China Press Review – August 30, 2019

Press review

China’s Manufacturing Job Losses Are Not What They Seem
The assertion that China is suffering from a crisis of employment as a result of the tariffs imposed by the United States is, therefore, not based on the evidence. Employment in broad manufacturing has been falling over the past year, but at a slower pace than in 2014–17, before the tariffs were imposed. China’s exports to the rest of the world are growing enough to more than offset the lost sales to the United States, so employment losses due directly to the trade war seem to be de minimis. Basing trade policy on a bogus premise may be an effective way to sell it to the US public, but it is hardly likely to work with the Chinese.

US companies’ China optimism dips on trade tension, with more expecting revenue to fall this year, survey finds
Twenty-six per cent said they expect revenue in the current year to decline, a record high in the 19-year history of the US-China Business Council survey More than 80 per cent – 8 per cent more than a year ago – said trade tensions affected their China business operations this year

China’s renminbi is headed for its biggest monthly drop ever — and economists warn of a ‘contagion effect’
China’s yuan (also called the renminbi) is headed for it’s biggest monthly drop on record.
A lower-valued currency makes Chinese goods cheaper to export. It’s a battleground issue in the trade spat between the US and China. Economists are now warning that the currency may go down even more, and the risk of contagion to emerging markets is rising. Argentina, Brazil, and Turkey’s currencies could all be at risk.

The yuan hit an 11-year low this week. Here’s a look at how China controls its currency
China’s yuan is being closely watched as its economy slows and Beijing remains locked in a trade war with the U.S. The onshore yuan fell to levels not seen since February 2008 on Monday, while the offshore yuan dropped to its weakest since it began trading in the international market. Recent escalation in trade tensions left analysts and investors wondering how much further Beijing would allow the currency to weaken.

China says it hopes for “necessary conditions” to continue trade talks
China said it hopes “to create necessary conditions” to return to trade negotiations with the U.S., according to Reuters. China’s commerce ministry spokesman, Gao Feng also said the country is focused on removing new tariffs, rather than retaliation in a tit-for-tat trade war between the two economic powers.

US-China trade talks are good but ‘details are better’: strategist
How trade war fatigue is making the market more optimistic Trade tensions continue between the U.S and China. On Friday, both sides are expected to talk trade after China hinted that it would not retaliate against the new tariffs set to go into effect in coming days. “We’ve been down this road before. I think there are still so many issues that haven’t been resolved, the subsidies from China to their state-owned companies, their theft of U.S. intellectual property rights, on and on and on. So talking is good, details are better,”

China imports worth US$250 billion a step closer to 30 per cent tariff as US moves ahead with Trump’s plan
United States Trade Representative files notice in the US Federal Register inviting comments on plan to increase tariff from 25 per cent to 30 per cent on October 1 American businesses have already strongly opposed plans to impose tariffs on US$300 billion of imports set to come into force on September 1 and December 15

U.S. Companies: China Unfair, But We Don’t Really Care
China’s rose has put Western style capitalism on notice. From the point of borderless, multinational corporations, whose only home is the Nasdaq or the New York Stock Exchange, current tariffs on China are not enough to persuade them to leave. China is where it’s at, freedom or no freedom. No one in the C-suite is really all that worried about it.

What If There Was a Trade War Truce?
Some countries have benefited from the standoff between the U.S. and China. Resolving it could jeopardize that economic boost.

China-US Investment Flows Showcase A Love-Hate Scenario
A contrasting picture arises in recent studies of US-China investment flows. Cross-border foreign direct investment and venture capital fell to $13 billion in the first half of 2019, the lowest level since 2014 as the impact of the trade war resonated. But U.S. investment in China gained slightly to $6.8 billion in the first six months of this year

Why American Farmers Won’t Need China Anymore
It’s time soy farmers move beyond China.

