Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – January 18, 2022

2022 Chinese New Year: How Foreign Businesses Should Prepare in the COVID Context
The 2022 Chinese New Year will not see the country mark a return to normal due to the COVID-19 pandemic and implementation of disease control measures. The traditional holiday period, unpredictable COVID flareups, and China’s “zero COVID” policy may hinder business travel and interprovincial business events for longer than usual. Moreover, China has stepped up its COVID prevention and control in its port cities, which could pressure supply chains. Businesses should keep track of the fast-changing developments on the ground and plan for possible disruptions. As the public in China are encouraged to stay put, the stay-at-home economy will experience another boost, fueling more business opportunities on e-commerce and streaming platforms. These consumption behavior trends are likely to spillover into the post-virus era, and foreign investors should consider Chinese e-commerce preferences and spending frenzy during the Spring Festival / Lunar New Year period in the years ahead.

China’s record trade gap a symptom of struggle to rebalance its economy
China reported the largest monthly trade surplus in its history last Friday. At $94.5bn, this was the latest in nearly two years of record monthly surpluses even as Chinese consumption has stagnated.   But while it may seem sheer good luck for China that its soaring trade surpluses came just in time to balance stagnant consumption, this misunderstands the relationship between domestic consumption and trade. Contrary to what many assume, the country’s burgeoning trade surplus is not a symptom of manufacturing prowess, nor is it evidence of a culture of thrift. It is instead a consequence of the great difficulty China has had in rebalancing its domestic economy and reining in its soaring debt.    This is because the very conditions that explain stagnant domestic consumption also explain the rapid growth in Chinese exports relative to imports. This is true, by the way, not just of China but of all countries that run persistent trade surpluses. Whether they are high-wage economies, such as Germany and Japan, or lower-wage ones, like China and Vietnam, their international competitiveness is based mainly on the low wages their workers receive relative to productivity.

China’s Xi Jinping defends ‘common prosperity’ crackdowns
Chinese president Xi Jinping has made a rare defence on the world stage of his “common prosperity” policy, which has seen major crackdowns on businesses.

Online consumer spending on physical goods in China slowest since 2015 amid maturing market and pandemic slowdown
Growth in online sales of physical goods is now on par with total retail sales growth at about 12 per cent, as e-commerce continues to decelerate       Total online sales of goods and services topped US$2 trillion last year, as consumer spending recovered from a pandemic-induced slowdown

China’s slowing growth will have a global impact
By most international standards, China’s 4 per cent year-on-year growth in the fourth quarter of last year was a pretty solid performance. Yet while it was slightly above most analysts’ predictions, it was the slowest pace of expansion for 18 months — representing a slide from 6.5 per cent growth during the same period of 2020. Overall, gross domestic product grew 8.1 per cent in 2021. Any sustained chill in Chinese expansion will have a global impact: according to IMF numbers, China is the biggest contributor to global GDP and was set to account for more than one-fifth of the total global growth in the five years to 2026. It is notable that the three main factors exerting a drag on the Chinese economy derive in large part from government policies. A months-long series of crackdowns has targeted industries such as fintech, online education and entertainment as well as perceived societal ills such as celebrity culture, gaming and effeminate fashion trends.

China urged to ‘hurry up’ with moves to stabilise economy, stay ahead of the curve to avoid credit ‘collapse’
On Monday, the People’s Bank of China (PBOC) unexpectedly cut borrowing costs on its medium-term loans for the first time since April     There is still room for the PBOC to cut banks’ reserve requirement ratios, although this had been reduced by reductions in the past, said vice-governor Liu Guoqiang

From 6G to big data, China is looking to boost tech’s share of its economy
China is aiming for 10% of its gross domestic product to come from the digital economy by 2025, up from 7.8% in 2020.   As part of its 14th Five Year Plan, Beijing says that this will come from technologies like big data and 6G mobile internet, even though that is some years away.  The ambition highlights China’s push to get ahead in new technology as it continues a rivalry with the U.S. in areas from semiconductors to artificial intelligence

