Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – January 4, 2022

China’s Dec factory activity returns to growth, beats forecasts- Caixin PMI
China’s factory activity grew at its fastest pace in six months in December, driven by production hikes and easing price pressures, but a weaker job market and business confidence added uncertainty, a private survey showed on Tuesday.   The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 50.9 in December – its highest level since June. Economists in a Reuters poll had expected the index to rise to 50.0, which separates growth from contraction on a monthly basis, from

China PMI rose following Xi’s stability policies
The Caixin manufacturing PMI confirmed the expansion of activity shown by the official PMI a few days back. This follows a turn in policy direction from aggressive reform to stabilisation. We shall see more growth from various industries in 2022 with a highlight being green objectives

China’s participation in RCEP has implications for Europe
The Regional Comprehensive Economic Partnership (RCEP) entered into force on January 1. The world’s largest trade agreement will have a significant effect on global value-chains and European trade with China and other members, says Aya Adachi. The EU needs to catch up and complete agreements of its own in the region.

RCEP trade agreement takes effect
An regional trade pact that created the world’s biggest free trade zone came into effect on Saturday, grouping together 15 Asia-Pacific nations that make up almost one third of the global economy, reports Caixin. The Regional Comprehensive Economic Partnership (RCEP), singed in November 2020 after eight years of talks, went into force for China and the nine other countries that were first to ratify the agreement: Japan, New Zealand, Australia and six members of the Association of Southeast Asian Nations (ASEAN)—Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam.

Exporters already see RCEP wins with trade
A number of Chinese exporters said they have significantly benefited from the Regional Comprehensive Economic Partnership, as the agreement has helped lower tariffs and raise competence.    The RCEP agreement, which took effect on Jan 1, covers roughly 30 percent of the world’s population. It is expected to provide a strong boost to international trade and investment and contribute to global economic recovery.

podcast : Jing Liu on China’s Economy in 2022
Jing Liu, Senior Economist at HSBC, discusses her outlook on China’s economy in 2022 and the latest PMI data with Doug Krizner and Paul Allen on Bloomberg Daybreak Asia.

China’s economic growth model is close to its limits
A ‘great pause’ now seems probable Every day, then, credit to China’s private sector is becoming more constrained and this, of course, means that lending has to be rationed among competing uses. Perhaps not surprisingly, the authorities in Beijing have decreed that the property and construction sectors, together with a number of other sectors that have been deemed unproductive or not aligned with the government’s vision for “common prosperity” will be largely excluded from the credit markets. These important sectors now face years of enforced austerity. The authorities are, of course, still underwriting the flow of credit to its favored sectors as they seek to increase productivity and support activities that add more value to the economy. They will also want to ensure that the export sector can contribute at least some growth to the economy. However, as we look forward into a post-pandemic world with clear environmental priorities, there has to be a question over whether world trade growth will, in fact, be strong enough to support China’s export drive, and whether the West will want to receive higher value-added goods from China. Geopolitical tensions may not only be reflected in trade quotas but also in the types of goods that countries are willing to import from their rivals. It is uncertain that even a well-supported export drive by Beijing will be successful. So it seems clear to us that China’s rate of economic growth will remain subdued for a considerable time. The country took what amounted to a five-year timeout in the late 1990s following the excesses of 1992 and 1993. We feel that a similar but perhaps longer Great Pause in China’s growth trajectory is likely this decade. What this means internationally is harder to predict. The way the economy rebalances will be critical, but Beijing will face difficult choices between competing priorities and have fewer policy options to play with. For investors and industries exposed to China, greater volatility seems inevitable, but the risks appear to be on the downside.

Performance Will Determine Prestige in US-China Geopolitical Competition
As Washington and Beijing increasingly compete across a wide range of areas, they are constrained by interconnections not easily unraveled. Moreover, the possibility of competition escalating into armed conflict is thwarted by a mutual awareness that the outcome would be catastrophic. The contest for global influence will thus ultimately come down to which system, American or Chinese, is best positioned to deliver benefits to a world wary of this emerging great-power rivalry. In short, which system performs the best will matter the most, writes Ryan Hass.

