China Press Review – August 7, 2019

Press review

China’s Economic Growth: How Is China’s Economy Doing?
China has been a major contributor to global growth, and its economic activity tends to have significant repercussions for the global economy. Purchasing managers’ indices are a better indicator of the health of the Chinese economy than the gross domestic product number, which is politicized and is a composite in any case.

A Heightened US-China Financial War Imperils Global Economy
Just what the fragile global economy didn’t need: An unpredictable escalation in President Donald Trump’s trade war with China, one that spreads the conflict to currency markets, threatens to involve other countries and raises the risk of a global recession.

China’s exporters will be forced to downsize, cut jobs, relocate if Trump follows through with tariff threat
Last week US President Donald Trump issued a threat to impose new 10 per cent tariffs on US$300 billion worth of Chinese goods on September 1 US-China trade war forcing firms to consider Vietnam, Indonesia and India with 25 per cent tariffs already in place on US$250 billion worth of Chinese imports

America should apply Cold War lessons to China: Compete hard, hold fast to our values
The United States should not fear a new Cold War with China. Done right, strategic competition with Beijing is Washington’s to win — and could reshape the United States and its role in the world for the better.

Fears of Chinese capital flight resurface amid sliding yuan
The biggest slide in China’s yuan since 2015 threatens to revive concerns about the capital flight back then that helped spur the country to spend US$1 trillion (S$1.38 trillion) of its reserves. For all its perceived success in tightening regulations and strengthening scrutiny of funds moving abroad, the trauma of that period poses a big reason to avoid any continuous depreciation. An even more important financial consideration could be the stockpile of Chinese dollar debt, which has more than doubled since the end of 2015 to US$729.8 billion, according to data compiled by Bloomberg. Issuance so far this year is a record US$138 billion.

China hits back at ‘currency manipulator’ label as Donald Trump ratchets up US trade war
The People’s Bank of China called the United States’ move to label China a currency manipulator ‘wilful unilateral and protectionist behaviour’ Markets slid on the potential further escalation in US-China tensions, with analysts predicting more tariffs to come

China state banks seen supporting yuan to steady declines: sources
China’s major state-owned banks have been active in the yuan forwards markets this week, sources said, using swaps to curb greenback supply as authorities sought to slow the currency’s decline after its break past the key 7 to the dollar threshold.

So the US Treasury just labelled China a currency manipulator, roiling global financial markets. What are the implications?
The renminbi, as the Chinese currency is called, weakened to an 11-year low of 7 yuan per US dollar on Monday

Australia weighs in on US-China currency row and trade war, calling for ‘cool heads to prevail’
Australian Treasurer Josh Frydenberg avoided saying whether the US was right to brand China a currency manipulator However, he insisted Australia wants ‘the international rules-based framework to be maintained’

The US-China Trade War: What’s Next?
A lot has gone on with China this last week.

The US-China Trade War: What’s Next?

In Trade War, China’s Hard-Line Stance Risks Economy
The Chinese leader, Xi Jinping, wants to appear strong in the face of President Trump, even if it means enduring the economic fallout.

The risks of Trump’s trade war gambit with China
President Donald Trump’s trade war just got more complicated — and it’s far from clear whether he’ll win a deal before American voters head to the polls next November.

The Long-Term Impact Of US Tariffs On China
That means, even if the US and China do manage to strike a new trade agreement between now and the 2020 US General Election, the realignment of global supply chains and the uncertainty that accompanies such changes is unlikely to end any time soon. For company leaders, these changes place a premium on corporate agility and the ability to respond quickly to rapidly changing customer requirements and other external factors such as supply chain disruptions. For consumers, if these moves are successful, the prices of imported goods may not rise as much as might be expected as a result of the tariffs on Chinese imports. But they will probably see fewer ‘Made in China’ labels.

The Trillion-Dollar Grift: The Long-Term Plan for US-China Decoupling
There is a certain amount of “OMG how did we get here??” handwringing over the escalating trade war between the US and China.

Bridgewater’s Ray Dalio says investors should still bet on China despite trade war
Trade conflict ‘natural development’ between world’s biggest economies, founder of world’s biggest hedge fund says Not investing in China is ‘very risky’, Dalio says

What is driving Donald Trump’s relentless trade war with China? Look to the 2020 US presidential election
As Trump eyes re-election in 2020, China and Chinese goods are fair game, as this resonates with his base That he will be hurting US consumers is a risk Trump seems willing to take, but his actions may be pushing China too far

Short on cash, businesses in China rely on IOUs
China was on the cusp of the biggest building boom the world had ever seen when Zhang Zhiyang started his architecture firm. It was 2007, and the money rushed in for contracts to design residential complexes and an exhibition hall But many of those private businesses are short of cash. Instead, more than US$200 billion in IOUs — known in the dry world of finance as commercial acceptance bills — are floating around the Chinese financial system, according to government data.

