China Press Review – January 9, 2019

Press review

US-China trade war talks end on a positive note, as American delegate says they went ‘just fine’
Beijing says it will release details of the three-day negotiations ‘soon’

US-China trade talks in Beijing to continue for third day on Wednesday, US Trade Representative’s office confirms
The talks were initially scheduled to take place over two days, with discussions continuing late into the night on Tuesday The fact that talks will continue shows ‘the whole thing has not blown up yet’, according to a former assistant US trade representative

The costs of containing China
Washington’s policymakers at last understand that China is a serious strategic rival. For the first time since the Soviet collapse, they recognise that a major country is trying to expand its power and influence at the expense of US global leadership.

US-China trade deal would have to be ‘extremely far-reaching’ to calm the markets; JP Morgan says
Global markets are enjoying some gains this week on hopes that Beijing and Washington will reach a trade agreement, but strategists at J.P. Morgan Asset Management are skeptical on whether anything significant will be resolved.

China’s 2019 gross domestic product forecast cut to 6.2 per cent by World Bank under ‘Darkening Skies’
Multilateral development lending institution is the latest to predict a deepening of the economic slowdown in the mainland American President Donald Trump has claimed that the weakening economy gives the US an advantage in trade talks with Xi Jinping’s administration

Hong Kong, China stocks get boost from trade talks, Beijing signals on consumption stimulus
China carmakers and home appliance makers rally after a top official says policies are coming to boost consumption US trade talks get an extra day, buoying investor sentiment

Experts warn of China’s rising subprime risks
Economists have warned that the rapid growth in household debt in China could pose threats to the country’s medium-term economic growth and, if left unchecked, poses greater risks to national financial stability, Caixin reports.

China’s latest move to cushion its economy won’t be the last, say economists
That’s the view of economists after the central bank on Friday (Jan 4) announced another cut to the amount of cash lenders must hold as reserves in a move to release a net 800 billion yuan (S$158.4 billion) of liquidity and offset a funding squeeze ahead of the Chinese New Year.

Hong Kong emerges as Asian startup hub
Hong Kong is quickly becoming a center for startups in Asia, with 2,625 such businesses operating here as of November, up 18% from 2017, government data showed. The number of people working at startups surged about 50% over the same period to 9,548 amid generous government support geared to promoting entrepreneurship. The city’s investment promotion agency compiled the data based on tenant lists from major coworking spaces and startup-incubation facilities.

After a bumpy 2018, 2019 looks like more of the same and quite possibly a great deal worse as a China-US trade spat threatens to derail a lot of carefully laid out China development plans. At particular risk are foreign – and especially American-owned – service and manufacturing companies, whose client base in China is built typically upon handling international, rather than domestic Chinese, clients. Rare examples aside, businesses falling into this category in 2019 need to start to prepare for what could be a turning point for foreign businesses in China. Increasing China operational costs, fast-developing Asian competition, and a prolonged trade spat – or something even worse – could spell the end of the road for many foreign-invested businesses in China.

Former US senator Joe Lieberman’s work for China’s ZTE makes him a foreign agent, complaint says
Joe Lieberman’s firm says it doesn’t advocate on behalf of ZTE, while claiming an exemption that means lobbyists do not have to register as foreign agents The Campaign Legal Centre, which filed a complaint about Lieberman’s ZTE work, says he ‘can’t have it both ways’

Donald Trump will have final say in Huawei CFO Meng Wanzhou’s case, says former US federal prosecutor
Nelson Cunningham says White House can overrule US Justice Department Huawei CFO may be exchanged in US-China trade negotiations

New documents link Huawei to suspected front companies in Iran and Syria, and may bolster US case against Meng Wanzhou
Three Chinese-named individuals had signing rights to bank accounts in Iran for both Huawei and Skycom, a company US prosecutors claim Huawei controlled A Huawei executive appears to have been appointed Skycom’s Iran manager, while a lawyer said Huawei operated in Syria via another company, Canicula

Carmakers rise after China vows to boost spending on autos as car sales fall for the first time in more than 20 years
The national economic planning agency says it will introduce policies to boost domestic consumption, without giving details Domestic buying interest is hurt by slowing growth and the impact of US-China trade war

China’s New Negative List Targets Unified Market Access
China’s new negative list is the first unified table of prohibitions and licensing requirements that will apply to both domestic and foreign companies across the country.

Infographic: How four tech giants dominate China’s AI endeavors1 min read
Chinese tech media outlet Huxiu earlier this week released a series of images as a year-end review, casting light on Baidu, Alibaba, Tencent, and Huawei’s dominance over the artificial intelligence business landscape in China.

When even US Treasuries are no longer safe havens, market volatility is here to stay
Benjamin J. Cohen says the US government bond market is no longer seen as a safe haven for investors. And nor is the euro zone or the Japanese government bond market, while Chinese securities inspire little confidence either And then there is China, with the world’s third-largest national market for public debt. Certainly, the supply of assets in China is ample. But the Chinese market is so tightly controlled that it is essentially the opposite of a safe haven. It will be a long time before global investors even consider putting much faith in Chinese securities.

Shopping app Little Red Book opens platform for brand-KOL partnerships
E-commerce and social networking platform Little Red Book, also known as Xiaohongshu, has taken a step towards encouraging partnerships between company brands and key opinion leaders (KOLs).

