China Press Review – July 10, 2019

Press review

China, Hong Kong high-net-worth individuals led US$2 trillion decline in global wealth last year, Capgemini says
China accounted for about 25 per cent of the decline, according to consultancy’s latest annual wealth report High-net-worth individuals in Hong Kong saw 13 per cent drop in wealth, 10 per cent drop in their numbers

US-China trade talks to restart
China and the US hope to resume trade negotiations this week. But there are no signs of either side softening. And Donald Trump repeats his mantra that China is devaluing its currency

The worst is yet to come for China’s economy, with trade war tariffs likely to escalate, Nomura economists say
Nomura economists expect Chinese gross domestic product to increase by 6.1 per cent in the second quarter and only 6.0 per cent over the second half of the year High debt levels restrict Beijing’s room to manoeuvre on monetary easing, with better-than-expected first quarter growth proving ‘illusory’

US ‘will let firms sell to Huawei if no national security risk’, as trade talks resume by phone
Stipulation helps ensure ‘we don’t just transfer revenue from US to foreign firms’, Commerce Secretary Wilbur Ross says – but Chinese company would stay on Entity List White House economic adviser Larry Kudlow says Beijing is expected to act promptly on agreed agriculture purchases

‘It’s tough’: US and China struggling with last few issues in trade talks, says White House economy adviser Larry Kudlow
‘There is no time limit on China. There is no speed. We want a good deal,’ he said

Trade war tariffs are new normal and may be difficult to remove, says former US ambassador to China
Deadlock makes status quo likely for the rest of the year, Max Baucus says But Beijing and Washington have incentive to strike a deal because they ‘probably need each other’

Donald Trump pushed China to commit to buying US farm goods at G20, but Xi Jinping avoided firm pledge
The US president repeatedly pressed Chinese counterpart to commit to purchasing US agricultural goods at G20 summit in Japan Xi refused to make specific commitment, signalling a new and tougher stance towards trade talks from Beijing, which was previously happy to make purchases

China should try to keep talking and stop looking for fights in US trade war, says leading professor
Peking University’s dean of international relations Wang Jisi warns that country should be ‘more proactive’ about promoting its cause and goals

US-China trade war and interest rate rises spell losses for the super-rich
Donald Trump’s trade war with China and fears over rising interest rates triggered stock market losses worth $2tn (£1.6tn) for the world’s super-rich last year.

No trade war winners with US and China set to see freight slump, DHL data shows
Tariffs are leading to slump in air and sea freight for key commodities, with the US and China both predicted to suffer a trade downturn as a result Logistics company DHL examined freight volumes for early-cycle commodities such as bumpers for cars, touch screens for mobile devices and brand labels for clothes

Trade War Threatens Chinese Factories’ Existence, Supplier Says
Walmart, Nike supplier is accelerating shift out of China Vietnam now ‘completely full’ as American retailers rush in

How China can win a ‘trade war’ between Japan and South Korea
Chinese companies including Huawei are well-placed to capitalise as Seoul and Tokyo take aim at each other’s tech firms, analysts say Meanwhile, Beijing’s diplomats have another reason to smile

Huawei taps domestic lenders for $1.5 billion loan
Huawei plans to raise $1.5 billion from a group of domestic lenders, an anonymous source familiar with the matter told Bloomberg. The move will mark the Chinese telecom giant’s first offshore syndicated loan secured without any help from overseas banks.

Huawei taps domestic lenders for $1.5 billion loan

China June exports seen falling, adding to fears of global slowdown – Reuters poll
China’s exports likely fell in June as weakening global demand and a sharp hike in U.S. tariffs took a heavier toll on the world’s largest trading nation, a Reuters poll showed. Imports are expected to have fallen for a second straight month, pointing to continued weakness in domestic demand and highlighting the need for Beijing to roll out more economic support measures

China’s producer prices stall in June, fuel deflation worries
China’s producer prices flatlined in June on lower oil prices and weak global demand, fuelling concerns that a slowdown in manufacturing from a bruising trade war will further drag on growth in the world’s second-biggest economy.

Stocks Blog: Markets feeling weight of US-China trade war, interest rate uncertainty
Phone call between US-China trade negotiators called ‘constructive’ Inflation data coming out of China

Are investors placing too much hope in the Fed? As US-China trade war lingers, analysts see fewer rate cuts than markets
Financial markets expect the US Federal Reserve to cut interest rates by 75 basis points this year Analysts, economists see an ‘insurance’ cut, with more cuts only if the trade war intensifies

China economy feels the strain as consumer prices soar and producer prices plummet to the brink of deflation
The consumer price index (CPI) stayed at 2.7 per cent in June, the same as in May, which was itself the highest reading for 15 months Producer price index (PPI), the price charged to buyers at the factory gates, fell to the brink of deflation at 0.0 per cent in June

Subsidy cuts could sound the death knell for China’s cheap electric carmakers as entry-level vehicles face huge price rises, says Xpeng chief
Government subsidy cuts could force affordable electric-vehicle makers to raise prices beyond the reach of most entry-level buyers, says boss of Xpeng Electric cars priced below US$8,700 could soon cost over US$14,500, he estimates

China’s car market fell off a cliff this year. It faces a long road back
China’s car sales rose for the first time in a year last month, but the world’s largest market remains stuck in a deep slump that shows little sign of ending soon as the country’s massive economy slows.

