Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – January 6, 2022

China’s pandemic-hit businesses see tax cuts and fee reductions extended in bid to kick off new year on a high note
Premier Li Keqiang has been outspoken about the need to protect what is considered the ‘backbone’ of China’s economy, and he vows support measures will continue.
Since 2016, tax and fee cuts have saved market entities a total of 8.6 trillion yuan (US$1.35 trillion)

China’s services sector activity growth accelerates, but Covid-19 flare-ups weigh on outlook
Caixin/Markit services purchasing managers’ index (PMI) rose to 53.1 in December from 52.1 in November     China’s official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, rose to 52.7 from 52.3 in November wins Spring Festival Gala partnership, following ByteDance, Tencent, and Alibaba, in sign of political approval is CCTV’s official partner for the most-watched television broadcast in the country, when it will give away cash as virtual red packets      The partnership has become a sign of both financial power and political approval, which the company has maintained amid China’s crackdown on Big Tech

China’s economy: the fallout from the Evergrande crisis
Last month, China’s State Council, the government’s most powerful organ, unleashed its wrath on an unusually small target, accusing officials in a county of just 660,000 people of effectively extorting private sector businesses.  In a long and detailed statement issued on December 17, the State Council said the local government in Bazhou, situated just 90km south of Beijing in Hebei province, had seriously violated both government and Chinese Communist party orders by embarking on a fee-collection spree from small and medium-sized enterprises in order to offset its own declining land-sale and tax revenues.
Like many jurisdictions across the country, Bazhou had been hit hard by the party’s year-long crackdown on highly leveraged real estate developers such as China Evergrande Group, a colossus that teetered for months before it finally defaulted on bond payments on December 6 and entered into a formal restructuring process.

The ‘Made in China’ plan is back – and it’s better
As the world headed into 2022 grappling with the latest virus variant, China unveiled a sharpened version of the Made in China 2025 industrial policy blueprint. Previous iterations may have had nations like the US on edge, but this is the one to keep an eye on.    State planners released a five-year smart manufacturing development plan in late December that aims to digitise 70 per cent of the country’s large enterprises. China will now focus on building and owning industrial robots, as well as upgrading equipment and processes used in the manufacturing sector.    The US and other nations have been talking up advanced manufacturing, too. Yet limited progress has been made. The global supply chain snarls that have left companies across the world scrambling to produce goods with all the right parts in a timely fashion makes that clear. It’s also put a spotlight on the otherwise mundane role of factories and their workers, shipping, logistics and warehouses, exposing deficiencies in the US industrial complex.    Viewed through that lens, Beijing’s plan is on point: Keeping the world reliant on China for as long as possible.

China tech crackdown: fresh antitrust fines on Alibaba and Tencent signal continued scrutiny in 2022
Another round of fines on Alibaba, Tencent and Bilibili over the failure to disclose 13 deals signals a continued hard line on antitrust this year     Fines related to past deals have become routine in Beijing’s effort to reign in the influence and expansion of Big Tech firms in the past year

How Chinese EVs remade China’s auto industry reputation
China has officially become the world’s biggest market for electric vehicles, accounting for 41% of all EVs sold worldwide. That is a huge number for one admittedly huge country. Chinese brands like NIO, Polestar, and BYD are leading in EV innovation, jostling with Tesla for the most innovative cars in the world.    But things weren’t always like this. Back when electric cars were just a futuristic gimmick, Chinese car companies simply couldn’t compete with Western stalwarts like Ford, GM, and Volkswagen. So just how did China go from an also-ran in car production – to the battlefield for the future of the automotive industry?

Tesla, Chips and China: The Auto Storylines to Watch in 2022
Tesla’s strong performance in China, the world’s biggest auto market, helped fuel the company’s impressive year-end deliveries. China is the largest market for VW, BMW and Mercedes, so defending or even expanding market share there will be a major priority for all three German manufacturers.  This year is also special because China’s relaxed foreign ownership rules take effect. BMW — which just revealed it beat Mercedes in global luxury-car sales last year for the first time since 2015 —  expects to get a nod this quarter from Chinese regulators for its plan to fully consolidate its local car-making joint venture with China’s Brilliance. This would allow BMW to include the firm’s results in its reporting, substantially boosting revenue, cash flow and earnings. The relaxed rules may also create an opening for Mercedes to lift its stake in its main Chinese joint venture with BAIC Motor from the current 49%. BAIC Automotive Group owns roughly 10% of Mercedes parent Daimler, and the Germans last month referred to the partnership as a “role model for Sino-German cooperation” after collaborating on vehicle development and production since 2003. Doubling down on the project with BAIC would make sense also because Daimler is downsizing a tie-up with BYD. The German manufacturer said last month it will cut its stake in the 50-50 electric-car venture Denza to just 10% following years of weak sales.