China-US Subnational Exchanges Under the Biden Administration
Under Biden, Beijing appears to have kept its focus on maintaining and further developing subnational relationships.   Legislative measures that will be examined in upcoming articles have been coded as pro-PRC, neutral, or anti-PRC. The next part of this series will focus on neutral bills – those that relate to public health and the environment and were introduced without the intent to target the PRC or the CCP – and anti-PRC measures, resolutions that relate to “sensitive issues” like human rights violations and sovereignty, as well as one bill that sought to close Confucius Institutes. The next six articles will feature the personal experiences of current and former state lawmakers whose legislative measures Beijing opposed. The first two of these will explore the dynamics behind Beijing’s opposition to a few public health bills introduced in East Coast states and the series of events that followed, starting with Maryland.

China tech: those who control the algorithms control the future
Recommendation algorithms define the reality of online. These programs show information and products that address our interests in US-based websites such as Google and Amazon. This technology is often very visionary and borders the eerie, making Chinese counterparts also very profitable. More rigorous scrutiny clues from the state aimed at destroying trust and controlling access to public news and opinions. The algorithmThe “secret source” of many tech companies, is just one target of China’s latest crackdown on Chinese companies. Regulators want technology groups to fully disclose how big data and user browsing history are processed to display products and content.

China rolls out new regulation to rein in algorithms used on apps as Beijing continues to clip wings of Big Tech firms
The new regulation, which was drawn up by four government agencies, will take effect on March 1   Algorithms, which leverage artificial intelligence and big data generated by app users, have helped shape trends and online discussions in China   he algorithm regulation is expected to help authorities clamp down on information recommendations, which have the potential of “shaping public opinion” or “social mobilisation”, according to the CAC.  Online news providers will be required to get a licence for their services. They are also specifically prohibited from publishing information that is not from the government’s list of approved news sources. In October last year, Beijing released its white list of 1,358 news outlets. The new regulation directs algorithm recommendation service providers to “protect the interests of elderly people”. In particular, these platform operators must monitor, identify and provide information related to telecommunications network fraud for the benefit of the elderly. With the SAMR’s involvement, the new regulation also provides clauses related to antitrust and unfair competition requirements. “Tightening regulation [on algorithms] means the disappearance of grey areas and the increase of operating costs [for platform operators],” said Wang Qiongfei, lawyer at Hangzhou-based Kinding Law Firm. “Some small and medium-sized internet companies may face difficulties in terms of development, a factor that affects their survival [in the industry].”

China’s Economic Development Model Shows Some Cracks
The so-called Washington Consensus, which emphasizes market-based reforms, is looking better lately.  A few years into the 21st century, it was clear that China was producing one of the greatest growth miracles of all time. Thus was born a new consensus — may I call it the Beijing Consensus? — that wise and sophisticated commentators were expected to embrace. While few Western intellectuals favored every aspect of the Chinese model, many were happy to cite results that showed the benefits of widespread government intervention. As the years pass, however, the Washington Consensus is looking better. On the research side, recent work has suggested that, overall, it produced good results and reliably raised per capita incomes. The more dramatic developments have come from China itself. China did effectively wield state power to build infrastructure, manage its cities and boost economic growth. And most advocates of the Washington Consensus underestimated how well that process would go. Now, because state power has its limits, it is difficult for China to solve many of its most fundamental problems. Chinese leaders are worried about the country’s low birth rate, for instance, but lifting restrictions on the number of children has not yet helped increase the birth rate. In many societies, it is religious families that have more children, but promoting religion is not a remedy that comes easily to China today.

PBOC move to aid small businesses
The central bank’s decision on Saturday to continue supporting Chinese smaller businesses under liquidity pressure will inject greater confidence into the latter and better anchor market expectations, experts said.   The People’s Bank of China confirmed on Saturday it will continue its lending mechanism that helps encourage financial institutions to lend to small businesses under pressure due to the impact of COVID-19.

