Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – January 24, 2022

Is China Putting ‘Wolf Warriors’ on a Leash?
Recent signs indicate that Beijing wants to moderate – but not abandon – the assertive tone of its diplomats.  There are a number of factors at play making the current moment an opportune time for Beijing to adjust its diplomatic messaging. With Xi set to take a precedent-breaking third term as president at the year-end Communist Party Congress, as well as China’s hosting of a controversial Winter Olympic Games next month, domestic concerns this year are likely to take precedence over foreign ones. Moreover, with former President Donald Trump and his more vocal foreign policy hawks now replaced by a less strident Biden administration, China may be moderating its tone in-kind, with an eye toward stabilizing its rocky relationship with the U.S.    While we haven’t seen a wholesale shift away from the fiery discourse recently seen from certain diplomats and foreign ministry officials, the evidence laid out above does point to a departure from the more outrageous behavior of the wolf warriors. Realistically, we shouldn’t expect to see substantive changes to China’s messaging on U.S. decline, Western encirclement of China, or human rights whataboutisms, yet it appears a modest change in tone is underway.  Some have pointed out that wolf warrior diplomacy has not served Beijing’s strategic interests, and that it may in fact be undermining them. While this possibility has no doubt occurred to Chinese leaders, observers shouldn’t expect any abrupt shift in the rhetoric of Chinese ambassadors or foreign ministry spokespeople; quickly moving away from wolf warrior diplomacy could be seen as capitulation by Beijing. Instead, those interested in China’s communications with other nations should track subtle changes in discourse and decision-making, shifts that could gradually serve to course-correct China’s diplomatic statecraft, while also saving political face.

China’s Guangdong GDP for 2021 set to top that of South Korea and most other countries
Southern manufacturing powerhouse is not only China’s largest regional economy, it would likely rank among the top 10 global economies if it were a country   Annual gross domestic product in Guangdong province grew by 8 per cent, year on year, to 12.4 trillion yuan

What next for EU ties as ‘shocked’ Beijing lashes out at Slovenia over Taiwan office plans?
Chinese foreign ministry has slammed ‘dangerous’ comments from Slovenian Prime Minister Janez Jansa in reminder of reaction to Lithuania over similar moves     Hanging in the balance are the future of Beijing’s cooperation mechanism in Central and Eastern Europe, and hopes of mending EU relations

The Global (Dis) Order Warfare: The Chinese Way
Since the ascension of Xi Jinping, two important developments have come to dominate the global headlines. One, the so-called wolf diplomacy of China has been on the forefront of global political relations and two, there has been a huge spurt in Chinese efforts to use disinformation and espionage, as a part of its global diplomatic-strategic plans to destabilise countries who it sees as rival or a threat, in more than one ways.  Suddenly, there are instances of greater violence, instability and conflict in countries and regions that could be considered as political/economic/military rivals or likely competitors to China. In the US, FBI has reported an increase of 1300 percent in economic espionage investigations with almost 90 percent cases having a Chinese military/government background. On an average, the US has reported registering of a new counter espionage case against China, every 12 hours. A recent report suggested the operation of about 250 MMS Chinese spies in Brussels, the capital of European Union. To make matters worse, a detailed analysis of individuals occupying important positions in government/international organisations reveals that a few of them do have some or the other sort of Chinese support that has affected their actions or lack of it, vis-à-vis China. The tremendous suffering that the world and humanity have to endure due to Corona, clearly occurred due to deliberate or ineptness of Chinese government/military/scientific community. However, the World Health Organisation (WHO) has failed to fix accountability for this pandemic on China.    All such development clearly points towards a Chinese strategy to create a global disorder, a state where democracies like the US, India, Australia, Japan, Europe, Taiwan will not be able to stand unitedly and make way for the ascent of the middle kingdom to the pinnacle of global political, economic and military hierarchy.

Russia and China’s plans for a new world order
The western alliance has threatened the Kremlin with “massive” and “unprecedented” sanctions if Russia attacks Ukraine. But, as the Ukraine crisis reaches boiling point, western efforts to isolate and punish Russia are likely to be undermined by the support of China — Russia’s giant neighbour. When Vladimir Putin travels to Beijing for the beginning of the Winter Olympics on February 4, the Russian president will meet the leader who has become his most important ally — Xi Jinping of China. In a phone call between Putin and Xi in December, the Chinese leader supported Russia’s demand that Ukraine must never join Nato. A decade ago, such a relationship seemed unlikely: China and Russia were as much rivals as partners. But after a period when both countries have sparred persistently with the US, Xi’s support for Putin reflects a growing identity between the interests and world views of Moscow and Beijing. According to the Chinese media, Xi told Putin that “certain international forces are arbitrarily interfering in the internal affairs of China and Russia, under the guise of democracy and human rights”. As Xi’s remarks to Putin made clear, the Russian and Chinese leaders are united by a belief that the US is plotting to undermine and overthrow their governments. In the heyday of communism, Russia and China supported revolutionary forces around the world. But today Moscow and Beijing have embraced the rhetoric of counter-revolution. When unrest broke out in Kazakhstan recently, Putin accused the US of attempting to sponsor a “colour revolution” — a term given to protest movements that seek to change the government — in a country that borders both Russia and China. Senior Chinese ministers echoed those remarks.