What we know about Evergrande’s ‘black-box’ restructuring
The crisis at Evergrande, the world’s most indebted property company, reached a milestone last month when it officially defaulted on offshore bonds. But the rest of the saga could take years to unfold.
The builder, a symbol of China’s heavily leveraged property sector, shook world markets when it started missing offshore bond payments in September.    It took three months for Evergrande, weighed down by construction delays, litigation and its vast liabilities of more than $300bn, to formally default, by which time liquidity troubles had engulfed the sector.  The company launched a risk committee, with the majority of seats held by representatives of state-owned companies in the southern province of Guangdong, where it is based. Meanwhile, there are signs Evergrande’s billionaire chair Hui Ka Yan has come under pressure to draw on his own resources to support the company. While last month brought some clarity over Evergrande’s default status, the developer’s fate and that of many of its peers remains uncertain. Here is what we know about the anticipated restructuring process:

We showcase six unique case studies of China’s SOE mixed hybrid reforms, four which involved public markets and two major domestic mergers. These will likely result in internationally significant IPOs. We examine this new trend and show how new Chinese corporate thinking is gradually changing red chips to blue chips – and where the investment opportunities exist.

China GDP growth beats expectations, narrows gap with US, but population crisis, Covid-19 cloud outlook
Gross domestic product (GDP) grew by 8.1 per cent last year, beating most expectations and Beijing’s target of ‘above 6 per cent’      But GDP growth in the fourth quarter slowed to 4 per cent year on year, amid virus disruptions and a property market slowdown

China’s coal production hit record levels in 2021
In blow to climate campaigners, state encourages miners to ramp up output to avert winter gas crisis     China’s coal production reached record levels last year as the state encouraged miners to ramp up their fossil fuel output to safeguard the country’s energy supplies through the winter gas crisis.

Electric cars: China must put even more EVs on the roads at a faster rate to meet nation’s 2060 carbon neutral target, Greenpeace says
Zero-emission vehicles (ZEVs) must make up 63 per cent of total automobile sales by 2030, rising to 87 per cent by 2035 in China, Greenpeace says   Vehicle emissions may peak at 1.75 billion tons of carbon dioxide by 2027, with the reduction reaching a plateau of 1 per cent between 2027 and 2029, Greenpeace says   Policymakers will also need to set higher quotas for ZEVs sales into 2030, Greenpeace suggested.   In a development plan issued in 2020 for NEVs, the State Council ordered that by 2025, green vehicles including pure electric cars, petroleum-electric hybrids, and vehicles that run on fuel cells, should account for 20 per cent of all automobiles sold in China.      According to Greenpeace, the ideal response would be for Chinese carmakers to phase out internal combustion engine vehicles entirely by 2030. Anything later would jeopardise progress toward meeting the Paris Agreement target of limiting global warming to 1.5 degrees Celsius.    “Currently, carmakers in China are far behind. And especially foreign brands, which have a huge, influential presence in the Chinese market, are the farthest behind,” Bao said.  Volkswagen, which announced a 50 per cent sales target for NEVs by 2030, would need to raise that goal by 13 percentage points to reach 63 per cent. Honda Motors, which makes cars in Guangdong province, must add 23 percentage points to its 2030 NEV sales target of 40 per cent to reach the same, Greenpeace said.

China’s technological self-reliance push leaves German firms fearing ‘lack of equal treatment’
A third of German firms surveyed by the German Chamber of Commerce in China last year listed preferential treatment offered to local companies as a concern    Survey of 596 German companies took place from October 14 to November 3

Chinese premier in first call with new German leader urges focus on ‘pragmatic’ outlook
Pragmatic cooperation has been a ‘ballast’ for bilateral relations, Li Keqiang tells Olaf Scholz, floating possibility of a ‘fast track’ mutual travel corridor      Li also voices hopes that Germany would ‘continue to make a positive impact on China-EU cooperation’

China: $1.9 Trillion Boost and 88M Jobs by 2030 Possible with Nature-Positive Solutions  
Nearly $9 trillion, two-thirds of China’s total Gross Domestic Product (GDP), is at risk of disruption from nature loss. Making China’s economy ‘nature-positive’ could generate $1.9 trillion in additional annual revenue and create 88 million jobs by 2030. These are the findings of the latest report by the World Economic Forum Seizing Business Opportunities in China’s Transition Towards a Nature-positive Economy. “China is uniquely positioned to lead a global movement towards a nature-positive, carbon-neutral future. As the president and host of the Convention on Biological Diversity’s COP 15, it provides leadership in setting forth an integrated agenda which builds societal, economic and ecological resilience.” said Elizabeth Mrema, Executive Secretary of the United Nations Convention on Biological Diversity.

