Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – February 9, 2022

Is the deglobalisation writing on the wall? How China is reversing cultural openness with the West
In the decade or since Beijing hosted the Summer Olympics, the country’s relationship with developed economies has descended into antagonism and confrontation. Public sentiment, official rhetoric and general contact has shifted as well amid the belief that others are trying to stop China’s rise.

China well-being declined last year, but still better than other major markets, Lululemon survey finds
Chinese people continued to have the world’s highest well-being score in 2021. Chinese citizens are more likely to use a number of top well-being strategies: Lululemon executive.

Why China may finally become an exporter of inflation
A deflationary force to its trading partners for a long time, China has kept inflation in check largely because of its pool of cheap labour. But urbanisation is slowing, population growth is collapsing and addressing rampant inequalities is on the government’s agenda  First, China’s urbanisation is slowing, and population growth is collapsing. As a result, wage growth for migrant workers is likely to be very significant in the decades ahead. Second, Beijing’s “common prosperity” drive is designed to address inequality and the exploitation of migrant workers.Moreover, China has begun to show better self-discipline in its monetary policy. For example, it has refrained from quantitative easing during the Covid-19 crisis. This may mean that subsidised and cheap credit is ending for the country’s vast export apparatus. Finally, China’s aggressive decarbonisation efforts will add considerable costs to production over the next few decades.

How Does Excessive Debt Hurt an Economy?
Most economists have trouble understanding why too much debt may harm an economy, let alone how much debt counts as too much. To make matters worse, the common practice of comparing vastly different countries’ debt-to-GDP levels is not a useful tool for gauging how a particular economy is likely to manage its debt burden.

China GDP: with the ‘pressure on’, what do local economic targets say about the 2022 national outlook?
China’s national gross domestic product (GDP) growth rate target for 2022 is expected to be announced during the ‘two sessions’ in March   China posted a better-than-expected economic growth of 8.1 per cent last year

Beijing’s Olympian symbol of self-assurance
Omicron is a test for China, but its zero-Covid-strategy is seen as a sign of strength, writes Vincent Brussee. This is the sixth in a series of short analyses that looks at China’s systemic competition and normative rivalry with the US and the EU. A look beyond the Beijing leadership shows how far debates about the features of political systems and the power to interpret events reach into Chinese society – and possibly shape the country’s actions.

RCEP: why benefits from the world’s largest trade pact may not be as clear-cut as they seem
Regional Comprehensive Economic Partnership forecast to boost intraregional trade by nearly 2 per cent, or about US$42 billion    But the potential benefits in some sectors like e-commerce or for workers are uncertain, due to limitations in its scope, experts say

China’s zero-Covid policy threatens global economic growth, says Bank of Japan policymaker
China’s zero-Covid curbs may prolong supply-chain woes and intensify inflationary pressures, Japanese official Toyoaki Nakamura cautions   Remark follows a warning last month by International Monetary Fund head Kristalina Georgieva that China should reassess its approach

China misses trade targets it promised to Trump
China fell more than $213 billion short of its commitment to increase purchases of US goods and services that it made to then-President Donald Trump in 2020, according to a report released Tuesday. The commitment was made in what’s known as the Phase One deal, in which Beijing promised to purchase $200 billion more in American exports than it had in 2017, before a US-China trade war began. Trump and Chinese President Xi Jinping both stopped escalating tariffs after the deal was signed.   The deal required China to meet its purchase commitments by the end of 2021. While China was never on track to meet the target number, a new report from the Peterson Institute for International Economics gives the first complete picture of how much was purchased over the two-year period.  Ultimately, China bought only 57% of the US exports it had committed to purchase under the agreement, according to the report, which analyzed new trade data from the Department of Commerce. “China bought none of the additional $200 billion of exports Trump’s deal had promised,” wrote Chad Bown, a senior fellow at the institute, in his report.

