‘significant post-tax impairment losses’ because of downgrade of mainland commercial loans Lender warns protests could hurt consumer, business confidence

Mainland Chinese backlash over ‘political decision’ by Twitter, Facebook amid US-China tensions
Chinese take to social media to vent their anger over move to close accounts for allegedly spreading disinformation about Hong Kong protests One post reads that ‘it is outside the firewall where freedom of speech is suppressed’

The trouble with trying to turn Hong Kong’s young people into ‘patriotic youth’
In a series of in-depth articles on the unrest rocking Hong Kong, the Post goes behind the headlines to look at the underlying issues, current state of affairs, and where it is all heading Here we look at how the city’s government has poured millions of dollars into programmes to expose the younger generation to mainland China but the campaign has failed to foster national pride

As Cathay feels the heat of political risk in China, it’s time to remember lessons of the Mao era
Xi Jinping’s administration highlights how politics has always been in command in China, and companies must either adapt or rethink their China business But nationalistic leaders and web users would do well to remember the losses suffered through extreme political correctness in the Mao era

China’s Soft-Power Failure: Condemning Hong Kong’s Protests
Beijing wants greater sway over global public opinion. Instead, its propaganda outlets make Chinese leaders look like bullies.

China confirms detention of British consulate trade officer Simon Cheng Man-kit for 15 days
Foreign ministry says Simon Cheng held over violation of public security regulations Comes a day after Britain said it was “extremely concerned” by reports that Cheng had been detained

China threatens sanctions over US-Taiwan F-16 fighter plane deal
China has threatened to impose sanctions on US firms involved with the sale of F-16 fighter planes to Taiwan if Washington goes ahead with the deal.

US cruise missile test will start a new arms race, says China
Test of ground-launched missile on island off California will help develop intermediate-range capabilities, US says Russia also on alert as test hints at Washington’s changing priorities after recent arms treaty withdrawal

Alain Gillard
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