China Press Review – August 9, 2019

Press review

US delaying Huawei licences as China stops buying farm goods
American businesses need special permission to supply goods to Chinese telecoms giant after it was added to trade blacklist over national security concerns US Commerce Secretary Wilbur Ross said last week he has received 50 requests and that decision on them was pending

US trade war drives China’s producer prices into deflation, as pork prices send consumer inflation higher
Producer price index (PPI) fell back into negative territory at minus 0.3 per cent in July compared to a year earlier, down from the flat reading in June Consumer price index (CPI) rose to 2.8 per cent in July, the highest reading since February 2018, largely due to rising pork prices

US rushes to ready new China tariffs as firms say Donald Trump’s decisions ‘made with a tweet’ leave them no time to plan
American companies make last-ditch appeal to be spared from latest round of duties US Trade Representative Lighthizer under pressure to revise initial list targeting more than 3,800 Chinese product lines

China Tries to Teach Trump Economics
But he doesn’t seem to be learning. If you want to understand the developing trade war with China, the first thing you need to realize is that nothing Donald Trump is doing makes sense. His views on trade are incoherent. His demands are incomprehensible. And he vastly overrates his ability to inflict damage on China while underrating the damage China can do in return.

Bull, meet China shop: Trump’s foreign policy in Asia is disastrous
‘The future of Asia remains bright, but a crippling array of challenges threatens to upend its potential – and could have an immense impact on the US.’ The trade war, meanwhile, hurts American workers and the US economy, according to the Chairman of the Federal Reserve. If the next round of US tariffs is implemented, some estimate they could cost American families between $700 and $1,270 a year. The incoherence of Trump’s approach on China undercuts American prosperity and has done nothing to advance our goals in addressing genuine problems with China. Trump is an expert at stepping into controversy and making bad situations even worse, and his engagement in Asia is no exception. If these situations continue to spiral out of control, any one of the simmering problems from North Korea to Hong Kong to Kashmir could explode. And that could spell serious trouble for US prosperity and national security.

Is the world headed for an Asian future? Not if we don’t admit to some inconvenient histories
Asia’s leaders, intent on dragging their countries into developed status, kicking and screaming, are ignoring festering historical fissures that threaten any developmental gains, writes Imran Shamsunahar

Trade war escalation leaves markets shaken, but a meltdown is not on the cards
Trump’s latest tariffs and the yuan’s slide this week are forcing investors to take the threat of a prolonged stand-off more seriously But a dovish Fed and growing confidence in China’s ability to manage its currency are among the reasons we are still some way from a fully fledged crisis

China producer prices fall for first time in three years, deflation worries resurface
China’s factory gate prices shrank for the first time in three years in July, stoking deflation worries and adding pressure on Beijing to deliver more stimulus as the economy sputters amid an intensifying trade war with the United States.

US trade war drives China’s producer prices into deflation, as pork prices send consumer inflation higher
Producer price index (PPI) fell back into negative territory at minus 0.3 per cent in July compared to a year earlier, down from the flat reading in June Consumer price index (CPI) rose to 2.8 per cent in July, the highest reading since February 2018, largely due to rising pork price

Asia shares mixed as Chinese food inflation soars, Japan GDP beats expectations
Stocks in Asia Pacific were mixed on Friday, as China released data showing that food inflation soared in July. Japan’s economy grew more than expected in the period from April to June. Meanwhile, the People’s Bank of China fixed its midpoint for the yuan at 7.0136 against the dollar on Friday — the second time this week it was set weaker than 7.

Shanghai’s bourse asks banks, bondholders to cut debtors some slack to ensure financial stability through China’s 70th birthday
In an August 5 meeting with creditors and bondholders, the Shanghai Stock Exchange (SSE) asked lenders to give Hawtai Motor Group until after October 1 to repay up to 1 billion yuan in owed payment

The Mideast has oil, China has rare earths
The trade conflict between China and the United States has already resulted in the impositions of punitive tariffs on hundreds of billions of dollars’ worth of goods. So long as this situation remains unresolved, China could explore the option of halting its rare earths exports to the U.S.

