China Press Review – January 31, 2019

Press review

Trade war or not, China’s pivot to the private sector and return to infrastructure spending are worth watching
Christine Loh says having seen results from its crackdown on shadow banking, China is taking steps to address the private sector’s need for financing. Meanwhile, more funds are also expected to be allocated to infrastructure

Treasury Secretary Steven Mnuchin upbeat after first day of US-China trade war talks in Washington
US treasury secretary makes brief but positive comment as other delegates remain tight-lipped at end of opening negotiations Leader of Chinese delegation, Vice-Premier Liu He, expected to meet Donald Trump in the Oval Office on Thursday

Trump says U.S.-China trade talks ‘going well’ but wants to see Xi
U.S. President Donald Trump was upbeat on Thursday about high-level trade talks with Chinese officials in Washington but said no final deal would be made until he meets with Chinese President Xi Jingping.

Trump to Meet Top China Trade Negotiator in Final Day of Talks
Economies are a month away from March 1 deadline for deal Negotiations come against backdrop of Huawei criminal charges

China says it has no motivation to inflate data as Beijing pursues slower but ‘quality growth’
National Bureau of Statistics official has conceded that there were problems before in compiling data but they have been ‘dealt with’
Majority of the country’s 31 provinces have lowered growth targets for 2019, according to state media reports

podcast: Don’t rule out China’s economy, says RiverFront’s Konstantinos
RiverFront Investment Group’s chief investment strategist Chris Konstantinos tells Reuters’ Fred Katayama investors can conservatively play China by buying emerging market funds or Japan, which he’s also bullish on.

US and China in the lead in the AI race, says the UN
China and the US are ahead of the global competition to dominate artificial intelligence (AI), according to a study by the UN World Intellectual Property Organisation (WIPO) published on Thursday. The study found US tech giant IBM had by far the biggest AI patent portfolio, with 8,920, ahead of Microsoft with 5,930, and a group of mainly Japanese tech conglomerates.
pdf WIPO’s First “Technology Trends”

Managing The Dragon’s 2019 Predictions
“If you are going to be a bear, be a grizzly,” my father used to tell me. That’s the way I feel about going into 2019 with my five predictions for the New Year. Four of the five are dependent to a greater or lesser degree on the trade war between the United States and China being history by mid-year. If that happens, those four predictions will most likely hold up. If not, it will be a tough year.

Managing The Dragon’s 2019 Predictions

Economic diplomacy: FTAs, shrinking China, and ecommerce
The shift from multilateral to bilateral deals is possibly the biggest shift in trade policy in the past 25 years Instead, the firm says China’s share of world gross domestic product (at purchasing power parity prices) is set to decline two percentage points from 19% today to 17% in 2040. It’s only one forecaster’s projection but has grabbed the attention some economists, most notably the Financial Times’ Martin Wolf, who is certainly no China bear. He says in response: China may well fail to replicate the success of other east Asian high-growth economies, in becoming a high-income country in short order. While the US-led efforts to rein in China’s high-tech superiority ambitions have long been gestating, this sort of revisionist economic growth outlook may only add more impetus to the showdown now underway. What’s interesting about the Capital projections is that while China is now larger than the rest of developing Asia (minus Japan), by 2040 it will be overtaken by Asia’s other emerging economies powered mainly by India, Indonesia, and Vietnam. China would still be the world’s largest economy but not quite the projected outsized player that has possibly underpinned its more aggressive actions in recent years

For holiday spending, Chinese consumers favor brick and mortar
Though e-commerce gets most of the press, Chinese consumers still prefer brick and mortar outlets for their holiday shopping. According to Penguin Intelligence, a China-based internet analytics firm, in 2018 more than 80% (Chinese link) of people born in the 1980s and 1990s bought New Year products at physical shops, as did over 90% of those born in the 1970s. Even among shoppers born after 2000—who normally prefer digital channels—79% bought their New Year items at physical stores. Most of this spending takes place before the holiday begins, as stores close to allow staff to return home for the holiday.

