China Press Review – February 28, 2019

Press review

US and China reach deal on enforcement mechanism for possible pact to end trade war, US trade chief Robert Lighthizer tells Congress
Mechanism ostensibly answers a US concern that any agreement to end the trade war be specific, measurable and enforceable at all levels of Chinese government US-China tensions have eased since US President Donald Trump said he would delay plans to raise tariffs on US$200 billion in Chinese goods

The perils of Chinese ambiguity: how and why the US mistrusts and misunderstands China
Chinese entrepreneurs seem well versed in the art of doublespeak, which dates back to a philosophical dichotomy in the Qin and Han dynasties. The practice is culturally acceptable in China but does not go down well in the West

US trade demands could take China years to achieve, says Beijing’s ambassador to Washington
Cui Tiankai says aspects requiring legislation could take ‘five to 10 years’, although some requested measures tally with Beijing’s own plans Ambassador sees US action against Huawei as separate issue to trade talks but calls pursuit of the Chinese company ‘stupid’ and ‘absurd’

US demands level playing field in China, but can Beijing rein in state subsidies to end trade war?
United States trade representative Robert Lighthizer has been a long-term critic of advantages given to domestic companies that make it difficult for foreign firms China has long been accused of favouring domestic companies, resulting in an unfair competitive advantage at home and abroad

What’s worse than the US-China trade war? A grand peace bargain
But far worse for Australia, and its Asia-Pacific neighbours, could be a deal to end the trade war, especially if it involves a grand geopolitical bargain between the US and China.

Next stops: Europe and United States. Chinese President Xi Jinping to head to Italy, France and Florida on trade and tech missions
There is a chance of no deal to end the China-US tariff war but a summit at Mar-a-Lago boosts the prospect of success, observer says

‘The time of naivety is over’: Europe’s China problem is on the agenda at next European Commission meeting as states focus on competition
France and Germany lead the push for a common strategy to deal with competition from Chinese giants Adviser to French president says the time of naivety is over There have been growing demands from business communities for more support from governments to help boost competitiveness. Last month German business lobby BDI published a list of 54 demands for a tougher EU strategy on China, addressed to the German government and the European Commission.

Amid Espionage Concerns, Poland Reconsiders Its Relations With China
The high-profile arrests last month of a former Polish intelligence official and a Huawei executive in Poland have stoked an ongoing policy debate in Warsaw over how to calibrate its relationship with China. The 16+1 framework, which Beijing introduced in 2012 to promote engagement with Central and Eastern Europe, raised expectations among Polish officials for increased Chinese investment and trade ties. But those hopes have been slow to materialize, and in the meantime, national security concerns, primarily over espionage and Beijing’s long-term goals in the region, have grown. In an interview with WPR, Patrycja Pendrakowska, president of the board at the Poland-Asia Research Center in Warsaw, discusses the evolution of Poland’s approach to China.

GOLDMAN SACHS: Forget about a global recession — the worst of the US and China’s economic slump is over
Most notably, the world’s two largest economies, the US and China, look set to see growth pick up in the coming months after a long period of worry about a major slowdown in both countries

China’s economy hasn’t hit bottom yet. The good news is that it will in the next quarter
Despite decent sales during the Lunar New Year, declining demand is likely to push China’s economy further down before loosening credit takes effect in the second quarter and sparks a recovery

China economy slows further as manufacturing sector PMI contracts for third straight month
February’s manufacturing index drops to 49.2 from 49.5 in January after analysts had predicted an unchanged reading Composite purchasing managers’ index falls to its lowest level in two years at 52.4 from 53.2

China’s tech giants are firing people as the economy slows
Among the most sought-after places to work for the country’s top talent, China’s tech giants appear to be carrying out layoffs amid a slowing economy.

China seeks to fuel economic growth with coal mines and airport projects worth over US$15 billion
Four mines in the north of the country will produce enough coal in one year to equal the United Kingdom’s entire consumption for 18 months New airport in Hohhot, the capital city of Inner Mongolia, will cost US$3.28 billion as Beijing seeks to boost its slowing economy amid the US-China trade war

China stocks run up best month in nearly four years
The Shanghai Composite Index records best month since April 2015 Shanghai benchmark has gained an eye-watering 14 per cent since beginning of February

Strong economic performers set to take key roles in China’s rust belt province of Liaoning
Officials with long experience in economic development tipped to take on leadership roles in country’s worst economic performer.

The slowdown in China’s economy just cost 1,400 Illinois auto workers their jobs
Nearly 1,400 autoworkers in Belvidere, Illinois, will lose their jobs as a result of weak demand in China for the Jeep Cherokee.

