China Press Review – January 15, 2019

Press review

Impact of China’s tax-cut stimulus is estimated at US$300 billion, or 1.2 per cent of output, according to JP Morgan’s economists
China’s government will cut taxes on a “larger scale” to prop up the slowing economy, according to a Tuesday statement by deputy central bank governor Zhu Hexin, assistant finance minister Xu Hongcai and Lian Weiliang, vice chairman of the National Development and Reform Commission

Hong Kong and China stocks shoot up after Beijing vows tax cuts to boost manufacturers, small businesses
Beijing pledges a mix of tax breaks to help businesses amid slowdown in economy In Hong Kong, Tencent-backed Weimob surges on debut

What is Hong Kong’s role in a new economic world order as supply chains shift amid US-China trade war?
Industry leaders remain confident of city’s ability to adapt as uncertainty looms, pointing to focus on logistics and trade financing

China’s IIT Law Updates: Six-Year Rule and Other Preferential Policies
China’s new Individual Income Tax (IIT) law came into effect on January 1, introducing new tax brackets and a slew of other changes to the country’s IIT system. In the run up to the law’s implementation, tax authorities released a number of amendments and guidelines to offer greater detail on how the law will be implemented. These include updates and clarifications regarding the tax treatment of foreign workers in China.

How China can avoid 2 per cent growth nightmare: cut interest rates, expand money supply and ramp up deficit spending
David Brown says Beijing must start treating the unthinkable – economic growth slumping to just 2 per cent – as entirely possible and implement a huge stimulus programme to stop the rot

China’s weakening trade figures should concern us all
If China wanted to appease Donald Trump’s ever-present anger at its trade surplus with the United States, the latest trade figures won’t work to calm him down.

China’s corporate default storm continues to rage at the start of 2019 after a record year
Midway into January five Chinese companies are already likely to default on 3.5 billion yuan (US$446.25 million) worth of debt Beijing Kang Dexin Composite Material tumbled 10 per cent on Tuesday after saying it’s likely to default on the payments of two corporate bonds

Why China and Russia are struggling to abandon the US dollar and forge a yuan-rouble deal
Another delay to a bilateral payments system shows how tough it is to develop an alternative to the US dollar But the rise in Russia-China trade means the two countries won’t abandon the mission, analysts say

China Dec new loans beat forecasts, hit record $2.4 trillion in 2018
Chinese banks extended far more new loans in December than expected, bringing last year’s tally to a record $2.4 trillion as Beijing scrambles to help cash-starved companies and ease mounting pressure on the weakening economy.

China’s Banks Can Handle a Rate Cut
Investors needn’t fear, now that banks have trimmed back on risky business loans and added safer mortgage loans.

China Is Losing The Trade War In Nearly Every Way
China exports fell more than expected in December, signaling more pain ahead as the trade-war fallout starts getting measured by the markets. China is still the world’s No. 2 economy and is still the monster of emerging markets, but regardless of those bonafides, Xi Jinping’s country is losing the trade war in nearly every way imaginable. The arrest of Huawei CFO Meng Wanzhou in Canada last month for breaking U.S. sanctions law, followed by the firing of Huawei sales executive Wang Weijing in Poland last week shows China can be a bad actor, exactly as Washington believes.

China Is a Dangerous Rival, and America Should Treat It Like One
Enough with the endless talks and handshakes. We need to untie the American economy from China.

The Search for China’s Sixth Consumer Wave
The answer may lie in redistributing income to poorer workers rather than offering incentives to buy more cars and refrigerators.

China’s central bank denies delaying Mastercard and Visa access to payments market
China’s central bank has denied dragging its heels on opening the massive Chinese payments market to Mastercard and Visa The Financial Times reported that the PBOC was stalling market entry for payments giants

How Japan may offer China road map towards a trade deal with the US
Promise of large purchases of US goods formed basis for deals, according to Johns Hopkins professor Kent Calder Growing competition over technology is adding complexity to the bilateral negotiations

China trade slump casts broad shadow over economy
For the first time in more than two years, China’s exports and imports both fell year on year in December, according to data released Monday, reflecting the drop in trade with the U.S., as well as shrinking domestic consumption.

