Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – February 14, 2022

Slower growth and higher inflation are the hallmarks of a post-Covid world
A hot spurt for global growth is generating breathless headlines. India is on pace to be “the world’s fastest growing large economy” and France is posting its “strongest growth in 52 years”. President Joe Biden cites the latest quarterly growth data as evidence that the US economy is growing “faster than China’s” for the first time in two decades and is “finally building an American economy for the 21st century”.   The virus triggered a baby bust, a migration bust and a wave of retirement and quitting that is adding to the pressures of depopulation on growth. Though productivity typically surges early in a recovery, this time it continued to languish in many economies. Major powers from the US to China are turning further inward, extolling “self-sufficiency” over globalisation.

China’s provincial GDP growth targets average 6% for 2022
China’s official goal likely to be around 5-5% for 2022: experts   With North China’s Tianjin Municipality releasing its GDP growth target for 2022 over the weekend, the nation’s 31 provincial-level regions on the mainland have all announced their economic goals, which average about 6 percent – generally lower than for 2021, but still represents a relatively stable pace in the face of mounting pressure.

China’s GDP tops 110 trln yuan in 2021
China’s gross domestic product (GDP) exceeded the 110-trillion-yuan (17.3 trillion U.S. dollars) threshold in 2021, official data showed Monday.  The country saw its GDP increase 8.1 percent year on year to 114.367 trillion yuan last year, according to the National Bureau of Statistics (NBS).  The hard-earned achievement marked a new economic milestone for the Chinese economy after the country’s GDP expanded 2.3 percent year on year to 101.5986 trillion yuan in 2020.

Lithuania tests the EU’s resolve on Chinese economic coercion
The name of a small office at the top of a drab skyscraper in the centre of Vilnius has set off a geopolitical firestorm that threatens billions of dollars in trade.  This is the Taiwanese Representative Office in Lithuania, a diplomatic outpost so new that the chief of mission’s business cards still carry the address of his previous posting in Latvia.  At issue is the fact that the name of the mission explicitly refers to the disputed island of Taiwan — and not, as is more common, its capital city of Taipei. To Eric Huang, who heads up the office, this makes complete sense. “We are representing Taiwan, not the city of Taipei,” he says.  But for the Chinese, the opening in Lithuania of what amounts to a de facto embassy represents a big step towards formal recognition of Taiwan, which Beijing claims as part of its territory. And it has retaliated furiously to this perceived provocation, not just by stopping direct imports from the Baltic country but by taking aim at global supply chains — stopping German companies, for instance, from using Lithuanian components in China.  For many policymakers in Europe, Asia and the US, the tactics that China is deploying in the dispute with Lithuania mark a watershed moment for the global economy. Although China has long used various types of economic coercion in political disputes with countries from Canada to Australia, this represents the first time the Chinese government has tried to prescribe where companies can, or in this case cannot, source parts for goods they make in and sell to China.

Exports surged in 2020, 2021, but this year will present challenges
China”s export value reached $3.364 trillion last year, an increase of 29.9 percent year-on-year, recording the highest growth rate since 2010, an important support for the nation’s economic growth during the pandemic-ravaged 2021. Will it continue to perform similarly this year? By studying China’s export structure since the COVID-19 outbreak and determining possible key factors-from both the supply and demand angles-we may have the answer.

Saving up, spending down for Chinese households
Spurred on by the depositing of year-end bonuses with banks, Chinese households spent less and saved more in January. Savings increased by RMB 5.41 trillion ($851 billion) in January, reports Caixin. This number is up around RMB 4 trillion year-on-year and distinctly higher than the average level.
Meanwhile, non-financial business deposits decreased by RMB 1.4 trillion. Analysts at CIB Research attributed the increases to year-end bonuses paid to employees ahead of the Lunar New Year. Continuing pandemic outbreaks and the sluggish housing market have also dampened people’s consumption, said Zhong Zhengsheng, chief economist of Ping An Securities.   A survey by the central bank showed that 51.8% of households preferred to save more during the fourth quarter, 1% higher than in the previous quarter. The survey also showed that 24.7% of households said they preferred to spend more and 23.5% would invest more.

