Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – January 26, 2022

Trade Outlook 2022: Clogged supply chains won’t hold trade back 
Demand for consumer goods rose strongly last year despite the profound disruption to supply chains due to the pandemic. We expect global trade not only to nomalise in 2022 but to grow further despite still challenging circumstances.

Economic growth weakens in late 2021 ahead of a high-stakes year MERICS Economic Indicators Q4/2021
China’s quarterly GDP growth continued to slow, expanding by 4 percent in Q4. Strong growth early in the year delivered annual GDP growth of 8.1 percent, a result that was easily within the government’s cautious 6 percent target. Growth is unlikely to pick up any time soon as Covid-19 outbreaks linked to Chinese New Year and the Winter Olympics seem inevitable. Any lockdowns will dampen consumption and may disrupt supply chains. In addition, the financial troubles in the real estate sector are far from over.    Lower Q4 GDP growth and the downward economic pressures must be seen in the context of government reluctance to unleash massive stimulus. Instead, the government’s policy actions in Q4 have cut economic growth; these range from heavier regulation in the tech sector, to cutting carbon emissions and curbing financial risks. Policy priorities are always likely to be adjusted over time, but the government seems increasingly willing to pay economic costs to achieve policy goals.

Chinese Outbound FDI Held Steady In 2021, As Global FDI Rebounded
China’s global FDI held steadily in 2021 and Chinese outbound M&A reached $23.7 billion, a slight decline compared to 2020. Eighth annual survey shows Chinese FDI in Europe rose by 25% to USD 12.8 billion, while it fell by 34% in North America to just USD 5.8 billion Latin America continued to see significant Chinese investment, with USD 3 billion in 2021.  Less politically sensitive sectors such as consumer products, entertainment, and online gaming continue to see significant interest

Chinese deal-making shifts to Europe amid U.S. tensions
Strict COVID-19 rules and regulatory hurdles weighed on outbound investment   Chinese investments have been booming throughout Central and Eastern Europe over the last decade but new data show, in particular, that mergers and acquisitions activity shifted to Europe from the U.S. last year.   China’s mergers and acquisitions activity shifted to Europe from the U.S. last year, a new survey said Wednesday, on the back of rising tensions between the world’s two biggest economies.   Deals in Europe rose 5% to $8.4 billion last year while plunging 37% to $4.7 billion in North America compared with 2020, said the joint survey by Baker McKenzie and Rhodium Group.  Despite last year’s rise, the European Union has also beefed up its oversight of Chinese investment, especially in the technology and infrastructure sectors. “Outbound high-tech M&A has shrunk as overseas regulators have upped scrutiny and China is focusing on building out domestic alternatives,” the report said. “What’s significant is that the European Union is also taking a more aggressive approach towards China’s investment, particularly in the high tech area,” Shi told Nikkei Asia. and Africa was about $1.5 billion. Total M&A activity by Chinese companies dropped to $23.7 billion in 2021, down from a year earlier, even as global cross-border deals recovered sharply in the same period, the report said, citing China’s strict COVID-19 rules and regulatory hurdles for Chinese companies. “The decline in mergers and acquisitions has been especially acute and China’s strict pandemic measures have further weighed on outbound deal-making in 2020 and 2021,” said Baker McKenzie’s eighth annual analysis of Chinese outbound investment trends. Sectors considered less sensitive such as consumer products and entertainment were the top attractions for Chinese outbound investment, accounting for almost half of the total, followed by transport and infrastructure, financial and business services, basic materials, and health, the report said.

Chinese companies boost overseas investment in consumer products, EV supply chain
Chinese companies invested more in consumer sectors and the electric vehicle supply chain worldwide, according to a report released Wednesday by Baker McKenzie and Rhodium Group.   The increase came despite an overall decline in Chinese mergers and acquisitions overseas last year, the data showed.  Latin America has become a bright spot for Chinese dealmaking, the release said.