You can’t contain China: former US trade chief Robert Zoellick warns Donald Trump
Former World Bank president said he ‘doesn’t agree with Trump’s approach to trade’

Germany’s slowdown fans fears China woes spreading
“The German economy rises and falls with China,” said Joerg Kraemer, chief economist at Commerzbank in Frankfurt. He warned of a toxic cocktail of risks in China, including high debt at state owned companies and uncertainty linked to a trade war with the U.S.

China will rebound from today’s ‘peak pain’ but Maoist revival blights the future
Xi Jinping has talked up Marx’s Communist Manifesto and stoked fears of a fresh ‘war on property’

Will the Year of the Pig rein in Chinese yuan bulls as the seasonal boost ends and trade war reality kicks in?
Neal Kimberley says despite the Chinese currency’s strong start in January, the uncertainty over US-China trade negotiations and the possibility that Chinese exporters were behind seasonal demand for the yuan should give investors pause

Chinese workers may get 2½-day weekend to go shopping, but public services users aren’t buying it
As state planners get ready to roll out consumer incentives, document from Hebei suggests longer weekend might be just what’s needed to stimulate local economy But commenters voiced concern over access to public services

China province looks to boost shopping with longer weekend
Under a new proposal, workers in Hebei province could see their weekend extended
A province in China may give workers Friday afternoon off as part of wider efforts to boost consumption in the country’s slowing economy.

China’s Grand Strategy
Technology has transformed the global economy. Over the past two decades, technology has introduced a pivotal shift in the nature of power with emerging economies gaining a competitive advantage. Leveraging this “geotechnological” shift is Chinese grand strategy. China’s unprecedented economic expansion now exerts a gravitational pull on the world economy, gathering emerging markets in its orbit. Bolstered by its commercial heft, China’s global ambition is increasingly built on ports, highways and pipelines in the expansion of its supply chain empire. More than this, China’s grand strategy is built on developing new markets for advanced Chinese technology.

China’s Not Too Rich for World Bank Loans, Report Says
China has taken out low-cost loans from the World Bank for years. But as growth soared, propelling the country to the world’s No. 2 economy with a $3 trillion hoard of foreign-exchange reserves, its borrowing has become a controversial issue and a target of criticism by the U.S., most recently by President Donald Trump’s administration.

Huawei’s founder Ren Zhengfei breaks years of silence amid continued US attacks on Chinese tech giant
The emergence of the reclusive Ren, who last spoke with foreign media in 2015, underscores the depth of recent attacks on Huawei

Huawei founder Ren Zhengfei denies firm poses spying risk
Ren Zhengfei founded Huawei in 1987, since when it has become one of China’s biggest companies
Huawei’s founder has denied Chinese authorities have ever asked his company to help spy on its clients.

Huawei products banned by Taiwanese tech institute as island targets Chinese brands
Decision covers Chinese firm’s smartphones and computers for security reasons amid concern over their capacity to steal information It follows US calls to blacklist Huawei and Taiwan’s introduction of law forbidding use of certain Chinese products in government systems

In its newest consumer-trends report, Alibaba Group’s Taobao Marketplace found that Chinese consumers are paying up to rid themselves of tedious, time-consuming tasks. According to the report, consumers this year have spent RMB16 billion ($2.31 billion) on products that cater to the lazy, a 70% increase over last year. And the biggest portion of that growth was fueled by young shoppers born after 1995, a demographic that is a key source of growth for China’s consumption-driven economy today.

Chinese food-delivery giant Meituan prepares gaming foray despite government concerns about youth addiction
Meituan co-founder Wang Huiwen said in a WeChat posting that he’s ‘just giving it a try, don’t overthink about it’

Luckin Coffee rumored to seek Hong Kong IPO
Luckin Coffee is reportedly looking to go public on the Hong Kong Stock Exchange. According to anonymous sources cited by Equal Ocean, investment banks have begun to prepare listing materials for the company. Luckin, which began trial operations at the beginning of 2018, has become Starbuck’s top competitor in China.

