Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – January 14, 2022

China’s global trade surplus surges in 2021
China’s global trade surplus surged to US$676.4 billion in 2021, likely the highest ever recorded by any country, as exports jumped 29.9 percent over a year earlier despite semiconductor shortages that disrupted manufacturing.  The country’s trade surplus in December swelled 20.8 percent over a year earlier to a monthly record of US$94.4 billion, customs data showed Friday.  Exports rose to US$3.3 trillion in 2021 despite shortages of processor chips for smartphones and other products as global demand rebounded from the pandemic. Manufacturers also were hampered by power rationing imposed in some areas. Although China piled up a series of monthly export surpluses last year, trade grew more slowly in December as the world’s second-largest economy showed signs of slowing.    Exports rose 20.9 percent year on year last month, after increasing 22 percent in November. Imports climbed 19.5 percent in December, down from a 31.7 percent gain the month before. China’s swelling trade surplus in 2021 prompted less criticism from the United States and other trading partners than in earlier years as they focused on containing coronavirus infections. The surplus with the US, one of the irritants behind a lingering trade war, rose 25.1 percent in 2021 over a year earlier to US$396.6 billion.

China’s trade surplus hits annual record as exports soar 30%
China’s trade surplus soared to its highest level on record last year as a sustained boom in exports helped counter a loss of momentum across the country’s wider economy.  Official data released on Friday showed that China’s trade surplus was $676bn for 2021, 26 per cent higher compared with the previous year.  Exports were 30 per cent higher at $3.36tn for the full year, with December’s year-on-year growth of 21 per cent adding to a streak of double-digit gains in every single month in 2021.

podcast : China trade surplus hits new high
Chinese exports surged in 2021 on solid global demand as countries reopened from pandemic lockdowns. China’s trade surplus is likely the highest figure in history for any country.

China’s zero-Covid strategy is a problem for the world as supply chain disruptions, inflation stall recovery
Recent citywide shutdowns and the return of strict social distancing measures suggest China’s self-imposed isolation will not end soon     While shifting from pandemic to endemic has its own challenges as the West well knows, the economic impacts of ‘zero-Covid’ are making global recovery harder

China’s hard-line COVID-zero response to Omicron could trigger supply-chain chaos
The holiday typically marks the largest annual movement of people in the world, but China’s transport ministry expects roughly half the number of citizens to travel for the holidays compared with pre-pandemic years owing to the outbreak. Zhuang says that employers may take advantage of those inter-China travel restrictions to actually keep factories open, instead of closing for the break, as is usually the case.  “Chinese firms are encouraging migrant workers or workers to stay where they work, which means that even with limited closures, factories can still operate through Chinese New Year,” Zhuang says. “That will ease some of the severe [supply-chain] disruptions.”  But with the pandemic now entering its third year and exacerbated by the more transmissible Omicron variant, analysts are unsure whether China can, or should, maintain its zero-tolerance approach for much longer.
“Imposing lockdowns and strict restrictions more frequently and widespread would carry significant economic cost,” says Tommy Wu, an economist at Oxford Economics. With the pandemic now the norm in the Western world, too, China would be unable to rely on an export-driven post-lockdown recovery as it did during the pandemic’s initial stages. On Wednesday, U.S. investment bank Goldman Sachscited Omicron and the lockdowns as it cut its forecast for China GDP growth to 4.3% from 4.8% .
But China seems far from ready to abandon its COVID-zero approach.  In a note last week Morgan Stanley said China will only consider shifting away from COVID zero when two conditions are met: COVID-19 appears less deadly globally, and Chinese citizens gain access to mRNA vaccines, which are not yet approved for the Chinese market.

Globalization, complexity, and China
Anthea Roberts and Nicolas Lamp, authors of the new book ‘Six Faces of Globalization,’ appeared on the Sinica Podcast to discuss China’s role in a changing world — and how to think about common narratives on this or any other complex topic.

