Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – July 13, 2021

China trade ‘likely to slow down’ in second half of year despite strong imports, exports in June
China’s exports grew by 32.2 per cent in June compared with a year earlier, up from 27.9 per cent growth in May.  China’s imports grew by 36.7 per cent last month, year on year, down from 51.1 per cent growth in the previous month. Due to a higher base one year ago, the year-on-year growth rate of imports and exports in the second half of the year is likely to slow down, while the trade throughout the year is still expected to maintain a rapid growth,” Chinese customs spokesman Li Kuiwen said on Tuesday.    China’s total trade surplus stood at US$51.53 billion in June, compared with US$45.53 billion in May.   In the first half of 2021, China’s exports rose by 38.6 per cent year on year to US$1.52 trillion, while imports rose 36.0 per cent over the same period to US$1.27 trillion.   China’s trade surplus, meanwhile, was US$251.52 billion in the first half of the year.

The forefront of the US-China technology dispute passes
The historic Belgian city of Leuven is a centuries-old university and is known as the headquarters of the brewing giant Anheiser Bush InBev NV. Not as much as the location of semiconductor research organizations that are currently the focus of both political and industry attention.  The Interuniversity Microelectronics Center (imec), perhaps the best-protected secret in Belgium, is an application in the fields from genome sequencing to autonomous driving that is globally sought after for research into the future of computer chips. I will. As chips become a political weapon in the US-China technology conflict, they are getting more and more attention in the eyes of the government. Meanwhile, a serious industry shortage during a pandemic is competing for access to advanced research as the United States, China, Japan and Europe all demand greater independence in semiconductor manufacturing.    “There are two gems in Europe,” Intel CEO Pat Gelsinger said in an interview in May. “One is ASML, the most advanced lithography, and the other is imec, the most advanced semiconductor research in the world.”

How will central banks respond to the Delta variant?
The highly transmissible coronavirus variant will complicate the Federal Reserve’s attempts to tread a fine line between retaining accommodative monetary policy and managing inflation     China, on the other hand, has more room for monetary policy manoeuvring   One area of concern for Beijing may be China’s export sector. A key driver of the recent recovery of the Chinese economy has been the strength of the country’s exports, not least to the United States. Overseas sales might well be negatively affected if global demand is adversely affected by the spread of the Delta variant.    And that is without factoring in the existing erosion of profit margins in China’s export sector caused by rises in raw material prices related to post-pandemic bottlenecks, as evidenced again in the still-elevated Chinese producer price index data.

China to cut interest rate by end of year, UBS analyst clashes with broader consensus
People’s Bank of China is likely to lower its benchmark lending rate by the end of the year, according to Hayden Briscoe, head of fixed income for Asia-Pacific at UBS Asset Management     Most fund managers do not expect China to go as far as that in its easing policy after last week trimming the reserve requirement ratio by 0.5 percentage points for most banks

China central bank says macro policy will depend on domestic conditions
China will base the pace and intensity of monetary policy on the domestic economy and inflation trends in the second half of the year, a central bank official said on Tuesday, following a surprise cut in bank reserves to bolster the economic recovery.

Weaker Yuan May Be an Inflation Salve for the World
The chances are that weight will be put on China’s currency to depreciate from here.   All of this suggests that the yuan may well now be as strong as the Chinese authorities can bear. It doesn’t float freely, of course, and its peaks represent levels of tolerance among Chinese officials, rather than landmarks in market psychology. Thus, the chances are that weight will be put on the yuan to weaken from here. That would mean relative strength for the dollar, and would also at the margin imply lower import prices and lower inflation in the U.S. and Europe.   I warned last month that China might effectively be exporting inflation to the U.S. Judging by the big gap in core inflation rates between the two countries, something along those lines has been occurring. But that changes if the latest shift in Chinese monetary policy, in response to what looks like a worryingly feeble consumer sector at home, really does mean that a weaker yuan is in the cards. In such circumstances, the prospect is that one source of inflationary pressure for the U.S. and Europe will reduce. That lies in the future. For June, the continuing strange effects of the pandemic on the Chinese economy will have prodded U.S. inflation upward. We will soon learn a lot more about exactly how much U.S. prices rose last month.