CATL, China’s largest EV battery maker, launches EVOGO battery-swapping service
EVOGO, offered via a mobile app, will allow users to change their depleted car batteries at swap stations, CATL said     The battery-swap service will be launched in 10 mainland cities initially

Sino-American confrontation and the Re-binarized world
Americans performed three very different policies on the People’s Republic: From a total negation (and the Mao-time mutual annihilation assurances), to Nixon’s sudden cohabitation. Finally, a Copernican-turn: the US spotted no real ideological differences between them and the post-Deng China. This signalled a ‘new opening’: West imagined China’s coastal areas as its own industrial suburbia. Soon after, both countries easily agreed on interdependence (in this marriage of convenience): Americans pleased their corporate (machine and tech) sector and unrestrained its greed, while Chinese in return offered a cheap labour, no environmental considerations and submissiveness in imitation. Both spiced it by nearly religious approach to trade.   However, for each of the two this was far more than economy, it was a policy – Washington read it as interdependence for transformative containment and Beijing sow it as interdependence for a (global) penetration. In the meantime, Chinese acquired more sophisticated technology, and the American Big tech sophisticated itself in digital authoritarianism – ‘technological monoculture’ met the political one   To this end, let us quickly contrast the above narrative with some key facts: Russia holds the key positions in the UN and its Agencies as one of its founding members (including the Security Council veto right as one of the P5); it has a highly skilled and mobilized population; its society has deeply rooted sense of a special historic mission (that notion is there for already several centuries – among its intellectuals and enhanced elites, probably well before the US has even appeared as a political entity in the first place). Additionally and tellingly, Moscow possesses the world’s largest gold reserves (on surface and underground; in mines and its treasury bars); for decades, it masters its own GPS system and the most credible outer space delivery systems (including the only remaining working connection with the ISS), and has an elaborate turn-key-ready alternative internet, too.   Finally, as the US Council of Foreign Relations’ Thomas Graham fairly admits: “with the exception of China, no country affects more issues of strategic and economic importance to the US than Russia. And no other country, it must be said, is capable of destroying the US in 30 minutes.”

China to Curb Purchases of U.S. Farm Goods, Fitch Solutions Says
Brazil will be a winner as its share in China imports may rise   Other key agribusiness themes include logistics, soaring costs

Will GM seed planting see China reduce its dependence on feed imports?
The next few years are likely to see planting of genetically modified (GM) corn seeds in China, according to a Rabobank report.

Ozone Pollution Is Cutting China’s Crop Production, Study Says
Researchers say the air pollutant has decreased wheat and hybrid rice yields by about 30%.

China must ‘urgently’ find solutions to boost trade ties with Germany, Berlin’s top diplomat says
Travel and quarantine restrictions are two of the difficulties faced by China and Germany, said Berlin’s acting ambassador Frank Rueckert on Tuesday    He was speaking at an event in Beijing marking the release of the annual survey of business sentiment by the German Chamber of Commerce in China

China’s Digital Silk Road: Chris Devonshire-Ellis Q&A With Zawya
Digital know-how along the Belt and Road Initiative will set future global tech standards

How Chinese Competition Helps Western Conglomerates
Firms like GE and Siemens may well find that their decision to split their businesses into multiple companies leads to increased profits and higher stock prices. But recent research indicates that this is not the only way conglomerates can boost efficiency.

China stocks advance by most in 6 weeks on policy easing speculation while Hang Seng surrenders gain
China’s economy lost further momentum last quarter, fuelling hopes for more policy support and rate cuts to stabilise growth      Several Macau casino operators surrender some of their two-day gains from last week’s regulatory boost

China tech crackdown: at least 25 large online tutoring firms closed up shop in 2021
Of the companies that disappeared, nearly half were located in Beijing, according to recent 100EC report     Surviving operators are scrambling to pivot towards vocational training and non-curriculum classes, such as chess and music

China Now Has Company In Showing Japan Who’s Boss
As Beijing pulls the rug out from under Chinese tech and other key industries, he’s creating space for Japan to remind the globe it’s a mature and stable power. If Kishida is wise, he’ll use this moment to rally support for his “new capitalism”framework.  Time, after all, is not on Tokyo’s side as Omicron risks cloud the 2022 outlook. And as Korea and Taiwan join China in potentially outshining an economy that once towered over the region. In his opening address to lawmakers on Monday, Kishida said he will firm up his reform plans by the spring.  Kishida shouldn’t wait that long. He’s already waffled on early comments on policies toward capital gains taxes and share buybacks. Kishida must hit the 2022 ground running with a clear blueprint to rekindle the innovative spirit that once made Japan Asia’s role-model economy. It’s not like China, Korea, Taiwan and other Asian upstarts are waiting for Tokyo to get its groove back.

