China’s ‘two sessions’: why this year’s event is so important for Xi Jinping’s vision for the future
Next month’s major political set piece will take on special significance this year as it coincides with the Communist Party’s centenary. The gathering also marks the start of the next five-year plan and could also reveal more about the leadership’s long-term economic plans But this year’s event, which starts in early March, also sees the beginning of the latest five-year plan for the economy, which gives the leadership an opportunity to outline longer-term plans that could come to define President Xi Jinping’s legacy and the party’s future. The country’s success in containing Covid-19 domestically and keeping the economy on track will help shape the political messaging – especially in contrast with the struggle of many countries in the West to contain the pandemic and events such as the attack on the Capitol in Washington last month – but it still has to overcome serious problems both at home and abroad.
China: What to expect from the ‘Two Sessions’
China’s main annual political meetings known as the Two Sessions take place next month, with the Chinese People’s Political Consultative Conference (CPPCC) on 4 March and the 13th National People’s Congress (NPC) the following day. The government work report is the main focus of the NPC as it will prioritise the policy agenda for 2021, which is the first year of the 14th Five Year Plan. This article previews what we expect and don’t expect from the Two Sessions this year
China’s economy shines as post-COVID recovery gathers pace
Beijing has wasted no time in reintroducing restrictions on borrowing That means Beijing can now shift its attention from the immediate challenge of COVID. In the past, the focus has generally been on maximizing growth. But today, the policy is more about improving the quality of growth. Going forward, that means growth will be less credit-driven and the potential financial risks coming from over-borrowing by both corporates and households reduced. This focus on the quality of growth has been building up for some years. For example, in the years between 2012 and 2016, the growth in debt as a proportion of GDP increased by over 8 percentage points. But in 2017, Beijing sharply reduced that number to just over 1 percentage point, particularly by clamping down on the hunger for borrowing from local governments, according to data from Helen Qiao, who heads Asian economic research for Bank of America. That control, however, was relaxed to deal with the pandemic last year, leading to a surge in debt to GDP of over 300% of GDP. The commitment to cleaning up the environment does not have to mean slower growth, though. For example, other countries that have made similar commitments to carbon neutrality in the coming decades will have to turn to China for vital inputs such as solar panels as they shift away from coal to solar power. Moreover, in the future, China’s commitment to technology, including everything from renewables to robotics, and e-commerce to electric vehicles, will increase its competitiveness, especially because there are fewer legacy infrastructures.
31 China’s provinces and regions set GDP growth targets about/above 6%
2021 a ‘big year’ for China’s economy to rebound Despite wide speculation that China has not so far set a national target for GDP growth in 2021, most of China’s provinces and regions have set their own targets above 6 percent this year, signaling confidence to achieve further economic rebound from the coronavirus bite in a “big year” for the Chinese economy.
US-China power struggle: rest of the world must come together to stand up for themselves
Other countries prefer to stay neutral amid the intense jockeying for influence between China and the US. The only way they can achieve that is to join hands in pushing back attempts by either power to use them as a pawn against the other The world today can be compared to a large passenger plane with two co-pilots, China and the US, jointly contributing to more than half of the world’s economic growth. In the cabin, 194 passengers are seated – the rest of the world’s countries – mostly in economy class; some in business. In mid-air, a rapidly escalating argument erupts between the co-pilots. If not contained, a physical fight might soon ensue. The plane is losing altitude, and the passengers can no longer afford to remain quietly in their seats. It’s time for them to storm the cockpit. Gal Luft is co-director of the Institute for the Analysis of Global Security (IAGS). His latest book is “De-dollarisation: The Revolt Against the Dollar and the Rise of a New Financial World Order”
US, EU must prepare for ‘long-term strategic competition with China’, says Joe Biden
‘We have to push back against the Chinese government’s economic abuses and coercion,’ US president says Chinese companies should be held to the same transparency standards as US and European companies, he adds
China signals real financial opening up, but will it follow through?
Idea of allowing people to change yuan into other currencies and then decide what offshore assets to buy is revolutionary Immediate monetary impact of a relaxation would be limited because many affluent Chinese have invested overseas anyway The immediate monetary impact of this relaxation, however, will be limited because many affluent Chinese have invested overseas anyway. China’s foreign exchange regulators will need a strong political blessing to move forward and prove that the plan will not create systemic risks. In 2007, China announced it would try a “through-train” plan to allow investors in Tianjin and Shenzhen to invest in Hong Kong stocks, but that plan was scrapped the same year as Beijing found huge amounts of money flowed to Shenzhen.