Donald Trump hints at more trade aid as US farmers suffer ‘body blow’ from Chinese retaliation to tariff threat
Beijing has halted purchases of US farm products amid escalating trade war US agricultural industry could see long-term loss of market share as other countries rush in to fill Chinese orders

African Swine Fever Continues To Devastate China’s Pork Supply, But U.S. Farmers Are Unlikely To Fill The Need
Tyson Foods released its third quarter earnings on Monday with a statement from CEO Noel White on African Swine Fever and the Chinese import market. “Given the magnitude of the losses in China’s hog and pork supplies, the impending impact on global protein supply…is likely to be a multi-year event,” said White. But don’t count on African Swine Fever to benefit U.S. pork farmers anytime soon, as barriers between between U.S. pork exports and the Chinese consumer remain firmly in place. And with China’s most recent decision to halt imports of all U.S. agricultural products, commodities like soy are threatened, too.

China rare earths group supports counter-measures against U.S. ‘bullying’
China’s rare earths association said it would support Chinese counter-measures in the escalating trade row with the United States, which it accused on Wednesday of “bullying”.

BMW’s China Mini project reportedly heads into a tailspin
BMW’s joint project with Great Wall Motor to build the new electric Mini model in China has reportedly hit the rocks due to “big cultural differences,” the latest case of collaborative difficulties between global auto giants and Chinese OEMs.: Global automakers have rushed to tap China’s booming electric vehicle industry by partnering local firms after the government brought out its first NEV mandate policy in September 2016. However, they may have underestimated cultural differences in the local market when attempting to bring over their tried-and-tested methods.

BMW’s China Mini project reportedly heads into a tailspin

China’s AI chip startups – how many will survive?
Baidu, Alibaba, and Tencent (BAT) are the top three investors in AI startups among large Chinese companies. Most of such funding goes to those focused on application layers or algorithms. While the tech giant trio has only made strategic investments so far, the field has also seen a stream of government and VC funding in recent times. Baidu and Alibaba have also moved into chip design themselves.

China’s AI chip startups – how many will survive?

China’s smartphone shipments beat expectations but decline continues amid trade tensions
Huawei continued to lead domestic shipments with a 27 per cent year-on-year increase to 36.3 million units last quarter

Huawei pushes ahead with US$1.4 billion R&D centre in Shanghai in spite of US trade restrictions
Huawei reported 23 per cent gain in revenue in the first half, led by smartphone shipments and 5G equipment demand New R&D centre will be located in Shanghai’s Qingpu district and house 30,000 to 40,000 employees

Huawei ban: China warns India of ‘reverse sanctions’ if telecoms giant gets blocked from 5G bidding, sources say
India’s ambassador in Beijing was called to the Chinese foreign ministry on July 10 to hear China’s concerns about the US campaign against Huawei China’s foreign ministry said Beijing hoped India would make an independent decision on 5G bidders

Smart Cities or Surveillance? Huawei in Central Asia
Chinese surveillance technologies are popular among Central Asia’s governments.

China’s stocks endure longest losing stretch in two months as trade war dims growth prospect
Mainland shares fall before MSCI’s announcement on weighting increases for Chinese stocks and release of July trade data CLP was the best performer on the Hang Seng Index as the city’s power supplier seeks to make a foray into the Chinese market

Stocks blog: Chinese stocks fall ahead of MSCI announcement, foreign trade data
CLP Holdings jumps in Hong Kong trading amid defensive play Gold and cobalt producers rally in mainland trading

China doubles size of Shanghai Free-Trade Zone to include Tesla town in drive to open markets
FTZ expanded to encompass Lingang, the site of American carmaker’s new factory Tax incentives and exemptions offered to attract talent and infrastructure

Two Things Drive China’s Economy. One Is In Trouble.
China’s growth engine is increasingly relying on the single cylinder of consumer spending, which delivered two thirds of its GDP growth in the first quarter 2019. Consumer confidence has been lifted by rapidly rising incomes alongside a long run in property prices. Both of these drivers now face challenges, but one—real estate—is way worse than the other.

Understanding China’s Negative Lists and Catalogues Related to Foreign Investment
Between 2011 and 2019, the number of prohibited or restricted items have fallen from 180 to 40.

