China Press Review – August 6, 2019

Press review

Remember when Trump said trade wars were ‘good’ and ‘easy to win’?
Some of Donald Trump’s tweets are more important than others. A year and a half ago, the president declared that the United States is “losing many billions of dollars” on trade, which reflected a degree of confusion about how the economy works. The differences between trade deficits and “losing money” matter – and are obvious to those with a basic familiarity with the issue. But Trump quickly added on March 2, 2018, “[T]rade wars are good, and easy to win.” I wonder if he still believes that.The idea that the United States would “save a lot of money” by ending trade with China is as foolish as arguing that China is paying us billions of dollars by way of Trump’s tariffs – a bogus claim the American president continues to repeat, convinced of its accuracy. It’s one thing for Trump to struggle with a trade war he thought would be “easy” to win; it’s something else for Trump to struggle with a trade war because he’s not altogether sure how trade works.

Trump says US in ‘strong position’ and money ‘pouring’ in from China as trade war intensifies
“Massive amounts of money from China … is pouring into the United States for reasons of safety, investment, and interest rates!” Trump writes on Twitter. The U.S. president’s comment follows the Treasury Department’s move to label Beijing a “currency manipulator” and a renewed round of trade angst. “We are in a very strong position. Companies are also coming to the U.S. in big numbers. A beautiful thing to watch!” Trump added.

US labelling China currency manipulator is ‘absurd’, threatens global recession, warns adviser
Yu Yongding, a fellow at the Chinese Academy of Social Sciences, said that the ‘US is trying to start a currency war’ US Treasury Department made the decision after the yuan weakened below 7 to the US dollar on Monday

Donald Trump could be ‘laying groundwork for more tariffs’ by labelling China a currency manipulator
There is no direct US legal provision linking currency manipulation with tariff imposition, but it does free the US president up to take more unilateral action Other courses of action include a ban on US government procurement from China, an end to trade talks and an investigation by the International Monetary Fund

Kyle Bass: China’s currency would collapse 30% to 40% if they stopped supporting it
“If they were to ever free float their currency, I think it would drop 30% or 40%,” Bass said of China and its currency, the yuan. Bass’s comments came after the Chinese yuan changed hands above 7 against the dollar for the first time since 2008.

Yale economist Stephen Roach: US declaring China a currency manipulator is an ‘empty threat’
If the U.S. imposes more tariffs or other sanctions, there will once again be intensification of pressure coming back from the Chinese, says Stephen Roach, a senior fellow at Yale University. Intervening in the market will not work unless there’s a “grand coalition of other countries that would join with the U.S. in attempting to push the (Chinese currency) back up,” Roach says.

Global financial crisis, recession risks raised as US-China trade war tensions escalate over currency row
Former US Treasury Secretary Lawrence Summers says world at the ‘most dangerous financial moment’ since the 2009 global economy meltdown Washington labelled China a ‘currency manipulator’ after the yuan exchange rate dropped to its lowest rate for 11 years on Monday

Yuan fall: Why is China’s currency getting weaker?
China’s currency has weakened to its lowest point in more than a decade, prompting the US to label Beijing a currency manipulator.

US declaration of China as currency manipulator roils global financial markets from the Americas to Asia
Treasury Secretary Steven Mnuchin said his agency would engage with the IMF ‘to eliminate the unfair competitive advantage created by China’s latest actions’ Financial markets fell from the Americas to Asia, with stock indexes plunging from Seoul to Wellington. Hong Kong’s Hang Seng Index gave back nearly all of its gains this year

China says ‘no such thing’ as currency manipulation despite US claim it depreciated yuan exchange rate
US Treasury declared China a ‘currency manipulator’ on Monday after the yuan fell below the key threshold of 7 to the US dollar for the first time since 2008 People’s Bank of China says it has ‘refused to engage in a competitive devaluation’ despite the year-long trade war with the United States

‘Ready to rumble’: Escalating U.S.-China fight puts world economy on the brink
Whatever happens next, it is clear that the trade war is no longer confined to trade
‘Ready to rumble’: Escalating U.S.-China fight puts world economy on the brink

China’s central bank to sell US$4.3 billion worth of yuan-denominated securities, slowing currency devaluation
Bill issuance in Hong Kong seen as most efficient way to absorb offshore liquidity and prevent further depreciation of yuan Move indicates that central bank not looking to defend a particular level for yuan against US dollar

Shanghai benchmark retreats to five-month low as US and China up the ante in trade war
Mainland equities fall after Beijing halts purchases of American agricultural goods and Washington labels China as a currency manipulator Hong Kong stocks trim losses after key Beijing officials say city’s government ‘completely capable’ of protecting law and order

China suspends purchases of US farm products in retaliation for ‘serious violation’ of trade deal between Xi Jinping and Donald Trump
Trump’s levying of new 10 per cent tariff on Chinese imports was ‘a serious violation of the consensus of the heads of state’, China’s official news agency says US must ‘have the confidence to implement the commitments to create the necessary conditions for cooperation in the agricultural fields’, report says

