Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – February 28, 2022

New Relief Measures for Service Industry and Small Businesses in China in 2022
The service industry and small businesses in China will benefit from a series of new relief measures ranging from tax exemptions to monetary support from financial institutions. The beneficial policies target some of the industries hardest hit by the COVID-19 pandemic, including catering, retail, and travel. Small businesses are the bedrock of China’s economy and their long-term health and development will therefore be key to ensuring China’s future economic growth.

Inflation to remain in reasonable range in 2022
China has the conditions in place and the capability to keep prices stable within a reasonable range in 2022 despite fears over global inflation, analysts and experts said. They expect inflation in China to remain mild this year, saying softer inflation will leave the door open for more monetary easing given downward economic pressure. Liu Zhicheng, a researcher at the market and price research institute of the Chinese Academy of Macro-economic Research, said while high global inflation is expected to persist for some time, the inflation pressure is likely to ease gradually in 2022 with the shift in monetary policy in major economies and the narrowing gap between supply and demand.

China’s Stimulus Fails to Jolt Construction in Blow to Economy
Commodities, housing and other data suggest slower growth Public investment may pick after March legislative meetings “High-frequency data suggest demand for properties likely remained weak in January,” Goldman Sachs Group Inc. said in a note last week. Mortgage lending “only accelerated modestly in January as property policy easing has been relatively measured thus far,” the Goldman Sachs analysts wrote. Economists at Morgan Stanley, who have been among the most bullish on China’s growth prospects this year, said this month that housing policy support has been “muted” so far, posing downside risks to their full-year GDP forecast of 5.5%. Growth momentum is weakening, with the latest Bloomberg survey showing economists have cut their forecasts for quarter-on-quarter expansion to 1% from 1.2% previously. “The limited data we have so far suggest there hasn’t been much, if any, improvement in construction so far this year,” said Adam Wolfe, an economist at Absolute Strategy Research in London. While the increase in local government bond issuance should result in more investment “it might take a few more months to see those infrastructure projects get underway. I’d expect to see construction picking up gradually from the second quarter.”

Podcast : Real Challenges Are Ahead for China’s Economy
China is the economic success story of the last half century as GDP and per capita GDP have gone up faster than any economy in history. But now some people see some problems developing. David Westin reports on “Wall Street Week.”

Ukraine crisis comes at a very bad time for the world economy
Unless the crisis can be resolved quickly, expectations for global growth this year and next will take a dive. Major economies like the US and China will not be spared from the fallout, while Europe could be left vulnerable to financial instability.

Russia’s war with Ukraine will hurt global food security
War in a breadbasket region like the Black Sea could impact food importers in the Middle East and Asia, especially as it comes at a time when pandemic dislocation has already sent food prices soaring around the world.

Ukraine crisis: Russia’s attack boosts commodities and shipping lines, while bank stocks, airlines and chip makers get hammered
Asia’s commodity and shipping stocks are emerging as safer bets given concerns about shortages of raw materials as Russia is a major exporter. Strategists at Goldman Sachs Group advocate a rotation to commodity-heavy Australia and recommend being overweight on the energy sector.

Ukraine invasion: Chinese chip makers a wild card in US-led sanction push against Russia
Washington said it planned to implement export controls to cut Russia off from semiconductors crucial to the military. US rules supposedly apply to all companies – including those in China – that use American technology, such as SMIC.

China, Russia and the race to a post-dollar world
Markets often react strongly to geopolitical events, but then later shrug them off. Not this time. Russia’s invasion of Ukraine is a key economic turning point that will have many lasting consequences. Among them will be a quickening of the shift to a bipolar global financial system — one based on the dollar, the other on the renminbi. The process of financial decoupling between Russia and the west has, of course, been going on for some time. Western banks reduced their exposure to Russian financial institutions by 80 per cent following the country’s annexation of Crimea in 2014, and their claims on the rest of Russia’s private sector have halved since then, according to a recent Capital Economics report. The new and more aggressive sanctions announced by the US will take that decoupling much further. It will also make Russia much more dependent on China, which will use the US and EU sanctions as an opportunity to pick up excess Russian oil and gas on the cheap. China is no fan of Vladimir Putin’s war. But it needs Russian commodities and arms, and sees the country as a key part of a new Beijing-led order, something Moscow is aware of. “China is our strategic cushion,” Sergei Karaganov, a political scientist at the Moscow-based Council on Foreign and Defense Policy, told Nikkei Asia recently. “We know that in any difficult situation, we can lean on it for military, political and economic support.”