Xi himself is a risk to the Chinese economy: Report
Underlining the side effects of Chinese President Xi Jinping’s “abrupt and extreme” policies, a report published in a Japanese daily said Xi himself is a risk to the Chinese economy. This comes as experts say that weakening growth in the closing months of 2021 could cause trouble as China faces a worsening real estate crisis, the latest Covid outbreaks and the country’s strict no-tolerance approach to controlling the virus.   Although last year’s growth figure is somewhat in line with the expectations. But, experts point out how China’s GDP expanded just 4 per cent in the last quarter of the year compared to a year prior, the slowest pace in a year and a half. “If Xi fails to improve the economic situation by the Communist Party’s national congress in autumn, it could affect his power,” Japanese financial newspaper Nikkei Asia quoted a Chinese political source as saying.

China’s wealth inequality has worsened in pandemic, highlighting ‘alarming’ global trend, Oxfam finds
World Bank Group warns that pandemic has widened the rich-poor gap, particularly in emerging markets and developing economies such as China   The Chinese wealth gap has widened particularly due to the ownership of flats, which is the biggest source of household wealth and debt, according to Ren’s research. The wide rich-poor gap helps explain Beijing’s push since last year for common prosperity – a strategy that has shifted the country’s policy direction.       China’s wealth gap has widened particularly due to the ownership of flats, which is the biggest source of household wealth and debt, economist says   China’s leadership has denied that the common-prosperity goal will equate to a Robin Hood-style “rob from the rich to give to the poor” plan, but it has also vowed to address income disparity through taxes, social security and direct government transfers, with the goal of creating an olive-shaped distribution structure in which middle-income groups account for most wealth.  While vowing to eliminate “unreasonable incomes” and illegal revenue, Chinese authorities are also encouraging wealthy individuals and companies to give back more to society. Additionally, more Chinese cities will pilot a property tax plan from this year, though the tax rate and scope of levy remain unclear. Government data released this month shows that progress has been made in narrowing the rich-poor and regional gap, as per capita disposable income rose 8.1 per cent to 35,128 yuan last year, in line with the expansion of the gross domestic product.

Ignore the Hype, China’s Leaders Cannot Re-Shape Economic Reality
While worries about Evergrande seem to have quieted, none of this means there’s nothing to learn from what happened. The Chinese real-estate giant is a useful reminder of how politicians and bureaucrats have no ability to prop up or grow any economy. None at all.    This is worth bringing up as news out of Beijing signals alleged economic support from China’s leadership. In a recent front page piece (“Beijing Moves to Cushion Economy As Risks Worsen”) at the Wall Street Journal, Stella Yifan Xie reported that “China’s leaders” cut “two key interest rates” in “response to the impact of pandemic restrictions and a property-market slump.” At best, these machinations will achieve less than nothing. And the reasons why are obvious.   Which brings us back to Evergrande. There’s more to its story than simple debt troubles. To see why, consider the currency denomination of so much of its debt. It’s in dollars. This speaks volumes, and most crucially does about the globalization of capital. While Evergrande is based in China, it’s apparent that the financing of its business endeavors is globalized. On its own the above is a positive statement of the growing interconnectedness of the world economy, but it also speaks to the folly of “Beijing” attempting to cushion China’s economy. Good luck.  Indeed, assuming China’s economy is really contracting, rest assured that global capital intermediaries will pull from China’s commercial sector much more capital than Beijing can add. There’s no stimulus to speak of here. Money goes where it’s treated well, and if the markets have decided that Chinese producers are overextended, no amount of meddling by Chinese bureaucrats will alter this truth. All the leadership can do is slow economic growth by subsidizing what market actors will not.  Conversely, assuming the markets are wrong about growth prospects in China, rest assured that globalized financiers will know this far sooner than the high functionaries in Beijing. Put more simply, if there’s abundant potential for progress in China, copious funds from around the world will be there to finance it. Government cannot make great what isn’t.