US-China investment at risk of slowdown under Senate proposal for greater FDI scrutiny, report says
Up to 43 per cent of American investment in China between 2000 and 2019 would merit review under the proposed new legislation   US firms are also likely face greater legal and compliance costs, while the US-China investment environment will change

International investors in Chinese companies face growing risks
As property companies such as Evergrande teeter on the brink of collapse and the Chinese government cracks down on the tech sector, the FT’s global China editor James Kynge and markets editor Katie Martin discuss the changing dynamics of investing in China and examine whether the opportunities to make money are worth the growing political risk

Coming era of stagflation and wealth destruction will be boon to working class
While investors tremble at the prospect of falling asset prices and tighter monetary policy, the working class is set to benefit from rising wages    Strong wage growth could drive higher consumption and prop up the global economy while overvalued stocks and real estate fall sharply

Xi Jinping Targets Big Tech
China’s anti-graft agencies possibly targeting Ant, watching Tencent  On January 19, nine ministries and government agencies, including the National Development Reform Commission and Cyberspace Administration of China, published a list of suggestions on the regulation of fintech platforms. The suggestions include stricter supervision of fintech platforms to prevent them from abusing their market dominance.  “Xi wants his control to reach every sector and every social strata,” said the China watcher.  Tencent and Ant declined to comment.

China-US tensions: meet us halfway to build trust and ease conflict, former Chinese vice-premier urges Biden
A former Chinese vice-premier urged the newly inaugurated United States President Joe Biden to “meet China halfway” to rebuild trust and restart dialogue to ease the “unprecedented predicament” of strained relations between the major powers.  Zeng Peiyan, who served as vice-premier from 2003 to 2008 before becoming a top economic policy adviser in Beijing, said in virtual remarks at the Hong Kong forum “US-China Relations: The Way Forward” on Tuesday that the two sides needed to work to abolish trade tariffs, remove restrictions on people-to-people exchanges and cooperate on global leadership for issues such as pandemic control and climate change.   “It was completely wrong to approach and manage Sino-US relations with such cold war mentality and ideological bias,” he said. “I hope that the US can take the opportunity to change its mentality and behaviour and meet China halfway so that we can engage rather than confront each other. To do that, first we need to build mutual trust by restarting and improving the multilateral engagement mechanisms between China and the US.”

China is beating the world on yet another climate technology
In July 2021, UK-based oil major Shell made a splash when it switched on a 10-megawatt facility to produce hydrogen from renewable energy, the largest in Europe. “Green” hydrogen, as it’s called, is rare today, but is poised to be essential in the climate-proofed economy to replace fossil fuels in agriculture, shipping, and heavy industry. European countries and the US have big plans to build more large-scale electrolyzers, the machines that use electricity to split hydrogen atoms out of water. But as with other climate technologies like solar panels, wind turbines, and batteries, on electrolyzers China is already eating the rest of the world’s lunch.

Cut emissions not productivity, says Xi Jinping
China’s ambitious low-carbon goals should not come at the expense of energy and food security or the “normal life” of ordinary people, President Xi Jinping is quoted by the Xinhua News Agency as saying, signalling a more cautious approach to climate change as the economy slows.   As the world’s biggest source of climate-warming greenhouse gas emissions, China has been under pressure to “enhance ambition” and take more drastic action to tackle global warming.   But Xi told senior Communist Party leaders in a recent speech that the country needed to “overcome the notion of rapid success” and proceed gradually, according to Xinhua.  “Reducing emissions is not about reducing productivity, and it is not about not emitting at all,” Xi said.

‘We must do it’: Xi Jinping stresses urgent need to meet China’s climate goals
The country must take a path of green, low-carbon development, president tells Politburo    Xi’s speech underscores the country’s difficulty in achieving its climate goals, analyst says

McKinsey pegs price tag of liveable climate at $12.4 trillion a year
An analysis from McKinsey & Co estimates that the investment in new infrastructure and systems needed to meet international climate goals could be US$9.2 trillion (S$12.4 trillion) a year annually until 2050.    That is at least US$3.5 trillion more a year than the world is currently laying out for both low-carbon and fossil fuel infrastructure and changes in how people use land.  McKinsey analysts wanted a sense of how much investment would be necessary, and what behavioural changes would be required, to slash the impact of greenhouse gas pollution to zero by 2050, in alignment with scientific guidance and the Paris Agreement.