Explainer: How does China manage the yuan, and what is its real value?
Monthly data shows that at the end of June, the yuan’s REER was 4.9% above its average for the past 10 years and 13.4% above its 15-year average. In comparison, the dollar’s REER was 11.2% above its 10-year average and 10.3% above its 15-year average. “The real effective exchange rate is one benchmark, and on that measure the yuan looks fairly valued at the moment,” said Julian Evans-Pritchard, senior China economist at Capital Economics in Singapore.

China’s Currency Devaluation Will Hurt China More Than It Hurts The United States
What China did this week is the strongest counteraction it has taken so far in its ongoing trade war. It might have achieved the desired effect of causing market panic, but it will end up hurting China the most.

China’s household debt has grown so much that trade war stimulus is largely ineffective, study shows
Chinese consumer debt-to-income ratio rose to 92 per cent at the end of last year, up from only 30 per cent in 2008, according to the Institute of International Finance The ratio is higher than the 86 per cent in Germany and close to the levels of 97 per cent in the United States and 100 per cent in Japan

China’s soft market turns brutal for domestic brands
But none of the new models has generated meaningful volume. Geely sales fell 24 percent to 91,375 in July. Most domestic Chinese carmakers, spurred by generous government subsidies, have invested heavily to launch electrified vehicles in the past few years. It has turned out to be an ill-conceived strategy. On June 25, Beijing finished slashing subsidies by more than 50 percent for EVs and plug-in hybrids. The move instantly chilled demand for those vehicles. In July, sales of EVs and plug-in hybrids at BYD Co., China’s largest electrified vehicle maker, dropped for the first time this year, declining 12 percent from a year earlier. Another major domestic EV maker, Jianghuai Automobile Co., had its EV sales plunge 66 percent last month.

Merkel’s crisis: Germany slips into economic meltdown as US-China trade war escalates
GERMANY is in the midst of an economic meltdown due to the trade war between the US and China, with a top economist from Berlin urging Chancellor Angela Merkel to give the go ahead to a rapid reinvestment programme to save the nation.“And the reason here is that a lot of the industrial companies in China and the Asian suppliers are using German machinery and equipment

Wharf Holdings warns China’s stringent property curbs could weigh on future profit
The company’s underlying profit fell 12 per cent in the first half to HK$2.24 billion from HK$2.53 billion a year earlier

How does the great firewall of China work?
China’s internet is only connected to the worldwide web through a few servers, which are closely monitored by the state. And Chinese platforms scrutinize uploaded content in real time.

Why was Xiaohongshu Pulled from China’s App Stores?
This week, major media outlets have been reporting that China’s most popular social community app Xiaohongshu was pulled from Android app stores

Why was Xiaohongshu Pulled from China’s App Stores?

Huawei’s Hongmeng may not replace Android on smartphones after all
Huawei on Friday unveiled its long-awaited self-developed operating system HarmonyOS on its smart television product, but it may not be an Android alternative as previously rumored. : HarmonyOS, also known as Hongmeng OS, was deemed to be Huawei’s alternative to Google’s Android after the Chinese firm was cut off from US technology. The debut of the operating system was on Huawei’s TV set, but it is not yet available on smartphones

Huawei’s Hongmeng may not replace Android on smartphones after all

This Chinese billionaire built AI that helps Samsung, Huawei phones take better photos
Michael Deng’s software company, ArcSoft, sharpened its focus on mobile photography in 2004 That bet has paid off amid the rapid global growth of mobile phone users, who are estimated to surpass 5 billion this year

China reportedly will continue to allow hardwood imports
U.S. hardwoods are not on list of agricultural products Chinese government wants to halt in retaliation for latest tariffs

China reportedly will continue to allow hardwood imports

Donald Trump’s ‘real threat’ of Vietnam tariffs sends ripples of anxiety through Southeast Asian nation
The US president is keen to narrow America’s trade deficit and stop illegal transshipments from China looking to avoid trade war tariffs Vietnamese authorities are cracking down on illicit tariff dodging behaviour, but exporters worry that a ‘small batch could ruin it for everyone’