China’s Former Richest Man Expects Lowest Sales Growth In Five Years
China Evergrande Group, controlled by China’s third-wealthiest person Hui Ka Yan, has lowered its sales target for 2019 to the lowest level in the past five years. The real estate giant is targeting 600 billion yuan ($87.8 billion) in contracted sales this year, an increase of only about 8.8% from the previous period, according to a filing to the Hong Kong stock exchange on Monday

China faces tidal wave of exits by ageing tycoons. Their succession plans will shape China’s future
Huge leadership change coming for private companies, but many hard-charging offspring are looking beyond the family business Chinese tycoons less likely to have handover plans in place than global peers

Bacteria for piglets and Chinese infants spur Li Ka-shing’s gut instinct to put his money behind this US biomedical firm
Infants increasingly lack beneficial gut bacteria due to Caesareans, formula feeding, antibiotics Piglets have a hard start in life, and trial will get under way in China to see if product can toughen them up

How China’s fight against climate change is finding allies in the business sector
Wang Shi says China’s booming private sector has been upping its role in the fight against climate change, with the real estate industry making some pioneering moves

China’s HNA Group Sells Manhattan Building Near Trump Tower
HNA Group Co. sold a building in Manhattan to help ease the embattled conglomerate’s debts and stave off U.S. concerns about a Chinese company owning property near Trump Tower.

Chinese post-95s spent 80% more buying overseas in 2018
Post-90s was the main force of Chinese Haitao users while post-80s held the strongest per capita consumption power. Surprisingly, post-95s attracted extensive attention as its expenditure on overseas products growing at 80%

Tencent takes big step to free WeChat from smartphones as battle shifts to business customers and self-driving cars
Tencent introduces Siri-like voice assistant called Xiaowei at WeChat conference in Guangzhou

The Digital Silk Road at the China Institute –Too Much Pollyanna?
By now, most people have heard of One Belt, One Road (“OBOR”) – the Chinese government’s program to build up the infrastructure in developing countries across Asia, Eastern Europe and Africa. OBOR has largely been seen as a brick-and-mortar type of operation – building railroads, ports, pipelines. But in 2017, President Xi Jinping announced a new initiative within the government’s OBOR – promotion of a digital silk road.

China clamps down on two education apps for ‘inappropriate’ content
Chinese authorities have clamped down on two education apps that contain “inappropriate” content. The Office of Combating Pornography and Illegal Publications ordered HDzuoye, an afterschool tutoring platform, to close its mobile app and pay a fine of RMB 50,000 (around $7,300) for redirecting student users to online games. Similarly, Namibox has received a RMB 80,000 fine and was ordered to remove problematic parts of its app, which allegedly contains “immoral” and “unethical” content.

On SMEs Trusting China Manufacturers. Don’t. Just Don’t.
One of the things I love about my law firm’s China practice is its diversity. We represent all sizes of businesses, from start-ups that never really start to Fortune 50 companies that have been in China for more than twenty years. This sort of diversity more than holds true on the manufacturing side of our legal work as well.

The New Logo-Restyling Mania. A Risk or an Opportunity in China?
The real risk is when brands are developed by a “consumer-led” attitude. As they increase their similarity with other brands in the industry, they develop a weak and not consistent brand image and offer, they lack innovation and do not evolve in their own terms. In the end, it’s not the logo that makes the difference and opens the road to success. It’s the authenticity of the whole brand.

For food delivery, machines won’t replace humans any time soon
Robots won’t replace the millions of delivery workers who crisscross Chinese cities every day, carrying food and groceries to consumers in all sorts of weather. Instead, humans and machines will collaborate, making sure tasty meals make it to hungry mouths in a timely manner.

China-Russia: a pseudo-alliance in limbo
A relationship of mutual irritation and barely hidden mistrust

China’s Belt and Road is more chaos than conspiracy
Is China’s Belt and Road Initiative a bold infrastructure vision, or a slush fund? The question is becoming more pressing.

Is China’s Belt and Road Initiative an Opportunity for Indonesian Renewable Energy?
Is there a significant role for BRI to play in the Indonesian renewable energy sector?

The region’s economy is a cause of optimism for most experts, a survey has found, even if there’s little confidence in trade deals such as the CPTPP

Why China’s Students Are Being Told to Kneel Down and Take a Bow
Schools should bow out of the campaign to revive ancient practices like ‘kowtowing.’ To kowtow is to show obeisance: It’s a symbol of your utter and complete respect and gratitude for the other party. In traditional Chinese culture, there’s no conception of a personalized god who goes around issuing commandments, punishing evil, and rewarding good behavior. Instead, Chinese worshipped at the altars of a wide variety of different deities, depending on the needs of the moment. Among the most widely recognized and frequently invoked spirits were a family’s ancestors — a faith known as ancestor worship

Out of character? Xi Jinping has a Mao Zedong-style signature
Chinese president has adopted the former chairman’s distinctive writing style, according to a scholar The unorthodox calligraphy style is also becoming more popular in state media productions – and there is even an online ‘Mao script generator’

Xi vs. Stalin: What drives the reversal of economic reforms?
In the parlor game of finding historical analogies for present leaders, Chinese leader Xi Jinping is often compared to Mao Zedong. This is not very apt: Xi is an organization man, whose overriding desire for order is quite different from Mao’s love of chaos. After spending some time with Stephen Kotkin’s Stalin biography, Stalin: Paradoxes of Power 1878-1928, I am surprised more people do not compare Xi to Stalin (though of course some have). Both men rose in an authoritarian system formally run by a collective leadership, and shifted it in the direction of more personalized rule for themselves and tighter political controls on everyone else.

Alain Gillard
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