China’s central bank launches digital yuan wallet app, Ningbo releases blockchain white paper: Blockheads
The People’s Bank of China releases a digital yuan wallet app. China’s state grid completes the country’s first digital yuan smart contract payment in the solar power industry. The eastern city of Ningbo embraces blockchain technology. Taiwanese pop star Jay Chou shows support for friend’s NFT project.

China Mobile to debut in Shanghai after raising $7.7 billion in China’s biggest offering in a decade
China Mobile will start trading in Shanghai on Wednesday after raising $7.7 billion in China’s biggest public share offering in a decade.  China Mobile’s Shanghai debut will be closely watched as an increasing number of companies including BeiGene have fallen below their offering prices on debut in China.  The world’s largest mobile network operator by total subscribers, China Mobile sold 845.7 million shares at 57.58 yuan ($9.06) each in Shanghai, the company said in an exchange filing on Tuesday.

China: Evergrande shares rise as Hong Kong trade resumes
Shares in crisis-hit Chinese property developer Evergrande rose on Tuesday afternoon as they resumed trading in Hong Kong.

Evergrande says it will abide by orders to tear down 39 structures on its flagship property project in ‘China’s Hawaii
Evergrande will tear down 39 buildings on Island No. 2 of its Ocean Flower project in Hainan
The demolition does not affect the remainder of the development, where 60,567 apartments have been delivered, with 628 units on their way, Evergrande said

Chinese banks face slower loan growth, squeezed margins, credit risk in 2022
Beijing’s latest attempts to free up more liquidity for lending are too modest to revive credit growth, which has slowed to its lowest pace in more than 15 years, analysts said. The easing measures, which include lowering banks’ required reserve ratio and a 5-basis-point cut to a benchmark interest rate late last year, will also likely keep banks’ net interest margins at multiyear lows.

‘Return our money!’ Evergrande investors protest at office of Chinese developer
Investors in financial products issued by China Evergrande Group protested outside the cash-strapped company’s offices in Guangzhou on Tuesday, with many worried that their returns would be sacrificed to keep real estate projects afloat.

Why Ocean Flower Island – dubbed ‘Dubai of China’ – is important to China Evergrande Group and Hainan province
Ocean Flower Island is the world’s largest man-made tourism island  The island has attracted more than 5.5 million tourists since January 1 2021

The Winners and Losers of 2021
As 2021 draws to a close, Jing Daily looks at the winners and losers of the local and international brands vying for the dynamic China market.  Every year, navigating the China market is a complicated game of snakes and ladders. One minute you’re ahead, up even; the next you’re down, embroiled in a controversy or worse still, find yourself cancelled. Very few houses emerged entirely unscathed this year. From miscalculated ambassadorial appointments to campaign missteps, no name is truly ever safe in China: 2021 was no exception. In fact, 2021 was less about winning and more about surviving on the mainland. Here Jing Daily finds the few global and local names that did just that, as well as the ones who failed.

The Top 4 Marketing Strategies for China in 2022
In China, integrated online and offline channels create an unmatched level of user stickiness, helping brands build loyalty among future consumers. China’s luxury consumer group has reached a turning point. The data shows that the consumers born between 1990 and 2000 are now 50 percent of the luxury market.Although the China luxury goods market has maintained 20-percent growth this year, the pandemic also has had a profound impact on luxury consumer perceptions, and brands must change their marketing focus to adapt. Digitalization helps online luxury consumption continue to expand, from 20 percent in 2020 to 22 percent in 2021. As such, online channels are becoming more and more important as a platform for brand marketing and increasing customer stickiness.