With the EU at risk of a double-dip recession, investors’ faith in the euro is being severely tested
Despite a strong rebound in the third quarter, the bloc recorded a 0.4 per cent contraction in the fourth, raising fears of a double-dip recession Bungled handling of Covid-19 mass vaccination is complicating the bloc’s economic troubles, putting further strain on its fragile union
China to tighten online lending rules from 2022 in additional measures to rein in fintech giants, pre-empt banking crisis
Online lending platforms will need to contribute 30 per cent of own capital for loans they make with commercial banks from January next year Digital banks, trust companies, consumer financing firms and car loan providers also need to comply, according to the CBIRC
‘Dialogue the key to repairing Sino-US relations’
Senior Chinese diplomat Wang Yi called on the administration of US President Joe Biden to work with Beijing to reopen dialogue between the two countries to restore a bilateral relationship damaged under the presidency of Donald Trump.
U.S. Chamber Releases In-Depth Analysis of U.S.-China Economic Relationship
The U.S. Chamber of Commerce’s China Center, in partnership with Rhodium Group, released a new analysis today examining the complexity of the U.S.-China economic relationship. A first-of-its-kind study, “Understanding U.S.-China Decoupling: Macro Trends and Industry Impacts” seeks to better understand the degree to which the U.S. and Chinese economies are intertwined and dependent on each other for stability and growth.
Rethinking the US-China fight: Does China really threaten American power abroad?
President Joe Biden is so far maintaining his predecessor’s tough China policy, which aims to curb China’s international power both economically and politically. In the US and Europe, China is widely recognized as a rising star that threatens Western power. But my research on the country suggests China may no longer see itself that way.
US-China tensions: Joe Biden signals tougher line on Beijing with key appointments
Asia experts and veteran advisers from the former Obama administration are among picks for roles across departments President has warned of ‘extreme competition’ with China and the change in tone from the Obama era is unambiguous, analyst says “All of the signs coming out of the administration are that even if many of the individuals are the same as a decade ago, the policies will not be,” she said. “The specifics are still unclear but the change in tone from the Obama administration is unambiguous.”
US must scrap tariffs and end restrictions on Chinese tech, Wang Yi says
China’s foreign minister lays out conditions for restoring damaged relations between Beijing and Washington Wang reiterates the need for high-level dialogue and cooperation on pandemic control, climate change and economic recovery Tang Xiaoyang, from the international relations department at Tsinghua University, said the US was unlikely to remove the tariffs on Chinese products for the time being, but he expected relations between the two countries would improve in the longer run. “It is not the case that China and the United States can cooperate only after they have met the conditions put forward by both sides. It is through increased cooperation that they can create the conditions for improving Sino-US relations,” Tang said. “For the Biden administration, what is really needed is cooperation with China in other areas, such as climate change. Only when China is willing to cooperate with him in these areas will the relationship between the two nations improve. Once things improve, the United States will give more consideration to China’s demands to reduce sanctions and tariffs.”
China’s top diplomat says Beijing seeks to US to join forces on new energy and new technologies
Politburo member Yang Jiechi says China puts itself forward to help writing new global rules Analysts say groundbreaking technologies and global cooperation are needed to achieve Xi Jinping’s ambitious targets on emissions and carbon neutrality
US-China Phase One Trade Deal: Challenges for Trade Expansion
After a year since the United States and China signed the phase one trade deal agreement, it is evident there are several systemic challenges to its full implementation. China’s decentralized governance, limitations in the deal’s dispute resolution mechanism, and failure to address structural issues in the bilateral economic relationship limit the prospects of reaching phase one goals of trade expansion. The consequent market distortions may negatively impact international trading partners, whereas China’s search for alternatives to US imports will hinder progress in subsequent negotiations.
