Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – February 11, 2022

China’s social credit score – untangling myth from reality
The idea that China gives every citizen a “social credit score” continues to capture the horrified imagination of many. But it is more bogeyman than reality. Instead, we should be worrying about other, more invasive surveillance practices – and not just in China  So, what are the facts relating to China’s Social Credit System (SoCS)? First, a system does exist, but it is very different from what is imagined by many critics outside China. The biggest disconnect is around the notion of scores. Some commentators seem to imagine that a magic algorithm draws from AI cameras and internet surveillance all over the country to calculate a score that determines everyone’s place in society. In reality, the SoCS is not the techno-dystopian nightmare we fear: it is lowly digitalized, highly fragmented, and primarily focuses on businesses. Most importantly, such a score simply does not exist.

China Infrastructure Investment in 2022 – Can it Stimulate Economic Growth?
China infrastructure investment has historically been a key driver of economic growth. In the face of a slowing economy, the government is now hoping infrastructure development can continue to spur growth as it has in the past, despite a rapid deceleration in investment growth over the past decade and the dual priorities of increasing spending and reducing government debt. As the central government holds tight reins on monetary and fiscal policy, financing will mainly go to sustainable infrastructure projects that can help secure the country’s future, such as digitalization, transport, affordable housing, and public sanitation.

China seeks economic, political stability with the ‘vigour of an uncaged tiger’ as loans soar
Chinese banks extended a record monthly high of 3.98 trillion yuan (US$626 billion) in new loans in January, representing a year-on-year increase of 11.5 per cent    It cut two major policy rates last month to reflect mounting pressure for pro-growth measures after the economic growth rate slowed to 4 per cent in the fourth quarter

China’s central bank to keep liquidity ample, step up finance support for key sectors
China’s central bank on Friday (Feb 11) said it would keep liquidity reasonably ample and step up financing support for key sectors and weak links of the economy.    The People’s Bank of China (PBOC) will meet the reasonable financing demands of the real economy while not resorting to flood-like stimulus, it said in its fourth-quarter implementation report.    The world’s second-largest economy has shown signs of slowing after a rapid rebound from the Covid-19 slump, with concerns about the financial health of property developers and the rapid spread of the Omicron variant clouding the outlook.

Revising Taiwan’s GDP forecast due to export growth and strong global demand for semiconductors
Exports are the main strength of Taiwan, and among all export items, integrated circuits have been the sole growth engine. This should continue as the global demand for semiconductors remains strong in 2022. Together with exceptionally strong imports, we are revising our GDP forecast upward

US-China tech war: top Chinese chip maker SMIC to invest record US$5 billion in capacity expansion after profits doubled in 2021
SMIC reported net profits of US$1.7 billion in 2021, more than double the previous year, despite difficulties in developing more advanced chips due to US sanctions    Analysts said hot demand for 5G smartphones, smart vehicles and consumer electronics helped SMIC achieve its record results

China semiconductors/SMIC: longer waits for new cars mean higher profits
China’s largest chipmaker could lack modern know-how and be underneath the yoke of strict US sanctions however Semiconductor Manufacturing Worldwide Company (SMIC) is receiving a shock increase from beforehand considered one of its largest drawbacks. Its record sales last year trace at what to anticipate this 12 months. Revenue from operations quadrupled to $1.4bn final 12 months over the 12 months as its high line rose 39 per cent to a report $5.4bn. SMIC has what the market wants most: the older, low-tech chips broadly utilized in automobiles, cellular community gear and smartphone cameras.  Globally, carmakers themselves can not make sufficient automobiles to satisfy surging demand. Couple that with a increase in electrical automobile gross sales in China, up 160 per cent final 12 months, and Beijing’s push to triple its 5G community protection within the subsequent three years. All of that has stored the worldwide provide of chips as tight as ever.