Japan’s Nikkei 225 drops nearly 3% as Asia-Pacific markets largely fall
The Dow Jones Industrial Average saw its first decline of 2022 overnight as traders geared up for potentially tighter U.S. monetary policy.    Minutes from the U.S. Federal Reserve’s December meeting released Wednesday showed officials are ready to aggressively dial back policy help.

China Passes Sweeping Recommendation Algorithm Regulations
The Cybersecurity Administration of China has passed a new set of recommendation algorithm regulations that take significant steps in regulating how the technology can be used. If enforced as intended, the regulations will have a major impact on companies that rely heavily on the technology, such as social media applications, e-commerce platforms, and news sites, requiring them to increase oversight and make significant technical adjustments.

China is Committing to Strengthening IP Protections. But Should Foreign Companies Take it in Good Faith?
For so long, ever since the Chinese “door” became open to foreign investment, IP protection or lack-thereof, has been a recurring challenge. Foreign investors have complained about this issue to their embassies, consulates, and chambers of commerce. They did this hoping that these institutions would advocate on their behalf and demand better national laws and consistent enforcement of the already agreed commitments China made with regards to IP protection upon joining the WTO in 2001.  China, not having much IP produced locally as it does today, failed to take this matter as a top priority for a long time. Some foreign companies lost cases before Chinese administrative authorities and had long fruitless legal battles in court.    Despite the above concerns and challenges, foreign investment continued to pour into China relentlessly, as it has during the ongoing COVID-19 pandemic and despite travel restrictions. In fact, as reported by state news agency Xinhua, “foreign direct investment (FDI) into the Chinese mainland is expected to register “double-digit growth” in 2021”. This has been confirmed by Fitch Ratings.   Coming back to IP protection, recent developments show reason for optimism. China has led the world in the number of patent filings since 2011 and is working to improve its regulatory regime governing IP protection.  In this article, I will briefly summarize China’s commitment to IP protection and explain what it means for foreign companies in China.

China’s ubiquitous WeChat doubles down on mini apps, short videos as it faces stricter regulation, market saturation
With 1.26 billion monthly active users as of September 2021, WeChat is facing headwinds from regulatory crackdowns and fierce competition from rivals     Allen Zhang Xiaolong, known as the father of WeChat and a star attraction at the event for the past six years, was absent this time around

China bans most exclusive copyright deals for digital music platforms
China’s copyright authority said on Thursday (Jan 6) digital music platforms are not allowed to sign exclusive copyright agreements except in special circumstances, amid a regulatory crackdown on monopolistic behaviour in the country’s private sector.    The National Copyright Administration of China (NCAC) gave the order on Thursday at a meeting in Beijing with influential digital music platforms, as well as record and songwriting copyright companies, according to a statement published on the NCAC’s official WeChat account.

Chinese scientists build factory robot that can read minds on the assembly line
Trained robot monitored co-worker’s brain and muscle signals to predict needs, China Three Gorges University team says in domestic peer-reviewed paper     China is in dire need of more powerful robotic technology to address its problems of a shrinking workforce and rising labour costs

China property debt crisis: R&F warns its asset sales may not meet bond repurchase deadline in a slumping real estate market
The Guangzhou-based developer said proceeds from some asset sales may fail to materialise by January 10 for repurchasing notes from offshore bondholders   Creditors holding almost 72 per cent of theUS$725 million bonds vote for 17 per cent discount on principal to receive proceeds earlier

US-China Fast Track Channel makes it easier for businesspeople and their families to enter China, with caveats
Quicker invitation letters are to be issued from local Chinese authorities, but inclusion of family members is limited to those under 18 years old, and travellers must apply for own visas    Mechanism comes into effect less than two months after President Xi Jinping said China had agreed to upgrade fast-track entry for American executives

Covid in Hong Kong: Here’s a list of everything that will be shut down starting tomorrow
Hong Kong will be re-imposing strict Covid-19 measures from Friday as the city is bracing for the spread of the highly infectious omicron outbreak.   “We are facing a very dire situation of a major community outbreak any time, and that’s why we have to take very decisive measures,” Chief Executive Carrie Lam said Wednesday.   Hong Kong recorded 38 new coronavirus cases on Wednesday, and has 12,708 confirmed cases so far, according to a government website.