China Risks Going To Economic Hero To ‘Zero’ In 2022
Yet the biggest—China—might surprise many because it’s essentially the flip side of what saved world growth in 2021. The reference here is to China’s success in generating 8.1% worth of gross domestic product in 2021 despite the pandemic. That included a 30.1% jump in imports, helping to share the benefits of China’s revival with demand starved Asian neighbors. What worries Bremmer’s team at Eurasia, though, is President Xi Jinping’s stubborn attachment to the “zero Covid” scheme that worked so well in 2021. China, along with South Korea and Taiwan, proved that only by taming Covid-19 can economies get their grooves back. Yet Omicron requires a very different response than the initial 2020 Covid strain or 2021’s Delta variant. Its transmissibility means Covid absolutism is futile. Omicron requires a more nimble and permissive containment strategy. In the Omicron era, vaccination rates are a better weapon than lockdowns. As Bremmer sees it, “China is in the most difficult situation because of a zero-Covid policy that looked incredibly successful … but now has become a fight against a much more transmissible variant with broader lockdowns and vaccines with limited effectiveness.”  Not only might that lead to weaker mainland growth, but increased inflation. HSBC economist Frederic Neumann worries this Covid absolutism leads to the “mother of all supply chain stumbles.” The concern, he says, is that “Asian production networks, hitherto impressively resilient, may be thrown into a funk as Omicron grips the region…and all at a time when, faintly, faintly, supply chain issues appear to be easing in the West. The risk, then, is that over the coming months we’ll experience” an “Omicron-driven stall” in Asia’s factories. This domino effect worries the International Monetary Fund, too. On Friday, IMF Managing Director Kristalina Georgieva told CNBC that Beijing’s Covid imperative is increasingly looking like a “burden” to global GDP. “The zero-Covid policy, for quite some time, did contain infections in China,” Georgieva said. Now, she adds, “the restrictions that need to be imposed are more of a burden to the economy, putting more at risk not only [for] China but also China as a supply source for the rest of the world.”These inflationary side effects are helping generate 7% consumer price increases in the U.S. Even deflation-plagued Tokyo is unnerved by the specter of importing too much inflation too fast. Yet worries at Eurasia Group and the IMF about Xi’s zero-Covid obsession are only half the story. The other is Xi’s reluctance to recalibrate crackdowns on tech, property, education, entertainment and other sectors over which the Chinese state wants greater control. In recent days, the People’s Bank of China has been cutting interest rates and upping liquidity to reduce default risks. Last year’s miss-payments fiasco involving developers like China Evergrande Group spooked markets. The defaults raised ill-timed questions about whether Xi’s crackdowns on leverage had gone too far. And hopes that Beijing regulators might throttle back in the interest of GDP rates. Not so, Xi hinted last week. On Jan. 17, the same day China reported growth had cratered to 4% in the last three months of 2021, Xi told a World Economic Forum audience that anti-leverage policies remain the same. “We will first make the pie bigger and then divide it properly through reasonable institutional arrangements,” Xi said. “As a rising tide lifts all boats, everyone will get a fair share from development, and development gains will benefit all our people in a more substantial and equitable way.” While it’s hard to quibble with this aspiration, economists worry Xi is misreading Omicron. Xi is believed to be standing firm ahead of a Communist Party vote later this year, when he hopes to secure an unprecedented third term as Chinese leader. But political ambitions appear to be clouding his understanding of the shorter-term risks to Chinese living standards. Such policy mismatches partly explain why the World Bank worries developing economies could be on track for a “hard landing,” says bank economist Ayhan Kose. To be sure, China is very keen to tame Covid-19 and gain greater control over key industries. But the conditions facing Asia’s biggest economy are quite different from those it confronted in 2021. Is China going from economic hero to zero in just one year really the legacy Xi wants? Until his inner circle gets the memo, and recalibrates accordingly, China’s policy mix is a clear and present danger to global growth.

China’s tech-savvy single-person households set to grow larger, helping drive economic growth
Mainland China had 125 million registered single-person households at the end of 2020  This so-called lonely economy has become a new market segment for many Chinese merchants and online platform operators

Agile Group becomes latest debt-ridden Chinese developer to be rescued by state-owned company
State-backed companies are bailing out Chinese developers pushed to the edge of ruin by Beijing’s ‘three red lines’ borrowing restrictions   Agile will sell its stake in a Guangzhou property joint venture for 1.84 billion yuan to a unit of state-owned China Overseas Land & Investment (Coli)  Many developers – even financially sound ones – have been reluctant to conduct mergers and acquisitions, fearing they might fail to meet the three red lines after absorbing the debts of their beleaguered peers.
For example, Yuexiu Property, a unit of state-owned Guangzhou Yuexiu Holdings, dropped plans to buy China Evergrande’s headquarters building in Hong Kong. Sunac Holdings Group cancelled its planned buyout of First Services, the property management unit of troubled Modern Land. However, the central government recently decided to give cash-strapped property firms some breathing space. Policymakers plan to exclude debt raised by a developer to acquire distressed assets of another home builder when calculating their compliance with the three red lines, Cailianshe reported earlier in January.The easing of the three red lines has encouraged more M&A activity in the sector, which may explain why Agile is not the only developer to have been saved recently by a white knight in the form of a state-owned company.   Shimao Group, founded by the developer Hui Wing Mau, said on Friday it had sold a plot of commercial land in Shanghai for 1.06 billion yuan (HK$1.3 billion) to a company owned by the Shanghai municipal government to reduce its debt. Meanwhile Liang Senlin, the chairman of China Cinda (HK) Holdings, a unit of one of the country’s biggest state asset managers, has joined Evergrande’s board as a non-executive director, according to a filing to the stock exchange on Sunday.
Other recent measures designed to cut home builders some slack in the face of increasing defaults and liquidity problems include reducing borrowing costs. China’s one-year loan prime rate (LPR), the benchmark for corporate and household loans, was cut by 10 basis points to 3.7 per cent during the central bank’s January fixing last Thursday. The five-year LPR, used as the reference for mortgage lending, fell by 5 basis points to 4.60 per cent, the first reduction in nearly two years. A lower loan rate gives developers much-needed breathing room, as they face US$38.3 billion of offshore bond payments in the first six months of 2022. A cheaper mortgage rate – even by 5 basis points – attracts buyers who genuinely need a roof over their heads and rekindles transactions in a property market that has gone into deep freeze after five years of crackdowns.

China’s Transportation Plan Will Boost Post-Pandemic Logistics
As China’s infrastructure improves further, it’s going to be harder than ever for U.S. multinationals to move to underdeveloped countries like Vietnam and Indonesia.   China’s ongoing efforts to build up its transportation infrastructure and logistics sector make it even harder for multinationals considering a production shift to other Asian nations due to geopolitical conflict to leave China. Firms have found Vietnam and Indonesia to be at a severe disadvantage in terms of infrastructure development. As China strengthens its capacity to cater to multimodal and specialty transportation, its transportation infrastructure is rising to world-class levels.  Despite China’s extensive transportation infrastructure, the nation has faced severe supply chain bottlenecks during COVID-19 due to its zero COVID tolerance policy. Bottlenecks arose due to production and transportation shutdowns, followed by a surge in demand when the pandemic declined in severity in China and other nations. Some of the bottlenecks have been resolved through greater use of technology, particularly autonomous drones, which were used to transport goods and passengers to and from quarantine areas. The pandemic also shifted preferred modes of transportation from public to private to some extent, driving an increased use of motorized vehicles and bicycles.  Post-pandemic transportation will adjust to normal, as supply and demand in this sector calibrate to pre-pandemic levels or higher. China’s infrastructure will continue to be a selling point for multinationals producing and doing business overseas.