Why the US dollar will remain on the comeback trail for many months
While the dollar outlook has been cloudy in the recent years, it is fighting back, thanks to tougher interest rate tightening expected from the Fed and a brighter political climate under US President Joe Biden

Greater Bay Area: Alibaba backs HK$2 billion fund for start-ups in and around Hong Kong
The Alibaba Hong Kong Entrepreneurs Fund will be an anchor investor in a new fund focusing on Greater Bay Area start-ups      The Chinese e-commerce giant said the fund will help start-ups to access Alibaba’s resources

Hong Kong to benefit from Beijing’s Didi crackdown, IPO rules overhaul, analysts say
The crackdown on Didi sends a strong signal that Beijing does not want to see Chinese IPOs listing in the US: analyst         ‘If we had to speculate, it would probably be easier for these companies to list in Hong Kong than in the US,’ partner at American law firm says

Huawei and Verizon settle patent lawsuits mid-trial without disclosing terms
A week after the a jury trial started in Texas, the telecoms giants announced they had settled disagreements over licensing terms for network technology      The companies did not disclose the terms of the agreement, making it difficult to gauge who is coming out ahead

US takes a final step to end Trump-era legal effort to ban TikTok and WeChat
Justice Department says the case against the Chinese-owned video-sharing app ‘is now moot’     Orders seeking to bar the apps were withdrawn by the US Commerce Department in June

US out to counter China in Asia with proposed digital trade deal
Details of the agreement are still being drafted, but could include Canada, Chile, Japan, Malaysia, Australia, New Zealand and Singapore       The deal could set out standards for the digital economy, including rules on the use of data, trade facilitation and electronic customs arrangements

China’s chip imports soar in June as manufacturers build up supply amid global shortage
China imported 51.9 billion semiconductor devices in June, the third-biggest volume in a single month after March and April     The country spent a total of US$38 billion on chip imports in June   China imported more than 310 billion semiconductor devices in the first half of this year, up 29 per cent from a year ago. China’s semiconductor  imports continued to grow at a fast clip in June, meeting the country’s huge demand for integrated circuits (ICs) used in the production of smartphones, cars, computers and home appliances amid a lingering global chip shortage  The world’s second-largest economy imported 51.9 billion semiconductor devices in June, the third-biggest volume in a single month after 
a record high in March  and  another strong period in April The car industry’s faster-than-anticipated bounce back after factory shutdowns – when companies cancelled chip orders after incorrectly forecasting lower demand for the rest of the year because of the pandemic – sent semiconductor supply into a downward spiral, creating a shortfall in the tiny electronics across a wide swathe of industries. Investors from China’s public and private sectors have been pouring more moneyinto the country’s semiconductor industry  – about 40 billion yuan (US$6.2 billion) in the first five months of this year – in a bid to deliver on Beijing’s goal of self sufficiency and meet rapidly growing demand for advanced chips.

Chinese e-commerce giant to increase employee pay by 14 per cent over next two years said in a WeChat post that it will increase employee annual salaries to the equivalent of 16-months pay by July 2023 from the current 14-months      Average wages in China increased 4.3 per cent in 2020, but growth accelerated to 12.4 per cent in the first quarter of 2021 thanks to a relatively low base a year earlier

Sichuan Languang defaults on US$139 million bond payment as debt woes spread among Chinese developers
Sichuan Languang Development’s delinquency ‘will also trigger cross-defaults’ on local bonds and the firm’s offshore debt, said S&P Global Ratings      Chinese junk-rated dollar bonds, of which developers  make up a large portion, recently saw their worst sell-off since the pandemic roiled markets in March 2020. Fuelling that has been concern about heavyweight  China Evergrande Group , whose leverage is watched by the highest levels of China’s government for potential systemic risks to the  economy   Languang is one of China’s bigger builders, ranked 38th by contracted sales in 2020, according to China Real Estate Information. The developer said on Monday night it and its units had 4.5 billion yuan of overdue debt. China Fortune Land Development, which saw its first bond default earlier this year, in comparison recently disclosed its delinquency total had reached 67 billion yuan.    Languang has US$1.05 billion of dollar bonds outstanding, according to Bloomberg     “The company’s refinancing in the public market has run into trouble since the end of 2020,” Languang said on Monday. That, plus strained operating cash flow and debt accelerations imposed by some financial institutions, led to the missed bond payment, it added. The firm is making a “medium- to long-term, comprehensive” plan to resolve its problems with “strong support” from local authorities and “active coordination” of financial regulatory institutions.   Languang’s shares listed in Shanghai have tumbled 41 per cent this year, one of the biggest decliners in the Shanghai Composite Index.