Xi pursues policy of ‘pro-Russia neutrality’ despite Ukraine war
As Russia’s invasion of Ukraine has intensified, so have the rhetorical gymnastics of diplomats from the country’s giant neighbour that is also one of its few large remaining international partners: China. Their attempts to balance Beijing’s policy of support for global peace and stability while avoiding any criticism of Moscow are a sign that the war is unlikely to derail China’s quasi-alliance with Russia, diplomats and analysts said.“ The Chinese foreign ministry is doubling down on their alignment to Russia, so we are learning in real time what they mean when they say there are ‘no limits’ in their partnership,” said Evan Medeiros, a China expert at Georgetown University and former senior Asia policy adviser to Barack Obama. China’s close ties with Russia theoretically created a “strategic trilemma” for Beijing, potentially clashing with its other foreign policy principles, such as protection of states’ sovereignty, and with other important economic relationships with the US, Europe and elsewhere, he said. “But they are clearly privileging their alignment with Russia and pursuing something I would call pro-Russia neutrality.”

Don’t mention the invasion: China spins Russia’s war in Ukraine 
As images of Russian troops storming into Ukraine flashed on screens around the world, several senior Chinese foreign policy experts sent a flurry of text messages to friends and colleagues in the US: “Is this fake news?” Hours later, Hua Chunying, a Chinese foreign ministry spokesperson, repeated Russian defence ministry statements that Ukrainian cities would not be targeted in a briefing with reporters in Beijing and questioned whether the Russian invasion should be called “an invasion”. China’s refusal to acknowledge the all-out military assault that has included attacks on multiple cities, including the capital Kyiv, much less join in international condemnation of it, reflects the strength of Chinese president Xi Jinping’s relationship with Russian leader Vladimir Putin, experts say. After weeks of blaming the US for “hyping” the threat of war, China’s response also signals the fraught path the west will have to navigate as it seeks to punish Putin — a task that could be made much more difficult if Beijing maintains strong political and economic support for Moscow. Yun Sun, a China foreign policy expert at the Stimson Center, a US think-tank, said Beijing “has decided to side with Russia” and shifting its stance would be a question of degree, not direction.

What lessons are there for China in Russia’s invasion of Ukraine?
Russian armed forces were able to mount a sudden attack despite being under constant US watch  Ukrainian resistance to an airfield assault points to complexity of airborne use of special forces, blogger says.

The war in Ukraine and a decoupling world
Continuing on with the topic of my most recent Swamp Notes, I want to explore the impact the war in Ukraine might have on deglobalisation and economic decoupling between the west and Russia/China.As I noted a few months back, the Covid-related fears of personal protective equipment shortages didn’t stop various US states from going right back to buying cheap Chinese masks as soon as they were available. As you might remember, China hoarded them at the start of the coronavirus outbreak for obvious reasons. Businesses worried about keeping margins up in the wake of already spiralling inflation may be inclined to try and source as cheaply as they can, wherever they can. Certainly, they are lobbying to keep the loopholes that allow them to do so. But, as I argued in a column last week, that may no longer be politically possible. Countries worried about conflict are likely to try and build as much self-sufficiency as possible, looking to bolster national or regional supply chains and to find new sources for raw materials. Witness Germany pulling the plug on Nord Stream 2 (it’s about time) and European politicians starting to talk about speeding up the transition to clean energy in order to reduce dependence on Russia once and for all. See also the semiconductor chip wars that are at the heart of the new Great Power conflict between the US and China, with Europe somewhere in between as per usual.

Asia-Pacific wind energy sector set for rapid growth, as China becomes world’s largest market in 2030
China could add 93 gigawatts worth of new offshore wind power capacity from 2021 to 2030, Wood Mackenzie says. Global growth will be largely driven by high demand across Asia-Pacific, especially in China, webinar hears.

China sees biggest growth in energy and coal use since 2011
China recorded its biggest increase in total energy consumption and coal use in a decade in 2021, as the economy recovered from COVID-19 slowdown a year earlier, data from the country’s statistics bureau showed on Monday. China, the world’s biggest coal burner and greenhouse gas emitter, used 5.24 billion tonnes of standard coal equivalent of energy last year, up 5.2% from 2020, the National Bureau of Statistics (NBS) said. The rate of growth was the highest since 2011, according to Reuters records based on official data.