Chinese leader Xi Jinping sends fresh signal of determination to push for ‘high standards’ of economic independence
President’s comments to high-level meeting reinforce leadership’s emphasis on economic reform and hi-tech innovation Central reform committee meeting told that country must remove barriers and do more to promote property rights A report released by state news agency Xinhua after Friday’s meeting said the committee had been told that China should take advantage of nationwide support, remove institutional barriers that restrict the improvement of core science and technology, speed up research into key technologies, and “firmly grasp the initiatives of innovation and development”. Wei Shaojun, a professor with Tsinghua University’s Institute of Microelectronics said China should respect market rules in the semiconductor sector, rather than replying on administrative interventions. “What we lack is high-end chip production capacity. However, in recent years local governments have attracted investments to build up low-end capacity, many of which resulted in business closures,” Wei said, “We should be wary of such blindness.”
China chases semiconductor self-sufficiency
A priority in the Chinese Communist Party’s (CCP) 14th Five-Year Plan (2021–25) is to strengthen China’s autonomy in semiconductor production. This is in response to US sanctions restricting the supply of chips containing US technology to China. The trade war is a reminder for Chinese leadership that it can no longer rely on imports and must develop in-house core technology and pursue technological leapfrogging, especially in essential components such as semiconductors. China’s demand for modern and emerging technologies is on the rise. Semiconductor imports increased to over US$300 billion in 2019 and were the country’s largest import item. China supplies just 30 per cent of its chips domestically. Chip production is a complex process involving different components and manufacturing stages. China has made progress in chip design — Huawei successfully developed its in-house premium-tiered chip, Kirin, for its 5G equipment and flagship smartphones. By some measures, Kirin is as competitive as chips made by commercial rivals Qualcomm and Samsung.
US-China tech war: calls for Biden to fund US semiconductors grow louder in Washington
South Korea currently leads with a 25 per cent share of the world’s advanced chipmaking capacity, followed by Taiwan, Japan and China Cotton, a China hawk, views Beijing’s rivalry in cutting-edge technology as a threat to the US’s commercial and military advantages By the end of last year, China had already built the world’s largest 5G network, with about 720,000 5G base stations. In semiconductors, Beijing is providing qualified projects with generous subsidies, tax incentives and policy supports with the goal of cutting reliance on imported chips. It is unclear how far the Biden administration will go in financially supporting the US semiconductor industry and whether it will relax China’s access to US technologies that were tightened under former US president Donald Trump. However, a global shortage of chips for cars and electronics have made the case that the US must boost its own production capacity.
Bloomberg New Economy: China Cashless Economy and Surveillance
Among the many wonders Marco Polo encountered on his journey to China in the 13th century was paper money. The Chinese invention so impressed the Venetian traveler that he observed the Mongol emperor at the time had “a more extensive command of treasure than any other sovereign in the universe.” Today, China is again at the forefront of monetary innovation. It plans to eliminate notes, which have been circulating for 1,500 years, and launch a digital-only currency. Coins will disappear, too.
Can China meet its ambitious decarbonization goals?
When the world’s largest emitter set an ambitious 2060 carbon neutrality target at the UN in September, it set off a chorus of hope that global heating might be kept below catastrophic levels.
China’s carbon neutral push gathers pace as coal-fired power plants drop below 50 per cent for first time
China is the world’s largest producer and consumer of coal, but it has committed to achieving carbon neutrality in 2060 Fitch Ratings report shows a surge in the use of wind, solar and hydropower, although coal-fired generators still produced 60 per cent of the power last year
Xiaomi reportedly plotting electric car play
Chinese smartphone maker Xiaomi is planning to make electric vehicles, according to a Chinese media report. This move could make it the latest entrant into the country’s exploding electric vehicle market, with founder and CEO Lei Jun reportedly leading the project The reported entry of Xiaomi, often dubbed “the Apple of China,” could shake up the entire auto industry. Its success in the consumer electronics market has given it high brand awareness among domestic consumers.
Tencent, Ant Group banks to take part in digital yuan trials: report
Tencent’s WeBank and Ant Group’s MyBank will be the first two privately owned banks to participate in digital yuan trials, Chinese media reported. The two online banks will be the first fintech companies to participate in the tests, possibly gaining an edge over their competitors despite widespread speculation that developing the currency was in part to curb their influence.
China’s Digital Yuan Trial Moves to Promotion Stage, WeBank and MYbank Jump In
Tencent backed WeBank and Ant backed MYbank are now enlisted by the Chinese central bank for it’s digital yuan project trial. Some vending machines in the Shanghai subway are already accepting digital RMB China might be the first major economy to have a CBDC. China has resorted to taking the private bank route contradicting initial speculations.
