Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – December 14, 2021

China urged to cut interest rates, boost infrastructure spending to hit 5 per cent GDP growth next year
Policymakers should use interest rate policy tools earlier rather than later and alleviate the private sector’s debt burdens with lower rates. The advise came from Zhang Bin and Zhu He, research fellows at influential China Finance 40 Forum think tank

Dangers for China in the EU drive for strategic autonomy: analyst
Beijing has supported the bloc’s for a more united and independent global profile. But there are economic and geopolitical risks as well as rewards for China, researcher says

China puts forex markets under microscope as yuan rallies and capital outflow poses ‘major risks’
Domestic economic slowdown and tensions with the West threaten to reduce China’s attractiveness to foreign investors and trigger an exodus of hot money    State forex regulator reiterates the importance of ensuring the safety, liquidity and value of China’s US$3.2 trillion worth of forex reserves. On Tuesday, SAFE granted approval for the Bank of China, one of the country’s Big Four state-owned banks, to open up a foreign exchange “green channel” during the 2022 Winter Olympics.  Beijing, which tries to project a positive image to the rest of the world, will simplify procedures for individual forex transactions and help foreign institutions open accounts during the sports gala. Meanwhile, it has vowed to make it more convenient for tourists to use mobile payment tools. This is in line with the central bank’s plan to let people use the digital yuan at the Winter Games, which take place from February 4-20, despite a diplomatic boycott by the US, Canada and Australia.

Evergrande’s boss forced to sell an additional 277.8 million shares as China’s government says it’s not bailing the property giant out
Evergrande billionaire Hui Ka Yan was forced to give up an additional 2% of his stake in the property giant last week. The sale of 277.8 million pledged shares was due to forced selling by a third party.
The forced sales cut Evergrande chairman Hui Ka Yan’s stake in the company from 61.88% to 59.78%. According to Bloomberg calculations, the shares were worth around HK$498 million (US$64 million).

Will China’s Regulatory ‘Great Wall’ Hamper AI Ambitions?
Beijing is taking a legal sledgehammer to the AI industry – at the expense of its own tech companies.   Neither the DSL nor PIPL constrains data collection by China’s state security apparatus – only internet and data companies. But it’s not clear to what extent state security offices rely on data collected data in-house or outsourced to these firms. If public security bureaus have immediate and unfiltered access to the collection platforms operated by private companies, as has been claimed about Huawei 5G platforms and Lenovo computers, then the government would have little incentive to spare Chinese AI companies from stringent restrictions on data collection.    But, because of their special relationship with the state, it’s possible that China’s internet companies will benefit from data collected and provided by Chinese security services to continue their AI development. Under the auspices of China’s national security and cybersecurity laws, Chinese businesses are compelled to work with the state’s security apparatus. Companies that handle data related to “national security” are further required to allow the Ministry of State Security access to their companies’ servers. Even if Baidu, Alibaba, and Tencent face data collection limitations, they could theoretically continue to rely on data provided by Chinese security services to fine-tune their AI products.
Although it’s not clear how exactly China’s large internet companies may be affected by new regulations on data and algorithms, the composition of China’s private tech industry will be fundamentally altered. The DSL and PIPL will make it substantially harder for existing businesses to continue operating with the same degree of autonomy they had enjoyed in the past, and may create steep barriers for new players hoping to enter China’s tech market.

US-China tech war: Washington blocks Chinese fund’s US$1.4 billion takeover of South Korean chip maker
The move by CFIUS is a further blow to China’s efforts to acquire semiconductor technologies and production capabilities    Wise Road Capital has emerged as an active Chinese buyout fund in the chip sector, raising eyebrows as it snapped up assets around the world

Here are the 10 U.S.-listed Chinese stocks with the greatest American ownership — and Alibaba’s not one of them
Rising political pressure from both Beijing and Washington means more Chinese companies may need to delist from the U.S. and move to Hong Kong.  But most of the affected stocks have low levels of U.S. ownership, according to a Morgan Stanley report published Dec. 9. Those with a higher share of American ownership don’t include well-known names like Alibaba, according to the report.