Belt And Road Initiative: Geopolitics, Opportunities And Challenges For Regional Integration – OpEd
The growing influence of regionalism will help countries like China and Russia to integrate the Eurasian region. Sharing according to their economic power and mutual strenuous efforts will serve common objectives. Verily, the biggest contribution of this new silk route will be the formulation of a global economic system and it will definitely change the narrative of the world-system. Improved infrastructural development and regional connectivity, fortifying the economic cooperation, increasing interactions between local governments with effective communication channels, new political and diplomatic ties could be ameliorated between member countries under the domain of Belt and Road Initiative. The advancement in communication, 5G-technology and automation system could assist to improve regional connectivity and economic integration.

Belt And Road Initiative: Geopolitics, Opportunities And Challenges For Regional Integration – OpEd

Eastern China on red alert as super typhoon Lekima approaches
Weather bureau says Lekima is strongest typhoon since 2014 Authorities batten down hatches with travel restrictions and preparations for heavy rain

China says US is using ‘gangster logic’ after Washington calls Beijing a ‘thuggish regime’
Foreign ministry commissioner’s office in Hong Kong also calls comments by a US State Department spokeswoman ‘blatant slander against China’ Morgan Ortagus had accused the Chinese government of being behind the leak of a US diplomat’s personal details after she met pro-democracy activists

Here is where the next revolution may take place in Hong Kong
Locking up troublemakers and throwing away the key would only breed revolutionaries Political reform that gives our young a sense of ownership must be part of the solution

Hong Kong must pull back from the abyss and avoid a bloody ending or it may never recover
Hong Kong must not play into the hands of those who want it to burn, as it could lose its status as a financial centre and slip into a devastating recession, shunned by mainlanders and the international business community

Hong Kong police warn North Point violence will not be tolerated
Close-knit Fujianese community in city passes on message to “mainland brothers” said to be on their way for Sunday protest march Online posts and video clips calling on Fujian natives to fight Hong Kong demonstrators at North Point this weekend have spread rapidly

Hong Kong protests: How badly has tourism been affected?
Protesters in Hong Kong have begun a three-day sit-in at the city’s international airport – a day after the US warned citizens to “exercise increased caution” when travelling there.

China and Japan revive ‘big picture’ vice-ministerial dialogue after seven years
Senior Chinese and Japanese foreign officials will meet in Tokyo to resume talks that played vital role in diplomacy between Asian rivals

The U.S. Recently Erected a New Hurdle to U.S.-China Academic Cooperation. Here’s What It Might Mean
However, a recent move by the U.S. Department of Commerce reminds us that academic relationships are not immune from the effects of deteriorating U.S.-China relations. In April 2019, the Department includedseveral Chinese universities on its Unverified List (UVL)—most notably, Renmin and Tongji Universities, prestigious, highly ranked schools with many ties abroad. While being placed on the UVL is not the most serious action the U.S. government can take against a Chinese university, the UVL episode illustrates some of the obstacles facing deeper U.S.-Chinese academic cooperation in the future. Such cooperation will not likely come to an immediate, screeching halt because of the designation, but it is easy to imagine that there may be longer-term, more subtle effects as U.S. universities begin to think twice about working with their Chinese counterparts.

US flexes military muscle in South China Sea with nuclear aircraft carrier port call in the Philippines
Washington and Manila use visit to bang drum for community and military ties Analyst expects stopover to prompt show of military might from Beijing

How could China hit back if Japan or South Korea sign up to US missile plan?
Beijing has promised to retaliate to missile deployment in its backyard – but it also needs to win friends in its trade war with the Washington

Beijing woos Taiwan hearts and minds with ‘paid’ news
Mainland authorities have paid at least five Taiwanese media groups for coverage in various publications and on television, in an effort to win hearts and minds on the self-ruled island as part of Beijing’s reunification agenda.

Alain Gillard
Information Officer
Service Asie Pacifique
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