Commerce sets steep preliminary duties on Chinese-made cabinets
Domestic producers say they are being driven out of business by unfairly subsidised imports from China, putting more than 250,000 American jobs at risk US imported US$4.4 billion worth of wooden cabinets, vanities and related components from China last year

Chinese students and US universities become pawns in the trade war
America clamps down on visas while China urges students to stay away

Hong Kong’s July foreign exchange reserves rise to a record US$448.5 billion, offering a shield against financial turmoil
Hong Kong’s hoard of foreign currencies increased 0.6 per cent to a record, bolstering the city’s defences against currency attacks and financial turmoils Foreign exchange holdings, excluding gold, rose to US$448.5 billion at the end of July from US$431.9 billion a year ago, and compared with US$445.6 billion in June

Hong Kong mall landlord Wharf says ‘perfect storm’ of trade war, anti-extradition bill protests has hurt retail
Sales at Harbour City, Hong Kong’s largest shopping centre, declined 1 per cent in the first half to US$2.36 billion Second quarter was worse than the first quarter, Wharf Reic chief says

Kuaishou to get tough on shady e-commerce operators
Kuaishou has launched a new campaign to prevent shop owners on the platform from redirecting users to external channels. Shop owners do this to avoid incurring charges when completing transactions. The Chinese short video app looks to tighten up its e-commerce offering. Why it matters: Content-driven e-commerce is a growing trend in China as more and more sellers use short video apps like Kuaishou and Douyin as effective ways to promote products. Some merchants encourage shoppers to pay privately via WeChat or Alipay to avoid extra fees and also to reduce their responsibility for after-sales service.

Kuaishou to get tough on shady e-commerce operators

WeChat Links E-commerce Capability with Moment Ads
WeChat quietly added one more function allowing brands to connect Moment Ads with e-commerce function, according to Chinese tech media Ebrun on August 4. Photo:
On August 4, WeChat quietly added one more function allowing brands to connect Moment Ads with e-commerce function, according to Chinese tech media Ebrun.

WeChat Links E-commerce Capability with Moment Ads

Will China’s Currency Devaluation Reverse Luxury Gains?
As Nicole Tanenbaum of Chequers Financial Management told Fortune this week, “Allowing the yuan to weaken makes Chinese imports into the United States less expensive, effectively offsetting the impact of the tariffs, and making U.S. companies less competitive,” adding that a “weak yuan will help boost China’s exports while hurting foreign competition.”

Will China’s Currency Devaluation Reverse Luxury Gains?

What happened to India’s disappearing Chinese migrants?
New but long overdue census data shows thousands fewer Chinese migrants now call the South Asian country home Difficulty in obtaining long-term visas and a trend in Tibetan refugees leaving for the West cited as contributing factors

China is expanding its UN presence, in belt and road push
UN farming chief is the latest top job to be filled from Beijing, as China promotes ‘ecological civilisation’ and promises to green its foreign investment drive

China is expanding its UN presence, in belt and road push

Europe’s new agenda in the Western Balkans
And while the EU is recalibrating its policies on the Western Balkans, other powers are upping their game there. The region has been a focus of China’s efforts to extend its Belt and Road Initiative in Europe for quite some time. There is a visible Chinese presence in almost every corner of the region.

Unequal Sequel: China’s Belt and Road Initiative
Finally, if the BRI does become more transparent and economically responsible, as Xi described, that could actually sap the initiative’s dynamism further. With decelerating global trade and many countries already heavily burdened with existing debt, the BRI should find fewer, not more, worthwhile infrastructure investments. Depending on how closely it hews to Xi’s admonition to do things differently, BRI lending should slow. That means that the BRI’s ambitions, whatever they may be, will take longer to achieve. Oftentimes, sequels find it difficult to surpass the originals; the BRI might be no different.

Unequal Sequel: China’s Belt and Road Initiative

Chinese Official Calls Turmoil in Hong Kong Worst Since 1997 Handover
“The violence is getting more and more intense” in Hong Kong, the mainland official said just days after protests and a citywide strike resulted in clashes with the police.

China Warns Hong Kong Protesters, But It Has Few Realistic Options
Beijing is warning protesters in Hong Kong that it’s restraint in the face of protests is not without limit. However, it has few realistic options when it comes to how far it can go.

China’s envoys try to rally Europe to Beijing’s side on Hong Kong protests
Ambassadors to Britain, the Netherlands and Spain call for condemnation of violence in the city

China troll army’s battle expeditions leap Great Firewall
Secretive Chinese nationalist group targets Hong Kong protesters and supporters on social media platforms banned on mainland

What the Li Xiujuan Story Says About Petitioning Rights in China
Though the law clearly gives citizens the right to file petitions, the reality tends to be much murkier.

Nato Secretary General Jens Stoltenberg says alliance needs to address the rise of China
Partners must be concerned with ‘the fact that China is coming closer to us’ Stoltenberg talks about increased Nato presence in the Arctic and Africa

Chinese architects win international contest to redesign Notre Dame’s roof and spire after devastating fire
While proposals are unlikely to see the light of day, US architecture publisher that ran competition hopes it will prompt French to rethink decision to rebuild Parisian landmark exactly as it was before Winning design features kaleidoscopic mirrors on roof and spire, which would have floating tip powered by magnetic levitation

Alain Gillard
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