China Press Review – July 12, 2021

China is injecting $150 billion into the economy — that may fuel a short-term rally, UBS says
The People’s Bank of China is set to cut the reserve requirement ratio by 50 basis points for all banks, a move that will release around 1 trillion yuan ($154 billion) in long-term liquidity into the economy.   “We think this broad-based RRR cut could boost market sentiment in the short term and improve stock market liquidity,” UBS analysts Lei Meng and Eric Lin wrote in a note on Monday.   However, the market rally may be short-lived given concerns over the slowing economic growth, the bank indicated.    China’s

Slowing V-Shaped Economic Recovery Sends Global Warning
China’s V-shaped economic rebound from the Covid-19 pandemic is slowing, sending a warning to the rest of world about how durable their own recoveries will prove to be.    The changing outlook was underscored Friday when the People’s Bank of China cut the amount of cash most banks must hold in reserve in order to boost lending. While the PBOC said the move isn’t a renewed stimulus push, the breadth of the 50 basis-point cut to most banks reserve ratio requirement came as a surprise. Data on Thursday is expected to show growth eased in the second quarter to 8% from the record gain of 18.3% in the first quarter, according to a Bloomberg poll of economists. Key readings of retail sales, industrial production and fixed asset investment are all set to moderate too.

China’s GDP And Powell’s Speech May Show That Global Growth Have Peaked
China’s second-quarter gross domestic product (GDP) is forecasted to grow 7.9% from one year earlier as base effects, related to the pandemic, fade. This is a slowdown from the 18.3% pace in the first quarter. Several economists lowered their Q2 GDP forecasts recently after domestic demand missed expectations in both April and May, along with the COVID-19 problems at China’s export hub. The changing outlook was emphasized on Friday when the PBOC cut the amount of cash most banks must hold in reserve, to boost lending. While the PBOC said this move is not a renewed stimulus push, the breadth of the 50 basis-point cut to most banks’ reserve requirement ratio (RRR) came as a surprise. Data on Thursday is expected to show growth in the second quarter to 8%, from the record gain of 18.3% in the first quarter, according to a Bloomberg poll of economists. Key readings of retail salesindustrial production, and fixed asset investments are all set to moderate too.

China ‘recession’ risk sparks ‘unease’ in economic circles, with warnings of quarterly slowdowns
Consumption outlook in year’s second half ‘remains pessimistic’, and capital outflow could result in ‘yuan depreciation’ and give rise to asset bubbles     Bearish economist says China is in late-stage stagflation and warns that real estate and exports will drag on the economy in the coming months   Sheng said the second half of this year will be a key period for China to marginally loosen its monetary policy – not only for a further RRR reduction, but also a rate cut.   Currently, the bilateral interest rate gap remains relatively large. The 10-year yield of US Treasury bills has fallen from a late-March high of 1.74 per cent to 1.37 per cent, compared with 3 per cent for Chinese government bonds.   China must continue its bid to sustain economic growth, having passed its recovery phase, Sheng added.
Domestic small, medium-sized and micro enterprises are struggling,” he said. “The upstream raw material prices are too high. Due to the homogeneity of SMEs and fierce competition, prices cannot be passed down [to consumers] … the consumption outlook in the second half of the year remains pessimistic.”

Slowing economic recovery in China is a warning sign to the world
Economy was expected to descend from its recent heights, but the softening comes sooner than expected.

The PBOC’s swift move to lower banks’ RRR is one way to make sure that the recovery plateaus from here, rather than stumbles.
PBOC slashes RRR to support real economy
The People’s Bank of China, the country’s central bank, announced it would cut the reserve requirement ratio by 50 basis points for eligible financial institutions from Thursday to support the real economy. The RRR cut, which will be imposed on all financial institutions except those who have already held the ratio at 5 percent, will likely release 1 trillion yuan (US$154.43 billion) in long-term funds, the PBOC said on Friday.   After the reduction, the weighted average RRR for Chinese financial institutions will stand at 8.9 percent, the central bank said.

10 best employers in China
The Chinese edition of the business magazine Forbes surveyed over 50,000 people to determine the 10 best employers in China from over 100 companies this year.  Among the over 100 companies, 24 percent are from the industrial manufacturing industry, 32 percent are in Beijing, and 19 percent are in new first-tier cities.    The top three industries college students expect to seek jobs in are enterprises in technology, finance and fast-moving consumer goods.