Climate Change: China’s new five-year energy efficiency targets to drive heavy industry consolidation, analysts say
Higher energy efficiency bars have been set for companies in sectors ranging from oil refining to non-ferrous metals smelting by a circular published on Friday   New policies will ‘amplify the trend of the strong getting stronger’, analyst says

Will China’s new steel industry carbon target cloud peak emissions plans?
Chinese authorities say steel industry has until 2030 to turn the corner, 5 years later than previously thought    Original goal still within reach but depends on government will, analyst says

China’s Focus on Food Security
What Xi Jinping’s latest comments on food security suggest about China’s priorities for 2022.  At present, the full socioeconomic and environmental implications of China’s push to strengthen domestic grain production, especially of soybeans and corn, remain unclear. However, China’s aims of increasing domestic production may encounter difficulties from external factors, such as higher cost of fertilizers, which could add to the production cost of crops. Also, questions may be asked about China’s climate change commitments, green agenda, and food security. For example, how much water and energy are needed for Chinese farmers to meet these targets? With Xi having promised that the country will reach peak carbon emissions by 2030 and achieve carbon neutrality before 2060, how could this impact China’s ambitions of increased domestic soybean and corn productions, while simultaneously trying to satisfy China’s food demand and ensuring that the country’s agricultural systems are environmentally efficient? For other countries, China’s reduced reliance on imported crops may result in greater availability of soybeans and corn for other importing countries or force farmers in exporting countries to decrease production to prevent a major price drop.

India bans 54 Chinese apps, including those of Tencent, Alibaba and NetEase, on security concerns, report says
India’s Ministry of Electronics and Information Technology banned rebranded versions of Chinese apps that New Delhi already prohibited in 2020   The latest move comes as a long-running dispute between the two nuclear-armed nations remains unresolved

Are tech giants ‘sunsetting’? Strategists warn of big tech under pressure
Large consumer tech platforms such as Facebook and Amazon are in the “sunsetting” phase, Viktor Shvets, head of global and Asian strategy at investment bank Macquarie, told CNBC Thursday. The world is set to transit from second-generation technologies to third-generation, says Shvets. And the question is — which tech companies will survive that major transition. While China’s big tech firms are under a lot of regulatory pressure, they are also facing a lot of strong competition, says Roderick Snell, an investment manager at Edinburgh-based Baillie Gifford.

China’s tech giants push toward an $8 trillion metaverse opportunity — one that will be highly regulated
China’s technology giants from Tencent to Alibaba and ByteDance are investing in the metaverse, a market that could be worth $8 trillion in the future, according to Morgan Stanley. While U.S. firms like Facebook parent Meta and Microsoft are going all-in on the metaverse concept, Chinese companies are taking a more cautious approach amid tighter regulation.  China’s metaverse could look very different to the rest of the world due to government censorship, strict rules on the technology sector and Beijing’s crackdown on cryptocurrencies.

China’s top metaverse app removes itself from app stores, citing online attacks
Jelly, which became China’s most popular free iOS app three weeks after launch, says it has been experiencing malicious rumours and system crashes   Some users claim they have run into data leaks after signing up for the app – allegations that Jelly has denied

Beijing is ahead in the race for establishing a global digital currency standard
(FPRI) — At the Beijing Olympics—in addition to showcasing a 60-foot snowman and an ambitious (if controversial) environmental initiative—China is debuting its newly minted central bank digital currency, or CBDC. The country had hoped to make a splash by having thousands of international visitors experience the high-tech convenience of downloading currency directly to a smartphone wallet or a dedicated card, bypassing the ATM or foreign exchange bureau. Sadly, foreign spectators will not be permitted to attend this year’s games.  Still, the coming of age of the e-CNY, as the digital currency is known, is a significant development. It should also constitute a serious cause for concern among the U.S. and its allies.  China has a substantial lead in developing a CBDC which has important strategic implications. The U.S. government exerts outsize influence overseas thanks in part to the U.S. . These levers enable Washington and its allies to enforce economic sanctions, fight crime, punish military adventurism, and promote ideologies such as democracy, human rights, and liberal capitalism.