Xiaomi founder Lei Jun vows to challenge Apple with sharpened focus on the global high-end smartphone market
Lei Jun described competition in the high-end smartphone arena as ‘a war of life and death’, which Xiaomi must overcome to continue growing  The stakes are high for Xiaomi after Apple once again became the world’s top smartphone vendor in the fourth quarter last year

Online fashion giant Shein plans US$2 billion global supply chain base in Chinese port hub
The Chinese retailer with a major following among American consumers is set to expand its supply chain facilities in Guangzhou, a government document shows   The company has found success leveraging China’s manufacturing prowess to serve fast-fashion consumers overseas

Chinese EV maker Xpeng to sell cars in the Netherlands and Sweden, as it expands foray into Europe
Guangzhou-based company will work with Emil Frey in the Netherlands and Billa in Sweden    Xpeng will also open its first self-operated European store in Stockholm this week

Xiaomi leads funding round in high-voltage EV battery startup Chilye
Chilye, a Chinese startup that develops high-voltage battery systems for electric vehicles (EVs), has raised around RMB 100 million ($15.7 million) from a group of investors led by Xiaomi, the latest move of the Chinese smartphone maker joining the EV race.  Why it matters: Leading automakers have been embracing high-voltage battery systems, a technology that enables fewer charging times when using fast chargers and a longer driving range with better energy efficiency and lighter car weight, according to Otmar Bitsche, a director at Porsche’s research unit.

China to keep prices stable in 2022 amid solid efforts
Looking into 2022, China has a solid foundation for stable prices, after prices remained within an appropriate range throughout 2021, experts said.   The moderate increase trend in China’s consumer price index (CPI), a main gauge of inflation, is expected to continue this year, said Liu Zhicheng with the Chinese Academy of Macroeconomic Research, a think tank under the National Development and Reform Commission.  Meanwhile, inflation of the producer price index (PPI), which measures costs for goods at the factory gate, may gradually decline, with more price trends coordination at the upstream and downstream markets, the researcher noted. For the full year of 2021, China’s CPI stood well below the annual target by gaining 0.9 percent, 1.6 percentage points lower than the previous year, official data showed.

Economists say the worst of China’s regulatory crackdown is over
Chinese leaders’ new priority for 2022 is to defend 5% growth, Macquarie’s chief China economist Larry Hu said in a note late Wednesday. That means “peak anti-monopoly, peak property tightening and peak decarbonization are all behind us.”   That does not mean the end of regulation — which has swept across internet technology, real estate and other industries in the last year — but signals fewer major changes ahead, the analysts said.  They pointed to many official statements in the last few months — including the past week — that indicate a softer stance from Beijing.

Chinese developer Zhenro’s stock crashes 81% on debt worries
Asia-Pacific’s fourth-largest junk bond issuer met with a sudden sell-off  The Hong Kong-listed shares of midsize mainland Chinese developer Zhenro Properties Group plunged over 80% at their lowest Friday as concerns grew over the company’s heavy debt load.   The Shanghai-based house builder was the fourth-largest issuer of junk bonds across the Asia-Pacific region in 2021, according to Moody’s Investors Service. It issued over $1 billion, trailing only peers Kaisa Group Holdings and Sunac China Holdings as well as Studio City Finance, a unit of a Macao casino operator.

Asia-Pacific stocks lower as investors react to hot U.S. inflation report
Shares in Asia-Pacific declined in Friday morning trade, tracking losses overnight on Wall Street.
Markets in Japan were closed on Friday for a holiday.  A closely-watched U.S. inflation report released Thursday showed a faster-than-expected rise in prices and lifted the 10-year Treasury yield past 2%.

Too early to buy China’s favourite stocks as ChiNext’s worst performance in Asia vindicates market bears
Kweichow Moutai, Contemporary Amperex Technology and Eve Energy are among the biggest losers this year as key indices slide   The main risks for onshore stock market include a potential capital flight from emerging markets as the Fed tightens policy and the US dollar strengthens

Belt and Road Initiative: China ended coal financing last year, but oil and gas investments tripled, study shows
China’s oil and gas engagements in the 144 belt and road nations tripled to US$10.9 billion last year from US$3.7 billion in 2020, Fudan University report shows    Funding for renewable energy projects declined to US$10 billion last year from US$12.5 billion in 2020