US stocks plummet as China announces trade war retaliation involving currency value and farm purchases
Dow, Nasdaq and S&P plunge as Beijing allows the yuan to weaken below 7 to the US dollar and says it will stop buying US agricultural goods Technology stocks are among the hardest hit, as the sector stands to suffer more than others if the trade war keeps escalating

China’s slowing economy won’t push it into joining the global rate-cutting cycle. Here are three reasons why
Concern over capital outflows, the need to deleverage and Beijing’s independent monetary policy mean the PBOC won’t cut rates, even as economic worries encourage other central banks to do so

China exchange rate drop could continue into 2020 as it tries to offset US tariff impact, analysts say
Beijing’s decision to let yuan fall below key 7.0 level against US dollar means it has decided to use yuan as tool to fight the trade war, analysts said Some analysts see yuan weakening to 7.2 to the US dollar, about a 5 per cent depreciation from its exchange rate before the start of the trade war

Global chip sales continue to decline as US-China trade war escalates
Worldwide semiconductor sales fell 16.8 per cent year on year to US$98.2 billion in the three months ended June 30

Tencent in talks to buy stake in Universal Music, label behind Lady Gaga, Ariana Grande, Bruce Springsteen
Vivendi, Universal Music’s parent, has been looking to sell up to 50 per cent of the business Transaction would value Universal Music at US$33.6 billion

China’s biggest chipmaker is still years behind its global rivals
Semiconductor Manufacturing International Corporation (SMIC), China’s largest contract chipmaker, is behind rivals when it comes to technology, analysts say. China is trying to boost its own semiconductor industry as the trade war with the U.S. continues. But SMIC’s chip technology is several years behind bigger competitor Taiwan Semiconductor Manufacturing Company (TSMC).

China’s pollution is so bad it’s blocking sunlight from solar panels
As the world’s largest consumer of solar power, China’s energy industry is attempting to move on from its coal-burning past towards a more sustainable future. But sometimes the past isn’t easily forgotten. New research published in the journal Nature Energy suggests the country’s densely polluted atmosphere is blocking the sun’s rays, preventing solar panels from harvesting energy efficiently.

China’s Two-Headed Energy Policy
Until 2017, China was championing the global movement to combat climate change through committed efforts at reducing reliance on coal and highest investments in renewable energy. The US-based Institute for Energy Economics and Financial Analysis (IEEFA) in its January 2018 report identified China as being among the top leaders in outbound clean energy investments in 2017, establishing itself as a world leader in driving a domestic decarbonisation agenda.

Climate crisis business opportunities
But most likely the holy grail will be companies that take greenhouse gasses out of the air. The technology is there, although it has not been done at scale yet. It will be extremely expensive (think in the trillions of dollars), but it’s feasible. The ‘good’ thing is that we can keep on living similar lifestyles to our current ones, until viable alternatives have been developed. In a way this will reward oil companies (they will get a life extension), but I hope we can force them to scale down significantly with taxes: offsetting their carbon emissions with carbon credits. This could lead to a huge cycle of innovation, when companies that develop these carbon reduction innovations can create carbon credits and sell them to oil companies and other bad actors.

Climate crisis business opportunities

Hong Kong electricity provider CLP eyes China power distribution market, India’s renewables, says CEO
CLP reported a net loss of HK$907 million (US$116 million) for the first half, on the back of a huge impairment on its Australian retail business

How can China and Europe become low-carbon leaders?
China and Europe are expected to lead the way in low-carbon investments, now that the US has stepped back from implementing the Paris Agreement. While there have been broad estimates of the necessary increases in low-carbon energy investment worldwide, a detailed comparison of the cases for China and Europe was absent. “We wanted to better understand the possible pathways that China and Europe might take to decarbonize their respective energy systems in light of their ambitious targets for reducing greenhouse gas emissions, and then from that back out what investment flows would likely be needed to realize these futures,” says Zhou.

How can China and Europe become low-carbon leaders?

Can belt and road plan reverse sagging fortunes of China’s trade war-hit northeastern ports?
The rust belt region is focused on drawing more firms from Japan and South Korea to use the subsidised sea-to-rail service, a signature of the Belt and Road Initiative Liaoning, which counts the United States as its fourth largest export market, is seeking to use Dalian port to connect with Russia, Eastern Europe and Central Asia

All but one of China’s provincial level governments ran deficit at start of 2019, raising further funding fears
Shanghai was the only authority that ran a surplus financial position in the first six months of the year News follows takeover of Baoshang Bank and bailout of Bank of Jinzhou, leaving local governments and financial institutions in need of capital or even help from Beijing

Aldi and Costco test China’s retail appetite with fresh approaches
Discounters buck trend of exits by foreign store chains, taking small steps

Tmall Hopes New York Fashion Week Audiences Buy Into “China Cool”
In collaboration with Tmall, New York Fashion Week: The Shows is set to give young Chinese designers a platform in one of the world’s fashion capitals next month. Taking place at Spring Studios, Tmall’s “China Cool” event will showcase emerging Chinese design, in the latest NYFW/Tmall partnership and the largest since the two began collaborating in 2017.