In the electric vehicle race, China coming first
China is not only a producer and consumer of EVs themselves, but also of the battery components on which they depend

Jidu, Baidu’s smart EV arm raises US$400 million to accelerate development of first production model with L4 autonomous driving technology
The funding was raised from joint venture partners Baidu and Geely    Earlier this month Jidu said it would unveil a prototype at the Beijing car show in April and start deliveries next year

China ignited a property implosion. Now it is trying to engineer a soft landing
Having ignited an implosion in their property sector last year, China’s authorities now appear to be doing anything and everything they can to put a floor under it. It was Beijing’s “three red lines” policy last year, which limited property developers’ leverage, that completely destabilised the sector and led to a continuing spate of defaults on developers’ debts, most notoriously the $US300 billion ($419 billion)-plus liabilities of the country’s second-largest developer, Evergrande.

Profits of Chinese SOEs surge 30.1% in 2021
The combined profits of China”s State-owned enterprises (SOEs) surged 30.1 percent year-on-year to nearly 4.52 trillion yuan ($715 billion) in 2021, official data showed Wednesday.   The SOEs raked in 75.55 trillion yuan in their operating revenue last year, up 18.5 percent year-on-year, according to data from the Ministry of Finance.

Chinese warn US debt, dollar hegemony may lead to another ‘Nixon shock’ with global implications
‘Nixon shock’ occurred a half-century ago when economic policy shifts by US President Richard Nixon upended the international monetary system    US ‘doomed to bring a second shock to the world’, globalisation expert says, pointing to record inflation levels and mounting debt

Britain to review anti-dumping sanctions on Chinese-made steel
Tariffs were first put in place in 2016, when UK was a member of the European Union bloc    UK trade agency reviewing dozens of trade measures carried over from EU membership era

WTO lets China impose tariffs on U.S. in Obama-era case
The World Trade Organization (WTO) authorised China on Wednesday to impose $645 million of compensatory tariffs against the United States in a ruling likely to receive a cool reception in Washington.

China’s spending on R&D reaches new high in 2021
China”s spending on research and development (R&D) hit a new high of 2.44 percent of its gross domestic product (GDP) in 2021, up 0.03 percentage points from the previous year, official data showed Wednesday.  The country’s total expenditure on R&D amounted to about 2.79 trillion yuan (about $441.13 billion) last year, up 14.2 percent year on year, according to a report released by the National Bureau of Statistics (NBS). After deducting price factors, China’s R&D spending in 2021 rose 9.4 percent year on year, said the NBS.

What’s On the Cards for Retailers in 2022? Wellness Products Surge During Pandemic
The coronavirus pandemic, climate change and evolving gender politics are among the powerful forces refashioning consumer behavior. Retailers are racing to keep up.   The industry will need to adapt to changing norms quickly, or swathes of businesses will face irrelevancy as past purchases no longer imply brand loyalty. Market research provider, Euromonitor International, has identified ten consumer tribes that erupted onto the scene during the pandemic and is advising retailers on how to seize the opportunities and avoid the pitfalls created by social upheaval. Over the coming days, we will profile other consumer tribes and examine how merchants, from multinationals to startups in niche categories, adapt to meet their needs.