Does China know something the rest of the world doesn’t?
Why did China announce a cut to its banks’ reserve requirements last week? What do they know that the rest of the world doesn’t? The government announced a 50 basis point reduction in its reserve requirement ratio, effective from this Thursday, which should add about 1 trillion yuan ($210 billion) of liquidity to its banking system.

Zhang Jindong, billionaire founder of steps down as chairman after China-led bailout
The founder of Chinese retail giant has stepped down as chairman following the completion of a US$1.4 billion bailout recently revealed plans to buy assets from a private equity fund to revive the group, after forays into football clubs and other businesses drained its cash

BRI of China poses economic risks, say experts
Due to its proximity to China, India is the only country which has a very clear idea on the BRI and the danger it poses. And to deal with this, experts have suggested that New Delhi evolves its own plans which can counter the BRI project or to take a lead role in implementing G7’s B3W initiative.

Compute North to Expand Bitcoin Mining Colocation Capacity by 1.2GW: Report
CEO Dave Perrill says it could take until Q3 2022 for mining capacity to recover from China’s recent crackdown.

How Should the U.S. Approach Climate Diplomacy with China?
During the Trump Administration, American media routinelytouted China as the new climate leader. Days before Trump took office, President Xi Jinping and other Chinese officials spoke of the need to maintain global climate cooperation. Last year, Xi surprised many when he announced at the UN General Assembly that China would reach carbon neutrality by 2060.

China And Brazil To Align National Investment Programmes
Paulo Estivallet de Mesquita, Brazil’s Ambassador to China has said that Brazil and China are keen to fully explore the synergies between China’s Belt and Road Initiative and Brazil’s Investment Partnerships Programme.

Chinese companies corralling land around world
Acquisition of nearly 6.5m hectares over 10 years sets off alarms   In all, Chinese companies have gained control of 6.48 million hectares of land devoted to agriculture, forestry and mining around the world from 2011 to 2020, according to Land Matrix, a European land monitoring organization. That figure dwarfs the combined 1.56 million hectares controlled by British companies, the 860,000 hectares held by American companies and the 420,000 hectares controlled by Japanese ones.  Chinese businesses are rapidly acquiring land overseas to meet burgeoning domestic demand resulting from China’s economic development. Acquiring land abroad gives these businesses stable access to natural resources as supplies tighten around the world. The Democratic Republic of the Congo offers an illustration: Most of the land in the central African country, is forested. Amid soaring timber prices, a Chinese company, Wan Peng, has been shipping large quantities of timber from the country to China. The Congolese Embassy in Tokyo declined to comment on the contract with the Chinese company.v   Chinese companies are also buying mines. China Minmetals invested $280 million in Tanzania, in southern Africa, in 2019, and China Non-Ferrous Metal Mining poured $730 million into a mining operation in Guinea in 2020, according the American Enterprise Institute for Public Policy Research, a think tank. The investments were reportedly aimed at gaining access to minerals for use in, among other things, batteries for electric vehicles.

China tells counties to power on with small solar projects as state giants eye pilot scheme
Some lower-level authorities had ordered a halt to their projects in hopes of consolidating and repackaging them for the trial    But the central government does not think bigger is better, analysts say

Beijing blasts Japan’s ‘sense of crisis’ over Taiwan Strait tensions
Tokyo has released a defence white paper escalating its concerns over the stability of Taiwan, angering Beijing      Report notes the overall military balance between Taipei and Beijing is tilting in the mainland’s favour

To Capture Taiwan, Chinese Forces Might Attack From Several Directions
For many years, Taiwanese defense planners assumed that, if and when China invades the island democracy, the main Chinese force would sail across the 100-mile Taiwan Strait and assault the beaches of southwestern Taiwan.