China tightens online lending rules in fresh blow to Jack Ma’s Ant Group
China’s banking regulator has tightened rules governing how online lending platforms fund their loans, a move that analysts say could hit the valuation of Jack Ma’s Ant Group, reported the Financial Times.
Under the rule changes announced over the weekend by the China Banking and Insurance Regulatory Commission, online lending platforms will have to contribute 30% of the funding for loans they offer in partnership with banks. The CBIRC will also cap how much capital commercial banks can commit to online lending in co-operation with tech platforms. The new rules will come into force next year.
Ant, which uses algorithms to determine the loans individuals are eligible for, is set to come under even more valuation pressure due to the new rules, experts said, reported the FT. Wong Kok Hoi, the founder of APS Asset Management, said the rules were likely to force the current scale of fintech loans to “contract significantly” in China and the changes could force the companies to operate more like commercial banks. “Ant’s business model will need to be drastically revamped,” he said.
Alibaba, Pinduoduo Fight Against China’s Looming Food Crisis
The battle to supply 1.4 billion people with fresh fruit and vegetables is taking China’s e-commerce companies into the country’s hinterlands, where they are attempting to revolutionize centuries-old agricultural practices to secure future supply for their burgeoning online grocery businesses. Xi Jinping’s government has long made self-sufficiency in food a “top state issue” as it seeks to avert a looming food crisis. The need to modernize China’s 200 million largely small-scale farms took on added urgency during the pandemic, when output and logistics disruptions coincided with homebound shoppers turning to Alibaba Group Holding Ltd. and other internet retailers for their produce.
Chinese investors look south to Hong Kong as outflow rules ease
Strong outflow of capital driven by China’s strong post-coronavirus recovery and greater financial opening up Brisk two-way flows will help broaden the country’s forex market, senior regulatory official says Foreign investors increased their holdings of Chinese bonds by US$93.6 billion last year, while in January their purchases of both bonds and stocks rose by US$41.6 billion, according to Safe. This investment, together with China’s 9 trillion yuan coronavirus stimulus last year, weighed heavily on the capital market, raising concerns in Beijing of asset bubbles.
Coronavirus: China’s Sinopharm seeks general use green light for second vaccine
State firm says it has applied for approval for shot developed by the Wuhan Institute of Biological Products Work is also under way on a third jab using different technology that would be easier to scale up, company chairman says
How can Biden win over a still sceptical Asia?
The United States abandoned economic leadership in Asia four years ago. Rather than promote and strengthen the multilateral institutions and frameworks that underpin Asia’s prosperity, the United States under President Trump began systematically undermining them: from the WTO, WHO and Paris Agreement, to military alliances with Japan and South Korea, bilateral trade ties and cooperation in regional forums
Modi shouldn’t echo Xi’s policies because India isn’t China on so many levels
Market economies seeking private investment don’t function well without autonomous institutions, checks on executive excess, and freedom to express opinion without fear.
India to clear 45 investments from China worth billions amid sour ties: sources
Two government sources who have seen the list said most of the 45 proposals are in the manufacturing sector, which is deemed non-sensitive in terms of national security Some 150 Chinese investment proposals worth over US$2 billion were held up amid sour ties, with firms from Japan and the US routing investment through Hong Kong also caught in the crossfire
India and China hold fresh round of border talks after ‘smooth completion’ of pullback from Pangong Tso
A joint statement said commanders from both sides had held their tenth round of negotiations along their disputed frontier on Saturday This month’s withdrawal agreement follows months of tension that peaked in June with a deadly clash in the Galwan Valley
If Laos fell into a Chinese debt trap, would it make a noise?
China’s largesse in funding regional infrastructure has prompted claims Beijing is seeking leverage over poorer, heavily indebted nations Yet Laos’ increasing reliance on its large-pocketed neighbour has faced relatively little scrutiny, in part because it is obscured by Vientiane’s ties with Hanoi Analysts warned the railway, alongside other Chinese investments, could end up being a debt-trap for the Southeast Asian country. Various estimates place Chinese investments in Laos at over US$10 billion. This represented around 45 per cent of Laos’ GDP in 2019, according to a study by the Australia based Lowy Institute. Credit rating agencies say Laos faces a growing risk of debt distress and sovereign default – problems that have been exacerbated by the pandemic and a debt-laden power sector. The country’s foreign exchange reserves have fallen below US$1 billion, less than its annual debt payments. Last September, the Financial Times reported that Laos had asked China, its largest creditor, for advice on a possible restructuring.