China-West tensions raise questions about limits of Beijing’s influence at WTO, UN and World Bank
China’s representation in international bodies, especially at an elite level, still lags behind major Western economies    Underrepresentation is constraining China’s efforts to reform the global governance system, Chinese experts say

Sri Lanka in ‘debt trap’, India’s response shows pushback against China has begun
While China waits for a Hambantota Port-like ‘takeover’ of Colombo port city, India has responded with great alacrity to Sri Lanka’s financial needs.

Shopify, pair up in China as e-commerce competition intensifies
Canadian e-commerce giant Shopify said on Tuesday it has partnered with China’s to let merchants in the United States sell to JD’s customers in China. The strategic partnership comes amid tight competition in the e-commerce space in China with players like Pinduoduo, Alibaba Group Holding and Douyin. Financial terms of the agreement were not disclosed.

Down but not out: China’s Alibaba looks towards challenging 2022
Chinese tech giant’s deep pockets and ability to adapt are seen as key to weathering the tough year ahead.

Alibaba transforms the Beijing Winter Olympics for the digital era
The 2022 Beijing Winter Olympics is around the corner and is highly anticipated within China and around the globe. It will be the first high-tech green Olympic Games in the history of the games. From event broadcasting and scores releasing, to athletes’ accommodation, transportation, and healthcare, all the logistics and information will be processed with cloud computing technology on Ali Cloud (a sector of Alibaba).   Alibaba will also employ its AR (alternative reality) and other visual intelligent technologies to offer overseas viewers an immersive experience, transforming the ways in which we experience this historic event. Since 2017, Alibaba has launched a long-term partnership with the International Olympic Committee and is committed to helping transform the Olympic Games for the digital era. In 2022, this tech giant became the top sponsor of the Beijing Olympic Games, furthering its commitment to the games and allowing them to imbed their technology

China orders overseas mail disinfection over Omicron fears
China’s postal service has ordered workers to disinfect international deliveries and urged the public to reduce orders from overseas after authorities claimed mail could be the source of recent coronavirus outbreaks.

Taiwan plans representative office in Slovenia as the EU nation blasts Beijing
Island confirms negotiations for it and Slovenia to host each other’s missions, in defiance of Beijing, which has rebuked Lithuania for a similar arrangement    Slovenian leader Janez Jansa condemns ‘capital with a one-party system lecturing about democracy and peace’ and says Beijing could gain from Taiwan joining WHO  It’s terrifying [that Beijing is] trying to isolate a small country that also fought for its independence 30 years ago,” he said, adding that the EU backed Lithuania and putting pressure on European countries would not benefit the Chinese government.   “Good trade relations are a common interest,” he said. “If one side is trying to hurt these relations, maybe they could benefit short-term, but long-term we are all losers.” Jansa said he believed that Taiwan should have the right to decide its own future, be it to reunify with mainland China or “live independently”. Taiwanese foreign ministry spokeswoman Joanne Ou said Taiwan and Slovenia had “close economic and trade exchanges” and had “held virtual talks on anti-pandemic measures”. She said that Jansa had written to EU member states asking them to support Lithuania’s ties with Taiwan, showing the value he placed on friendship with Taipei.

China forced 2,500 ‘fugitives’ back from overseas during pandemic, report finds
Methods used in Sky Net program range from family intimidation to state-sanctioned kidnappings, says rights group

‘Picking quarrels’: China critics overseas at increasing risk
New report finds Chinese authorities trying to coerce critics thousands of miles from home into returning.

China’s education crackdown forces ‘anxious’ parents to rethink immigration, foreign-study options for kids
Parents in China are increasingly torn between the risks of moving overseas and ensuring a Western-equivalent education for their children     Companies that help people emigrate say business is booming, especially among China’s middle class

Declining And Dangerous China – Analysis
Chinese economic statistics like all other information flowing out of China are unreliable, but now those, along with other indicators, paint an unflattering picture of the economy.   In May 2021, the Chinese government revised its population data from 2011-19, adding approximately ten million births over the eight-year period   Six months later, in November 2021, China again revised population data from 2000-2010, adding 11.6 million births in the period

Alain Gillard
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