China’s smart health care plan can unlock its economic future
Getting it right will boost consumption across all generations   When it comes to China, the dominance of its state sector in areas like finance, debt-infused infrastructure and housing-led growth gets lots of attention for how these inhibit entrepreneurialism. December’s Central Economic Work Conference meanwhile highlighted that China’s economy faces triple pressures in demand shrinking, supply shocks and weakening expectations.   Health care spending in China is expected to increase from less than 5% of gross domestic product to over 10% by midcentury. As the country’s roaring economy otherwise slows down, health care and biotech offer growth worth hundreds of billions of dollars as so many workers — Mao’s children — retire and need looking after over the next 20 years. The success or failure of China’s new Smart Health Care Industry Development Action Plan, whose three parts are a guiding ideology, basic principles and a development vision, will be deterministic therein. So will its potential for generating broader technological spillovers for the economy in the process.  The first part, unsurprisingly, relates to Xi Jinping Thought. The second states that the needs of China’s now burgeoning retiree pool should be met by upgrades to the supply of related products and services and should meet both health and pension needs. The third sets out a more detailed vision of how China plans to adopt technology to sustainably cater to millions of rich and poor elders while continuing to realize longer-term national development goals.   China’s high household savings rate has been associated with everything from Donald Trump’s trade-hinged political agenda to China’s skewed birth ratio in favor of boys. Families with a son are found to save disproportionately. But it is far more directly associated with precautionary savings to cover the inhibitive cost of health care.    As China’s growth slows, and world economy becomes more fragmented and the number of retirees in China explodes, the cost and accessibility of health care in China will be fundamental not only to China’s push for innovation-led growth but even to diminishing global imbalances. Progress and incentivization of China’s new Smart Health Care Industry Development Action Plan is worth watching.

Can Vietnam Become the Next China?
The luxury industry has pursued every opportunity in China’s high-growth market. Yet, thus far, it has ignored this other market in the Asia-Pacific region.  In 2020, Vietnam was the top-performing economy in Asia, beating China. Vietnam’s middle-class population has expanded massively over the past few years. And Nielsen forecasts that Vietnam’s middle-class population will climb to 95 million by 2030.   The luxury sector should benefit from the signing of 2019’s EU-Vietnam trade agreement, which removed 99 percent of tariffs and reduced many regulatory barriers.

BMW to make X5 SUVs in China, expanding its model lineup to fend off electric cars in the world’s largest vehicle market
BMW will add the X5 to the lineup of vehicles it makes with its Brilliance China Automotive Holdings venture in Shenyang   The Shenyang-made X5 will cater to the tastes and preferences of Chinese customers, including a long-wheel concept for them to be chauffeur driven

HSBC to cut coal financing by half by 2030 as it eyes 2050 net zero carbon emission goal
HSBC plans to slash lending to coal projects by at least 25 per cent by 2025 and will increase it to 50 per cent by 2030 from last year’s level     The UK-based lender said in March it would phase out financing for coal related projects in the EU and OECD by 2030, and the rest of the world by 2040

China’s Richest Getting Richer Yet Face Aging, Transition
It was a good year for China’s richest 100 on the Forbes China Rich List unveiled in November. Overall, China’s 100 Richest saw their collective net worth rise to $1.48 trillion from $1.33 trillion a year earlier.  Mainland China is second only to the United States in its number of billionaires.  
What’s next for this powerful group? I recently exchanged with Emily Zhao, founder of Zhanrui Family Business Service Center in Shanghai. Zhanrui coaches family businesses in China, provides inheritance planning help, and manages funds  Finally, I think family business structures will necessarily evolve in a healthy way. China’s private sector boom started later than overseas, and most mainland companies born after the 1980s have not yet established a complete family business management system. Many businesses haven’t navigated family transitions. Failed business and investment strategies and risk controls can wipe out the hard work of a founder. Company job assignments, decision-making power and the rules for managing those need to be addressed. One case I’ve looked at is the “Lee Kum Kee” family of Hong Kong, which is a member of the Forbes Hong Kong List. The family has done particularly well with a strict “family charter” to help. The Lee case tells us that family wealth can only continue to accumulate if a comprehensive family governance policy is formulated and the founders set suitable family succession programs.

The US is not responsible for China’s rise
You will have seen it play out on the news so often as to become cliché. A bereaved person embarks on a crusade against whichever disease, crime or public safety hazard claimed their loved one. A campaign is set up. Donations roll in. What motivates their efforts is a sincere desire to spare others from the same grief. But so does a deep psychic need to claw back control. Having been done to and acted upon by a capricious world, the feeling of agency, however brief, soothes them.
Nations too have losses to process. Whether or not China ever surpasses it, the US has been bereaved of its 1990s unipolarity. It copes with the trauma by dwelling on what could have been done about it. If only China had not been waved into the World Trade Organization 20 Decembers ago. If only successive White Houses had not been so credulous in their dealings with Beijing. The recriminations go back to 1949, when, as some Republicans still fancy, the US “lost” China to communism.