‘Debt-trap diplomacy’ a myth: no evidence China pushes poor nations to seize their assets, says academic
The ‘waiver of sovereign immunity’ clause causing fear and uproar in African nations is not well understood, says US professor Analysts say there remain other concerning issues around China’s loans in Africa “The real issue is China’s holding of 20 per cent of Africa’s debt, not debt-trap diplomacy,” Shinn said. He said there were eight to 10 countries in Africa now in debt distress where China held more than 20 per cent of their debts.
Chinese loans to Latin America plunge as virus strains ties
In 2010, China, its economy roaring and state companies looking to expand globally, set its eyes on Latin America, a region starved of capital but rich in natural resources the Asian giant lacked. The result: a record $35 billion in state-to-state loans that year. Fast forward a decade and the once-torrid relationship is starting to mature in ways that suggest China may be growing wary of its once do-no-wrong partner. For the first time in 15 years, China’s two biggest policy banks — the China Development Bank (CDB) and the Export-Import Bank of China — made no new loans to the region in 2020, capping a multi-year slump driven by Latin America’s worsening economic slide.
Canberra only hurts self with prickly diplomacy toward Beijing
The Australian Broadcasting Corporation provoked a question over the just concluded weekend: will China-Australia ties settle into a “new normal” with a prickly diplomatic relationship?
Chinese strategy is clear: The world has much to think about
The PRC perceives a natural and ineluctable shift of power from the West to the East. According to the report, woven into Indian military strategy are four fundamental features. India firstly sees itself at the geopolitical heart of Asia; secondly, it has pursued the same imperial agenda of military expansionism as it inherited from the British and followed the Kautiliyan dictum of treating neighbours as foes; and, finally, it has pursued a multi-directional deterrent strategy. Against its smaller neighbours, New Delhi has pursued “punitive deterrence” so that they conform to Indian interests and against China “dissuasive deterrence.” Taken as whole, the PRC sees India adopting and pursuing a coherent grand strategy, even if Indian strategists treat their own country’s grand strategy as ad hoc and incoherent over successive stages since its Independence.
Chinese–Russian ballistic missile cooperation signals deepening trust
During the annual meeting of the Valdai Discussion Club in October 2019, Russian President Vladimir Putin announced that Russia and China are cooperating on developing a ballistic missile early warning system (BMEWS). Putin underscored that such cooperation demonstrates the high level of trust between the two countries. Russia–US relations after Biden’s accession to power have had one positive development — the United States has agreed to extend the New Strategic Arms Reduction Treaty (START) for another five years. Despite this, the outlook for Russia–US relations remains bleak. The reality of Russia–China defence cooperation is complicated. A working and effective military alliance can be formed quite quickly if the need arises. But current foreign policy strategies make such a move unlikely unless there is real and imminent danger of military conflict with the United States
Chinese spies used code copied from America’s NSA for hacking operations, researchers say
Features in malware so similar they could only have been stolen from break-in tools leaked online, according to Check Point Software Technologies Head of research describes the malicious ‘Jian’ software as ‘kind of a copycat, a Chinese replica’
South China Sea: Vietnam builds up defences against Beijing in Spratly Islands, report says
Emplacements for air and coastal defence systems installed on most of its bases in the disputed archipelago to ‘ensure it can strike Chinese facilities’ Asia Maritime Transparency Initiative says the most significant upgrades in the past two years have been at West Reef and Sin Cowe Island
How China is remaking the world in its vision
It is the year 2049. China is celebrating having reached its second centenary goal – to become a “prosperous, powerful, democratic, civilised and harmonious socialist modernised country” by the 100th anniversary of the people’s republic. Its economy is three times the size of the United States’, as the International Monetary Fund predicted back in the 2010s. The US remains wealthy and powerful – it has functioning alliances in Europe – but its pacts with Asian allies have fallen into disrepair.
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