China Press Review – January 7, 2020

Press review

China Signals No Major Stimulus for 2020
From the worst economic slowdown in decades to the profound uncertainty posed by trade and technology conflicts with the United States, the Chinese economy is running into some of the most difficult challenges since the global financial crisis. Whether China will adopt a more expansionary policy to stimulate the economy has therefore attracted widespread attention. The latest signals indicate that despite all these headwinds, a rise in bond defaults, and growth coming in at the lowest levels in decades, a full-blown stimulus is probably off the table. Given China’s already unsustainable debt levels, this might be good news for financial stability, even if it means the slowdown continues into 2020

China’s economy needs reform, reform, reform!
As we enter the 2020s, the Chinese economy is facing an extraordinary moment.
In March, the Government Work Report for 2019 announced the Chinese government’s tasks for the year: continuing state-owned enterprise (SOE) reform, reducing restrictions on foreign investment and promoting financing and market access equality for public and private sectors.

U.S. on verge of first annual decline in trade deficit since 2013
The trade deficit fell sharply in November for the second month in a row and sank to the lowest level in three years, reflecting a decline in Chinese imports and the reemergence of the U.S. as an energy superpower.

Commentary: Why a US-China ‘Cool War’ may be worse than a Cold War
The US-China relationship can be characterised by an unprecedented combination of wide-ranging competition and deep interconnection, say Andrew Sheng and Xiao Geng.

Trade war: China’s refusal to lift grain quotas make Trump’s phase one import demands ‘more difficult’
China will not raise its quotas for the import of grains, according to vice agriculture and rural affairs minister Han Jun, raising the prospect of a stand-off with the US  Analysts suggest that while corn, rice and wheat were only likely to make up a small part of farm good purchases, the refusal to budge makes it more challenging

China economy: key changes overshadowed by trade war
Although the lawyers are still ironing out the details, the last days of 2019 saw a Phase One trade deal sealed between China and the United States. The trade war is by no means finished and further skirmishes around technology leadership are likely to go on, but the dispute has certainly cooled.

China’s forex reserves near US$3.11 trillion
China’s foreign exchange reserves came in at US$3.1079 trillion at the end of 2019, official data showed Tuesday.   The amount increased by US$12.3 billion, or 0.4 percent from the end of November, according to the State Administration of Foreign Exchange.

What to Expect as China’s Economy Enters 2020?
After an eventful year, China is heading into 2020 in a cloud of uncertainty.  Although the US and China recently agreed to a “phase one” trade deal, bilateral trade tensions are far from being ironed out. Similarly, protests in Hong Kong have calmed but the underlying socioeconomic issues have yet to be resolved.

China tech at the start of the 2020s
One, China’s technology sector (chip design and manufacturing, communications, AI, to name a few) must stand on its own going forward, due to the sudden cooling of Sino-U.S. technology collaborations following the December 2018 Huawei case.  Two, the October 24, 2019 Politburo group study of blockchain shows once again that development of technology is heavily guided by the government. And in this particular case, blockchain might arrive at a break-even price point faster because of China’s coming heavy investment in it.

Nio posts robust December delivery figures
Nio logo on the exterior of a showroom in Beijing on Sept. 28, 2019. (Image credit: TechNode/Coco Gao)  Electric vehicle maker Nio reported 25% sequential growth in December deliveries, bringing fourth quarter totals to 8,224 units and in line with the company’s forecast.  Why it matters: Nio has formed a community of devoted users to promote its cars to potential buyers, a marketing approach which has started to pay off.

China has over 200 million private cars
China had 260 million motor vehicles by the end of 2019, up 8.83 percent year on year, including 207 million private cars, the Ministry of Public Security said Tuesday.

How Luxury Watch Brands Are Celebrating The Year of the Rat
Every year, roughly a half dozen top luxury watch brands help celebrate the Chinese New Year with custom-made timepieces. The reasoning behind this is that Asian countries make up nearly half of the Swiss watch industry’s approximate $21 billion in sales. Creating special timepieces for the Asian market and Chinese customers around the world sets certain watch brands up for success, and Chinese New Year is the perfect time for brands to unveil limited-edition pieces that reflect the fine arts of hand painting, engraving, and more.