For holiday spending, Chinese consumers favor brick and mortar

We need to talk about Huawei: Europe debates ban on Chinese tech giant
Countries weigh risk of Beijing building back doors into European 5G networks but telecom firms urge restraint

Huawei is the casus belli for a broader US-China showdown
Numerous charges have been levelled at Huawei but none as damaging as the underlying complaint that Huawei helps China to spy.

How the US indictments may play out for Huawei
Huawei faces almost two dozen charges by the US, which contends that it stole trade secrets, violated Iran sanctions

Huawei reaches interim deal to license Qualcomm tech
Qualcomm has reached an interim agreement with Huawei to license its technology to the Chinese telecommunications giant. Huawei will temporarily pay Qualcomm $150 million every quarter for the use of its tech, Qualcomm CFO George Davis said on Wednesday during an earnings call. The two companies signed the short-term licensing agreement in late 2018, and the deal will run until the end of June 2019.

Briefing: Huawei reaches interim deal to license Qualcomm tech

Alibaba Group has been named to Fortune’s list of Blue Ribbon Companiesfor 2018.
The Chinese e-commerce and technology giant is the only Chinese company to make the list, which includes 56 companies in total this year. To qualify, companies needed to have appeared on at least four of Fortune’s most-rigorous annual rankings. In 2018, Alibaba was ranked among Fortune’s World’s Most Admired Companies (No. 34) and made the magazine’s Change the World (No.5), Future 50 (No. 14), The Global 500(No. 300) and Most Powerful Women International (No. 16 CFO Maggie Wu) lists.

Bloomberg to include yuan-denominated, Chinese government bonds in its benchmark indices
Chinese government debt will be phased into the Bloomberg Barclays Global Aggregate Index beginning in April It is the latest inclusion of Chinese securities in a benchmark index

China’s manufacturing shrank again in January, as fears of further economic slowdown mount
Official purchasing managers’ index (PMI) rose to 49.5 from 49.4 in December as factory activity in China contracted for a second consecutive month Non-manufacturing PMI rose to 54.7 from 53.8 in January, well above analysts’ expectations of 53.8, according to Bloomberg poll

Standing Out in China’s Sea of Cliché Influencers
Repetitive content has led to the following reality of the Chinese digital landscape; that key opinion leaders are abundant, but actual opinions are rare

Standing Out in China’s Sea of Cliché Influencers

Cryptocurrency and pyramid schemes add to US$44.5 billion surge in illegal fundraising in China
Police investigated more than 10,000 cases of illegal fundraising last year, a 22 per cent rise in the caseload, according to top prosecutors The total amount involved also rose, more than doubling to about 300 billion yuan, the Supreme People’s Procuratorate said

China’s P2P lending sector a ‘disaster zone’ of fraud: government official
The Chinese online peer-to-peer (P2P) lending industry is a “disaster zone” of fraudulent activity and illegal fundraising, according to a senior official at the country’s Ministry of Public Security.

China’s P2P lending sector a ‘disaster zone’ of fraud: government official

China’s ride-hailing leader Didi Chuxing seen overhauling its operations to enhance safety amid lay-off reports
Didi declined to comment on report that it plans to lay off as much as 25 per cent of its workforce

Foreign investors charge into China’s commercial real estate as credit squeeze hurts domestic developers
Investment in China’s commercial real estate rose to record 296 billion yuan (US$44.08 billion) in 2018 Domestic credit squeeze weighs negatively on Chinese developers and real estate funds, whose share of total investment slumps to 68 per cent Foreign investment rose to 94.6 billion yuan, or 32 per cent of the total, more than double the amount in 2017

US will feel impact of shifts in Chinese investment
A study released by China’s Ministry of Commerce on Tuesday reminded Chinese companies of increased risks of investing in North America, especially the US and Canada.

Chinese investment in Canada cut by nearly half as diplomatic spats, currency controls take toll
‘It suggests the heady days of Chinese investment are certainly over for now’
Chinese investment in Canada cut by nearly half as diplomatic spats, currency controls take toll

The tension between north and south in China’s history
As a focal point in the US reaction to China’s rise, Asean members know that it is more crucial than ever to be united. When the Americans redefined their strategic concerns by moving the goal posts from the Asia-Pacific to the Indo-Pacific, the decision made South-east Asia more central to the competing powers.