China clamps down on capital flight risk as yuan weakens
Banks and real estate developers pressed to keep funds within the borders

Shanghai fails to offer zero-duty incentives seen as crucial to cargo flows in Lingang free-trade zone
Operating guide published on Friday fails to mention what import duty policy will be adopted Difficult to ensure ‘greatest openness’ at Lingang without exemptions, analyst says

China adds Huawei, Hikvision to expanded ‘national team’ spearheading country’s AI efforts
The latest batch of 10 new national AI champions include Xiaomi,, Qihoo 360, Megvii and Yitu

Huawei reconsiders Mate 30 overseas release amid Google cut-off: report
Huawei could delay sales of its upcoming Mate 30 flagship smartphone overseas due to its lack of Google services amid the US trade ban, the South China Morning Post reported citing people familiar with the matter as saying.

Huawei reconsiders Mate 30 overseas release amid Google cut-off: report

Huawei, ZTE expand share in global telecoms gear, but all eyes are on the second half amid trade tensions
Chinese telecoms giants grow global share in first half on back of rising 5G network equipment orders

Didi to launch autonomous taxi service in Shanghai
Ride-hailing giant Didi will launch a pilot robotaxi fleet in Shanghai, allowing passengers to book rides in autonomous vehicles through its app, the company said on Friday.

Didi to launch autonomous taxi service in Shanghai

China isn’t trying to lead African countries into debt trap but plays ‘important role’, lender says
African Development Bank president says investment from China and other nations closes funding gap for crucial infrastructure projects Akinwumi Adesina urges Tokyo and Beijing to play ‘complementary roles’

For investors, Donald Trump’s tweets just sow confusion. In the trade war with China, they undermine his own position
The president’s Twitter missives make news, but their erratic musings also make for confusion about US policy direction Even his negotiating partners in Beijing are starting to realise that such ramblings reveal he won’t honour any deal

Fast Fashion Must be High-End to Compete in China
COS, H&M Group’s high-end, fast fashion option, has been seeing consistent growth, having opened 37 stores across 19 cities in mainland China since it opened in 2012.

Fast Fashion Must be High-End to Compete in China

How to Earn Brand Loyalty From China’s Millennials
Today, Chinese millennials are proven less and less loyal to luxury brands in China given the plethora of choices and the shifting face of social capital. Brands need to find more relevant ways to establish a long-lasting image and relationship with their Chinese consumers. China has proven a difficult market for brands seeking customer loyalty, particularly amongst China’s millennials. According to the Mckinsey China Luxury Report 2019, 30 percent of post-80s-born luxury shoppers regularly buy products outside from their preferred brands, while that rate jumps to 52 percent with post-90s-born shoppers. “[Chinese consumers] tend to be less loyal compared to more mature markets,” says Daniel Zipser, Senior Partner at McKinsey & Company, Leader of Greater China Consumer and Retail Practice. “This is even more pronounced when it comes to loyalty to individual brands rather than a portfolio of brands.”

How to Earn Brand Loyalty From China’s Millennials

Report: Digital currency is a low priority for China
The Binance research team looked under the hood of China’s much-anticipated, central-bank-backed digital currency and found little there.

China’s banks face earnings squeeze amid rate reform, trade war gloom
China’s banks face pressure on earnings and asset quality in the coming months as interest rate reforms squeeze margins and a Sino-U.S. trade war adds to economic uncertainty. Five of the nation’s top listed banks this week reported a profit rise of nearly 5% in the first half of the year, but some warned they faced headwinds. “In the second half of this year, the domestic and global economy is becoming increasingly complex and changeable, bank asset quality will continue to face pressure,”

China calls on local governments to ‘defuse the bomb’ of troubled small banks
Beijing lays out road map for rescuing troubled small and regional banks as risks of problematic lenders have started to emerge amid economic slowdown Move comes after Baoshang Bank, Jinzhou Bank and Hengfeng Bank all ran into trouble in recent months