China’s small-business owners tighten purse strings, embracing frugality as hardships and uncertainties mount
Fearing for their livelihoods with little respite from the hardships of the pandemic, those who own micro and small enterprises are forced to find income elsewhere      New data shows ‘backbone’ of China’s economy came under even greater pressure in recent months, while outlook for 2022 sends up more red flags

China’s rural-revitalisation plan calls on banks to support infrastructure projects, but avoid hidden-debt trap
Message by State Council comes on the heels of Beijing’s vow to ‘front load’ infrastructure construction to shore up economic growth this year  Financial institutions also warned not to add to the hidden debt of local governments through off-balance-sheet borrowing, which poses great risk to world’s second-largest economy

TikTok parent ByteDance kills off Shein-like fashion shopping app after three months
ByteDance had stayed relatively quiet on its fashion retail experiment Dmonstudio, introduced last November      Shein, a Chinese fast-fashion online retailer targeting Gen Z and millennials worldwide, faces a number of new rivals

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

US-China tech war: Washington’s latest unverified list hits at the most vulnerable parts of China’s technology supply chain
The US added 33 Chinese entities, mostly hi-tech manufacturers to its unverified list (UVL) last week, citing the inability to verify their ownership     The UVL differs from the better-known Entity List, which restricts access to US exports unless the exporter secures a license

China’s unified power market to give renewable energy a boost, but its implementation could be an uphill task, analysts say
China’s ambition to build a national electricity market could be held back by ineffective power trading programmes and potentially large trading volumes      Regulators last week released a policy document to improve the mechanism of the nation’s low-carbon transformation

Tesla zeroes in on Beijing for design centre to build Chinese-style cars for the mainland market
The design and engineering hub will be one of the key projects in Beijing this year, according to a report by the city government      Tesla said in January 2020 that it would establish a design centre in China to better serve customers

BMW expects $9.1bn from JV share increase
German carmaker BMW AG said increasing its stake in its Chinese car-making joint venture will boost earnings by up to €8 billion ($9.1 billion), signaling to competitors that it is highly beneficial to take control of operations the world’s largest car market, reports Bloomberg. Chinese authorities gave BMW permission to raise its stake in the business with Brilliance China Automotive Holdings Ltd. to 75% from 50%, the German company said Friday. The move will lead to a positive one-time effect of €7 billion to €8 billion for BMW’s main automotive segment.

With tech sector and US stocks losing their shine, emerging markets are the ones to watch
While more modest corporate earnings and the quick pace of policy tightening have hurt the tech sector and US equity market, emerging market equities have been much more resilient   China’s looser monetary policy should lift its economy, with the positive effects spilling over to other closely linked economies

China jobs: Beijing offers support as record 10.76 million graduates ramps up employment pressure
The government will offer special help to young entrepreneurs and a range of incentives for small companies to employ fresh graduates     Youth unemployment is already high in China and competition for jobs has been intensified by lay-offs caused by regulatory clampdowns

Can China’s lower-tier cities be another breeding ground for global luxury brands?
As China is on track to be the world’s biggest luxury market by 2025, it has long been the market that is craved by luxury brands from around the world. The top-tier cities, such as Beijing, Shanghai and Shenzhen, have so far been the most favoured home to many global labels with their larger populations and typically higher average salaries.   However, there seems to be a shift of location preference from the big to lower-level cities, due partly to the consumption being deemed to have reached a ceiling in those more developed areas, coupled with the potential of extravagant purchasing in less-advanced areas in China remaining huge. According to Boston Consulting Group, over half of China’s luxury consumption comes from 2-and-3-tier cities, where foreign luxury brands have not yet been as present as they are in big cities.

Alibaba’s share price rebound faces test as quarterly earnings release draws closer
Alibaba’s shares have rebounded 13 per cent after falling to a record low in January    The e-commerce giant may have posted its slowest quarterly revenue growth on record, according to analysts’ consensus estimate

How supply chains became headline news
The Covid-19 pandemic brought supply chains into the spotlight like never before, but what long-term impact will the past two years have on them? The supply chain disruptions of the past two years have been felt by consumers all over the world.  Still, it would be justified to describe the big shipping companies as one of the supply chain winners in the two years of Covid, irrespective of the bad feeling they may be bottling up. Indeed, the pandemic has produced many ‘winners’ when it comes to the supply chain industry, as well as its fair share of losers, with regards to both countries and companies, with some falling into both camps. Is China a winner, give that it is still a global manufacturing and logistics titan, or is it a loser, given that many companies have adopted a ‘China plus one’ strategy, which has seen them move away from their reliance on Chinese manufacturing, without fully cutting the country out? This has led to the likes of Bangladesh and Vietnam moving into the ‘winners’ enclosure. It is too early to tell who the long-term beneficiaries of the chaos that has ensued in the past few years will be, as the existing supply chain logic is still flying out of the window.  Our Supply Chain Vulnerability Index shows some surprising disparities in the world’s major economies, with Germany and China faring very well but the US struggling.