2022: Rise of Economic Power of Small Medium Businesses across the World
Our hyper-digitized world has now openly exposed; meritocracy-centric and mediocrity-driven nations. In this global race, no nations are the same; but rules of engagement on productivity, performance and profitability and entrepreneurial behaviors are almost identical. If economic survival to save nations is critical, still why in most nations the tasks of economic development mandated to teams critically lacking the required entrepreneurial and job creator mindsets. Nations with mastery on national mobilization of entrepreneurialism will lead; others may follow or get out of the way.  Is this why economic development teams are so afraid?  Will such ideas alter government agencies and their mandates in the future? Is this how Meritocracy will drive out Bureaucracies? Is this where the new future of economic prosperity hidden? Is this how we will advance to catch up with lost time and opportunities?  Is this how nations will finally optimize already hidden talents in their national trade groups, chambers and governments to full capacity? Is this how we will eventually open new bold discussions on distribution of right intellectualism to fit the right needs of humankind?Suddenly, how far has our world moved on; bandaged, stitched and altered in thinking, psyche damaged but still aware of common sense. Our understanding of humanity is perhaps now in search of common good. To liberate itself from strangle of old thinking, the SME economic development world urgently needs major adjustments to bring balance between job seeker mindsets with job creator mindsets. Start immediately with a quick test across the economic development departments and measure such imbalances. Study more on Google. The rest is easy.

Winter Olympics 2022: China eases Covid testing rules amid rise in cases
The majority of the Beijing public aren’t allowed to attend the Games due to Covid restrictions
Organisers of the Beijing Winter Olympics have eased a Covid-19 testing requirement for participants, amid a growing number of cases in the capital.  The new change makes it easier for participants arriving at the Games to be considered virus-free.  Of more than 3,000 Olympic arrivals, 106 have tested positive for the virus since 4 January.   Outside of the tournament’s closed-off premises, Beijing locals are facing harsher restrictions and new lockdowns.

The American politicization of the Beijing Winter Olympics, and the “post-truth era” theory
“The Winter Olympics in China is not an arena for American political positions and manipulation against China. If the United States is determined to have its own way, China will also take resolute countermeasures”   Finally, we can explain here the impact of the American boycott on the current Winter Games in China, as I believe that “the American diplomatic boycott of the Beijing Winter Olympics will not affect the sporting events of the Games at all”. Evidence for the correctness of this is what was officially announced by the White House spokeswoman, “Jen Psaki”, who has been emphasizing that:   “All American athletes have the right to participate and compete in the Beijing Winter Olympics, they are free to do so, and the United States of America will support them 100 percent with their encouragement from the homeland, instead of being by their side in Beijing”    Based on those official US statements allowing athletes to participate in the Beijing Winter Olympics, we can conclude that the United States of America follows an “open door policy with China”, knowing that the comprehensive US boycott decision will definitely have a broader impact on relations, which may complicate the efforts of  The Biden administration is making progress with Beijing on issues, such as: (trade and economic talks and negotiations, arms control talks, efforts to de-escalate tensions over Taiwan), and others.

Lawmakers from UK, EU and other countries call for blacklists over Uygur treatment in Xinjiang
Inter-Parliamentary Alliance on China members call for bans similar to the US Commerce Department’s Entity List     Lawmakers want to force investment firms to divest from companies with ties to forced labour and other abuses

US house leaders unveil chips, China competition bill
President Joe Biden’s administration is pushing to persuade Congress to approve funding to help boost chip production in the United States, as shortages of the key components used in autos and computers have exacerbated supply chain bottlenecks.

US warns of fragile chip supply as inventory falls to just five days
Chip inventory held by manufacturers has plummeted to an average of just five days’ supply, as the global semiconductor shortage continues to wreak havoc on industry, the US Department of Commerce has warned.   According to a survey by the department of roughly 150 companies worldwide, manufacturers’ median chip inventory plunged from 40 days supply in 2019 to about five days late last year.  US commerce secretary Gina Raimondo on Tuesday warned US companies remain vulnerable to the weakened supply chain, adding that some could be forced to temporarily close and furlough workers in the event of even minor disruptions.  “This tells you how fragile this supply chain is,” Raimondo said. “Five days of inventory, no room for error . . . so what does that mean? A Covid outbreak, storm, a natural disaster, political instability, a problem with equipment — really anything that disrupts a facility anywhere in the world — we will feel the ramifications here in the United States.” The global chip shortage was prompted by a surge in demand for consumer electronics during the pandemic, and has been exacerbated in the US by sanctions on major suppliers in China.   The crunch has also illustrated the extent to which parts of the US manufacturing base are reliant on other overseas chipmakers such as Taiwan’s TSMC, the world’s largest foundry and a supplier to companies including Apple and Volkswagen.