Five Ways to Facilitate Leaving China
The first thing one needs to understand about leaving China, either fully or partially, is that everything — and I do mean everything — you did wrong coming into China may come back to haunt you when you try to leave. This includes everything that you from your company registration, to your tax payments, to whatever import/export duties you paid, to your accounting calculations, to your lease contracts and payments, to your employment contracts and payments, to your vendor contracts and payments. I can go on and on. Just be sure that whatever you have skirted or fudged or disputed or had disputed may impact your compliance with local, provincial, or PRC laws and can put you at risk when seeking to depart. If you have a joint venture, your joint venture partner will likely know your weak spots (even though it very well may have encouraged them) and it usually will not hesitate to point them out to Chinese government authorities if it is in their best interest. The same holds true with at least equal force for your employees, landlord, and vendors

Five Ways to Facilitate Leaving China

China’s dream of making the yuan a global currency hit by Hong Kong protests, depreciation, analysts say
The yuan slipped to the sixth most-used international transaction currency in July, behind the Canadian dollar, according to financial messaging service provider Swift Chinese authorities have let the yuan’s exchange rate depreciate by about 15 per cent against the US dollar since the onset of the US trade conflict in March last year

Chinese investors buy the dips even as Hang Seng Index ends August as world’s worst performer
Mainland traders have bought Hong Kong stocks for 31 days in a row, pumping a total of US$8.9 billion The Hang Seng Index’s 7.4 per cent plunge in August makes it the worst performer among the world’s major stock gauges

After long gap, China’s ruling elite to gather for October conclave
Top officials of China’s ruling Communist Party will hold a key meeting in October to discuss improving governance and “perfecting” the country’s socialist system, state media said on Friday, more than a year after the last was held.
After long gap, China’s ruling elite to gather for October conclave

China rises to top engine of global economic growth in 70 years
China has ranked first in terms of contribution to global economic growth since 2006, becoming the leading engine of world economic growth, an official report said Thursday.

Book Review: China Ascendant: Its Rise and Implications
A new book offers a refreshing non-Western perspective on the implications of China’s rise. Finally, the book is a refreshing change from other academic works on the rise of China written by Western scholars and practitioners who primarily analyze China through the lens of Washington Consensus. Written (mostly) by Indian thought leaders, the book gives voice to the concerns and anxieties of other developing countries about navigating a China-led international order. It will be an important addition to the documentation of the biggest story of our generation: the rise of China.

Hong Kong, China stocks end August lower as trade war intensifies, yuan weakens
The Hang Seng finished Friday almost flat, but lost 7.4 per cent in August The Shanghai benchmark closed lower, dragged down by tech stocks, though surging liquor stocks limit losses

Hong Kong’s banking system holds up, as financial war chest expands and capital remains even if protest rallies deter tourists
The size of the Exchange Fund grew by 0.02 per cent, or an increment of HK$700 million, to HK$4.138 trillion at the end of July, according to data by the Hong Kong Monetary Authority The financial system’s aggregate balance, an indicator of banking liquidity, dipped by 0.06 per cent in July to HK$54.24 billion from a month earlier

How can Hong Kong investors best protect against inflation? Negative-yielding bonds may provide the answer
About one-third of developed-market government bonds are trading at negative yields now. This essentially means paying a government for the privilege of borrowing money from it. But some believe bonds can still deliver capital gains

Hong Kong activists arrested: Joshua Wong and others detained
Several prominent Hong Kong democracy activists have been arrested in less than 24 hours amid a police crackdown.

Hong Kong risks catastrophe in China-US proxy battle, Global Times chief warns
Editor-in-chief of nationalistic tabloid says Western meddling has made de-escalation difficult but the city’s future is in its own hands Beijing does not want Hong Kong to become just another mainland city, Hu Xijin says

Hong Kong is irreplaceable for China. That’s why the PLA hasn’t rolled in yet
Hong Kong is still China’s critical gateway to multinational capital, and mainland banks, now worth US$1.2 trillion, hold overseas assets concentrated in the city. China simply can’t afford to destroy Hong Kong’s commercial freedoms

China Intercepts WeChat Texts From U.S. And Abroad, Researcher Says
Owned by Tencent, one of China’s biggest companies, the WeChat app has more than 1 billion monthly users in China, and now serves users outside the country, too.

Alain Gillard
Information Officer
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