The case for solar energy in the US: it’s the economy, stupid
Biden’s Build Back Better plan, which includes a tax credit for solar installation, must pass into law    Regardless of one’s politics, it should be clear that solar energy will lay the groundwork for a new energy economy and buffer the US against supply chain shocks   Of course, increasing America’s dependence on solar energy also increases its dependence on lithium, the raw material used to manufacture batteries. Chinese entities now control about half of global lithium production and 60 per cent of electric battery production capacity.  But we must remember, lithium-ion is not the holy grail of battery technology. From flow batteries to high-temperature nickel metal hydride batteries, battery technology research is fuelling a revolution that will relegate lithium-ion batteries to history’s footnotes, just like fossil fuels. In fact, there are energy solutions on the horizon that don’t require batteries at all. Researchers at Sandia National Labs are experimenting with thermal energy storage, which uses sunlight to heat up molten salt, which can then be turned into steam to power a turbine. This method mirrors coal energy production, but replaces coal with concentrated sunlight. Given the sheer pace of technological development, it’s clear that we won’t remain dependent on Chinese lithium for long.

China Plays Long Game on C919 Development
Comac now projects the C919 will earn Chinese certification by the end of this year. (Photo: Comac)
In the case of China’s aerospace ambitions, the fable of the tortoise and the hare is instructive. Naysayers have spent almost a decade writing off the chances of the country’s first-ever full-narrowbody-class commercial aircraft, but as 2022 dawns—and despite the disappointment of China Eastern Airlines over delays to the first-ever delivery of the aircraft, expected before the end of 2021—the Commercial Aircraft Corporation of China (Comac) appears on the verge of making the C919 a reality later this year.

Chinese banks fail to comply with FATF regulations
Beijing: Notwithstanding dominance of Chinese banks in the global banking listing, they are failing to comply with the regulations of host countries as well as the Financial Action Task Force (FATF), especially anti-money laundering (AML) controls as they venture abroad.  As per US-based news organization, Financial Post, their weak regulatory standards and failure in compliance are suspected to be misused by criminals and terror outfits for money laundering.   In its report, the Paris-based watchdog, FATF has pointed out several weaknesses in China’s anti-money laundering (AML) and counter-terrorist financing (CTF) regulatory systems. The FATF report noted that both financial and non-financial institutions in China had an incomplete understanding of the risks associated with money laundering and terrorist financing, which undermined the effectiveness of the country’s AML and CTF arrangements. China had four banks among the top 10 banks (asset wise) in 2020, namely the Industrial and Commercial Bank of China (ICBC), China Construction Bank, Agricultural Bank of China (ABC) and Bank of China.   Apart from these, some other Chinese banks also figured in the top 50 banks of the world, namely the Postal Savings Bank of China, China Merchant Bank, China Minsheng Bank, Shanghai

Digital yuan transactions beat out Visa at Winter Olympics venue: report
Many of the National Stadium retailers allowing purchases with China’s CBDC were outside the Olympics’ quarantine bubble for athletes, journalists, and staff.
Chinese developers selling off more London property to raise cash
Different Chinese language builders have defaulted on loans and stopped paying payments on London initiatives as Beijing cracked down on the extremely levered sector. One of many largest initiatives — the Royal Albert Dock improvement owned by Beijing-based Superior Enterprise Park — is on the point of collapse after collectors appointed directors to get better unpaid money owed final week.

Beijing ready to implement harsher Covid lockdown on Hong Kong
Beijing will help “formulate and implement” epidemic-control policies to contain Hong Kong’s largest coronavirus outbreak yet, increasing the chances that harsh lockdown measures routinely enforced on the mainland could soon be extended to the increasingly isolated financial centre.
China’s State Council office responsible for Hong Kong affairs said that officials from the territory would travel “in coming days” to southern Guangdong province for meetings with central and regional health officials. The office added that it was “highly concerned” about the Hong Kong outbreak, which has been stoked by the fast-spreading Omicron variant.

As Omicron spreads, Hong Kong malls stand to lose up to 30 per cent of sales as lockdowns, social distancing curbs crimp footfall
Tougher measures to contain the virus are likely to upend retail sales, which have been rebounding nicely over the past year   Analysts expect dwindling footfall to impact malls across the city, not just in affected locations, as measures bite

Omicron: mass screening as border city reports over half China’s new coronavirus infections
56 new cases reported, including 33 local infections in Baise and 22 cases in Liaoning province    More than 16,000 medical personnel sent to Baise to perform PCR tests, Guangxi regional government organises task force for contact tracing and quarantine

Can-Do: How China’s Canning Industry Preserved Local Tastes
Even today, the country’s canned goods market is dominated by local producers and dishes. You’ve probably heard of Cup Noodles, but what about canned kung pao chicken? To appeal to the country’s overworked, underfed young consumers, Chinese canned food brands have started marketing “meals for one,” a sort of TV dinner for the mandatory overtime era. Inside each can, you’ll find entire dishes, from kung pao chicken to fish-flavored pork.