China on the Verge of Energy Crisis
The energy crisis, once thought to be out of reach, has recently reappeared gradually around the world, and China too is beginning to face the challenge as well. As the “world’s factory”, China is certainly aware of the importance of energy and mineral resources to a country. China’s 14th Five-Year Plan places great emphasis on the three major areas of economic security facing China, i.e., food security, energy security, and financial security. Among these three areas of economic security, food security and financial security are mainly domestic matters, but the key to energy security lies not in the domestic market but in the international market. To this end, a considerable amount of international resources will be invested in China’s future development to ensure energy security. This also means that energy security will be a long-term “sensitive point” and risk factor for China, and one that can be easily exploited for geopolitical “leverage”. At present, China is still trying to build a conventional energy security system. Not long ago, during Putin’s visit to China on February 4, China and Russia reached an agreement on energy purchases and sales. Enterprises of the two countries signed an agreement on the purchase and sale of natural gas, making it the second long-term gas supply contract between the two. After setting up the new pipeline, it is expected that Gazprom’s total gas supply to China will reach 48 billion cubic meters per year.

Climate change: global assets worth up to US$12.7 trillion to be exposed to climate risks by 2100, report by UN-backed panel says
The world faces unavoidable climate hazards as global warming reaches 1.5 degrees Celsius within two decades from pre-industrial levels, IPCC report says. Asia ‘potentially more vulnerable to climate change’, AECOM executive says. Climate change can have a direct physical impact on infrastructure networks, besides indirectly impacting the economy through disruption to transport and electricity supply, said Scott Dunn, vice-president for strategy and growth in Asia at American infrastructure consulting firm AECOM. “Given many of Asia’s long coastlines – especially in Southeast Asia – and heavily populated low-lying areas, the region is potentially more vulnerable to climate change.

How Alibaba Cloud Data Centers Will Reach 100% Clean Energy By 2030
Alibaba Cloud is on track to meet carbon reduction targets as it upgrades server-storing data centers around the world, according to a scientist on the project. The cloud computing arm of Alibaba Group aims to have its global data centers running entirely on clean energy by 2030, starting with upgrades to five of its hyper-scale data centers in China. “Eco-friendly data centers are critical to Alibaba’s sustainable operations,” Shanyuan Gao, General Manager of Alibaba Cloud Infrastructure’s Internet Data Center Division, told Alizila in an interview.

Chinese EV firms face new hurdle as battery supply bottleneck leads to delays in deliveries
Last week, Xpeng had to apologise to customers for delays in deliveries of P5 sedans due to insufficient battery supply Tesla asks buyers to wait for as long as four months before its vehicles are delivered.

Chinese EV start-up NIO seeks quicker secondary listing in Hong Kong via introduction, skips fundraising
Companies that seek a listing by introduction are able to do so because their existing shares are already widely held. Shanghai-based carmaker has applied for a listing by way of introduction in Singapore as well.

China’s ‘common prosperity’ push, consumer nationalism stir new challenges for global brands
Campaign to reduce wealth gap presents new marketing challenges for global brands, though most are positive about expanded middle class. International brands also have to contend with rising nationalism and consumer sentiment that has not yet fully recovered from the pandemic.

Ukraine crisis: crude oil price soars as sanctions on Russia spur fear of a global energy crisis
Brent futures jumped more than 7 per cent before pulling back slightly to trade near US$103 a barrel    Goldman Sachs raised its one-month forecast for Brent to US$115 a barrel, from US$95, with significant upside risks on further escalation or longer disruption.

What is China’s Swift equivalent and could it help Beijing reduce reliance on the US dollar?
The move to ban certain Russian banks from Swift is likely to accelerate expansion of Beijing’s cross-border payment and settlement system, analysts say. The Cross-Border Interbank Payment System, or CIPS, was launched in October 2015 to boost international use of China’s currency in trade settlements.

SWIFT restrictions on Russia likely to help boost China’s digital yuan, weaken dollar clout
Russia’s expulsion from the SWIFT financial messaging system will convince China to shift to digital money in global trade and finance to escape the ambit of American power.

Renmimbi is a profitable alternative to the dollar – ING
The Chinese renminbi is holding up exceptionally well and its credentials as a reserve currency continue to grow. Economists at ING expect this trend to continue.

Alain Gillard
Information Officer
Service Asie Pacifique
Place Sainctelette 2
1080 Bruxelles
Tél 02 421 85 09 – Fax 02 421 87 75
Copyright © 2020 awex, All rights reserved