China refines NEV mandate policy to boost overlooked hybrid vehicles
China is working on changing the new energy vehicle (NEV) mandate policy, also known as dual credit policy, in an effort to close an emissions loophole that automakers were exploiting. China’s Ministry of Industry and Information Technology (MIIT) released a modified version of its NEV policy on Tuesday, which stipulates that fuel-efficient vehicles could offset 20% of the credits set for corresponding electric cars.

China refines NEV mandate policy to boost overlooked hybrid vehicles

More stimulus on way for economy
Stable expansion in January-May period despite global trade headwinds and friction

Trade war taking a toll on China’s plans
Even as China presses ahead with BRI, US companies situated there are trying to move out their operations

China’s Piraeus power play: In Greece, a port project offers Beijing leverage over Europe
For Beijing, this Mediterranean trade hub is the showpiece investment for the globe-spanning Belt and Road Initiative. But for Washington and its EU allies, it’s a worrisome foothold for Chinese influence in the West. Caught between two sides in a cold war, what will Greece do?

Eurasian Express: the Meridian Highway will form part of a link between Hamburg and Shanghai
( Awara Group )
The new Meridian Highway will help to connect Hamburg with Shanghai

China’s Belt and Road
Some projects will succeed. Others will fail. And in the end, China will likely find the political gain is quite mixed.

Poland open to investment from China: foreign minister
Poland is open to investment from China, the country’s foreign minister said on Monday, even as relations have faltered between the two countries over the role of Chinese technology firms in 5G and state infrastructure projects.

Where Is Indonesia on China’s Belt and Road Initiative?
Jakarta continues to seek ways to manage the opportunities and challenges stemming from the BRI.

China’s largesse in Tonga threatens future of Pacific nation
China has poured about $1.5 billion in aid and low-interest loans into the South Pacific since 2011, putting it behind only Australia, according to an analysis by Australian think-tank the Lowy Institute. And that figure rises to over $6 billion when future commitments are included. China’s use of loans and aid to gain influence in developing nations worldwide is nothing new, as illustrated by Chinese-financed projects from Africa to Latin America and the Asian subcontinent. Some worry that these can become debt traps when nations can’t repay. In Sri Lanka, for example, the government was forced to hand over control of its Hambantota port as it struggles to repay loans it got from China to build the facility — a move that has given Beijing a strategic foothold within hundreds of miles of rival India. Wang said China has only benevolent intentions in Tonga and no hidden agenda. “Some people in the West are being over-sensitive and too suspicious,” he said. “No need.”

Chanel brings beauty & Fragrance lines to Tmall
French luxury house Chanel next month will open a flagship store for its fragrance and beauty lines on Tmall and the e-commerce platform’s dedicated site for premium and luxury goods, Tmall Luxury Pavilion.

China will continue attracting investors, but start-ups need to prove their profitability, Rise Conference hears
Sentiment dampened by big listings that have failed to perform after IPOs Public investors willing to pay ‘quite a bit lower’ than pre-IPO rounds

Joint Ventures with Your China Factory/Supplier: Okay, but Maybe Not
It usually does noot make sense for a foreign company to become a co-owner with its Chinese factory of a Chinese entity before it knows how good that factory will be at selling the foreign company’s product in China. The better way to handle these relationships is usually with a China-centric distribution agreement that sets forth sales goals and allows you to walk away if your Chinese factory does not hit those goals. It usually makes sense to have a trademark licensing agreement with your distributor as well.

Joint Ventures with Your China Factory/Supplier: Okay, but Maybe Not

China has a big headache bashing Citic Securities with CLSA, instead of getting its own version of Goldman Sachs
Citic Securities has been hit by a wave of more than 50 resignations since January, an exodus that threatens to upend China’s push to create a global investment banking powerhouse Citic Securities’ revenue in fixed income this year through May was just US$20.7 million, 55 per cent below budget

Did AMD really give away ‘keys to the kingdom’?
The Wall Street Journal wrote last week that US semiconductor company AMD gave away the “keys to the kingdom” in a Chinese joint venture. The main theses of said article, which relied mostly on US Department of Defense sources, were that AMD had given away x86 architecture to China in 2015, and that this Chinese JV deal was key to the company’s revival.

Did AMD really give away ‘keys to the kingdom’?