China state think tank sees ‘targeted decoupling’ in supply chains with the West as a top risk for 2022 amid rising tensions
Report comes as Washington continues to restrict China’s access to strategic technologies, such as advanced chips     Global financial turmoil and increased tensions over Taiwan Strait also seen as key risks in 2022

Jack Ma’s Ant faces restructuring obstacle as state investor withdraws
Jack Ma’s Ant Group has suffered a setback to its government-led restructuring efforts after a state-owned asset manager unexpectedly pulled out of a deal to invest in the fintech’s lending arm.     China Cinda Asset Management, controlled by the country’s finance ministry, was set to invest Rmb6bn ($946m) in exchange for 20 per cent of Ant’s loans business, but said late on Thursday that it was withdrawing from the deal after “prudent commercial consideration and negotiation with the Target Company”.    Ant, which is controlled by the billionaire tech entrepreneur Ma, has been restructuring its business since Chinese regulators pulled the plug on its blockbuster $37bn initial public offering just days before it was set to debut in November 2020.   Ma has largely disappeared from public view as Ant and his ecommerce group Alibaba have come under severe government pressure. Financial authorities have focused on shrinking Ant’s business and limiting financial risk as part

Alipay’s new investment service goes offline due to compliance issue: report
Just days after launching, Alipay’s new investment advisor service has been taken offline due to “compliance issues,” 21st Century Business Herald reported Thursday, citing unnamed sources. Alipay’s financial platform Ant Fortune is collaborating with six other funds and financial institutions – including Aegon-industrial Fund, Southern Asset Management, and GF Fund Management – for the service, which launched on Jan. 4. It was intended to offer a fund portfolio chosen by Alipay’s financial advisors and based on the institutions’ fund libraries. The report quoted an unnamed source as saying that the compliance issue may be due to Alipay not being officially qualified to evaluate funds.

China tech crackdown: Alibaba, Tencent, ByteDance posts weaker ad revenue growth in 2021, report says
Growth of China’s internet advertising market declined last year, as regulatory pressure on tech firms increased     Antitrust investigations and a ban on off-campus tutoring services dampened online advertising business on the mainland

BYD’s Xian car plant resumes normal production after three weeks of disruption due to Covid-19 outbreak
‘Operation at the factory in Xian has basically become normal,’ Shenzhen-based carmaker says   BYD’s sales increased 231.6 per cent last year to 593,745 NEVs, making it the world’s largest maker of NEVs

Huawei follows Tesla into Japanese battery market
Large-scale units aim to meet energy storage needs with rise of renewables  China’s Huawei Technologies will begin selling large-scale batteries for renewable energy storage in Japan in March, Nikkei has learned.    China’s largest telecommunications equipment maker will buy small battery packs from manufacturers including Contemporary Amperex Technology (CATL). These will be bundled together into shipping-container-sized units that can each store up to 2,000 kilowatt-hours of energy — roughly 200 times as much as a standard home battery.  As demand for renewable energy grows, batteries will be essential to ensure a stable power supply when energy sources fluctuate.   Tesla entered Japan’s battery-storage market in 2021

China technology funding hits record high on boom in semiconductors, health care amid tech war, Covid-19
Start-ups involved in semiconductors, the core components that are in short supply globally, raised US$22.5 billion last year across 501 deals in China    The education technology sector, which enjoyed a boom when Covid-19 lockdowns popularised remote schooling in 2020, raised only US$3.3 billion in 2021

Explainer: What’s Going on in China’s Property Market?
China’s property market plays an outsized role in the global economy. It is intricately linked to core industries, performance of local governments, besides investors and homeowners. 2021 data showed that China’s largest property developers have accrued trillions of dollars in debt, causing alarm among economists and investors alike over fears of financial instability. While the Chinese government ended the year by easing restrictions on debt refinancing and loans, it is as yet unclear if this will be enough to reverse course in 2022.

China attracts a lot more foreign investment
Foreign direct investment (FDI) into China jumped 14.9% last year. How can the increase be explained? MERICS’ Jacob Gunter provides some insights.

China reforms securities settlement system to attract foreign capital
China’s securities regulator said on Friday it will reform the country’s securities settlement system, to bring it into closer alignment with global practices and to attract foreign capital. The China Securities Regulatory Commission (CSRC) published draft rules that will bring institutional trading in line with Delivery Versus Payment (DVP), a global practice under which settlement of stocks and cash occurs simultaneously.    Currently in China’s equity market, stocks are settled on the day they are traded but cash settles the next day.