Ros Atkins On… China’s zero-Covid dilemma
Ros Atkins looks at why China is still eliminating all Covid outbreaks, while many other parts of the world are learning to live with the virus.

China’s zero-Covid policy now looks like a ‘burden’ and it needs to reassess, IMF says
The International Monetary Fund’s managing director said Friday that China’s zero-Covid policy is increasingly looking like a “burden.”  Speaking to CNBC at The Davos Agenda, Kristalina Georgieva said the containment strategy, though initially successful, was now presenting more risks than benefits.  Georgieva noted that further measures could be expected as a “pandemic policy” remains a top economic policy for China and the rest of the world throughout 2022.

Zero-Covid is still the best choice for China now, top adviser says
Omicron remains an unknown and more variants will come along, Liang Wannian warns  The country’s approach has put it in a ‘safe position and has been cost-effective’

First-hand experience of China’s zero-Covid policy offers insight into costs and benefits
From quarantine in a designated hotel to being checked on by a community officer at home, a comprehensive system is in place to detect cases    Millions of medical workers, billions of dollars’ worth of equipment, endless days in quarantine and countless swab tests – it all adds up to lives saved on the mainland

Beijing Winter Olympics poses challenge to China’s zero-Covid policy
Just over two weeks before the start of China’s first-ever Winter Olympics, authorities in Beijing issued a warning designed to maintain the country’s strict adherence to its zero-Covid policy.   Citizens should avoid any contact with vehicles transporting participants and officials, who will spend the Games in a so-called bubble designed to avoid any contagion to the rest of the country, the traffic bureau said. In the event of an accident, they should wait for professionals to arrive rather than intervening to help.  The edict is one of many strict measures taken to avoid a coronavirus outbreak at the Olympics. The event was supposed to be a crowning achievement for an ascendant China 14 years after the Beijing Summer Games but is becoming a test of the country’s attempts to eliminate the pandemic.  China is the world’s last country to remain committed to a zero-Covid policy but the strategy is under strain after authorities locked down millions of residents amid domestic outbreaks and growing doubts about the efficacy of its home-made vaccines

Lunar New Year reunions in limbo for China’s migrant workers as nation races to curb Covid-19
Travellers left confused and upset by lack of clarity on varying regional measures as parts of nation battle Delta and Omicron variants    Entry rules differ in the level of strictness, and are subject to rapid changes as local authorities implement zero-Covid policy

How China’s Xi Jinping Is Staging the Beijing Olympics on His Terms
From Beijing’s unexpected bid through the coronavirus pandemic, China has managed to fulfill its promises and cow its critics. When the International Olympic Committee met seven years ago to choose a host for the 2022 Winter Games, China’s leader, Xi Jinping, sent a short video message that helped tip the scale in a close, controversial vote. China had limited experience with winter sports. Little snow falls in the distant hills where outdoor events would take place. Pollution was so dense at times that it was known as the “Airpocalypse.” Mr. Xi pledged to resolve all of this, putting his personal prestige on what seemed then like an audacious bid. “We will deliver every promise we made,” he told the Olympic delegates meeting in Malaysia’s capital, Kuala Lumpur.

China targets companies and traffic to improve air quality for Winter Olympics
Beijing and neighbouring province of Hebei given powers to close businesses and restrict vehicle use during the Games     Different measures to be taken for different emission sources, environment ministry says, insisting the economic impact will be relatively small

Outlook: China’s Influence and Xi Jinping’s Leadership in 2022
The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Trey McArver, partner at Trivium China in Beijing, is the 306th  in “The Trans-Pacific View Insight Series.”   This is something that Xi is already doing. For the past four years, Xi has consistently emphasized that China is under threat from a United States that wants to thwart China’s rise. He has identified this as a long-term challenge that will require hard work and sacrifice to overcome. He has then framed his own domestic agenda – cleaning up and strengthening the party, changing the economic growth model, and tightening control over information – as the key to overcoming that challenge. By framing these initiatives as part of an existential struggle with the United States, he has been able gain support for them.

Beijing 2022 vs 2008: Two Olympics and two very different Chinas
Beijing is about to become the first city to have hosted both the Summer and Winter Olympics. But much has changed between 2008 and 2022.   This time round, the mood, the host government’s attitude, and global expectations are all very different.    I covered the Beijing Games in 2008 and still live in the Chinese capital. In 2022 the atmosphere is definitely not the same.

China Rate Cuts Not Enough to Stabilize Economy: Ex-PBOC Adviser
Yu Yongding says more expansive fiscal policy needed     Beijing has called for increased infrastructure spending

How Asia has managed to keep rates low in the face of rising inflation
Central banks in Asia are not hiking interest rates aggressively, whereas their Central and Eastern European peers are. So why aren’t we seeing crazy Asian rates?