Chinese Counties to Ban Unvaccinated Adults From Public Facilities
Soon, only people with at least one shot of a COVID-19 vaccine will be able to visit hospitals and take public transport.

Chinese nuclear scientists urge readiness for electromagnetic pulse attack
US enhancing its capability and by 2032 will be able to protect vital infrastructure, tipping balance in its favour, the researchers say    Exploding nuclear weapons at high altitude can produce electromagnetic waves that can cripple power and communication without killing humans

Covid-19: question of booster jabs needs real-world data on Chinese vaccines
Most vaccines are believed to protect against severe cases, but a booster shot could be the way to counter mutations    However, vaccines’ success in stopping transmission remains in doubt, and using shots as booster doses may deny them to those yet to be vaccinated at all  There is insufficient real-world data, however, on Chinese vaccines. A study on Sinovac in Chile found that the vaccine was 66 per cent effective in preventing symptomatic infections, but that was conducted from February to May, before the Delta variant became a threat.   Turkey, the United Arab Emirates and Bahrain, for example, have been giving third shots of mRNA vaccines for those fully vaccinated with Sinovac or Sinopharm. Indonesia and Thailand are also eyeing boosters.  Chinese pharmaceuticals, the WHO and countries using the Chinese shots should quickly conduct real-world studies to check their effectiveness, as well as how well boosters using inactivated vaccines or other methods would fare.  They should also release data to help guide the next move. After all, Chinese vaccines are the most used shots in developing countries, and it is going to supply up to 550 million doses to Covax.

Why the Three-Child Policy Is Just a Start
The government is unveiling new policies to make it easier for women to juggle their family and work responsibilities. But what about women who don’t fit neatly into the career woman-housewife dichotomy?

Beijing steps up control of online influencers as culture ministry cracks down on talent agencies
The Ministry of Culture and Tourism is seeking to expand its oversight of multichannel networks, which help turn people into online influencers      With the draft regulation, the ministry has become one of several government agencies vying to control its own slice of the growing internet economy

Foreigners’ Work Permit Application and Renewal: Recent Changes
Due to the COVID-19 pandemic and subsequent travel bans, many expatriates who had returned their home countries have been restricted from re-entering China. As a result, renewing their Chinese work permits has become a complicated matter for those stranded.     Although the Chinese government has issued a temporary policy allowing foreigners to renew their work permits remotely, the process has not been fully solved because of the difficulties in renewing foreigners’ residence permits – the expiration of their residence permits may impede a second renewal of their work permits.  Besides, in July, some local governments appear to have tightened rules on work permit applications in a move to deter people from setting up shell companies solely for visa purposes.   It is highly advisable that expatriates are aware of these policy changes and make appropriate and adequate preparations.

Martial arts star Jackie Chan wants to join the Chinese Communist Party, but China doesn’t want him
The actor told a film symposium how much he loved the Communist Party, but in China, many said he was not worthy of membership due to alleged moral failings     Chan’s comments were further proof to people outside China he is anti-democracy and is a cheerleader for Beijing’s crackdown on Hong Kong   Chan was also criticised in 2009 for comments about the pro-democracy movement. “I’m not sure if it’s good to have freedom or not,” he said at the time. “I’m really confused now. If you’re too free, you’re like the way Hong Kong is now. It’s very chaotic. Taiwan is also very chaotic.”

Chinese scientists develop fabric they say can cool the body by nearly 5 degrees Celsius
It looks like ordinary T-shirt material and uses technology that causes it to emit mid-infrared radiation to reduce wearer’s temperature    Team designed the ‘metafabric’ to help people cope in a world increasingly feeling the effects of climate change

Chinese man who inspired Andy Lau’s Lost and Love film reunited with kidnapped son after 24 year search on a motorcycle
Guo Gangtang’s two-and-a-half-year-old son was abducted in 1997, he never stopped looking for him
His story was the subject of a 2015 Hong Kong film called Lost and Love

Alain Gillard
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