China-India trade stays on growth path
The value of bilateral trade continues to rise as India”s demand for Chinese goods remains robust and experts urge the authorities not to move away from China on business.    India’s Federal Junior Minister of Commerce and Industry Anupriya Patel, writing to the Indian Parliament recently, said the value of exports to China had risen about 24 percent in the first 11 months of last year over the corresponding period the year before. The value of imports also rose.    The value of India’s exports to China rose to a record high of $28.1 billion last year, 34.9 percent more than in 2020, China’s General Administration of Customs said. India’s exports to China last year were 56.5 percent higher than in 2019, and the value of China’s exports to India last year rose by more than expected.

India takes aim at China’s alleged trade coercion against Australia: ‘if it looks like a duck and walks like a duck’
Indian External Affairs Minister Subrahmanyam Jaishankar makes pointed comments about Beijing’s ‘politically influenced’ decision-making, two years into trade dispute with Canberra   Border clash between China and India was also discussed at meeting of the Quad regional partnership on Friday  4 Jan 2022    The Chinese government has denied using trade coercion against Australia and other countries, with foreign ministry spokesman Zhao Lijian insisting on Tuesday that China “always follows WTO rules”.

China is building a nuclear power plant in Argentina as it looks to Latin America
New deal is the latest Chinese effort to engage with countries in the region using its cutting-edge clean energy technology   But some projects have met opposition over environmental issues, and there is US pressure not to deepen ties with Beijing

Chinese and Taiwanese trade pact bids on CPTPP agenda this week: report
Bloc’s commission will discuss membership applications from two parties at meeting on Thursday, Liberty Times reports    Japan’s influence will be key but mainland China’s opposition a challenge, analysts say

Geostrategic Importance and Natural Reserves of East China Sea
The importance of the ECS China lies in its proximity to strategically important shipping lanes, and in their significant fishing grounds and oil deposits  (O’Rourke, 2015). Economically, the ECS is at the crossroads of global commerce and an increasingly vital source of both food and energy resources. Politically, cooperation in this sea is a growing test of rising Asia’s peace and prosperity, as well as a test of China’s narrative of its peaceful rise.  The East China Sea is rich in oil and gas resources and has long been the target of both China and Japan and other neighboring countries facing China’s maritime areas. The East China Sea may have abundant hydrocarbon resources, especially natural gas, although the region is underexplored. China and Japan, the two largest energy consumers in Asia, are both interested in using natural gas from the East China Sea to meet rising domestic demand. However, unresolved territorial disputes make exploration and development of these resources difficult.

Blinken zeroes in on Taiwan Strait in talks with Japan, South Korea foreign ministers
US secretary of state caps Indo-Pacific trip with united call for regional security   Ukraine crisis also on agenda in Hawaii, with officials offering support for Kyiv’s territorial integrity

Antitrust in China – 2021 Year in Review
2021 was the year where the PRC Government launched a broad regulatory assault on Chinese “Big Tech” companies.  The State Administration for Market Regulation (“SAMR”) did its part by imposing significant fines on Alibaba and Meituan for abuses of dominance, and administrative penalties in more than 100 cases for failure to notify, over 80 of which involved platform companies, such as Alibaba, Baidu, Didi, Meituan, Suning, and  The Government also released the Anti-Monopoly Guidelines for the Platform Economy Sector in February 2021 to provide guidance on enforcement in the tech space.  On the merger front, SAMR reviewed approximately 700 transactions, imposed remedies on four of them, and, more significantly, blocked one transaction – this is only the third time that China’s antitrust authority has ever done so.  2022 should see a continued increase in antitrust enforcement.  In this respect, SAMR’s Anti-Monopoly Bureau has been elevated in the Chinese bureaucracy, which signals its importance to the Government. The Government also published its Draft Amendment to the Anti-Monopoly Law (“AML”) for public comment in October 2021 and the proposed changes could be adopted in 2022.