Beijing lectures Alibaba, Tencent, other Big Tech firms on gig workers’ rights despite progress from last year
Four government agencies met with 11 internet platforms to tell them to do more to help gig workers like food delivery personnel and ride-hailing drivers      Beijing issued new guidelines last year seeking to protect workers in ‘new employment forms’ and addressing issues such as income and work safety

Alibaba’s home province to offer preferential tax policies and promote ‘hard tech’ such as chips and digital security
The local government aims to ease the financial burden for enterprises and individuals by 300 billion yuan in 2022    Policy support is in line with China’s pivot towards core technology areas to help it fend off pressure and sanctions imposed by the US

Imported food prices could go sky-high as Hong Kong suppliers cite rising costs for air and sea freight amid coronavirus restrictions
Food and beverage association director says suppliers face higher freight prices, delayed payments and a decline in order volumes    Logistics group chairman warns food costs could increase by about 30 to 40 per cent following Cathay Pacific cancellation issues

Green finance: Hong Kong’s role in the global standard to cut through the alphabet soup of ESG rules
The world has at least 200 sets of standards for reporting and assessing climate and sustainability risks, mostly created without coordination among different jurisdictions      The International Sustainability Standards Board (ISSB) will set “baseline” sustainability reporting standards, starting with climate-related issues    Qualifying financial instruments supporting the projects and products to be labelled as green or sustainable, it gives investors clarity and confidence, and facilitates the measurement and tracking of fund flows.   One litigation involved Irish low cost airline Ryanair, which was told to stop airing advertisements by the UK’s Advertising Standards Authority in 2020. The authority ruled that Ryanair’s claims in advertisements of “Europe’s … Lowest Emissions Airline” and “low CO2 emissions” were misleading, citing the absence of well-known competitors in its calculations.  Companies globally faced hundreds of climate change litigations worldwide, according to a report by international law firm Clifford Chance published in July.  At least 1,550 climate change law suits were brought against businesses and governments in 38 nations by July 2020, up from 884 in 2017, according to a joint study by Columbia University in New York and the United Nations Environment Programme.  It will entail a huge amount of work to make sustainability disclosures auditable, and many skilled professionals will be needed to do the assessments, she added.    Meanwhile, extreme climate events are increasingly affecting business operations and decisions, raising the urgency for more funding to enable quicker decarbonisation of the global economy.   The momentum for change in the right direction has gathered pace, Alder noted.  “The pace of change, the level of commitment among all players in this space has accelerated remarkably over the past 18 months,” he said.  “That’s important, because we don’t have the luxury of time [to fight climate change]. The pandemic has highlighted that risks which are serious may sometimes seem remote, until they actually hit.”

Hydrogen and lower emissions can push China to carbon neutrality, report says
Royal Dutch Shell report suggests focusing on hydrogen, biofuels and carbon-removal technologies  China’s 2060 target is challenging but creates opportunities to be a global leader in low-carbon manufacturing, Shell International’s chief economist says

Climate Change: China’s GCL Poly Energy ramps up production of cheaper, more efficient solar panel materials
The firm is readying plans to increase its capacity to produce so-called granular silicon products next month    The reduction in the carbon footprint of the production process is equivalent to planting 2.2 million trees per year, GCL claims

China-UK study ‘shines new light’ in solar-hydrogen power quest
Researchers say they have found a way to improve the efficiency of the process in the laboratory  The next step is to apply it to an industrial setting, they say

In our energy-hungry world, nuclear power is making a comeback – with safer and cheaper technology
Debate has been revived even in Japan, which suffered the catastrophic failure of the Fukushima plant
However, small modular reactors are now being favoured as they are said to be safer than conventional nuclear fission reactors, cheaper and easier to operate    Something has to give. In the case of China at least, that will not be economic growth, as Chinese authorities from President Xi Jinping on down have made clear. What will give instead will be greenhouse gas emission targets that are based on science rather than political reality.  Something has to give. In the case of China at least, that will not be economic growth, as Chinese authorities from President Xi Jinping on down have made clear. What will give instead will be greenhouse gas emission targets that are based on science rather than political reality.

Volvo owner Geely Automobile forms partnership to develop battery-swap services as electric vehicles boom in mainland China
The Chinese carmaker has formed a joint venture to compete in the battery-swapping sector and capture the rapid growth of the electric vehicle market  Electric-car makers are increasingly launching battery-swap services, which allow drivers to switch their depleted battery for a fresh one

Is Biden’s Foreign Policy Grade A Material?
Is America back? U.S. President Joe Biden came into office vowing to reset the United States’ standing in the world and repair ties with its allies after its tumultuous Trump era. But his first year in office has been rocked by a series of foreign-policy crises—from Kabul to Kyiv—that have thrown a wrench into the president’s “America is back” agenda. Biden has tried to repair relations with U.S. allies in Europe, but those efforts have been overshadowed by renewed Russian aggression toward Ukraine. U.S.-China relations have continued to deteriorate as Biden’s administration takes a hard-line approach to its superpower rival. Biden’s fateful decision to pull the plug on the U.S.-led mission in Afghanistan, ending a 20-year war, erupted in chaos and precipitated a massive new humanitarian crisis as the Taliban took control of the country. His efforts to tackle climate change have hit hurdles in Washington thanks to partisan gridlock. And all the while, the COVID-19 pandemic continues its deadly march around the world as international vaccine rollouts fail to live up to early promises.  We asked more than 30 experts to grade Biden’s foreign policy during his first year in office, offering their analysis on 11 key regions and issues that dominate the United States’ engagement abroad. (Some have been edited for clarity and length.) Here’s FP’s report card.