The U.S. Should Grab the Talent China Is Driving Away
It’s a great chance to admit highly skilled immigrants, if only the Trump administration were on board.

Trump has made China’s Huawei famous around the world
The US president’s battle with Huawei has made the Chinese brand a household name around the world

China is facing employment challenges as its economy slows, official says
On-the-record comments on Thursday by a researcher in China’s top executive body provided greater insight into how severe unemployment issues might be, at least in labor-intensive industries. For Beijing, keeping a handle on employment is critical to maintaining control over a massive country of more than a billion people. Unemployment in China remains low compared with other countries, but official reports are beginning to show some challenges in Chinese people’s ability to hold jobs.

Chinese households are feeling the strain as the economy cools and living costs rise
Growth in disposable income slowed in China last year while living costs rose, highlighting the increasing strains Chinese households are facing as the economy cools. Beijing is counting on the nation’s vast consumer base to cushion the broader slowdown. But as the outlook grows more clouded Chinese are tightening their belts, buying fewer cars, electronics and home appliances.
Disposable income per capita rose 6.5 percent last year to 28,228 yuan ($4,224), slowing significantly from the 7.3 percent pace for 2017, according to data published by the National Bureau of Statistics on Thursday.

Millennial China’s Expensive Skin
More and more Chinese young women are flocking into skin management clinics for pro-level coaching on beauty supplements, injectable Botox or fillers, and holistic nutrition.

Millennial China’s Expensive Skin

What China’s Middle Class Says About Trump, Trade and Tomorrow
We asked people across the country how an economic slowdown has affected their optimism. The answer in most cases — it hasn’t.

China’s economic policy dilemma increases as boosting growth is eating into local government coffers
Most of the nation’s 31 provinces failed to meet 2018 budget targets after China’s cut in value-added tax last year Analysts expect fiscal revenue growth to slow further due to planned business tax cut

Trade-war-hit Chinese manufacturers cut hiring and pay
Half-empty job fair adds to signs of trouble for consumer spending

Greater Bay Area to drive economy of China, even world
For the first time in history, the economy of Shenzhen surpassed that of Hong Kong, with Shenzhen’s 2018 GDP growth rising 7.6 percent to 2.42 trillion yuan ($362.2 billion) compared with Hong Kong’s HK$2.845 trillion, equivalent to 2.4 trillion yuan based on the annual average exchange rate given by Hong Kong’s Census and Statistics Department.

Shaping the future of the Pearl River Delta
With a combined population of over 69 million and a GDP of 1.53 trillion as of the end of 2017, the Greater Bay Area (GBA) represents a significant opportunity to shape the future of the Pearl River Delta region.

Worth Waiting For: The Greater Bay Area Megacity Blueprint
A fresh round of business incentives for corporations as the Greater Bay Area master plan provides clarity One-hour living circle to encourage the flow of people and capital, fundamental to the next phase of growth in the Greater Bay Area real estate sector, says CBRE’s Tom Gaffney

The grey wall of China: inside the world’s concrete superpower
Beijing’s new airport is just the latest megaproject that has seen China pour more concrete every two years than the US did in the entire 20th century

Luckin rival Coffee Box closes up to 40% of stores
Coffee Box, a local rival to “new retail” coffee brand Luckin, has shuttered 30% to 40% of its more than 400 stores nationwide in a pullback that began around the Spring Festival holiday. There are now 70 outlets in Shanghai compared with 120, and around 40 in Beijing vs. more than 60. Coffee Box stated that it targeted unprofitable storefronts and those that failed to meet certain brand requirements as it seeks to regain profitability amidst a cooling capital market. The company expects to return to profitability in the second quarter and a new financing round will be announced in April.

Briefing: Luckin rival Coffee Box closes up to 40% of stores

SoftBank Vision Fund Bets $1.5 Billion on China Used-Cars Giant
The investment values Chehaoduo, the parent of online sites Guazi and Maoduo, at more than $9 billion, a representative for the startup said. It intends to use the money to develop technology in data and cloud computing, the company added in a statement.

Tesla seeks $2 billion in loans for Shanghai Gigafactory
Tesla is looking for about $2 billion (RMB 13 billion) in loans for its Gigafactory 3 project in Shanghai, the company’s first production base outside of the US. A slew of local state-owned banks are expected to provide the massive loans jointly to the US EV giant, including Shanghai Pudong Development Bank, Industrial and Commercial Bank of China, China Construction Bank, and others, according to New York-based investment research firm JL Warren Capital. The interest rate for the first stage of financing will probably be 3.9%, below the current 4.35% benchmark rate set by China’s central bank.