A strong start for Shanghai in attracting foreign investment
Deals were signed on Friday on 53 foreign investment projects to be launched in Shanghai, with an overall value of US$5.44 billion.   Among the signed projects, 21 are worth more than US$100 million   These deals demonstrate that the city remains one of the preferred locations for the global layout of multinational companies’ industrial, supply and innovation chains.

Suzhou a new front in China’s all-out battle against Omicron coronavirus variant
Public gatherings banned and school semester delayed after cases found at industrial park  Mass screening under way and production stopped at least one chip plant

Meet the Comac C919, the first mainline airliner made by a Chinese company that could begin deliveries this year
Chinese planemaker Comac is hoping to deliver its first C919 passenger jet this year, six years later than expected.  The narrowbody plane has had a long production due to technical issues and shipping delays.  China hopes the C919 will make it less reliant on foreign-made technology like Boeing and Airbus.

A Succession Drama, Chinese Style, Starring Xi Jinping
One rising Chinese provincial chief lauded Xi Jinping because the Communist Party’s “greatest guarantee.” The occasion chief of an enormous coastal metropolis urged officials to revere Mr. Xi’s “noble bearing as a leader and personal charisma.” A top general said Mr. Xi had confronted down “grave political risks” to attain the “revolutionary reinvention” of China’s navy.  The orchestrated adulation that has carried Mr. Xi into 2022 provides to the rising certainty that he’ll safe one other time period in energy at a Communist Party congress late within the 12 months. In an period of worldwide upheaval and alternative, scores of senior officials have mentioned, China wants a resolute, highly effective central chief — that’s, Mr. Xi — to make sure its ascent as a superpower.    Mr. Xi “has to bring in new people, but he doesn’t want any of them labeled as his successor,” Mr. Bo mentioned. “There’s the big dilemma for Xi Jinping — how to promote them but not too far and limit his options.”
There is more likely to be way more turnover within the full Politburo, the second-highest rung of energy. Retirements there may create 11 vacancies, which Mr. Xi may use to advertise a cohort of loyal officers of their 50s or early 60s, many now provincial leaders.  But if Mr. Xi stays on the prime for an additional decade or longer, they might even be handed over for even youthful potential successors now working in obscurity in ministries and native administrations.  “If Xi stays healthy and avoids policy disasters, he could remain a capable national leader and a formidable political operator for another couple of decades,” mentioned Neil Thomas, who analyses Chinese politics for the Eurasia Group.

50 Years Later, Some Question Value of U.S.-China ‘Panda Diplomacy’
In part because of the central role they play in U.S.-China geopolitics, pandas have benefited from quality medical care and breeding and research efforts at facilities around the world. American zoos have, in turn, benefited from the increased foot traffic and revenue that pandas generate, helping to offset the cost of acquiring and keeping the animals.

To be or not to be single, that is the question: China Daily contributor
The writer says getting married is essentially an economic decision, with the costs and benefits of a marriage playing a key role.

Hosting the Olympics Is Costly. For China, It’s Worth Every Billion.
Perhaps most important of all to China’s leader, Xi Jinping, the Olympics are a chance to demonstrate to the world his country’s unity and confidence under his leadership.  “For China’s international image, prestige, and face, as the Chinese would say, nothing is too expensive,” said Jean-Pierre Cabestan, a political scientist at Hong Kong Baptist University.  Still, with China’s economy already slowing, and a dimming outlook for global growth, as well as concerns that the Omicron variant of the coronavirus would lead to more shutdowns and choking of global supply chains, Beijing has been wary of spiraling costs. Even Mr. Xi acknowledged the event had to be streamlined, saying last year that the aim was to hold a “simple, safe, splendid” event.

What’s black and white, weighs half a pound and is popular in China?
Now though, websites are flooded with discussions about the competitions and the athletes, and an unexpected buying frenzy has emerged for Olympics memorabilia. Souvenir coins are selling well. So are nonfungible token Olympics pins. (NFTs are digital files created using blockchain computer code, much like the code that makes Bitcoin possible.) And most popular of all is an 8-inch-tall plush stuffed animal version of the Beijing Olympics mascot — Bing Dwen Dwen, a rotund panda in a suit of ice. The main version of the stuffed animal weighs seven ounces and sells for $30 at 162 official Olympics memorabilia stores nationwide. Long lines form every morning to buy limited stocks.

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