Hong Kong’s banks including HSBC, Standard Chartered ask staff to work from home in A-B teams as Omicron tears through Covid-19 defence with threat of a fifth wave of infections
As Hong Kong government reimposes strict social distancing measures to contain the fifth wave of the pandemic, banks in the city are heeding its call     Banks move staffers in split teams and encourage working-from-home, as the city bans flights from six countries and shutters venues

Xi’an: The messy cost of China’s Covid lockdown playbook
With residents pleading for help while locked in their homes, and accounts of people being turned away from hospitals, the stories emerging from the Chinese city of Xi’an in recent days may sound all too familiar.

Xi’an hospital punished for refusing entry to pregnant woman
Hospital officials in the northern Chinese city of Xi’an have been punished after a pregnant woman miscarried after being refused entry, reportedly for not having current COVID-19 test results.     The city government announced Thursday that Gaoxin Hospital General Manager Fan Yuhui has been suspended and the heads of the outpatient department and medical department sacked.

Xi’an Residents Voice Frustration Amid Lockdown
China’s largest-scale lockdown since 2020 has residents complaining about food shortages and harsh restrictions.

Into the grey zone: how the US could change the game with China and Russia
Washington needs a whole-of-government approach to respond to the challenges of the two rivals, strategists say    Cyber operations and wedge issues among the options in the toolkit, they say

China Is Targeting Lithuania. The EU Must Push Back.
Europe must resist Chinese economic coercion with one voice.   The EU must make clear that it will not allow Beijing to dictate its China policy. Moreover, if the full deterrent effect of the Anti-Coercion Instrument (ACI) is to be realised, the European Commission needs to translate statements of support and solidarity into action – starting with an examination of China’s trade measures against Lithuania. The EU should seek the cessation of such coercion via open engagement, for instance through negotiation and mediation, and should that fail, get ready for response measures including the possible suspension of tariff concessions.    Importantly, both the Union and other member states, such as Germany and France, are bound by loyalty and solidarity obligations to protect fellow member states against unlawful transgressions that seek to divide and discredit the Union. Only by doing so will the EU, a supranational organization that aspires to be a normative power and is pursuing a rule-based order, safeguard its values, fundamental interests, security, independence and integrity.

China-Lithuania row: US vows to side with Europe to beat ‘economic coercion’ by Beijing
US trade representative and Lithuanian foreign minister say US-EU Trade and Technology Council could help address diplomatic and economic issues      US and EU ‘share a number of core values and principles that we need to defend internationally’, says US trade representative’s office

Japan and Australia sign defence pact in face of more assertive China
The leaders of Japan and Australia have signed a “landmark” defense agreement that allows closer cooperation between their militaries and stands as a rebuke to China’s growing assertiveness in the Indo-Pacific region

China: Is it burdening poor countries with unsustainable debt?
China’s lending for construction projects around the world has proved controversialhina has faced criticism for its lending practices to poorer countries, accused of leaving them struggling to repay debts and therefore vulnerable to pressure from Beijing.

Chinese space station reaches for next stage of construction with robotic arm test
In 47-minute exercise, 10-metre robotic device grabs onto and moves cargo ship    The US has voiced its concern about potential for interference with satellites, particularly in the event of a war

China’s defense against the war of words
Chinese experts see public opinion as the country’s Achilles’ heel in its race with “the West”, says Vincent Brussee. This is the first 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 louder Western criticisms of China become, the more resistance in China they appear to face and the more assertive China’s official counter-propaganda will become. (Zheng Qingxiang explicitly highlighted Wolf-Warror diplomat Zhao Lijian as key example of the appropriate response.) That obviously does not mean that the other countries should not dare to criticize China’s government. But they should see voicing criticism as a means to an end, not an end in itself. To avoid being dismissed as “anti-China”, they need to address discontent in China about anti-Chinese prejudice and Western double standards and arrogance. Only then can Western countries hope to be viewed an ally rather than an enemy of China’s citizens.

China’s propaganda machine is embracing a new slogan to entrench Xi Jinping’s status
Communist Party’s ideology chief, Wang Huning, tells officials to highlight the historical significance of the ‘two establishments’      It first appeared in a resolution on history approved in November and refers to establishing Xi as ‘core’ leader and establishing his political doctrine

Why are China’s Gen Z women rejecting marriage, kids more than their male counterparts?
There has been strong resistance to a public push to incentivise young adults in China to start a family – including an overhaul of family-planning policies to allow people to have three children   Marriage and childbirth have become ‘almost synonymous with the stress of life for us young people’

Alain Gillard
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