Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – December 3, 2021

China: The state asserts
State-driven policies will seek to rectify perceived economic excesses. China understands the importance of free market up to a certain degree, as also the long-term detrimental impacts of market failures create even more governance challenges in the long run. As a result, the stance of monetary policy in 2022 will likely remain neutral even though economic growth will decelerate further ahead alongside a consolidating property market. Monetary policy should not be run contradicting to deleveraging goal. Overall property prices will likely consolidate further next year.
There are intelligent policy/institutions designs that safeguard the long- term stability of Germany that are consistent with China’s “common prosperity” ideology.   There are reasons why the German model has strong appeals to China. First, the financial system is dominated by state banks, with credit union and commercial banks coexisting. Second, the manufacturing sector in Germany is much bigger than the banking/financial sector. Third, Germany is an export-led economy similar to the Great Bay Area in Guangdong. Based on our understanding, China increasingly views predominance of financial sector in an economy is a result of excessive expansion of capital. Since the Global Financial Crisis, the share of finance as percentage of GDP rose from 4.0% in 2006 to 8.3% in 2020. As a result, the long-term goal is to “scale down the relative importance of services sector (financial Sector in particular), and upsize the economic contribution of manufacturing.”
https://www.financialexpress.com/opinion/china-the-state-asserts/2380943/

Nvidia’s $40 billion Arm acquisition is now ‘highly unlikely’ to go through, analyst says
The deal is facing an increasing number of regulatory probes.  “I believe it’s highly unlikely it will go through,” Gartner chip analyst Alan Priestley told CNBC.    The deal was set to be completed by March 2022 but Nvidia CEO Jensen Huang admitted in August that it would probably go beyond that date.
https://www.cnbc.com/2021/12/03/nvidias-arm-acquisition-highly-unlikely-to-go-through-analyst-says.html

Tesla says it needs graphite from China for batteries, requests tariff waiver
Tariffs levied during the Trump administration’s trade war with China are contributing to automotive price increases — especially since temporary exclusions to some of those tariffs were allowed to expire in late 2020 or early this year.   Tesla and SK Innovation both requested a waiver on tariffs for graphite, which is used in the anode component of lithium-ion batteries in electric cars.   The outpouring of industry pleas could spur the Biden administration to reinstate government exclusions on 25% tariffs on
https://www.cnbc.com/2021/12/02/tesla-seeks-tariff-exemption-for-graphite-from-china-for-batteries.html

Huawei next to move into EV market
Embattled Chinese telecoms giant Huawei intends to develop a luxury electric SUV in conjunction with car manufacturing partner Seres, reports the South China Morning Post. The SUV will be the initial model under the premium smart electric vehicle (EV) brand AITO, which was launched by Seres on Thursday. It will come fitted with Huawei’s Harmony OS cockpit system.
https://chinaeconomicreview.com/huawei-next-to-move-into-ev-market/

Boeing 737 MAX cleared to fly in China again
Chinese authorities have approved the Boeing 737 MAX to resume service after making a series of safety adjustments, removing a major uncertainty surrounding the American aviation giant’s comeback after a lengthy slump.
https://news.rthk.hk/rthk/en/component/k2/1622617-20211203.htm

TSMC Begins Pilot Production of 3nm Chips: Report
Taiwan Semiconductor Manufacturing Co. has started risk production of chips using its N3 (3 nm-class) fabrication process, two reports from Taiwan read. As usual, it will take the contract maker of chips and its partners several quarters to polish off the technology and designs before both enter high-volume manufacturing (HVM).   TSMC initiated pilot production of N3 chips at its Fab 18 at the Southern Taiwan Science Park near Tainan, according to reports from DigiTimes and TechTaiwan. HVM of chips using the new node will commence in the second half of the year, but since cycle time for the new process is over 100 days, the first N3 chips made by TSMC will ship in early 2023.
https://www.tomshardware.com/news/tsmc-begins-pilot-production-of-3nm-chips

TSMC urges U.S. to include foreign firms in chip industry support
Comments come as Intel CEO says Washington should prioritize domestic players  Shutting foreign chipmakers out of a planned subsidy program would have an “adverse” impact on the U.S. chip industry, the head of Taiwan Semiconductor Manufacturing said on Friday, following remarks by Intel that Washington should prioritize investment in American players. Mark Liu, chairman of the world’s largest contract chipmaker, said the $52 billion package that Washington is preparing in order to boost the semiconductor industry under the CHIPS Act should be used to support both foreign and domestic players.   “If the U.S. CHIPS act is only for U.S.-based companies, that will be adverse to the development of America to restore its chip supply chain,” Liu told reporters. “Except for Intel, I believe most of our industry peers embrace openness and welcome all the investments in the U.S.”
https://asia.nikkei.com/Business/Tech/Semiconductors/TSMC-urges-U.S.-to-include-foreign-firms-in-chip-industry-support