Silk Roads without people
Xi Jinping’s likely visit to India must not be wasted. It can be a good occasion for New Delhi to question him about the new corridors and remind him about Demchok

China cannot afford debt traps
China does not want to set “debt traps,” in which it saddles governments with more debt than they can service and then forces them to surrender assets, such as ports. China cannot afford debt traps along the Belt and Road, nor does it need to. Some argue that in order to gain influence, China baits poor countries with cheap financing offers that they cannot repay. But China gains influence in most Belt and Road countries simply by being the only partner that is willing to provide construction services or loans in difficult environments. Losing additional money via debt traps is thus unnecessary.

“There’s been a huge reputational blow for China, but don’t underestimate their ability to learn fast and change course,” Chamorro said. “BRI 2.0 won’t have anywhere near the same numbers of huge, high-profile projects as the first version and they’ll be more more sustainable.”

Belt & Road | Souring deals in Asia put China’s initiative dreams under pressure

While China opens its doors wider to the world, the US slams their’s shut
As the world’s largest economy protects itself from outside competition by raising tariffs and erecting border walls, China has embraced globalization by removing investment and trade barriers while ratcheting up infrastructure investment in developing countries so that others can benefit and emerge from poverty. What a contrast!

Can solar diplomacy green the Belt and Road?
Experience from China’s own solar sector could help it deliver a sustainable transition in Belt and Road countries, writes Brian Eyler.

China offered to nearly halve cost of Malaysia’s $20-billion rail project -sources
– China offered to nearly halve the cost of a $20-billion rail project to save the centrepiece of its infrastructure push in Southeast Asia, two sources said on Thursday, but contradictory remarks by Malaysian ministers leave the outcome uncertain.

Hanjin shipyard bankruptcy poses dilemma for Duterte
Chinese interest in strategically located Subic Bay site sets off alarm bells in Philippines

Facebook warns that blowing up Silicon Valley firms through regulation might allow ‘sinister’ Chinese companies to dominate the internet
Facebook’s most senior lobbyist warned that over-regulating big Silicon Valley businesses might inadvertently help boost Chinese internet firms, which have scant regard for user privacy or freedom of speech.

Why 5G, a battleground for US and China, is also a fight for military supremacy
Next-generation networks will be vital to future military operations, raising the stakes between those developing the technology It may be easier to hack 5G, but strategic motivations are also behind concerns of the United States, experts say

Military-run Chinese space station in Argentina raises fears of secret operations
Lack of openness and oversight at Patagonian base fuel suspicions about its true purposes although Beijing insists it is solely used for scientific research China promised Argentina it would not be used for military purposes, but hosts have no oversight of its operations

White House map showing Taiwan as separate from China catches the eye of island’s internet
John Bolton and Steven Mnuchin were discussing Venezuela, but Taiwanese viewers were focused on another detail Sarcastic internet users ask if mainland social media users are going to start a campaign to boycott the White House

Mainland Chinese visitors drive Hong Kong’s tourist numbers to record high of 65.1 million
Overnight visitors from the mainland were up 7.4 per cent and day trippers shooting up 20.1 per cent Tourism Board expects 2019 to be a ‘bumpy and unpredictable’ year thanks to an economic slowdown in China and uncertainty in the world economy

French police maintains that death of China’s HNA executive was accident
French police on Thursday reaffirmed that the death of HNA Group Co-Chairman Wang Jian during a business trip in France last summer was accidental, dismissing a newspaper report that he more likely committed suicide.

China economy quiz: 10 questions to test your knowledge of the top stories from January 2019

China unveils its first self-developed wave pool
Yes, it’s official: there is nothing the Chinese can’t do, make or imitate. China has unveiled its first wave pool.

China’s cyber police directs news sites, app developers to promote ‘positive energy’ online
The move is part of the regulator’s recent initiatives to rid the domestic internet of ‘vulgar and lowbrow content

Chinese Reality Show Slammed for Reinforcing Gender Stereotypes
“My Little One” preaches the importance of marriage and traditional gender roles to the single female celebrities starring in the program.

Alain Gillard
Information Officer
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