Monaco has full 5G coverage using Huawei gear, first in Europe
The principality of Monaco is the first country in Europe to cover its entire area with a 5G network featuring Huawei equipment, giving the Shenzhen-based telecom giant an opportunity to showcase its equipment in real time.

Monaco has full 5G coverage using Huawei gear, first in Europe

China’s Internet: Bigger, Younger, Smarter, Says Study
China’s Internet ecosystem is becoming younger and smarter, while also becoming larger — and more isolated.According to the second annual “China Internet Report” published by research firm Abacus and the Alibaba-owned South China Morning Post newspaper, China added 57 million Internet users, to give a 2019 online population of 829 million. That is roughly 60% of the country’s population.
China’s Internet: Bigger, Younger, Smarter, Says Study

The top 10 things you need to know from China Internet Report 2019
Your one-stop analysis on what matters in China’s tech landscape this year Our new China Internet Report brings you insights into the most important trends shaping the world’s largest internet population. You can click the link to read the full report, which includes original takes from Pinduoduo co-founder Dada, SenseTime CEO Xu Li and other China tech insiders.

Chinese internet stocks still a solid bet, investment banks say
Despite US-China trade tensions which led to Chinese stocks tumbling in May, the sector remains a good investment option, according to investment banks UBS and Credit Suisse.

Chinese internet stocks still a solid bet, investment banks say

China tech bonds reward investors as trade war fears ebb
The beaten-down bonds of Chinese internet companies have rebounded since the May flare-up in U.S.-China trade tensions, reaping a good profit for investors who braved the storm to buy the dips.

Beijing should avoid ‘punishing’ Canada over Huawei case, cautions Ottawa’s ex-ambassador to China
Further curbs may bolster rise of new government unfavourable to Beijing, says Canada’s former ambassador to China, John McCallum Expect Beijing-Ottawa relations to normalise ahead of 50th anniversary of diplomatic ties next year, McCallum says

The end of the WTO and the last case?
On 14 June 2019 the WTO issued a communication announcing that the panel proceedings in case DS516 (European Union — Measures Related to Price Comparison Methodologies) initiated by China against the European Union had been suspended at the request of China. Finally, it is also possible that China suspended the case to contain domestic anti-WTO sentiment and maintain political support for the WTO. Since its accession, China has gradually built up confidence in the fairness of the multilateral trading system. Given the current crisis in the WTO, especially when it comes to its dispute settlement mechanism, China’s continued support for the system is critical. But this is not something that should be taken for granted, as there have been calls for China to withdraw from the system and build an alternative international economic order. If China were to withdraw, it would be much harder to get it back within the system. And if such a scenario does come to pass, case DS516 might well be remembered as the last case; ending the WTO and the rules-based multilateral trading system.

The end of the WTO and the last case?

Xi doctrine comes before profit for China’s state-owned companies
When Gao Dengbang, chairman of Anhui Conch Cement and its parent Conch Group, entertained Li Zhong — head of his company’s ultimate shareholder, the State-owned Assets Supervision and Administration Commission of Anhui Province — on July 4, it was more than a simple business visit. Li’s purpose, explained the company’s official website, was not only to discuss Anhui Conch’s financial performance, but to inspect how the company was conducting educational programs to support the new doctrines of Chinese President Xi Jinping.

Chinese cities experiment with new approach to land sales while Hong Kong sticks with highest-bidder model
Mainland cities are trying an alternative land sales model designed to keep home prices in check Five plots in Shenzhen were sold under a land tender on June 24 that capped prices

China’s government mulls special stake in as it looks to control the flow of information on trade, economics
China’s internet regulator is in talks to take up a stake in, whose financial news aggregation service had been suspended since June 10 The regulator’s stake, known as ‘special management shares’, may be held via a local state asset supervision authority or a government-backed fund, sources say

Hong Kong is a SAR of China — What that means and how it affects protests
Experts believe the continued upheaval reflects a deeper sense of uneasiness about Beijing’s influence on the SAR. “At the broader level, the massive protests also suggest (that the) grievance level of Hong Kongers is high,” Ong said. “(High) against economic conditions, lack of housing affordability, erosion of the rule of law, loss of identity or Hong Kong’s uniqueness and what differentiates it from the mainland.”
Hong Kong is a SAR of China — What that means and how it affects protests

Hong Kong families are feuding as China extradition bill exposes generational fall in living standards
Stagnant wages and high housing costs are not unique to Hong Kong, but the generational divide here cuts deeper than economic factors. As a semi-autonomous city, Hong Kong itself has a splintered identity — it is both China, and not. For some, this disconnect is irreparable. When protesters stormed the Legislative Council (LegCo) on July 1, they spray-painted slogans on the walls, including the phrase, “HK is not China.”

Wuhan protests: Incinerator plan sparks mass unrest
While the world’s attention has been focused on the protests in Hong Kong, another Chinese city has been witnessing unrest on a scale rarely seen on the mainland.

Alain Gillard
Information Officer
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