Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – January 12, 2022

Can  “good emperor” Xi ride over factional fights into a third term?
As 2022 begins to unfold, mainstream global media – including the “gossipy” Chinese language Asian press, are agog with news commentaries and op-ed pieces speculating how difficult it is going to be for Xi Jinping to “win” a third term. However, people often forget the thumb rule for leadership succession in communist China. Which is, the consensus on the next leader is arrived at within the central committee much before the party Congress.

China’s year of living less dangerously
Last year, amid a period of frenetic and dislocating policy changes, China’s authorities were determined to deleverage an over-leveraged economy. As this year gets under way, they are now responding to the unintended consequences of those policies with some urgency.   With a property crisis, energy crisis, food shortages and a significant slowdown in economic growth, Beijing is seeking to stabilise and consolidate in what is, with the twice-a-decade Communist Party’s national congress looming later this year, a sensitive year for Xi Jinping as he seeks an unprecedented third term as the party’s leader.

China inflation: easing consumer, factory-gate price pressure opens door for Beijing to support slowing economy
China’s official consumer price index (CPI) rose by 1.5 per cent in December from a year earlier, down from 2.3 per cent growth in November     China’s producer price index (PPI) rose by 10.3 per cent in December, down from a rise of 12.9 per cent in November

China inflation falls below 1 percent in 2021
The mainland’s consumer price index (CPI) climbed 0.9 percent last year, well below Beijing’s annual inflation target of approximately 3 percent, the National Bureau of Statistics said Wednesday.   Consumer prices rose 2.5 percent and 2.9 percent in 2020 and 2019, respectively.

Mainland producer inflation drops for a second month
China’s producer price index (PPI), which measures costs for goods at the factory gate, rose 10.3 percent in December from the same month last year, data from the National Bureau of Statistics (NBS) showed Wednesday.     That is down from the 12.9 percent year-on-year increase registered in November and the peak of 13.5 percent hit in October.

Goldman cuts China GDP target for 2022 — and exports aren’t the problem
Goldman Sachs cut its 2022 forecast for China economic growth to 4.3%, down from 4.8% previously.
The U.S. investment bank’s analysis is based on expectation of increased restrictions on business activity to contain the omicron Covid variant.   Consumption will likely be affected the most, while exports less so as they assume limited disruptions to supply chains, the analysts said.

China’s new bank loans hit record US$3.1 trillion in 2021, more than Britain’s GDP
Chinese banks extended 1.13 trillion yuan (US$177 billion) in new yuan loans in December, down from 1.27 trillion yuan in November     New bank lending hit a record 19.95 trillion yuan (US$3.1 trillion) for the year, up 1.6 per cent from 19.63 trillion yuan in 2020

Slowing loan growth weighs on cautious Chinese banks
Credit growth continued to slow in December, despite China’s central bank loosening monetary policy  This month’s small growth in credits shows that despite cuts to RRR and interest rates, banks are reluctant to lend as their concern is more about credit quality. This is because several big corporates have recently defaulted. Though the default entities are mostly real estate developers, the risk is increasing to the suppliers, mostly in the industry of construction materials.   In fact, this is exactly the result of the deleveraging reform, which is a reduction in debts. But if loans continue to experience a monthly decrease, the central government may need to send out a clearer message to banks. If risk awareness is on the top of the list of banks’ concerns, then further RRR and interest rate cuts may not yield a result of more credits. That means that even a loosening monetary policy may not boost economic activity.   We may also see a return to the old days when banks lent to State-owned Enterprises (SOEs), which are supposed to be better in terms of repayment ability.

China and lithium: why it’s time to retire the narrative of resource nationalism
While some in China are concerned by its dependence on imported materials for electric vehicle batteries, the West is anxious about Chinese control of resources    Fundamental differences exist between mineral and energy resources, however. Unlike oil and gas, minerals are recyclable

China Merges Three Rare Earths State-Owned Entities to Increase Pricing Power and Efficiency
On December 23, 2021, China Rare Earth Group Co. Ltd, a state-owned enterprise (SOE) directly supervised by China’s state assets regulator was formally established in East China’s Ganzhou, Jiangxi Province. The newly launched rare earth mega SOE is a conglomerate of some top industrial producers, including the rare earth units of three of the “Big Six” SOEs that dominate the rare earth industry – Aluminum Corporation of China (CHALCO), China Minmetals Corporation, and Ganzhou Rare Earth Group Co., Ltd and two research companies – China Iron & Steel Research Institute Group and Grinm Group Corporation Ltd.