US trade deficit hit a record in 2021 as China gap widens
Surging demand from American consumers, reined in during the pandemic shutdowns, helped drive imports from China   A Trump-era trade deal aimed at closing the trade-in-goods gap fails to reverse the course

China’s unicorns tap US$240 billion in private-market funding as they face IPO freeze
The 2021 private-market fundraising for Asian entrepreneurs doubled to over US$240 billion from 2017, driven largely by Chinese firms, according to JPMorgan’s estimate    Firms such as Blackstone, PAG and TPG have stepped up in doing more pre-IPO or growth-stage investments in Asia, according to UBS

China’s Regulatory Plans for Technology Companies and the Platform Economy in 2022
New government document reveals the trajectory of China’s regulatory plans for technology companies in 2022 – targeting antitrust, data and algorithm security, fintech regulation, and gig workers’ rights, among other areas. Companies operating in this domain or whose businesses depend on digital platforms are advised to pay close attention to their compliances and risk exposure. Also to be noted is the fact that sector regulatory guidelines are being continuously developed by authorities.

How China’s ‘lying flat’ generation is driving the country towards common prosperity
Some dismiss them as lazy, but China’s ‘lying flat’ youths are doing their share for society by drawing attention to the country’s growing wealth inequality    The refusal to work long hours for a low wage or strive for empty success should not be criticised, but used to fuel the national drive for common prosperity

Podcast : China’s human capital problem
How are industrialisation and automation affecting Chinese workers?   China is a highly unequal country. There are many reasons for this, ranging from a lack of social services to a lack of social mobility. Today Giuseppe Porcaro is joined by Bruegel Senior fellow Alicia García-Herrero, and Scott Rozelle, Co-director at Stanford Center on China’s Economy and Institutions, to talk about the impact of industrialisation and automation are having on rural and low-income workers in China.

China Evergrande vows to build 600,000 homes in 2022 and fully restore operations as it tries to sell its way out of its debt
Evergrande has about 220 billion yuan of funds in hand and contracted cash, Hui Ka-yan said during a Sunday meeting, according to a person familiar with the matter  The Guangzhou-based developer aims to fully restore construction operations and resume selling as soon as possible, Hui said

America’s Chinese Tech Conundrum
America’s policies toward technology from China don’t always seem coherent. The Biden administration is trying to figure out what to do about apps from China, including TikTok, which is owned by the Chinese internet giant ByteDance. U.S. officials have worried for years that China’s government might turn the information collected by the social media site against Americans. But the video game League of Legends — owned by China’s Tencent — is also popular in the U.S. The Chinese e-commerce app Shein is a hit with young Americans and collects information from their phones. Are those OK? The U.S. government has effectively banned smartphones from Chinese companies such as Huawei. But U.S. corporations are buying powerful computers called servers made by Chinese companies, and nearly all the smartphones that Americans buy are made in Chinese factories. Is that OK? There’s a difference between a data-hogging app and a laptop put together on a Chinese assembly line. But because there is so much mistrust of China among the U.S. public and politicians, it can be difficult for Americans to distinguish legitimate national security or economic threats from the imagined ones. “The alarm about everything made in China is alarmist, and I would say delusional,” said Dr. Graham T. Allison, a professor of government at Harvard University.

Supply Chain Predictions for 2022
Any ease in logistics supply chain pressures will be countered if there is a COVID-19 outbreak in China.  China’s zero COVID policy has kept most of the country operating under normal conditions.  However, more infectious variants such as Omicron could be a factor, and China’s domestic vaccines reportedly offer less protection than vaccines used in the West. An outbreak and the consequent shutdowns could cripple many companies that rely on goods from China.

Alibaba Details Use Of Proceeds For $1 billion Sustainability Bond
Alibaba said on Tuesday that net proceeds of about US$986.9 million from its dollar-denominated bond sale went into projects including energy efficiency, green buildings, Covid-19 crisis response and buying renewable energy.  Alibaba broke down its use of proceeds into $451 million on constructing energy-efficient data centers and $352 million on erecting and refurbishing green buildings. The company has engineered 1.9 million square meters in gross floor area of energy-efficient buildings with the funds.   The rest of the proceeds were put towards Covid-19 relief efforts, including technical support, merchant relief and rural support programs; the purchase of solar and wind power; and recycling and waste management programs.

China boasts over 1.4m 5G base stations
has set up a total of 1.43 million 5G base stations as of the end of 2021 amid the country’s efforts to boost information and communication technologies, according to the Ministry of Industry and Information Technology.  The figure accounted for over 60 percent of the global total, with 10.1 5G base stations serving every 10,000 people in China, nearly doubling from the end of 2020, the ministry said. Last year, China’s investment in 5G reached 184.9 billion yuan ($29 billion), a share of 45.6 percent in fixed-asset investment of the telecommunication industry, up 8.9 percentage points from that of a year ago.