Stocks are a ‘falling knife’ without fundamental changes in China policy, regulatory and geopolitical risks, Natixis says
Hang Seng Index logged a 3.9 per cent gain this week, the most in 14 months on tech rebound   Investors may be catching a falling knife as tech crackdown, distress among mainland developers and poor US-China ties are still playing out

‘Made in China, sold on Amazon’ community grew in 2021 despite crackdown on fake reviews, US e-commerce giant says
The number of new Chinese sellers added to the Amazon platform recorded double-digit growth last year, US giant said    At online sellers event, Amazon said it would make it a priority to work with Chinese merchants to operate within the rules

The role of SOEs in China’s common prosperity push, with Sarah Eaton and Nis Grünberg
A sizeable part of the Chinese economy is still dominated by state-owned enterprises (SOEs). Due to their direct link to the government, they are often employed as spearheads for the roll-out of new policies. What role does the government envision for SOEs in the ongoing common prosperity push for a more equal China? How can Beijing mobilize SOEs and what actions will they take? This episode of our podcast features a discussion with Sarah Eaton and Nis Grünberg. Sarah Eaton is Professor of Transregional China Studies at Humboldt University Berlin and co-founder of the Berlin Contemporary China Network. Nis Grünberg is Lead Analyst at MERICS.

China’s hard-line COVID-zero response to Omicron could trigger supply-chain chaos
The specter of Evergrande still looms over Asian economies in 2022, with the new year having already been littered with further negative news stories surrounding the Chinese property giants. With fresh fears of further defaults and suspended shares, Asian markets are likely to be impacted by Evergrande’s ongoing hardships long into the future.    Evergrande, the world’s most indebted developer, recently extended voting on the topic of delaying the early repayment of a 2023 6.98 percent yuan bond. The company held an online creditor meeting for the onshore bond, in which holders have been able to vote on a proposal to push back its repayment to July 8 from January 8 in the original schedule.  “Given social restrictions lured 20 million new online shoppers in 1H alone after 2020’s 40 million, and the unabating COVID-19 spread, our base case is that 16 million more will go online next year,” reported Bloomberg Intelligence. “Along with an extrapolation of Bain & Co.’s average gross merchandise value (GMV) per user — while keeping the trio’s estimated online transport, food, travel and media market size — e-commerce GMV may reach $156 billion, fueling a 28% jump for the region’s digital economy to hit $222 billion vs. 2021’s $174 billion.” “The pandemic gave a big boost to the digital revolution, and accelerated the world’s transition into the digital space. During the pandemic, a large number of financial transactions were processed electronically, a trend that is expected to continue,” added Maxim Manturov, head of investment research at Freedom Finance Europe.  With this in mind, digital transformation could offer an oasis of prosperity across a wider Asian market that’s still reeling from the impact of China’s real estate crisis. Although a wider slowdown is likely, consumer power may help to ensure that Asia continues to prosper.

Chinese food: inflationary climate heralds a new ice age
Hot and spicy braised fish, stir fry noodles and spring rolls are must-have dishes for lunar new year dinner tables. The looming week-long Chinese holiday is as famous for the huge sums — around RMB1tn ($157bn) — spent on shopping and dining, as it is for dragon dance parades. This year, a larger chunk than usual will go to a previously overlooked market: frozen food. The upcoming festivities are likely to be overshadowed by China’s worst Covid-19 outbreak since Wuhan in big cities such as Xi’an. The governments of Shanghai and Beijing have warned against travelling. Dining out is increasingly risky. As extreme lockdowns drag on, some residents of Xi’an are complaining of food shortages.
That partly explains the surge in shares of local frozen food companies. Those of Zhanjiang Guolian Aquatic Products gained 20 per cent — its daily limit — on Friday alone. Peers Zoneco Group, Joyvio Agriculture and Shandong Delisi Food rose by a tenth even as broader markets fell.

China is still the ultimate prize that Western banks can’t resist
For many companies, doing business in China is getting trickier by the day. But Western banks and asset managers are more than willing to up their bets on the world’s second biggest economy, convinced that the opportunities remain too good to pass up.      Major banks in recent weeks have inked deals to expand their footprint in China — or are otherwise attempting to take greater control of their businesses there — after years of being forced to enter the market via joint ventures. That’s despite fraught geopolitics, a slowing economy and an increasingly hostile environment for private business.
Late last month, HSBC (HBCYF) received approval from Chinese regulators to take full control of its life insurance joint venture, which was created in 2009 in equal partnership with a Chinese company under rules that were rolled back in 2020. The bank said the move underscored its “commitment to expanding business in China.”   The British banking giant is also seeking a greater stake in HSBC Qianhai, its joint securities venture in China, according to Reuters, which cited an anonymous source. HSBC declined to comment to CNN Business.