Harvesting the Other Half: Luxury Consumption in China’s Lower-tier Cities
While many international brands still choose Shanghai and Beijing as their starting points, they often open their next stores in Shenzhen, Hangzhou, or Chengdu shortly after.  Established cities like Beijing and Shanghai will always play a leading role in the consumption of luxury goods in China. However, according to a report from BCG and Tencent in 2019, over half of the country’s spend now comes from lower-tier cities.

Luxury 2030: Curated Lifestyles Drastically Change How Luxury Brands Need to Act
2030 will be exciting for brands who understand their role in the life of customers and the impact of curated lifestyles on how they move forward.  The first two parts of this series on luxury in 2030 were about how Gen Z goes mainstream and disrupts the luxury market and about the rise of purpose-driven brands. This week’s edition is about the impact of curated lifestyles on luxury brands.

China’s Market Regulator Clarifies Recall Obligations for Consumer Products
New rules detailing the recall obligations of producers and sellers of consumer products in China came into effect January 1, 2020. Foreign producers can designate a domestic agency to conduct the recall of any defective or spoiled goods.  The new compliance regime will facilitate industry best practices in product quality management and includes a time-bound process with penalty clause

China pledges ‘prudence’ in diversifying its foreign exchange reserves in 2020 as global risks rise
China will carefully push ahead with diversification of its US$3.1 trillion foreign exchange reserve holdings, says the State Administration of Foreign Exchange    The regulator says it will improve its management of reserves ‘with Chinese characteristics’, but has not elaborated on what that means

Fund CIOs call US-China tensions biggest challenge for 2020
Uncertainty surrounding the US-China trade war remains the biggest challenge facing the global economy in 2020, according to investment chiefs at 10 of the world’s largest fund managers overseeing $19 trillion of assets, reported the Financial Times.

Beijing’s New Solution for Millions of Tons of Trash
Following in Shanghai’s footsteps, the Chinese capital will become the second city in the country to implement a compulsory waste-sorting policy

China’s new urban dwellers really still live in the countryside, study says
Increase in numbers of people ‘relocating’ to urban areas due to land reclassification not migration, researchers say     Claims based on official data relating to demographic changes to 700,000 communities between 2009 and 2017

China’s US$4.3 billion IPO highlights investor confidence in world’s largest rail network
The 30 billion yuan (US$4.3 billion) initial public offering for the Beijing – Shanghai High-Speed Railway line was oversubscribed 126 times    In 2018, the 1,300km line reported an annual profit of 10.2 billion yuan (US$1.5 billion), making it one of the most profitable parts of China’s rail system

Chinese rail network predicts 440 million journeys over Lunar New Year period
China State Railway Group expects people to make 11 million train trips each day during the five-week Spring Festival    The holiday period sees the largest annual movement of people and the rail operator has laid on extra services to cope with demand

Chinese state media praises Xi Jinping’s ‘thrifty’ style and highlights effort to live like common people
State news agency Xinhua publishes report extolling president’s ‘pragmatic and frugal’ style and efforts to ensure party members stay down to earth   Reports of Xi’s austere lifestyle are seen as a part of an effort to burnish a Mao Zedong-style image as being on the side of ordinary people

The real China challenge
China’s rise has transformed geopolitics. The simplest articulation of this new reality is found in the United States’ National Security Strategy, which argues that the world has entered “a new era of great power competition.” Significantly, that outlook drives thinking around the world, not just in Washington. The European Commission has declared China a “negotiating partner …economic competitor … and a systemic rival.” Japan has long struggled to find balance in its relations with Beijing; that effort continues.

China Bans Imported Textbooks for Primary, Middle Schools
Textbook authors and editors are now required to hold political values that fall in line with the ideology of the Chinese Communist Party.

Americans in China warned over spreading mystery illness
Americans travelling in China should avoid animals and contact with sick people as the country grapples with a mystery pneumonia outbreak, the U.S. Embassy in China said Tuesday. The viral illness was first reported last week in Wuhan, a central Chinese city with a population of over 11 million, and has since grown to at least 59 cases.

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