Investors shun Chinese developers as bond sales slump 70 per cent with market frozen for many junk-rated borrowers amid defaults
Chinese real estate companies issued 48.1 billion yuan (US$7.6 billion) worth of bonds in January, a 70 per cent decline from a year earlier   The average yield on property firms’ bonds issued in January was 8.63 per cent, an increase of 263 basis points compared to December

Luckin Coffee: can China’s Starbucks win back investors?
In lower than 5 years of existence, Luckin Espresso has been variously a logo of the dynamism of Chinese language capitalism, the topic of a large fraud scandal, and now — its new senior executives insist — a plucky comeback story that has the potential to check US-China relations.    Based in 2017, the chain of espresso retailers unfold shortly throughout China, making a homegrown challenger to Starbucks. Simply two years later, Luckin floated on Nasdaq with a market worth that reached $13bn as buyers have been seduced by the prospect of booming Chinese language client demand. However the firm unravelled in 2020 after it was revealed to have defrauded buyers by faking greater than $300mn of gross sales. Luckin was delisted by Nasdaq and compelled to pay $180mn to settle prices from the US Securities and Change Fee.   The scandal stung buyers resembling BlackRock and GIC and supplied the most recent illustration of the failure of Large 4 auditors to identify holes in firm accounts — Luckin had been audited by EY.

Aluminium deficit falls deeper following Covid outbreaks in China
Covid outbreaks in Southern China have led to further supply disruptions fuelling the alumina and aluminium prices rally. Meanwhile, Europe saw further curtailments amid elevated power prices

China consolidates state food giants
China moved forward with the restructuring and consolidation of two of the country’s biggest state-owned agriculture firms by putting together two join ventures to preside over overlapping businesses, reports Caixin. State-owned grain giant Cofco Corp and national

RCEP: why benefits from the world’s largest trade pact may not be as clear-cut as they seem
Regional Comprehensive Economic Partnership forecast to boost intraregional trade by nearly 2 per cent, or about US$42 billion    But the potential benefits in some sectors like e-commerce or for workers are uncertain, due to limitations in its scope, experts say

US-China trade deal a ‘historic failure’ with purchases more than 30 per cent short of target, PIIE report says
China bought only 57 per cent of the US exports it had committed to purchase under the phase-one trade deal with the United States, according to a new report    According to the Peterson Institute for International Economics, agriculture purchases under the deal reached 83 per cent of the total commitment

US-China relations: no matter how bad it gets do not cut off contact, Chinese analyst urges
Relations are no longer in free fall but there’s ‘still room’ to take action to stabilise ties in the first half of the year, academic says at event in Beijing     Another researcher suggests the two sides need a new framework for the relationship, and that maintaining communication and exchanges will be key

More entities added to US “unverified list”
The US Commerce Department has added 33 more Chinese entities to its “unverified list,” which means that US companies need to undergo an increased number of procedures in order to ship goods to the named entities, reports Reuters. The department took the step citing its inability to verify the legitimacy and reliability of the Chinese entities in relation to their use of US exports. The entities included listed companies, universities as well as aerospace and electronics suppliers.

Decoding India’s ‘paradoxical’ trade ties with China
Even amid a persisting 22-month-long border stand-off, the two-way trade between India and China rose to a historic high, wherein the trade balance stands in favour of China. What explains this phenomenon? How is India dealing with this reality?   In spite of all the efforts by the Indian government to decouple and diversify from the clutches of the Chinese economy, a complete delinking seems far-fetched at the present, considering the facts and figures at hand. However, with a clearly-defined, purpose-driven, and facilitating policy framework, combined with the boosting and diversification of the country’s industrial base with the support of businesses of all scales – micro, small, medium or large – it is not unattainable for a young and tech-savvy nation like India with ample entrepreneurial talent to at least reach a numerically safer trade balance with China in the near future, from which it can progress on towards higher targets.

Putin and Xi manifesto signals start of a new era
Moscow and Beijing’s unity stems from mutual distrust of the U.S.  The Asia Pacific is entering a new period of turbulence. Earlier eras of geopolitical instability — Europe prior to the Second World War is a good example — have led to all manner of new security arrangements, concordats, pacts, treaties and indeed formal alliances.       It would be naive to assume Asia’s recent rash of security arrangements will develop only between the U.S. and its friends. In this sense, Putin and Xi’s recent manifesto does indeed suggest that international relations are entering a new era — one in which the U.S.’s adversaries are likely to cooperate ever more closely.