Taiwanese firm buys Lithuanian rum destined for mainland China amid diplomatic row
TTL, a liquor company fully owned by the island’s finance ministry, says it stepped in after being told the shipment was about to be rejected by Chinese customs   Vilnius has accused Beijing of blocking imports of its products in an escalating dispute over Taipei’s new representative office in the Baltic nation

China ‘pushed for big 5 nuclear nations pledge’ to not target other countries
In era of suspicion about China’s growing arsenal and the Aukus agreement, major nuclear-armed powers commit to using nuclear weapons only for defence    Vice-foreign minister Ma Zhaoxu says the joint statement will help ‘replace competition among major powers with coordination and cooperation’

China’s plot to ‘take over’ Latin America: Beijing inks new deal to share nuclear tech, build 5G networks, develop space programmes, and pump cheap loans into America’s back yard in ‘growing threat’ to US
China has put pen to paper on a new deal to deepen ties with countries in Latin America and the Caribbean   New deal will see Beijing share nuclear technology, build 5G and communications networks, help develop space programmes and pump cheap infrastructure loans into the region in attempt to buy influence  Comes off the back of years of Chinese investment and trade in the region, which has diminished US power  Beijing plans to ‘take over’ America’s back yard and is a ‘growing threat’ to the US, analysts have warned

While Paris may not see perfectly eye-to-eye with Washington, it does not want to see strategic divergence get in the way of working together in the face of a shared challenge. France sees value in cooperating with Washington on a wide range of issues ranging from maritime security to human rights to environmental protection. If AUKUS has complicated this convergence, both countries seem willing to move forward, especially when it comes to the Indo-Pacific. Recognizing where political misunderstandings occur will only make this cooperation easier. It will be instrumental for the success of transatlantic frameworks like the Trade and Technology Council and E.U.-U.S. dialogues on China and the Indo-Pacific. It will also be key for Washington and Paris to relaunch vital forms of practical cooperation in the defense domain, such as intelligence sharing, joint exercises, and contingency planning.

Chinese deep-sea surveys look for geological hazards in South China Sea
Researchers will use the data to find out more about subsea hazards that could affect future oil and gas projects, according to state newspaper   They made seven dives in a manned submersible, focusing on a basin southeast of Hainan and two areas near the contested Paracel Islands

Tesla opened a dealership in Xinjiang, China, despite widespread reports of Uyghur oppression there
Tesla announced on Chinese social media network Weibo that it’s opened a new service center in Urumqi, in the region of Xinjiang, which is home to a Muslim population known as the Uyghurs.  In 2021, the United States, United Kingdom and Canada said China engages in “forced labour, mass detention in internment camps, forced sterilisations” and other abuses against Uyghurs. Elon Musk’s electric vehicle company and his re-usable rocket company SpaceX have both faced scrutiny in China

China’s lockdowns, consumption concerns see short trips dominate in the new year
China saw an 18 per cent year-on-year decline in the number of travellers over the three-day holiday that ended on Monday, to 86.19 million     Fewest rail passengers since 2018, as many Chinese decide to hunker down and save money, rather than visit popular tourist destinations such as Xian

China’s Xian to end Covid-19 lockdown if it reaches ‘zero social transmission’
City could ease its measures once all new confirmed infections are linked to previously recorded cases, with no other local transmission, official says  Full lockdown is also announced in the small city of Yuzhou, in central province of Henan

China: Xi’an residents in lockdown trade for food amid shortage
Some residents under quarantine in the Chinese city of Xi’an have resorted to bartering supplies in recent days, as worries of food shortages continue.

This impoverished Chinese city bet its fortunes on the 2022 Winter Olympics. Then the Covid-19 pandemic happened
The organisers had grand plans for a ‘fantastic, extraordinary and excellent’ event. Now the goal is to be ‘simple, safe and splendid’   Zhangjiakou, the city hosting many of the skiing events, is hoping the event will transform its fortunes even though few, if any, spectators will be attending

Thousands remember late Wuhan whistleblower doctor, 2 years after COVID-19 warning
Thousands of people left messages on the social media account of the late Chinese COVID-19 whistleblower Li Wenliang on the anniversary of the day he learned of possible pneumonia-causing virus cases in Wuhan and shared the information with fellow doctors.

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