US sanctions 23 more Chinese companies for suspected Xinjiang abuses, military and business ties
14 companies are ‘implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass detention and surveillance’      Moves are the latest targeting the human rights situation in Xinjiang and China’s military build-up, which the US views as a threat to global stability

China implores US firms to invest more in northeast rust-belt region near Russia, North Korea
During a round-table discussion attended by representatives of 55 American firms, China’s economic planner gives its pitch to pull in foreign investment     But some foreign executives say China’s laws are still not transparent enough and the playing field remains uneven, with domestic firms still having the upper hand

China’s Big Tech face wake-up call as country’s web of data protection laws grows more elaborate
A cybersecurity review into ride-hailing firm Didi kicked off a new era in China that prioritises data security over unfettered growth for tech companies     Beijing authorities are cracking down on overseas listings, fearful that US data disclosure rules could compromise national security

Tesla: China Struggles Are Just Getting Started
Tesla is no longer the best-selling automaker in China in 2021.  A series of bad PR events along with the increase of deliveries of its competitors will likely prevent Tesla from regaining its dominant position in the Chinese market.   Political risks and the threat of stricter regulations in its second-biggest market after the United States also are limiting the company’s upside in the region.

Beijing tightens grip on China tech with proposal for cybersecurity reviews on all foreign public listings
Platform operators that have collected personal information from at least 1 million users must apply for a review by the Cybersecurity Review Office   The draft regulations also cover data security risks involving foreign powers, with reviews assessing the risks of data being transferred abroad illegally

Didi won’t be last IPO to pursue New York listing, but China’s cybersecurity review closes loopholes
China’s tech firms with more than 1 million users must undergo a cybersecurity review before being allowed to list on foreign exchanges      Didi Chuxing had pulled in US$4.4 billion with its New York IPO, but just two days after, its stock price was sent crashing as Beijing announced a cybersecurity review

China’s antitrust regulator blocks Tencent’s US$5.3 billion merger of game streamers Huya and Douyu in landmark anti-monopoly case
Huya and Douyu announced a merger deal last October to create a US$5.3 billion giant with almost 300 million monthly active mobile users      The aborted merger is the latest blow to China’s tech sector as regulators step up their scrutiny of monopolistic behaviour

Chinese chip maker Tsinghua Unigroup faces bankruptcy restructuring after creditor takes it to court
Tsinghua Unigroup creditor Huishang Bank has requested a bankruptcy restructuring as the conglomerate has no funds to pay off its debts     The state-backed group was showered with government cash and at one time was seen as China’s main hope for boosting semiconductor self-reliance

Taiwan Tech Firm Aspeed Rides Out The Chip Shortage Storm
Despite a global chip shortage, Chris Lin is finding ways to keep moving forward with growth at his tech firm Aspeed.

China’s hi-tech hub Shenzhen looks at legislation for digital economy, adopts data use law
City’s lawmakers reviewed 18 draft laws and regulations in areas like artificial intelligence, dispute resolution and surveillance cameras     Data use law will take effect in January and includes provisions limiting use of personal information by app developers

China removes 25 more Didi-linked apps from stores, tightening noose around nation’s biggest ride-hailing service
Newly blacklisted apps include the popular Didi Shunfeng, used by ride-pooling passengers, and several tailored for Didi drivers       One more blow to the company as it deals with a government crackdown at home and litigation overseas

Chinese e-commerce platform Meicai becomes latest mainland firm to shelve US IPO plan as tightened scrutiny unnerves issuers
Chinese regulators’ investigation of Didi Chuxing and other internet companies’ data collection practices has rattled potential new issuers targeting a US IPO      Meicai, which means ‘beautiful vegetables’ in Mandarin, was aiming to raise between US$300 million and US$500 million, reports said

Hong Kong technology start-up GRST seeks to revolutionise electric-car battery manufacturing on sustainability and costs
The five-year-old firm has clinched an agreement with a key shareholder to build a US$40 million plant to make – and later recycle – the rechargeable batteries
GRST’s water-based patented technology could cut the emission of greenhouse gases by up to 40 per cent during lithium-ion batteries production and by up to 80 per cent during recycling

China’s dominance in global coal loans is overstated, study finds
Private finance from Japan, the US and Britain is responsible for funding 87 per cent of new coal-fired power plants     The finding comes hard on the heels of a G7 call for Chinese lending for fossil fuel energy projects to be reined in

China ‘cannot relax coronavirus controls’ amid threat from Delta variant
Health official says authorities will continue to focus on preventing imported cases from spreading locally after recent outbreaks    Limited data on how well vaccines work against highly infectious strain but expert says ‘partial protection is better than no protection’

Why China’s education reform may be no match for the hypercompetitive drive
The government has zeroed in on rising property prices near popular school districts and unequal access to education as areas in urgent need of reform      As these reforms gain pace, questions remain over whether they can succeed to lower education costs and convince more young couples to have children

Explainer | US-China rivalry: who has the stronger military?
China has the weight of numbers on its side, but America has various technological and financial advantages   The PLA intends to become a modern fighting force within the next six years, but will need to overcome problems with training and equipment