EU, China set April 1 summit amid tension on trade, geopolitics
European Union and Chinese leaders are set to hold a virtual summit on April 1 after repeated delays, senior EU diplomats told POLITICO on Friday.The meeting is widely seen as a high-stakes diplomatic effort to calm the recently escalating trade and geopolitical tensions between the two, particularly over Lithuania. It will also be held against the background of China’s deepening ties with Russia, which is currently posing the biggest security threat to Europe since the end of the Cold War over what the West says is a likely Russian invasion of Ukraine.   Both Chinese President Xi Jinping and Premier Li Keqiang will join the meeting with Charles Michel and Ursula von der Leyen, presidents of the European Council and European Commission, respectively, according to one of the diplomats.

China bans Lithuanian beef, dairy, alcohol, claiming compliance issues and label tampering
China’s General Administration of Customs claims Lithuania has failed to provide technical documentation on beef products    China has formally downgraded its diplomatic relations with Lithuania after it allowed Taiwan to open a de facto embassy in its capital Vilnius last year

Australia’s ‘substantial trade interest’ pushes Canberra to join EU’s WTO dispute with China over Lithuania curbs
Australia has officially requested to be included in consultations as part of the European Union’s dispute with China over Beijing’s alleged trade curbs on Lithuania      Canada, the United Kingdom and the United States have also requested to be included in the dispute at the World Trade Organization (WTO)

African Opportunities in China-Africa Relations
African countries have the agency to use relations with China to their own advantage. Whether African leaders will use their power to benefit their people is another question.  Effective negotiation tactics and strong development strategies are central to ensuring Africa gains from the new international order. Sophie Harman and William Brown note that the “new scramble for Africa” opens up avenues for African states to capitalize on the opportunities presented by this competition and thereby pursue their own interests. African leaders must make firm, forward-looking decisions and take responsibility for their countries’ growth. China’s interest in Africa is a good opportunity for African nations to promote economic development and lift people out of poverty, and Folashade Soule outlines strategies for African governments to harness this new advantage.

Chinese navy puts fleets through combat-readiness paces
Vessels from three commands tested in separate maritime operations on Wednesday    Drills follow joint exercise in western Pacific by US and Japanese forces

Blinken says confrontation with China is not inevitable
US secretary of state Antony Blinken has said confrontation with China is not inevitable, but underlined that America and its allies must stand up for a rules-based system threatened by Chinese aggression. Mr Blinken spoke shortly before a meeting with the foreign ministers of Australia, India and Japan in Melbourne. The four nations form the so-called “Quad”, a bloc of Indo-Pacific democracies created to counter China’s regional influence. When he was asked by a reporter if a confrontation with China in the Indo-Pacific was inevitable, Mr Blinken replied: “Nothing is inevitable.” “I think we share concerns that in recent years China has been acting more aggressively at home and more aggressively in the region and indeed potentially beyond,” the top US envoy added.   The Quad partners are united by an “affirmative vision for what the future can bring” and a “commitment to defend the rules-based system that we have spent tremendous time and effort building”, he said

Russian aggression towards Ukraine could jeopardise Indo-Pacific stability, says US after Quad meeting
US secretary of state Antony Blinken says Russia’s actions could embolden other countries to pursue military aggression

Despite their warm relations, China and Russia aren’t yet a match made in heaven
For all the talk of bonhomie and cooperation, several sources of tension remain between the two countries       Russia’s threats over Ukraine and activities in Central Asia risk instability in areas where China has significant economic interests

Have India’s actions fuelled closer China-Pakistan ties?
Territorial disputes and historical mistrust between India and Pakistan have over the years pushed the latter closer to China, from trade to defence   But as New Delhi worries over the prospect of a two-front war, analysts say it’s likely Pakistan’s aim is to counter India by ‘keeping the water boiling’ while avoiding a clash