CEO of China’s top mobile phone chip designer expresses relief firm has survived parent’s debt crisis
Unisoc CEO Chu Qing said in a speech that the debt crisis of its parent company had created ‘many troubles’ for the chip designer     Chu’s comments came after Unigroup said a consortium formed by Wise Road Capital and JAC Capital had emerged as strategic investors

Blinken’s trip aims to boost U.S. ties with Southeast Asia amid rising tensions with China, says expert
U.S. Secretary of State Antony Blinken’s trip to Southeast Asia is significant as it sends a strong signal that Washington is keen to strengthen relations with the region at a time of growing tensions with China, according to an expert from a think tank.  Simon Tay, chairman of Singapore Institute of International Affairs, said Blinken’s swing through the region this week “must be seen clearly in the context of the Sino-American competition.”   Blinken also criticized China’s aggression in the South China Sea, noting it threatened more than $3 trillion in annual trade and is a cause of growing concern.

Xi and Putin to put on show of unity after Russia and China left out of Biden’s democracy summit
Chinese President Xi Jinping will hold a virtual meeting with Russian counterpart Vladimir Putin on Wednesday, their second virtual discussion this year     Both countries face criticism and pressure from the West, but observers say presenting a united front would signal to the US in particular they are aligned

Slovakia’s Growing Ties With Taiwan Signal Discontent With China in Central and Eastern Europe
On its own, a Slovak delegation’s recent trip to Taipei might not spark alarm in Beijing. But it’s part of a larger trend of disillusionment in the CEE region   This regional criticism of Beijing has only grown more pronounced in 2021, as China’s rising authoritarianism and perceived poor handling of the COVID-19 pandemic have soured opinions of the People’s Republic across Europe. In February of this year, China sought to bolster its position in Europe by having General Secretary Xi Jinping lead the 2021 17+1 Leader’s Summit, a task typically handled by Prime Minister Li Keqiang. Despite this grand gesture, the leaders of six 17+1 member states – Bulgaria, Estonia, Latvia, Lithuania, Romania, and Slovenia – opted to skip the meeting, despite the virtual format, in what was widely interpreted as a rebuke of the initiative.    Then, in May 2021, Lithuania delivered another significant blow to the 17+1, officially withdrawing from the grouping and subsequently expanding ties with Taiwan. In justifying the move, Lithuanian leaders argued that the arrangement had proven to be ineffective and unproductive. Building on this, Lithuanian Foreign Minister Gabrielius Landsbergis urged other EU states to pull out of the initiative, arguing that “the EU is strongest when all 27 member states act together.” While Beijing has forcefully criticized this decision – going so far as to sever all trade links with Lithuania – Vilnius has thus far been undeterred. Though the PRC retains several staunch CEE supporters such as Hungary and Serbia, its fortunes in the region seem to be diminishing.
As these recent developments have demonstrated, the Slovak delegation to Taiwan is no isolated incident. Rather, it appears to be the latest display of rising discontent with Chinese policy in Central and Eastern Europe. For Taiwan, the visit presents numerous opportunities, allowing Taipei to make critical inroads in a region long dominated by its cross-strait rival. For the PRC, however, Slovakia’s outreach to Taiwan represents a significant blow to its European aspirations, suggesting that the 17+1 initiative may no longer be an effective means of exerting influence in the CEE region

China’s Xi is set to meet Russia’s Putin virtually on Wednesday
Chinese President Xi Jinping is set to meet virtually with Russian President Vladimir Putin on Wednesday, China’s Ministry of Foreign Affairs said Monday.    The U.S. and other G-7 leaders issued a statement Sunday condemning “Russia’s military build-up and aggressive rhetoric towards Ukraine.”

How much does the diplomatic boycott of Beijing 2022 matter?
Protesters have targeted the International Olympic Committee (IOC) over the Games
While concern over human rights has become almost a constant theme in international sport in recent years, few hosts of major events have provoked quite as much controversy as Beijing.

Hong Kong elections: How China reshaped the cityClose
Hong Kong’s unique freedoms have been removed one by one by Beijing through a national security law and an electoral “patriots” rule.   Ahead of the Legislative Council (Legco) elections on 19 December, and as more people have been sentenced to jail, we explain how Hong Kong’s global identity has changed forever.

Coronavirus: traffic in and out of southern Chinese town halted after travellers test positive
A woman and a man in their 30s travelled together to the town of Dalang in Dongguan from Shenzhen airport on December 4    On Tuesday, China’s National Health Commission reported 51 new local symptomatic cases – all but seven were identified in Zhejiang province

China’s first floating nuclear reactor may withstand once-in-10,000-years weather event, engineers say
Testing at a simulation facility found it could endure hurricane force winds, but its mooring crane would need strengthening      The 60-megawatt station is being built to power oil rigs and islands off the east coast in the Bohai Sea

Alain Gillard
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