As US wades into digital currency arena, China’s e-yuan already has a big head start
US central bank says a digital sovereign currency would support the US dollar’s international role, as its dominance in global payments is already being challenged   Federal Reserve is soliciting public comments until May 20, marking the US’ first foray into the sovereign digital currency arena

China’s consumers spent $73.6 billion on luxury goods at home last year, up 36% from 2020
Mainland China’s share of the global luxury market rose in 2021 as consumers spent more at home, keeping the country on track to become the world’s largest luxury goods market by 2025, according to consultancy Bain & Company.   However, luxury goods sales were not immune to a slump in Chinese consumer spending in the second half of last year, and Chinese consumer spending on luxury goods worldwide last year remained below pre-pandemic levels, the report said.  The Bain analysts expect the growth of mainland China’s luxury market to moderate in 2022.

China Luxury: More Ups Than Downs Says Bain Report
The growth of China’s luxury market slowed in 2021 versus 2020, but certain drivers should keep it buoyant long-term Despite hazards like the property market’s instability (an issue that’s far from over), China’s luxury market ended 2021 in good shape. It grew by double digits, with some brands up 70 percent, according to Bain & Company’s China Luxury Report 2021. The boom is not a surprise. Chinese nationals have been corralled within their frontiers, thanks to tight COVID-19 travel restrictions over the last two years, leaving them no option but to shop on their doorstep. Repatriating high-end spending from hubs like Paris, Milan, and New York has been an aim for the Chinese government for years, and COVID-19 accelerated that process dramatically.    China has cleverly pulled luxury spending back inside its borders, and the Mainland will retain a high share, regardless of changes to future international travel rules.

A Guide to Minimum Wages in China in 2022
Starting in 2022, Henan raised its minimum wage standards from January 1, while Chongqing and Fujian will raise their minimum wage standards from April 1. Meanwhile, Hebei province has announced it plans to adjust its minimum wage standards in 2022 after completing an ongoing process of evaluation and calculation

China trade surplus that can’t be fixed from outside
Time was when China recording a record trade surplus would have thrown all of Washington into a tizzy: stern words of disapproval from the Treasury, cries of woe from rustbelt congressmen, rousing calls for currency market counter-intervention from the more hotheaded think-tankers, that kind of thing.   Well, China did precisely that 10 days ago and while no one was exactly delighted, it’s not the biggest thing to have happened in US politics so far this year. I’m not going to speculate on exactly why Washington reacts to events any more than I can predict what our toddler is going to do when told it’s bedtime. But it’s worth noting that, while the US analysis of its deficit continues to be wrong-headed, at least it’s not using trade and current account deficits as the main reason to further ramp up its trade war.  Current account balances are one of those things where it’s best to call in the macroeconomists, who correctly look at the savings-investment relationship inside a country rather than at external trade policy. You can argue that China ran surpluses for years because the government subsidised and promoted exports while discouraging imports with dense thickets of regulation, but so did India, which has had structural deficits for decades.  Sure, Chinese sales abroad received a boost in 2020 and 2021 from being a big manufacturing exporter — all that PPE and all those consumer durables. It turns out that, despite all the stories about Chinese factories being closed and ports ceasing to function, China’s harsh lockdowns affected its domestic services consumption more than they did goods exports.

China must brace for ‘digital cold war’ with US as battle for tech supremacy heats up
The digital economy will be the next battleground for strategic competition among powers, says top Chinese think tank analyst   Separately, former finance vice-minister Zhu Guangyao says US efforts to contain China ‘not good for the global digital economy’

Big Tech beware: Asian creators are rewriting the future with Web 3.0
The proliferation of blockchain and NFTs is decentralising the web, allowing creators to monetise their connections without depending on Big Tech social media platforms   What gives Asian creators the edge over their Western counterparts is not just their numbers – it’s also the readiness of Asian audiences to embrace Web 3.0’s new, immersive experiences   With at least 1 billion players worldwide, online gaming is seen by many as a precursor to the decentralised world of the metaverse, thanks to its virtual spaces where users can explore, interact and buy digital assets.  China, South Korea and Japan have the biggest online gaming reach, showing their predisposition towards virtual engagement. It’s this open and receptive nature that creators should look to channel when designing new forms of interaction.
Asia’s phenomenal digital rise has primed both creators and audiences for the leap into Web 3.0. Having grown and adapted within the constraints of traditional forms of social media, Asian creators now have a chance to break free. Web 3.0 will allow creators and their fans to build ecosystems that serve them, as opposed to Big Tech.    This new infrastructure has the potential to stimulate a new generation of Asian creators, resulting in a much more diverse, representative and independent creator economy.

China starts rebuff of various metaverse trademark applications amid rush to hype the internet’s next generation
A number of metaverse-related trademark applications have been denied registration by the National Intellectual Property Administration    These included submissions made by NetEase, iQiyi and Xiaohongshu

Alibaba, pace stock losses in Hong Kong amid global tech, crypto slump on policy risks
Chinese tech stocks extend slide after their Nasdaq peers suffered the biggest weekly beating since the onset of Covid-19 pandemic      Hong Kong saw the biggest outbreak of Covid-19 infections in 18 months on Sunday, hurting the chances of further economic reopening

China vows greater support for start-ups, small firms as Big Tech firms continue to reel from year-long crackdown
Beijing has pledged support for small and medium-sized companies in its pursuit of hi-tech innovation, including tax cuts     SMEs account for 60 per cent of GDP and 80 per cent of urban employment, according to government statistics