AI startup Horizon Robotics to raise $600 million in Series B funding
Horizon Robotics, a Chinese AI chip company, is about to close its $600 million Series B. The company founder and CEO Yu Kai on Monday said the fundraising would be “closing soon.” Yu made the comment at the launch event for its Silicon Valley-based research institute during the consumer electronics gala CES in Las Vegas. According to the company, major investors include “leading players in the automotive and semiconductor industries.” A spokesperson refused to comment when contacted by TechNode.

China Is Bypassing Governments to Gain Influence in Europe
When Wolfgang Tiefensee first made his pitch to the world’s biggest maker of electric-vehicle batteries, he was told he stood no chance of luring investment to Germany. More than a year and two trips to China later, Contemporary Amperex Technology Ltd. agreed to build its first foreign plant in the eastern German state of Thuringia. According to Tiefensee, CATL overlooked the high taxes, labor and energy costs relative to other locations because he promised what the government in Berlin is not willing to give: access to German high-tech R&D.

Luxembourg and Hong Kong sign mutual fund recognition agreement to ease cross border sale
Agreement was signed between Commission de Surveillance du Secteur Financier and the Securities and Futures Commission

Here’s how Hong Kong property would benefit from Greater Bay Area
The city is in the middle of an economy larger than the combined one for Russia, Australia, Mexico, Indonesia and Switzerland Area’s tech ambition will also boost Hong Kong’s IPO market

Sluggish Chinese investment in US to persist in 2019, casting shadow over bilateral ties
Although China’s outbound investment is facing difficulties in the US and Europe, overall it has managed to strike a balance with increasing investment in other regions, official figures showed. According to statistics released by the Ministry of Commerce (MOFCOM) in December, China’s overall outbound investment reached $104.48 billion in the first 11 months last year, about the same as the previous year. China’s investment in smaller countries and regions, like those along the routes of the Belt and Road initiative (BRI), has risen accordingly. According to MOFCOM figures, China’s investment in BRI markets was up 4.8 percent year-on-year in the first 11 months last year. The Baker McKenzie report showed that China’s investment in Canada grew by 80 percent on a yearly basis in 2018.

Can the Belt and Road Initiative push peace in South Asia?
China’s Belt and Road Initiative is largely seen as the China Pakistan Economic Corridor in South Asia, but this overlooks the potential for trade, water cooperation and research collaboration.

China Belt and Road is Replicating China’s Coal Fueled Climb from Poverty
China’s Belt and Road Initiative is replicating China’s fossil fuel-based climb from poverty in two-thirds of the world. These countries have two-thirds of the world’s population, 30 percent of global GDP, and an estimated 75 percent of known energy reserves. Those countries have an average per capita GDP of one-third of China’s per capita GDP. China is funding coal, oil, natural gas, ports, airports, mines, factories and industry to build up those countries.

How China is radically reinventing urban architecture to go green
China is a land of contrasts. The rural parts of the country are known for beautiful, green expanses. China’s cities are breathtaking in a more literal sense. It’s common to see people on the streets wearing face masks to avoid breathing dangerously polluted air. Large Chinese cities like Beijing consistently land in the “very unhealthy” range for air quality. This reputation for pollution — and the health consequences associated with it — is causing China to take quick action. On top of cleaning up its smog-filled cities, combating climate change is a key part of China’s current five-year plan.

The Green New Deal Is Happening in China
China’s progress in this effort is truly extraordinary. In the case of electric cars, it has used a carrot-and-stick approach where it offers consumers large subsidies for buying electric cars while also requiring manufacturers to meet quotas for electric car production as a percent of their total fleet of cars. It has also invested in the necessary infrastructure, ensuring that there are a large number of charging stations widely dispersed across the country so that drivers don’t have to worry about being unable to recharge their cars.

China starts new recycling drive as foreign trash ban widens
China plans to launch 100 new large-scale recycling “bases” by the end of next year, part of a campaign to make better use of its resources after extending a ban on foreign trash imports.