Leave or bear consequences, China warns US destroyer near disputed South China Sea islands
On anniversary of tribunal’s rejection of Beijing’s claim, USS Benfold warned it will pay price if it does not leave vicinity of Paracels     The guided missile destroyer is understood to have recently taken part in joint exercises with the Singapore navy

The ‘Minor’ Events That Had a Major Impact on Sino-American History
Professor Wang Yuanchong on the oft-overlooked stories that defined the early Sino-American relationship.   Today, Burlingame’s story has been largely forgotten on both sides of the Pacific, pushed aside by the momentous events and figures who dominated the Sino-American relationship in the late 19th and early 20th centuries. In 2015, when Wang Yuanchong, a historian at the University of Delaware, was planning a new course on the history of Sino-American relations, he found that the majority of historians had focused on the period from the end of the 19th century to the present day — the Boxer Rebellion, the “Open Door” policy, the Korean War, ping-pong diplomacy, and President Richard Nixon’s visit to China in 1972 — while paying little attention to earlier encounters.

Russia relationship better than an alliance, Chinese foreign minister says
Wang Yi advocates pushing the partnership to new heights as he marks 20th anniversary of friendship treaty with Moscow     He reiterates Beijing’s opposition to hegemony and a new cold war  Although the two governments have said that they would not establish a military alliance, leaders and diplomats from both have often boasted of relations that they describe as being without limits and at their best level in history.  Andrey Denisov, the Russian ambassador in China, said on Sunday that Russia would work with China “at its best”. Beijing hits back at Western sanctions against China’s alleged treatment of Uygur Muslims  Faced with growing opposition from Washington, Beijing and Moscow have significantly stepped up their cooperation on multiple fronts over the past few years. That has included traditional areas of shared interests such as trade, energy and military technologies, as well as emerging areas such as cyber issues and the Arctic.  Last week, the Russian financial ministry announced that it had fully removed US dollar assets from the country’s sovereign wealth fund, while raising the holdings of the Chinese yuan and euros as part of efforts to reduce its vulnerability to sanctions imposed by the US. The sanctions, which bar American financial institutions from buying Russian government bonds, make it more difficult for Russia to raise capital on the international market. However, observers have noted potential tensions between Russia and China. Last year, bilateral trade reached US$108 billion, far short of the 2024 target of US$200 billion.  China’s expanding economic presence in Central Asia through its infrastructure and investment programme the  Belt and Road Initiative  has drawn suspicions from Moscow, which sees the region as a backyard of its influence.

How Should Companies Prepare for the Special VAT E-Fapiao?
With the implementation of special VAT e-fapiao becoming more prevalent through 2021, it has been a top priority for CFOs and finance managers with responsibility for China operations to prepare for e-fapiao’s impacts on their existing procedures and systems as well as to comprehend the benefits rooted in the digitalization management of VAT invoice.

How China’s Communist Party centenary celebrations reflected the strength of its political model
China’s strength in mass mobilisation and organisation, which was on full display at the Communist Party’s centenary celebrations, is also apparent in its coronavirus response      It is a system that has deep historic roots and has delivered results for the people  In the absence of universal suffrage-based elections or referendums (which have in modern times produced disastrous results on more than one occasion), the Communist Party has tried to represent the interests of the people through continuous self-correction and delivering what the people want – peace, stability, prosperity, technological progress, national pride and a  better quality of life . It realises that its future will be on a knife’s edge if it ceases to continuously reinvent itself, and respond to the people’s needs.    As China’s President Xi Jinping   said recently   in a virtual meeting with world political leaders, there is no one-size-fits-all model for modernisation. Every country needs to find a modernisation path which best fits its circumstances.    Democracy comes in different shapes and forms. Whether a country should go down the democratic path should be decided by its people, not be by a handful (of outsiders). Assuming that all leaders want their countries to be prosperous and their people to be happy, China is no different from the democratic West. Liberal democracies have not flourished in all places that have held elections. China should be left to chart its own path, and countries that strive to export its democratic model to others, under the banner of freedom, are bound to fail, where the conditions are not right and true espousal of democratic values is absent.

Xi Jinping asks: why do Chinese officials lack initiative and wait for orders from the top?
The country’s most powerful leader in decades told an internal party meeting that too many cadres only act on written orders, according to a new book     Xi has moved to consolidate his control over the party – a process some believe has made his underlings risk-averse

In One Collapsing Village, the Other Side of China’s Rise
When Liang Hong returned to her village after spending a decade away, she discovered that the small truths at home painted a larger picture of China’s economic and societal trends.

The foreigners in China’s disinformation drive
Foreign video bloggers denouncing what they say is negative coverage of China on highly controversial subjects such as Xinjiang are attracting large numbers of subscribers on platforms like YouTube.

Alain Gillard
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