World’s largest iPhone factory maintains production schedule amid latest Covid-19 outbreak in central China
Operations at Foxconn’s smartphone and components manufacturing complex in Zhengzhou have been unaffected by the latest Covid-19 outbreak in Henan province    These operations, which employ more than 300,000 workers, are responsible for Zhengzhou producing about half of the world’s iPhones

Chinese port workers jailed in Dalian for Covid breaches
A Chinese court sentenced three port workers to up to 57 months’ imprisonment for violating the Covid-19 containment rules as authorities stepped up efforts to eradicate the virus with blockades and movement restrictions. Three workers at an imported goods company in the northeastern port city of Darian allegedly violated Covid containment measures, including not requiring employees to wear masks and protective clothing when handling cargo in 202039. He was sentenced to 57 months in prison.
According to court documents, the company was also fined RMB 800,000 ($ 126,000) after the breach led to an outbreak in the city. Chinese authorities tighten restrictions in areas hit by Omicron outbreaks, Zero Covid Strategy..

Chinese medical laboratory boss detained on suspicion of ‘causing spread of coronavirus’
Regional manager for the Zhengzhou Kingmed centre is in custody and case is being investigated, police say     It comes as Henan province is grappling with its worst outbreak since the early months of the pandemic

Anomalies In The Chinese Covid Data – Evidence Of Manipulation?
Four Anomalies Related to China’s Covid count The sudden and complete disappearance of Chinese covid deaths from official reports after April 1 2020 The peculiar Case Fatality Rates in China — the primary measure of the virulence of the disease  The anomalous overall death statistics in China in 2020 and 2021

Beijing’s Winter Olympics Warning as COVID-19 Wave Hits China
Beijing traffic management authorities have warned residents to keep their distance from Winter Olympic vehicles operating as part of the COVID-19 closed-loop environment. 
Authorities warned that residents “should not knock on the windows” of vehicles which display a red Beijing 2022 label. They also made clear that they should not help in the case of an accident, but should instead wait for emergency services to arrive.    The red label is shown in the picture below:

Chinese Expert: ‘TCM Will Play Greater Role in Treating Omicron’
Attention to traditional Chinese medicines renewed as Tianjin reported dozens of breakthrough infections.

Has Pop Mart become the salvation for KFC in China?
Young Chinese have gone wild about the KFC’s blind boxes, that have been launched by the American fast-food brand in collaboration with the Chinese toymaker Pop Mart, who is leading the country’s designer toy market and an expert in making record sales of blind boxes.  The launch of the limited-edition blind box is designed to celebrate the 35th anniversary of KFC’s entry into the Chinese market. It is understood that a total of 260,000 blind boxes are made available across China’s tier 1 and tier 2 cities, with each store, allocated 36 sets to give out.  Customers who order a family set meal priced for 99 RMB ($15.58) can get a box that randomly includes one of the seven figures of Pop Mart’s most beloved Intellectual Property (IP) Dimoo. This is not the first time a fast-food brand has partnered with a toy company, with McDonald’s omnipresent Happy Meal consistently selling well for a number of years.

Tencent’s Pony Ma Vows To Serve The Country Amid Government’s Tech Crackdown
Low-profile tech billionaire Pony Ma has issued another pledge to support China’s development in a recent address to Tencent’s employees that touched upon the future of his gaming and social media giant.    Although Tencent has grown and benefited from China’s development, it has by no means become an irreplaceable company, the 50-year-old tycoon said during a meeting with staff towards the end of last year. Ma, who is currently China’s third-richest man with a net worth of $46.9 billion, also said Tencent knows its place and won’t neglect or shy away from serving its duties of serving the country and society.  Tencent, for its part, has been ordered to limit minor’s playing time and give up exclusive music rights. It has also been repeatedly fined for failing to properly report on past mergers and acquisitions.   Tencent has been careful to adjust to the new realities and tow the government’s line. It handed out $16 billon of e-commerce platform’s shares as a special dividend payouts towards the end of last year. The move is in line with the government’s wish of breaking up enclosed ecosystems and allowing for more competition., which once counted Tencent as its largest shareholder, used to enjoy access to WeChat while its competitor Alibaba couldn’t directly share or promote product offerings via the messaging platform.  Tencent has also recently raised $3 billion by trimming its stake in Singapore-based gaming and e-commerce firm Sea, prompting speculation that it may eventually step back from other investments such as stakes in discount shopping site Pinduoduo and food-delivery giant Meituan.

How Hong Kong can be a model for China’s global talent search
China’s economic fortunes are tied to its talent pool, and it has a lot of catching up to do to match the drawing power of the US    One way to close that gap is to recreate Hong Kong on the mainland and use its strengths to attract talent from around the world

China’s civil servants ordered to tighten their belts
Local governments across the country are cutting back on a range of perks and bonuses as part of a drive to reduce costs     Some public employees have seen their monthly pay packets fall by up to a third

Kerry Properties becomes latest Hong Kong developer to make huge land acquisition in China
Kerry Properties, controlled by Malaysian billionaire Robert Kuok, pays 13.3 billion yuan (US$2.1 billion) for four plots in Shanghai     Kerry joins Shui On Land, Hong Kong Land and Hong Kong Resorts International who have recently splashed billions on land purchases in top tier Chinese cities

pocast : Understanding Japan’s economic relations with China – What can Europe learn?
2022 marks the 50th anniversary of the normalisation of diplomatic relations between Japan and China. As the world’s third largest economy, Japan cannot neglect the importance of economic and trade relations with China, despite tensions between two countries. How does Japan manage its economic proximity with China under the circumstances? Can Europe learn from Japan when it comes to juggling close economic relations with China when relations are bad?   Giuseppe Porcaro and Alicia García-Herrero are joined by Yoshikazu Kato, Director of Trans-Pacific Group Institute and Research Fellow at Rakuten Securities Economic Research Institute, to talk about how Europe is seen by Japan and China, what Europe can learn from Japan’s economic relations with China and to explore the possibility of a common approach to China.