China’s Internet Billionaires Suffer $73 Billion Wipeout As Economy Slows And Government Cracks Down
The fortunes of China’s richest Internet billionaires are still getting slammed, with four of the country’s best-known tycoons–Colin HuangJack MaPony Ma, and Wang Xing—losing more than $73 billion from their combined net worth since April, when Forbes published this year’s World’s Billionaires List.
https://www.forbes.com/sites/ywang/2021/12/03/chinas-internet-billionaires-suffer-73-billion-wipeout-as-economy-slows-and-government-cracks-down/

Evergrande looks to restructure offshore debt in talks with creditors
Provincial officials speak with chairman, agree to send in risk management team  Local Chinese authorities on Friday announced they would send a team of risk managers to China Evergrande Group as the troubled property giant said it would work with creditors on a plan for restructuring its offshore debt. Authorities agreed with debt-laden Evergrande’s request to send a working group to the company. The team will reportedly help bolster risk management and internal controls. Evergrande said in filing Friday that it had received a demand to perform an obligation tied to a guarantee of $260 million. The company said it many not have enough funds to cover the liability.  The People’s Bank of China, the central bank, announced Friday that it is working with the Guangdong government, together with relevant agencies, to resolve the Evergrande situation.   “We believe that administrative offices both domestic and foreign will handle matters in a fair and equitable manner in accordance with the law,” said a spokesperson from the China Banking and Insurance Regulatory Commission.
https://asia.nikkei.com/Business/Markets/China-debt-crunch/Evergrande-looks-to-restructure-offshore-debt-in-talks-with-creditors

China Evergrande gets $260 mln demand, warns of non-payment
Indebted real estate developer China Evergrande has got a demand under a $260 million guarantee obligation, the company said on Friday, adding it may be unable to repay due to a liquidity crisis that has gripped China’s property sector.    Repayment dates under certain other agreements may be pulled forward if it was unable to meet the obligation, the company warned in a filing to the Hong Kong stock exchange
https://finance.yahoo.com/news/1-china-evergrande-gets-260-124742737.html

Debt-laden developer China Aoyuan tumbles after failing to meet US$651 million of payment demands triggered by ratings downgrades
The cash-strapped developer said there is ‘no guarantee it will be able to meet its other financial obligations’    The non-payments may trigger other creditors to request accelerated debt repayment, as permitted under agreements entered into by the company
https://www.msn.com/en-xl/money/other/debt-laden-developer-china-aoyuan-tumbles-after-failing-to-meet-us-651-million-of-payment-demands-triggered-by-ratings-downgrades/ar-AARp3xr

China wants to turn Macau from a casino den into a tech base for the Greater Bay Area
The tech-themed Beyond Expo saw hundreds of mainland tech investors and executives cross the border to discuss their visions for Macau     Gambling contributed over half of the city’s US$54 billion GDP pre-pandemic and generated 80 per cent of government tax revenue
https://www.msn.com/en-xl/news/other/china-wants-to-turn-macau-from-a-casino-den-into-a-tech-base-for-the-greater-bay-area/ar-AARqOnL

Hong Kong eyes bigger role, market as it helps Hainan with free-trade port development
Hong Kong needs to expand its manufacturing and services capacity and market by enhancing cooperation with Hainan, says former city leader CY Leung   Some 78 per cent of offshore investment into Hainan was from Hong Kong, as the city’s businesses seek new connection points to mainland consumers and wider market
https://www.msn.com/en-xl/money/other/hong-kong-eyes-bigger-role-market-as-it-helps-hainan-with-free-trade-port-development/ar-AARpaEb

Asia-Pacific stocks mixed; Chinese tech stocks in Hong Kong drop after Didi delisting plans
Chinese tech stocks in Hong Kong plunged after ride-hailing giant Didi announced Friday on social media platform Weibo that it will begin taking steps to delist from the New York Stock Exchange.   Stocks around the world have been swinging wildly between gains and losses for much of this week as uncertainty remains around the economic impact of the recently discovered omicron variant.
https://www.cnbc.com/2021/12/03/asia-markets-omicron-covid-variant-currencies-oil.html

China app giant Didi plans US stock market exit in move to Hong Kong
Didi’s IPO was the biggest listing in the US by a Chinese company since Alibaba’s debut in 2014
Chinese ride-hailing giant Didi Global has announced plans to take its shares off the New York Stock Exchange (NYSE) and move its listing to Hong Kong.
https://www.bbc.com/news/business-59514800

Didi’s US exit shows Xi is the ultimate arbiter for China’s companies
US politicians have been firing pop guns at China Inc for years. On Friday, Xi Jinping responded with a bazooka, making it clear that while Chinese companies listed in the US irked Democrats and Republicans, they enraged the Communist party. Didi Chuxing’s announcement that it will retreat from the New York Stock Exchange and list in Hong Kong following a regulatory crackdown from Beijing has made it clear that the Chinese president — not US politicians or even the market — will be the ultimate arbiter of where China’s corporate champions go public.  Chinese officials have long worried that the country’s stock markets would be “doomed”, in the words of one senior party official, if they could not attract its best companies. Didi’s announcement is a clear sign that the party is done with worrying and is finally prepared to act.
https://tinyurl.com/mpvvyuv