How China’s Economic Coercion Is Bringing Lithuania and Australia Together
The bonds between Australia and Lithuania are strengthening as a result of China’s attempts to isolate the European country.    But what this episode also reveals is that China’s belligerence consistently keeps backfiring. Prior to its dispute with Lithuania, Australia and Lithuania were two countries that had very little to do with each other. Lithuania is Australia’s 75th largest trading partner, with two-way trade valued at a little over $100 million. While Landsbergis will be upgrading the Lithuanian consulate in Canberra to an embassy, Australia doesn’t even have an embassy in Lithuania. The Australian Embassy in Poland handles its limited interests in Lithuania.  Now Landsbergis will engage in high level talks with Australia’s foreign and defense ministers; he will be given the opportunity to address the prestigious National Press Club (broadcast live on the Australian Broadcasting Corporation) and will be generally fêted around Canberra like a hero. The bonds between Australia and Lithuania will strengthen and China’s attempts to isolate the country will have achieved the very opposite.

Australia offers timely lessons in resisting Chinese trade coercion
Australia’s rock lobster fisherfolk are an unlikely bunch to be found at the sharp end of an epoch-defining trade dispute, and yet here we are. Along with the country’s winemakers, the snarers of spiny crustaceans have been particularly hard hit by the blocks that China started imposing on Australian exports in 2020 in retaliation against Canberra’s call for an independent review into the origins of Covid.
The China-Australia dispute — perhaps the most salient current example of trade policy being weaponised for political ends — is being watched intently by policymakers worldwide, and particularly in Europe. The EU is considering how to support Lithuania against similar punishment by Beijing for establishing overly intimate diplomatic relations with Taiwan. It is also creating a legal “anti-coercion instrument” to deter future action.  Fortune seems so far to be favouring the brave. If China was hoping to cow Australia into submission with its absurd list of 14 grievances and make prime minister Scott Morrison’s administration vulnerable to domestic criticism on the issue, it’s largely failed. The blockades have hit some exports hard, but without a significant overall macroeconomic effect. Politically, they’ve hardened the consensus against being pushed around by Beijing.

The Chinese Legislature’s Hidden Agenda
Since 2020 the NPC has been adopting more and more bills without prior notification, jeopardizing earlier moves toward transparency.   The practice of hiding agenda items is also at odds with official rhetoric surrounding “whole-process people’s democracy,” a recent buzzword used to characterize China’s political system. The key feature of this ostensibly Chinese form of democracy, according to General Secretary Xi Jinping, is that the people have “the right to participate extensively” in the country’s political affairs, including lawmaking. In Xi’s own words, whole-process people’s democracy requires that the people’s congresses implement “the people’s rights to know, to participate, to express, and to oversee… in all aspects, all stages, and the whole process” of their work. But the NPC’s recent unexplained delays in disclosing certain agenda items in effect denies the people those rights and reduces the procedural legitimacy of the resulting legislation.  The NPCSC will likely approve the amendment within the year. The hidden-agenda practice it would codify has already inflicted great harm on the legislature’s transparency, predictability, and legitimacy by keeping the public in the dark about important legislation and irreversibly raising the specter of future “surprise” laws. But maybe that is the price authorities are willing to pay for political expediency.

Hong Kong’s young journalists decry the ‘death of free press’
Five years is the average career span of many young journalists in Hong Kong, or so my friends from the press school often joked. A low-wage career, with long and unconventional hours, exists only through a passionate passion for work. But last month, dozens of reporters with less time than that were forcibly ejected from the industry as two popular independent news channels, News and citizen news standThey were closed due to increased pressure from the authorities. Journalists have strongly condemned the “free press death” in Hong Kong, whose vibrant media scene – at least 15 newspaper headlines with a combination of political leanings and more than four news channels for a population of 7.4 million – was previously crowned as one of the newspapers. The most free in Asia.

Hong Kong’s supply of so-called nano flats to peak this year as government puts minimum size restrictions in place
Some 2,015 nano flats, measuring 215 sq ft or less ( editor’s note +/- 20 m2), are expected to be ready this year, according to JLL  A minimum flat size of 280 sq ft will apply to residential sites sold through government tender

Alain Gillard
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