Don’t Let Lithuania Stand Alone
The Baltic nation is only the latest country to suffer China’s economic punishment. Its friends should help — and harden their own defenses.   At the same time, like-minded countries should harden their defenses against future coercion of this kind. Threats of countermeasures may not directly deter China, especially over issues as sensitive as Taiwan. But better preparation can help neutralize the impact of its pressure campaigns. Governments could establish a formal relief fund for companies being targeted, for instance, while offering additional incentives to “friend-shore” critical supply chains to more dependable allies. They should also track and publicize the threats their companies are receiving, many of which are never brought to light. Coordinated action will be crucial; Germany should try to hammer together a consensus when it hosts the G-7 this year.   Lithuania won’t be the last country to learn the costs of crossing China. Prudent, concerted action can lower those costs — and maybe encourage Beijing to find other ways to register its displeasure.

US and China are not ready to talk about nuclear arms controls
The world’s five most powerful nuclear weapons states delivered a New Year surprise: by stating last week that “a nuclear war cannot be won and must never be fought”, the US, Russia, China, the UK and France signalled their willingness to tackle growing nuclear conflict risk arising from geopolitical tensions, cyber warfare and the new delivery technologies.   The move from the permanent members of the UN Security Council — the so-called P5, and also the only countries recognised as nuclear weapons states under the Nonproliferation Treaty — invokes the most important moment in the history of nuclear arms control: It repeats the language of the 1985 joint statement of US president Ronald Reagan and Soviet general secretary Mikhail Gorbachev, which led to the two superpowers’ disarmament push and the end of the cold war.

Why China won’t lose sleep over Russian troops in Kazakhstan
Suggestions of China-Russia rivalry for power in Central Asia miss the mark. In reality, while both are active in the region, their roles are more complementary than competitive    Russia is the de facto provider of security guarantees, while China is the economic opportunity everyone wants to tap    In fact, China is happiest when someone else is dealing with Central Asian security questions. In the immediate fallout from the collapse of the government in Afghanistan, it was not Chinese soldiers or weapons that were rushed to Central Asian borders, but Russian ones.   On the economic side, Russian companies are active in Central Asia, but cannot compete with their Chinese counterparts, whose appetites are on a different scale.   Similarly, the almost bottomless Chinese consumer market is something that Central Asian producers are increasingly keen to have access to. The entire economic geography of this region is being pulled towards China not because of geopolitics, but because of its sheer economic weight.  The “Silk Road economic belt” strand of the Belt and Road Initiative, which cuts through Central Asia, also ties Russia into China’s wider vision of global prosperity. Consequently, Moscow has little interest in complicating it; rather, it is focused on ensuring it benefits as well.   The question is in the medium to longer term – when China starts to worry about being dependent on Russian security guarantees.  At the moment, Beijing seems comfortable. But, at some point, this thinking may change. In many other places, China has increasingly started to try to provide its own security guarantees, and there is no reason to think this might not also take place in Central Asia.
On the other side of the coin, the tipping point for Russia is likely to be when Chinese economic investment into Central Asia starts to turn into unfettered Chinese economic influence and power in Russia directly. But this concern appears to be receding, as Moscow seems to increasingly welcome and open up its economy to Chinese investment and connections – in large part due to tensions with the West.  But none of this is about Kazakhstan. Rather, this is about China and Russia’s larger posturing and view of their respective roles in the world. Within this context, Beijing is happy if Moscow is going to play a role in tidying up what looks like an increasingly messy bout of political infighting in Kazakhstan, while Moscow is pleased to be seen as the regional security guarantor.    In contrast to many other situations involving China, this is a win-win for them both.

China’s Xi Jinping to his top leadership: ‘no mercy’ in fight against corruption
Anti-corruption success is key message in approach to this year’s national party congress    Xi also urges cadres to align with key messages of last year’s sixth party plenum, which solidified his position

UK court fines Chinese sports broadcaster
The Premier League, the world’s most-watched sports league, has been awarded $213 million by London’s High Court after the breakdown of a broadcast deal with China’s PPLive Sports International, reports Reuters. The Premier League ended their contract with PPLive in September 2020 after the broadcaster, part of the retail group Suning that also owns Serie A club Inter Milan, defaulted on payments due in March and June that year.

China has built an artificial moon that simulates low-gravity conditions on Earth
It is said to be the first of its kind and could play a key role in the country’s future lunar missions      Landscape is supported by a magnetic field and was inspired by experiments to levitate a frog

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