China’s economic growth is ‘biggest challenge’ for Beijing in 2022, senior adviser warns
Yang Weimin suggests that Beijing’s policymakers could rally more supportive policies to address economic deterioration and rising external challenges  Headwinds facing world’s second-largest economy include new Omicron variant, financial risks resulting from Evergrande debt crisis and trade relations with US
https://www.msn.com/en-xl/money/other/china-s-economic-growth-is-biggest-challenge-for-beijing-in-2022-senior-adviser-warns/ar-AARowPA

China Is Racing Ahead to Lock in Asian Trade. Time to Worry.
The world’s largest trade agreement is set to enter into force on Jan. 1, 2022, with China—not the U.S.—at its helm. If the Biden administration isn’t panicked yet, it should be. China’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, earlier this fall was a blow to U.S. interests in the Indo-Pacific region. But the entry into force of the Regional Cooperation Economic Partnership, or RCEP, a trade deal among 15 countries covering nearly a third of global gross domestic product, 53% of the world’s exports, and 2.3 billion people that orbits around China’s economy, is just as bad.  The entry into force of RCEP poses significant concerns for the U.S. Commercially, U.S. manufacturers and workers all stand to lose from the deal. U.S. agriculture also will become less competitive in Asia compared with its Australian and Japanese competitors. The common RCEP rules of origin will incentivize the use of Chinese components throughout ASEAN and lead to a deepening of Chinese-linked supply chains, which could scuttle the Biden administration’s diplomatic and economic supply-chain efforts in the region.  The most obvious answer, unfortunately, is also the most politically challenging: The U.S. should rejoin the CPTPP. Despite its baggage, it isn’t clear that CPTPP is as much of a political nonstarter as the administration seems to believe. The politics that torpedoed its predecessor, TPP, in 2017 have changed, along with the overwhelming national security and economic justifications for an Indo-Pacific deal that keeps China out of a U.S.-led Pacific. Congress’ original objections largely have been overcome by events. And, despite having campaigned against it, even President Donald Trump toyed with the idea of getting back in with acceptable changes—I was in the room when we discussed it.  Today, the U.S. would need to negotiate improvements to provisions on labor, the environment, automotive rules of origin, state-owned enterprises, and intellectual-property rights to survive a congressional vote. Admittedly, it may not be easy for CPTPP in any form to pass a Democratic-controlled Congress, including with progressive priorities, but that’s exactly why trade requires presidential leadership. As to whether CPTPP countries would be open to improving the text, my sense is they would embrace it if it meant bringing the U.S. back into the region as a counterweight to China. Whatever the administration decides, America needs an offensive and meaningful economic agenda for the Indo-Pacific. RCEP’s entry into force on Jan. 1 is a significant blow to U.S. interests and only reinforces the point that continuing to focus exclusively on domestic industrial policy is not an effective strategy for countering China’s growing influence in the region.
https://www.barrons.com/articles/salesforce-earnings-price-target-changes-51638365238

China’s largest online travel platform Trip.com to focus on domestic bookings as Covid-19 disrupts outbound tours, chairman says
China’s outbound tourism had been booming before Covid-19, with 155 million Chinese travelling abroad in 2019   Trip.com’s major competitor, Tongcheng-Elong, reported a 1.3 per cent year on year rise in revenue for the third quarter, while profits fell 8.7 per cent
https://www.msn.com/en-xl/news/other/china-s-largest-online-travel-platform-tripcom-to-focus-on-domestic-bookings-as-covid-19-disrupts-outbound-tours-chairman-says/ar-AARpcUm

US, EU concerned by China’s ‘problematic and unilateral actions’ at sea
The United States and European Union on Thursday (2 December) voiced strong concern at China’s “problematic and unilateral actions” in the South China Sea and stressed the need for close contact to manage “competition and systemic rivalry” with Beijing.
https://www.euractiv.com/section/global-europe/news/us-eu-concerned-by-chinas-problematic-and-unilateral-actions-at-sea/

podcast : Chinese disinformation and propaganda efforts in Europe, with Ivana Karásková
In this episode of our EU-China podcast series, we look at how China spreads disinformation in Europe. We explore patterns in China’s disinformation and propaganda operations, evaluate how effective they are and what has the EU been doing to address this challenge.
https://merics.org/en/podcast/chinese-disinformation-and-propaganda-efforts-europe-ivana-karaskova

20 Brookings Foreign Policy books for 2021
As 2021 draws to a close — the first year of the Biden administration, and second year of the COVID-19 pandemic — there are no shortage of questions about the future of international order, foreign policy, and American democracy. But a slew of insightful books from Brookings Foreign Policy experts published this year can help us better understand where we stand and where we may be headed.
https://www.brookings.edu/blog/order-from-chaos/2021/12/02/20-brookings-foreign-policy-books-for-2021/

How Chinese Women Embraced a Fuzzier Definition of Family
Chinese animal owners like to joke about being “slaves” to their pets. The truth is, we’re all slaves to intimacy.
https://www.sixthtone.com/news/1009113/

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