A billion reasons to try
China’s carmakers have enthusiastically tried to access Africa’s 1 billion-plus population, but so far have had mixed results breaking into local markets

Central China’s Hunan Province sees rising foreign trade volume in 2018
The import and export volume of central China’s Hunan Province surpassed 310 billion yuan (45.8 billion U.S. dollars) in 2018, a year-on-year increase of over 28 percent, the provincial commerce department said Tuesday.

Beijing mayor calls for belt-tightening amid ‘external uncertainties’, revenue squeeze
Under pressure from slowing economy, big-ticket commitments and dwindling income, city will cut spending by at least 5 per cent this year

Chinese lunar lander’s cotton seeds spring to life on far side of the moon
Chang’e 4’s test load of six organisms beginning to flourish, experiment chiefs say Cotton, rapeseed and potato chosen as foundation for human settlement

Can China grow a flower on the moon? The countdown begins
Chinese space agency to broadcast experiment that ‘could pave the way for human life in outer space’

Five Things to do to Avoid Getting Arrested in China, Part 2
Yesterday we wrote on how our China attorneys were hearing (mostly by email) of increasing arrests of foreigners in China and of how clients and readers were writing asking if they should go to China or not. Yesterday’s post, Five Things to do to Avoid Getting Arrested in China, was an effort to address those issues. At the end of that post, we pointedly solicited reader help on what more people can do to avoid arrest in China. We have received a number of emails from people, most of which said little more than “just don’t go.”

Canada warns citizens about China’s ‘arbitrary enforcement of laws’ after drug smuggling death sentence
Canadians told to exercise high degree of caution in China after Robert Lloyd Schellenberg was sentenced to death in retrial on Monday Sentence seen as retaliation by Beijing for Canada’s arrest of Huawei executive Sabrina Meng Wanzhou

China is not politicising Canadian drug smuggler it sentenced to death, state media claims
State tabloid denies China is using Robert Lloyd Schellenberg’s case to put pressure on Canada over arrest of Huawei executive Sabrina Meng Wanzhou Schellenberg’s retrial has received unusually prominent media coverage in China, including long segment on the hearing on state television

Bytedance takes on WeChat with new video messaging app
Chinese tech giant Bytedance on Tuesday launched a video-based messaging app focused on sharing content with friends and family, as it moves to take on WeChat’s newly launched short-video features.

China’s senior models find barriers have come down as fashion labels woo growing number of ‘silver spenders’
Ma Yinhong walks tall among counterparts in an industry where demographics and growing disposable income for seniors mean maturity is the next big thing

Beijing relaxes caps on home prices partially as unsold flats in the capital city rise
The city’s unsold flats are estimated to top 70,000 in 2019, compared with last year’s 20,000
Land sales in 2018 dropped 36 per cent

Sharp fall in China’s trade with North Korea as UN sanctions bite
Bilateral trade fell by more than half last year due to strict sanctions over nuclear programme

Why China and Taiwan should set their sights on 2072 for implementing an agreement on unification
Tom Plate says instead of escalating cross-strait tension, Beijing and Taiwan should focus on coming to an agreement on the ‘1992 consensus’ and working towards a settlement in time for the end of Mao Zedong’s 100-year waiting period

China won’t tolerate interference in Taiwan, military chief warns US
General Li Zuocheng also called for efforts to strengthen trust and communication and manage risks during meeting with US Navy commander Admiral John Richardson in Beijing Two military leaders have ‘deep exchange’ of views over the self-ruled island and the South China Sea, according to Chinese defence ministry

Answers needed in China files scandal
The Supreme People’s Court is no stranger to the reach of mainland corruption investigators, with two vice-presidents having been jailed for life in 2010 and 2017. But the latest probe, by a top-level task force led by the Communist Party’s Central Political and Legal Affairs Commission, is unprecedented. Its membership also includes anti-corruption officials, police and prosecutors. What further sets it apart is that its findings will be watched carefully by business and investment interests at home and abroad for signs that the party is serious about upholding their legal rights and interests

The Problem with Chinese Universities? Not Enough Dropouts
At many Chinese universities, the graduation rate is over 90 percent, and the guarantee of a degree has led to an epidemic of student slacking.

Alain Gillard
Information Officer
Service Asie Pacifique
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