China denies interfering in UK politics after MI5 alert
China has denied interfering in UK politics after MI5 warned an agent of the country had infiltrated Parliament.

Christine Lee: Labour MP Barry Gardiner says Chinese agent ‘gained no political advantage’ from him
In an exclusive interview with Sky News, Brent North MP Barry Gardiner denies he feels “a fool” following the revelation that Christine Lee – who donated hundreds of thousands of pounds to him – has been engaged in “political interference activities”.

Xi to address Davos, offer Chinese solution to pandemic-fraught, protectionist-ridden world economy
Chinese President Xi Jinping will attend the 2022 Davos World Economic Forum Virtual Session and deliver remarks from Beijing via video link on Monday. Observers said that as the world is once again at the crossroads in the post-COVID-19 era, China, with its contributions to global prevention of the COVID-19 and stable economic development, could offer Chinese approaches and wisdom in not only recovery but also resisting erosion of protectionism and unilateralism.    At the invitation of Klaus Schwab, founder and executive chairman of the World Economic Forum, President Xi will attend the event on Monday, Foreign Ministry spokesperson Hua Chunying announces Friday.

The global role of CPC and Xi Jinping in promoting a dialogue among civilizations
China’s global affirmation to respect the right of countries and peoples to choose and differ and build a common community for humanity: This principle is rooted in all principles and documents advocated by the Communist Party of China and its companions, with their affirmation of respecting differences between different countries of the world, and avoiding any differences, contradictions or frictions. It impedes the civilized dialogue between everyone, and raised the Chinese civilizational principle that “all people are belonging to one family”, as they live under “one sky and one planet on Earth”. Therefore, all the peoples of the world should adhere to the idea of all under heaven from one family”, and search for common ground while leaving aside differences and making joint efforts for (building a community with a shared future for humanity).    In conclusion, the essence of the idea of Chinese dialogue, which is meaningful to all countries, peoples and civilizations around the world, is the belief of the Chinese communist leaders and Chinese comrade “Xi Jinping”, and the affirmation of the belief of the Chinese nation in the principle of “all under heaven from one family”, by reference to the Chinese civilizational heritage, which calls for “loving of all people and creatures, make all nations live together in peace and a world of greater harmony”. This was translated by the political discourses of the Communist Party of China and its General Secretary, President “Xi Jinping”, and their affirmation of the Chinese nation’s aspiration to live in a better world, and everyone’s pursuit of justice for the public interest.

The Forgotten Analogy: World War II
Pundits are searching for adequate analogies to explain the growing China-U.S. rivalry and predict its future direction. Two main ones appear: the pre-World War I era and the Cold War. Both have their merits. The early twentieth century pitted Germany, a rising power, against status quo Britain and France. The Cold War also shares similarities to the current situation. The United States engaged in a prolonged struggle to contain a nuclear-armed great power. However, neither the Cold War nor the First World War offers an entirely appropriate analogy to make sense of the current world order.      Historical analogies are always risky and no situation ever recurs in the exact same way. Yet, if we are to compare the current international situation with a past example, the World War II analogy appears more powerful than the World War I and Cold War ones.   Indeed, the United States faces the same conundrum of having to deal with two formidable rivals on two different continents. World War II had Germany as the most powerful opponent and Europe as the theater concentrating the most resources. Now, both the strongest competitor and the main loot are in Asia. During World War II, U.S. policymakers wanted to focus their forces on taking down Germany but they also had to cope with Japan out of fear that Tokyo would successfully absorb much of East and Southeast Asia and become a far greater threat than it already was. Today, although Russia lacks the power potential of China and Asia has now more wealth than Europe, with potential hegemons in both Asia and Europe, Washington is forced into a gigantic act of dual containment. Therefore, the same dilemma that plagued the United States eight decades ago plagues the Americans of today.


Alain Gillard
Information Officer
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