US-China tech war: Shenzhen to establish international sourcing platform for semiconductors as global chip shortage persists
The Shenzhen sourcing strategy will enable partner firms to band together and gain greater leverage in negotiating for equipment, components and raw materials     Under that plan, Shenzhen will also serve as a major location for procurement, software development, branding, training and other related services

China’s top money managers bet on more tech stocks, cut liquor producers to boost returns amid policy challenges
Zhang Kun at E Fund made Tencent his top holding in flagship fund, while Yang Ruiwen at Invesco Great Wall bought Shiyuan Electronics, Raytron Technology    While fortunes were mixed last quarter, both have suffered losses in the opening weeks of 2022 amid risk aversion

Analysis-A metaverse with Chinese characteristics is a clean and compliant metaverse
How will China’s metaverse evolve? Look to the letter “c”. Clean, censored, compliant and crypto-less is the view from experts.   The descriptions point to the long shadow thrown by Chinese authorities who have already intimated they will have a heavy regulatory hand in how it will develop – a shadow some China metaverse advocates fear will stunt its growth. From Microsoft’s $69 billion plan to buy Activision to Facebook changing its name to Meta Platforms Inc, much of the tech world is leaping to build what many expect will be the next generation of the internet: immersive virtual worlds that replicate many aspects of real life. Experts say China’s metaverse efforts lag countries such as the United States and South Korea, citing less investment by domestic tech giants. Industry-leading products like Meta’s Oculus virtual reality (VR) headsets are banned in China and the slow development of attractive domestically made VR headsets has meant China has yet to see a VR platform or metaverse gain significant popularity.

Chinese version of TikTok promotes traditional dance and music as Beijing pushes to clean up internet content
ByteDance’s Douyin is investing ‘tens of millions of yuan’ to promote live-streamers producing content involving traditional music from different cultures   The incentive scheme offers creators cash rewards for such content that can include dances from Chinese ethnic minorities

China, EU urged to strengthen cooperation, manage differences
China and the European Union, two major markets that share broad common interests, should strengthen cooperation and manage differences to develop a sound relationship, according to analysts.     Ding Chun, director of the Center for European Studies at Fudan University in Shanghai, said the common interests of China and the EU far outweigh their differences, and both sides should tackle distractions and challenges to seek new progress in advancing the China-EU Comprehensive Strategic Partnership.

Lithuania considers modifying Taiwan representation name to defuse diplomatic row with Beijing
Officials suggest changing office name to refer to ‘Taiwanese people’ rather than Taiwan to mend Vilnius-Beijing rift      A single gesture will not change Beijing’s attitude on the issue, says observer

China promises more investment at Central Asia summit
Xi Jinping said trade has grown 25-fold over the last two decades.  For his part, Chinese President Xi Jinping vowed to open China’s domestic market to more Central Asian goods and agricultural products. This would be especially good news in Kazakhstan, where exporters suffered significant losses last year when China tightened border regulations, allegedly due to the coronavirus. The Chinese leader also said he wants to bring trade turnover between China and the region to $70 billion by 2030. The figure has grown 25-fold in the last 20 years, from $1.5 billion to $38.6 billion in 2020, according to state-run People’s Daily. Leading the growth is Turkmenistan, which has seen trade grow nearly 200 times, to $6.5 billion in 2020 – mostly in the form of natural gas exports.   Total Chinese investment in Central Asia approached $40 billion at the end of 2020, of which $21.4 billion went to Kazakhstan, People’s Daily reported; 7,700 Chinese firms were operating in Central Asia at the end of 2021.   Xi also pledged $500 million in grants to Central Asian countries within next three years for socially important projects and 50 million more doses of Chinese-made COVID-19 vaccines this year.