Shanghai mayor wants more chip production facilities to support new-energy vehicle growth
Mayor’s statement conveys a message that huge investments will be made in the coming years to develop and produce chips for use in cars, says analyst    A total of 550,000 NEVs – which include pure electric, plug-in hybrid and fuel-cell cars – were built in Shanghai last year, up 170 per cent from 2020

How a 23-year-old Hongkonger is bringing NFTs to physical fashion to woo Millennial and Gen Z gamers
Wear, one of the first Asia-based fashion NFT marketplaces, is collaborating with local eyewear brand A. Society and artist Lousy and has plans with Vogue    Project founder Nick Lau says Wear is ‘losing out’ on the mainland China market, where foreign NFTs are effectively banned

China’s Birth Rate Not A Problem For Economy–Now
China’s birth rate continues to fall. “Last year’s 10.62 million births, down from 12.02 million in 2020, barely outnumbered the 10.14 million death,” according to the Wall Street Journal. China’s rate of births per female is now down to 1.3, well below the replace rate of 2.1. The country’s low population growth, both now and in the future, has caused worry about China’s future economic growth. That worry is much overdone, though it’s clear that China’s fastest growth is past.  Any nation’s economy depends simply on total population multiplied by production per person. That arithmetic is right but hides some important insights. Many people are not productive. That’s not an insult, but a recognition that children and many elderly people produce little of economic value. The arithmetic offers more insight if restated: A nation’s economy depends on total working population multiplied by production per working person.
In the immediate future, babies are a drain on the economy, not a boost. Every parent knows this. Twenty years from now, today’s baby will be important to the economy, but that is of little value to forecasters looking out a few years into the future.  The rural farmers of Chinas were not bad farmers, but they produced relatively little because they lacked tools and, in the earlier years of communism, worked communally. The higher productivity of the urban factory employees led to higher wages, as businesses competed with one another for the available workers. In previous articles I argued that due to current politics, China’s Economic Miracle Is Ending. Even before that, though, I had seen that China Is Too Mature For Rapid Economic Growth because the easiest opportunities for expansion had been used. The two points of view are compatible. The first is not  In the coming years, China’s economic growth could rebound. A rebound would require the government to substantially relinquish the control over the economy that they have increasingly exercised in recent years. Even then, the growth would not match the ten percent rate achieved in many of the past 40 years. That’s not a forecast but rather a description of a possibility that seems unlikely at this point in time. A nation does not need a growing population to have a high and growing standard of living per person, though a larger population will certainly swell the gross size of the economy.–now/

Waiting for spring to come in China–US relations
As the poet Shelley once hopefully wrote, ‘if winter comes, can spring be far behind?’ When it comes to China–US relations now, it seems that spring is quite far behind.   Given the anti-China consensus in the US Congress and the slim majority the governing Democrats enjoy, Biden has had to remain tough on China to get anything done at home. This includes the appointment of cabinet officials, passing bills to contain COVID-19 and rebuilding infrastructure.  How the two countries interacted with each other, which was characterised by megaphone diplomacy for domestic consumption, undermined any goodwill that remained for stabilisation and improvement of the relationship.  In the short run, these factors are unlikely to change. The 2022 mid-term elections bode ill for China–US relations because the Republicans who stand on an even tougher policy toward China appear likely to win. Under these circumstances, the Biden administration is unlikely to be able to advance a pragmatic approach toward China. Ahead of the 20th Party Congress, China is also unlikely to compromise.  The stabilisation and improvement of China–US relations is likely to remain a distant prospect for some time yet.

Is there an end to the winter of the United States and China’s discontent?
The United States and China now confront each other awkwardly across the regional and global stage in a new era of great power competition.   If China were of a mind, however, there are other theatres in which to demonstrate good intentions and generate trust — on economic reform and political accommodation — that might lead to a stronger foundation for confidence and constructive dealings with the United States.    Perhaps that is what motivates China’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that includes some of the United States’ closest allies with whom proxy engagement on some of the thornier problems in the US economic relationship would be a useful start. Early conclusion of agreement with ASEAN on a code of conduct in the South China Sea would build trust not only with China’s Southeast Asia’s partners, but with the United States too.  For the United States, if it is serious about competition with guardrails, it needs to do better than being the less brutish superpower. It needs to get its own house in order, help fix the global system, become more competitive and have its political system set an example for the rest of the world.

How China and Russia forged a friendship after bridging decades-old differences
Shared mistrust of the West and mutual economic benefits have brought Beijing and Moscow closer than ever    Geopolitics has played a role in Beijing-Moscow ties since the Cold War and continues to drive united front against hostile Washington

Taiwan scrambles jets after Beijing sends 39 aircraft to island’s air defence zone
Sunday’s fly-by came a day after the US and Japan wrapped up a six-day joint maritime drill south of Okinawa     In biggest PLA sortie to island since October, planes flew northeast of Pratas Island, according to Taiwan’s defence ministry

As PLA threat grows, Taiwan’s bid to boost defence ‘may lead to conflict’
Mainland analyst says extra military spending will only add to tensions and ‘is likely to increase the risk of misjudgment’    Funds will be used for precision and long-range missiles as well as naval ships to strengthen the island’s air and sea defences

Taiwan Turning Itself into a Fortress
Chinese attackers to put up with much nastier things than porcupine spines

Recalibrating Policies In The South China Sea – Analysis
The South China Sea has been relatively quiet politically over the past few months. But that does not mean nothing is happening behind the scenes. Indeed, the principle protagonists — China and the U.S. — and Southeast Asian countries caught in between them — are trying to figure out what to do next — how, when and where. Once their strategies gel and begin to clash in real time, the South China Sea will return to its politically and militarily tempestuous and dangerous self.