Briefing: Tesla seeks $2 billion in loans for Shanghai Gigafactory

Will China’s EV Leadership Bring Global Automotive Dominance?
In the first half of 2018 Chinese automakers built 400,000 electric cars, over half the global total and twice as many EVs as the year before. So quickly has China grown to become the world’s dominant EV manufacturer that it appears destined to become a leading player in the global car market overall, particularly as EVs expand beyond their niche status to the mainstream.

Even China Can’t Solve Carmakers’ Growth Problem
While auto sales will continue to grow, they won’t return to the breakneck pace of the recent past

Netease restructures amid slowing e-commerce growth
Chinese internet and gaming giant Netease is slashing up to 50% of headcount from several business units, including e-commerce arm Yanxuan and its Hangzhou-based educational product unit, as it focuses on core businesses and boosting returns.

Netease restructures amid slowing e-commerce growth

China to open 400 big data, AI majors at its universities in 2019
China will form around 400 new majors relating to artificial intelligence, robotics, and big data at universities around the country in 2019. According to Fan Hailin, a deputy director at the Department of Higher Education, the curriculum for the newly established majors will include “computer application technology, information and communication, [and] control science and engineering.” The Ministry of Education also plans to continue promoting online courses during the year.

Briefing: China to open 400 big data, AI majors at its universities in 2019

Mahathir’s Malaysia still ‘open for business’ with China despite stalled rail link: top trade official Dr Ong Kian Ming
Upheaval over Beijing-financed projects such as the ECRL has not affected bilateral trade, says deputy minister of international trade and industry Dr Ong Kian Ming prefers to view economic ties in terms of the countries’ total trade volume, which reached a record high of US$108.6 billion in 2018

How Far Does the China Belt and Road ‘Pushback’ Really Go?
While the BRI has no doubt suffered serious setbacks, one should be wary about overestimating or misreading them.

The US-China Future: Meet Vietnam, Thailand, Mexico, Malaysia, Turkey, and the Philippines
The China lawyers at my firm are hearing the same sort of things. More importantly, we are being tasked with helping our clients reduce or eliminate their presence in China and then working with them on the legal side of doing business with other countries. What countries? So far we are seeing/hearing the following

The US-China Future: Meet Vietnam, Thailand, Mexico, Malaysia, Turkey, and the Philippines

Trump-Kim summit 2019: Xi could be ‘more helpful’, says US president
As the Hanoi summit between the United States and North Korea ends in disappointment, the US president warns trade war talks with Beijing could go a similar way, even as he acknowledges Chinese support

China WFOEs and Special Purpose Vehicles: Who Should Own Your China WFOE?

One of the first tasks in forming a WFOE in China is to determine what entity will be the shareholder of the WFOE. It is possible for an individual or individuals to own a China WFOE, but for various reasons, our China WFOE formation lawyers nearly always discourage that.

China WFOEs and Special Purpose Vehicles: Who Should Own Your China WFOE?

China’s Huge Number of Vacant Apartments Are Causing a Problem
One-fifth of China’s urban housing stock has been bought up and left vacant, and it’s adding to the country’s housing woes.

Hundreds of Chinese villagers end up on social credit blacklist after being ‘tricked’ into applying for US$15m worth of loans
Uneducated rural residents say they did not realise what they were signing and said they thought they were acting as guarantors for friends and relatives Half of village’s population affected after they were pursued by the courts for unpaid debts

Chinese-owned video sharing TikTok app to pay US$5.7 million fine to settle US charges it illegally gathered children’s data
The social network failed to obtain parental consent from its underage users, says the Federal Trade Commission

Donald Trump, human rights activist? Meet the Chinese dissidents sticking up for the US president
Inspired by escalation of Washington actions against Beijing, some dissidents see Trump as their best ally for political reform in China

Chinese-funded institutes on U.S. college campuses condemned in Senate report
A scathing Senate report released Wednesday says that without major changes, so-called Confucius Institutes paid for by the Chinese government and operating on dozens of American college campuses should shut down.

Chinese Communist Party warns members to put faith in Marx not ‘ghosts and spirits’
China’s ruling Communist Party warned party members on Wednesday to stick to Marx and Lenin and not believe in “ghosts and spirits”, in the latest effort to root out superstitious practices.

Shoes on or off inside? The Chinese haven’t always been in agreement, especially when there are chairs involved
Removing one’s footwear upon entering a house is often perceived as a pan-Asian custom. But it wasn’t always the case for the imperial Chinese

Alibaba Sees More China-Hollywood Deals After Its ‘Green Book’ Win
After becoming the first Chinese internet company to back a best picture Oscar winner, Alibaba Group Holding Ltd. is eyeing more Hollywood movies. The company also expects that more U.S. goods and services will be imported into China, and that the U.S. trade deficit with China will narrow.

Alain Gillard
Information Officer
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