China, Russia take another step closer, agreeing to strengthen coordination on Asian affairs
Senior diplomats ‘reach broad consensus’ to boost strategic communication and jointly maintain regional peace and stability in virtual talks    Meanwhile, China’s envoy to Russia welcomes Vladimir Putin’s visit to Beijing for the Winter Games next week, highlighting the nations’ friendship   Moscow and Nato have embarked on a new round of negotiations, with Russian President Vladimir Putin asking for “long-term legally binding guarantees” from Nato that no missile system would be installed in Ukraine. Meanwhile, Russia has continued a military build-up along its border with Ukraine, prompting Nato to send reinforcements to eastern Europe. On Tuesday, Denisov also said there could be a “surprise” gift for China-Russia ties when Putin visits Beijing for the Winter Olympics next week, without giving details.  Putin was quick to confirm his attendance at the Games’ opening ceremony on February 4. He will be among a small number of leaders expected to attend the event in person amid the coronavirus pandemic and a diplomatic boycott by countries including the US, Britain, Canada and Australia over China’s human rights record. That includes alleged abuses against Uygurs and other Muslim minorities in the far western Xinjiang region, which the US has called “ongoing genocide and crimes against humanity”. Beijing has denied the accusations, saying its policies in Xinjiang are aimed at combating extremism.

China’s Communists Oust First Official Over ‘Disorderly’ Capital
Zhou Jiangyong was party boss in Alibaba’s headquarter city   Anti-graft agency vowed to tackle disorderly capital last week

China pledges ‘purification’ of the internet ahead of the Beijing Winter Olympics and the Lunar New Year
China’s top cybersecurity regulator is vowing to crack down on “illegal” online content as part of a campaign to clean up the internet ahead of the Beijing Winter Olympics and one of the country’s most important annual holidays.
The Cyberspace Administration of China announced Tuesday that its month-long internet “purification” campaign is intended to create a “healthy, happy, and peaceful online environment.”

China Begins a Tense Spring Festival Travel Rush
China’s Lunar New Year holiday is approaching. But once again, the threat of the coronavirus is disrupting the festivities.

Why Chinese Men Want to Be Beautiful
Today, independent young women in China demand more from men in terms of style, culture, and appearance, forcing most men to raise their beauty games.

How I Lived in Beijing for 21 days for Free
I’m Zou Yaqi. From midnight on May 1 until midnight on May 21, I set myself a challenge to survive in Beijing for 21 days without money. During those 21 days, I received an estimated 10,000 RMB in giveaways. I basically presented myself as a young, beautiful socialite. Occasionally, I would play the role of a pregnant woman; in order to sleep in hotel lobbies, I would play the part of a wife trying to catch her husband cheating. At auctions, I played the part of a collector, and at expos I was a cosplayer. This was my graduation thesis at the Central Academy of Fine Arts.

“Westernized” patriots defend China’s model
Worldly Chinese super influencers are keen to re-shape the world’s thinking about the West, says Valarie Tan. This is the fourth in a series of short analyses that looks at China’s systemic competition and normative rivalry with the US and the EU. A look beyond the Beijing leadership shows how far debates about the features of political systems and the power to interpret events reach into Chinese society – and possibly shape the country’s actions.    “The East is rising, the West is on the decline” (东升西降) is a dictum used by Chinese nationalists like security tsar Chen Yixin, the Secretary-General of China’s Central Commission for Political and Legal Affairs. It is also a favorite of influential bloggers and scholars, some bilingual in English and Chinese after studying in Europe or the US. These super influencers debate with Western scholars and are given space by Western media. With millions of social media views, they have found audiences inside and outside China.

Most Western op-eds on China’s Covid status are specious and spurious
If you want to know what’s going on in China, try calling friends and families there, if you have any. Read Chinese blogs and local newspapers on the web (not everything is censored), if you read Chinese. Or try Google Translate

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