Tmall Hopes New York Fashion Week Audiences Buy Into “China Cool”

Luxury Brands Use Video Games to Speak to China’s Millennials
Creating collections that target younger demographics is not something entirely new but entering the gaming world and selecting a digital avatar to deliver a testimonial is groundbreaking. Until recently, such partnerships would have been taboo; the luxury world saw video games as geeky, and high-end brands didn’t want to be associated with nerds.

Luxury Brands Use Video Games to Speak to China’s Millennials

Why Are Foreign High-Tech Companies Leaving China?
China is making persistent efforts to transition its manufacturing powerhouse status from that of a low-tech producer to a high-tech manufacturing hub. As the US-China trade war completes a full year, this ambition is confronting its greatest challenge yet. So far, the US has slapped 25 percent tariffs on US$250 billion worth of Chinese goods. China, in turn, has responded with its own tariffs on US$110 billion of US goods. Consumer technology goods were left untouched by the tariffs, that is until now.

The resurrection of state capitalism in China
While state sectors remain significant in the economies of many countries, China’s state-owned enterprises (SOEs) continue to generate the most controversy. Key commentators have noted that Chinese state capitalism has continued to strengthen since the launch of a new stage of SOE reforms in the Third Plenum of the 18th Party Congress in November 2013. This has provoked discussions on the need for revamping the rules of the WTO, which is now a central issue in the ongoing US–China trade war and subsequent negotiations.

The resurrection of state capitalism in China

21 Assumptions To Avoid When Buying from Chinese Suppliers
Many buyers tend to make assumptions that are seldom valid in China, and it can be quite dangerous. When I started spending a lot of time in Chinese factories, what I saw blew my mind. A foreign buyer simply can’t imagine what is sometimes going on behind the scenes. I’ll say that China is the land where everything is possible… from the worst to the best. I wrote 21 common assumptions below, in categories, along with my comments.

21 Assumptions To Avoid When Buying from Chinese Suppliers

Why Do Countries Sign Up with China’s Belt and Road Initiative?
The naysayers analogize it as a Trojan Horse that can stealthily slip Chinese political and geopolitical influence into the recipient countries. The latter group of critics have a trust deficit with China and worried about the true intentions of the BRI. Based on such worries, bidding for Australian projects was cancelled and blocked. Because of the persuasiveness of the BRI, some scholars describe it as a form of soft power. Thus, persuasiveness may not only be restricted to funding opportunities but also fashioning itself as a champion of free trade in an era of anti-globalization forces. The naysayers fear that the BRI may link up other soft power features like study institutes, developmental aid funding, educational exchanges, media-related initiatives and cultural tools to influence international imageries of China.

China’s Belt and Road Initiative: the perils of being a subprime global lender 
China’s Ministry of Finance recently announced a new “debt sustainability framework” for the Belt and Road Initiative–the plan that China announced in 2013 for supporting construction of overland and overseas transportation infrastructure that would build closer links from China across Asia, and reaching to Africa, the Middle East and Europe.

Chinese universities need to attract more foreign students, but not by treating them differently
China has a talent-deficit problem that, if unsolved, will constrain its ability to innovate and further develop. It should take several steps to meet the challenge, starting with removing the wall between local and international students

Hong Kong’s government and police ‘completely capable’ of protecting law and order, key Beijing official says, ruling out need for PLA to be mobilised
Hong Kong and Macau Affairs Office under the State Council holds second media conference since protests began on June 9 Communist Party mouthpieces issue new commentaries calling on the Hong Kong public to take matters into their own hands to stop violence

Beijing appeals to Hong Kong public to help restore order in the city
State media urge ‘people who love’ the city to stand with its embattled police and administration

Beijing again gives ‘unflagging support’ to Carrie Lam, warns Hong Kong is entering ‘most dangerous phase’
Communist Party mouthpiece calls on city to put a stop to violent and continued social unrest as ‘no place can survive such turmoil’ Hong Kong and Macau Affairs Office will brief media on Tuesday, and ‘something new’ will be announced, according to a source

China warns Hong Kong protesters not to ‘play with fire’
China has issued a strong warning to Hong Kong’s protesters, saying their attempts “to play with fire will only backfire”.

Tencent helps Communist Party pay homage to the China Dream
Tencent Holdings is teaming up with the Chinese Communist Party apparatus to develop “patriotic” video games, edging closer to a government that’s increasingly intolerant of gaming.

China will not ‘stand idly by’ if US proceeds with Asian missile plans
Senior foreign ministry official advises South Korea, Japan, Australia in particular not to host intermediate-range weapons

Alain Gillard
Information Officer
Service Asie Pacifique
Place Sainctelette 2
1080 Bruxelles
Tél 02 421 85 09 – Fax 02 421 87 75
Copyright © 2019 awex, All rights reserved