China’s expanded naval reach in the Western Pacific fuels Taiwan tensions
China has established a continuous naval presence near Japan to the south and east of Taiwan, in a dramatic expansion of Beijing’s maritime power, which has focused attention in the area as a strategic war. potential field in the future. For at least six months, the People’s Liberation Army Navy has rotated destroyers and missile corvettes through the waters east and south of the southernmost end of the Ryukyu chain – which Tokyo calls the Nansei Islands – according to officials from Taiwan, Japan and the United States.A US defense official said the PLA Navy has increased its presence in the western Pacific between the Nansei Islands and Taiwan over the past year. He said it now has the consistent presence of a warship in the area that is usually accompanied by a second warship.   The increased presence marks the first continuous deployment of the Chinese navy outside the chain Island from Japan in the north to the Philippines in the south separating China from the Pacific Ocean.

Seeking escape from grinding poverty in northern Vietnam, the 43-year-old farmer labored for years on construction sites in Kuwait and Uzbekistan before being offered a ticket to what he was told would be “the promised land” — Europe, and a job with a good salary.  “I wanted to go to the West to change my life,” the farmer, a father of three who asked that his name not be used to avoid retribution from his employer, recalled in an interview.    His life certainly changed: It got much worse.

China’s Communist Party expels Bo Xilai protégé in corruption probe aftermath
Retired food official Xu Ming to face graft charges but it is not known if his case is related to disgraced former mentor  Xu also accused of being disloyal to the party and making inappropriate comments on key policies   After his former rival’s conviction, Xi accused Bo, along with a handful other disgraced officials, of “ganging up and trying to seize power”. Almost a decade after Bo’s fall, there are signs that the campaign to purge Bo’s political legacy is still under way. During a meeting in January last year, Chongqing party chief Chen Miner was still calling on his colleagues to “clear Bo’s remaining toxicity”. Xu’s corruption investigation comes three years after his retirement and nine years after Bo’s downfall, and it is not known if it is related to his former mentor. A handful of food officials like Xu, whose main jobs are to administer official food reserves, have been sacked in anti-corruption drives in a handful of provinces in the past year. In August, the CCDI launched a national anti-corruption campaign related to official food reserves. The campaign started a month after Xu’s corruption probe started. Xu Baoyi, former deputy of the state-owned China Grain Reserves Corporation Group, was also under investigation, the CCDI said on Sunday. The two Xus are not related

Chinese city boss punished for mishandling deadly floods that killed hundreds in Henan
The demotion of Xu Liyi, formerly party chief in Zhengzhou, was announced almost 6 months after the disaster    Footage of passengers trapped in the subway amid rising waters shocked the nation, and investigators said official ‘neglect’ had contributed to the death toll

Uphold China’s unity and socialist society, Xinjiang Communist Party chief tells minority and religious leaders
Ma Xingrui calls for firmly establishing a correct view of ‘country, history, ethnicity, culture and religion’   Echoes of President Xi Jinping as 62-year-old technocrat says sinicisation is ‘the only way’ forward for development of religions in the country    Meanwhile, Beijing has not announced the next stop for Ma’s predecessor in Xinjiang, Chen Quanguo, who played a crucial role in maintaining stability in the region despite foreign sanctions and criticism of actions taken against the mainly Muslim Uygur ethnic minority.  Beijing vehemently defends its policies in the region, saying they are designed to combat extremism and terrorism. Before being named leader of Xinjiang, Ma was the party’s top man in its southern tech hub of Shenzhen, after a long career in China’s aerospace industry in charge of the country’s ambitious moon exploration programme.

China’s vape queen hit by Beijing investigation
An investigation into China’s high interest rate Chu Lam Yiu sent a list of Hong Kong-owned shares to Huabao International Holdings down 65 percent, with President Xi Jinping resuming his corruption scandal.   Chu, one of China’s richest women who owns a major share in the perfume and perfume industry, is being investigated by the government on “suspicious charges,” according to Hong Kong reports. The company said in a statement that it had received a report from Huabao Flavors & Fragrances. “As of the date of this announcement, the company has not been notified of any of the allegations against Ms Chu Chu. It added that the minor received information from the Leiyang City Management Committee, indicating that the investigation was being carried out by the Chinese Communist Party and the government. No details were provided. The company declined to comment further.

Officials Hid Deaths During Zhengzhou’s Floods
A government report has concluded that deaths caused by flooding in China’s Henan province in July 2021, not only could have been avoided, but the true number was originally covered up by officials, as reported by Sixth Tone.   The floods in Henan killed 398 people, 380 of which were in Zhengzhou, the provincial capital. As the flood waters began to rise throughout the city and the perilousness of the situation became clear, officials underreported the number of deaths.

Chinese state media calls for an end to ‘chaos’ in esports industry amid Beijing’s tough stance on video games
At stake is China’s multibillion-dollar esports industry, expected to be worth US$34 billion this year    Esports players aged 18 are already considered mature because most participants consider retiring from the industry in their early 20s

Alain Gillard
Information Officer
Service Asie Pacifique
Place Sainctelette 2
1080 Bruxelles
Tél 02 421 85 09 – Fax 02 421 87 75
Copyright © 2020 awex, All rights reserved