Nixon in China: are there lessons for today’s leaders?
Now the hardliners in Washington say Nixon was misguided. They argue the relationship with China helped its economy too much, and hurt America’s. The Communist party could not have survived into the 21st century, they insist, if the US had not backed China’s integration into the international system. They are dismissive of the joint intelligence relationship aimed against the Soviet Union that unfolded after Nixon left office.    It’s the lack of diplomacy today we need to worry about. There’s no hint of talks between Washington and Beijing, or attempts to find a path on critical issues, including China’s increasing nuclear arsenal. “China is a full-service competitor,” says Charles Kupchan of Georgetown University. “Look at the indicators — AI, quantum computing. They have 1.4bn people and a market growing by leaps and bounds . . . I understand Biden saying: ‘We’re going to dig in, we’re going to compete.’ I would like to see the other side of the coin.”   Xi and Biden have known each other for more than a decade. Will either be able to work up the nerve of Nixon? It was one minute to midnight with the Soviets when Nixon went to China. Will Xi or Biden rise to the new reality 50 years later?

The China Factor in Indonesia’s New Capital City Plan
China’s economic influence in Indonesia will translate into a prominent role in the development of the new capital.  First, the government must ensure that it first uses products from domestic businesses to meet the needs of the new capital’s construction, for example, the use of cement, which is a concern for many parties. Giving permission for a foreign company to build a new cement factory in close proximity to the new capital when Indonesia has an oversupply does not send the right message. Second, the implementation of green industry projects requires a clear roadmap to reduce the risk of exploitation by foreign parties which will be detrimental to a nation that has always closely defended its sovereignty over key natural resources. As Sukamta, a member of the Indonesian parliament, put it in August 2021, Indonesia’s abundant natural resources, especially in the areas surrounding the new capital city, could fall into the hands of foreign investors if no proper regulations are passed. Third, while foreign investment can bring many advantages for Indonesia, including in the relocation of the capital to Nusantara, it also has the potential to increase the number of foreign workers into the country. Over the years, the entry of Chinese workers has sparked heated domestic criticism for reducing the opportunities for local workers, especially since many of them have entered the country illegally. As we know, negative sentiment toward Chinese workers among Indonesians remains quite high, and even the perception that large numbers of Chinese workers are entering the country could make the new capital project the subject of domestic political controversy.
Pudong Development Bank, China CTIC Bank and China Everbright Bank.

China’s singles put their hearts in the hands of the Communist Party
Local youth branches are acting as matchmakers to help single people struggling to find love in a country where men vastly outnumber women    In rural areas the imbalance can be ‘beyond 10-to-1’ leading to soaring betrothal gifts as families battle for brides

China’s family planning agency says it will ‘intervene’ in abortions for unmarried women, teens
It aims to ‘improve reproductive health’ and will set up a task force for education and communication projects, according to plan outlining key initiatives for the year   Association will also roll out pilot public health programmes to encourage Chinese to have more than one child, as it tries to reverse declining birth rates

China Emphasizes Stricter Law Enforcement on Tutoring Sector
Authorities announced plans to set up supervision departments and slap hefty fines on those violating unspecified infractions.

Podcast video The Evergrande theme park left derelict in China’s Jiangsu province
Like many of its development projects, construction work on Evergrande’s Cultural Tourism City has ground to a halt as the Chinese property giant struggles to emerge from a debt crisis. The half-completed theme park in the coastal city of Taichang in Jiangsu province has now been abandoned.

From Belgium, with love
Pianist Jean-Francois Maljean has released a piano piece to commemorate the 2022 Beijing Winter Olympics. He also wrote a song to support Wuhan in its fight against COVID-19 in 2020 and another song for Xi’an in December. A new composition from pianist Jean-Francois Maljean expresses his best wishes in welcoming the Winter Olympics, Chen Nan reports.  Belgian self-confessed sports fan and pianist Jean-Francois Maljean has released a piano piece to commemorate the 2022 Beijing Winter Olympics, which kicked off with a grand opening ceremony held at the National Stadium on Feb 4. Titled For Beijing Olympics, the piano piece, which is about 3 minutes, was commissioned by the Chinese embassy in Belgium, with the aim of celebrating Chinese New Year and to welcome the Winter Olympics.

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