China Press Review – July 14, 2021

China-EU third-party agreements – second time unlucky?
The G7’s B3W initiative will redouble Beijing’s resolve to win European firms for BRI projects. But, says Juliana Bouchaud, tensions with the EU suggest its chances of success are modest.  China’s Belt and Road Initiative (BRI) is a symbol of its economic and political power, but Beijing is still struggling to convince the world of its worth. The G7’s endorsement of the “Build Back Better World” (B3W) partnership as a “democratic alternative” to BRI appears to have stoked China’s anxiety. After Italy’s foreign minister Luigi di Miao in late June spoke with his Chinese counterpart Wang Yi, Beijing underlined Italy’s willingness to promote the BRI and encourage European firms to help build it (through so-called third-party market agreements) – assertions conspicuously absent from the Italian readout of the exchange.
https://merics.org/en/opinion/china-eu-third-party-agreements-second-time-unlucky

China’s economic policy diverging from US while ‘putting own needs first’, central bank says
Head of monetary policy says China’s economic focus is primarily on maintaining stability in its own financial markets     But diverging policies with the US may result in different interest rates and currency exchange rates that would be likely to cause unintended hot capital flows
https://www.msn.com/en-xl/money/other/china-s-economic-policy-diverging-from-us-while-putting-own-needs-first-central-bank-says/ar-AAM7dwa

How US, China can recover and thrive by being more like each other
Despite the abundance of heated rhetoric, the competition between the US and China is not between two political and economic systems     The challenges each faces in economic development are similar, as are the levers each has at their disposal to improve the lives of their citizens    In contrast, what has driven China’s growth after a failed planned economy have been local government initiatives, not centrally orchestrated industrial policies like in Japan. How Beijing’s aspirations in priority industries will be realised remain to be seen as competitive and uncoordinated local actions have often led to excess capacities instead of industrial upgrades.   What is clear is that China’s state-dominated banking system with a preference for supporting state-owned enterprises have led to significant inefficiencies. China’s economy has in some ways thrived in spite of, not because of, the state. China can become more competitive with financial liberalisation, away from misallocation driven by state meddling.  State intervention has been more consistently successful worldwide in the area of infrastructure development – a clear priority of the Biden administration. The World Economic Forum’s 2019 Global Competitiveness Report ranked the US 13th in infrastructure, much higher than China’s 36th. In another ranking by the International Institute for Management Development, the US was ranked sixth versus China’s 18th.    The competition between the US and China is not between two political and economic systems. The key challenges they face – such as unequal access to education and health care – and available levers for economic development – investing in infrastructure and human capital – are similar. Paradoxically, the US and China can be more successful by being a little bit more like the other.
https://www.msn.com/en-xl/news/other/how-us-china-can-recover-and-thrive-by-being-more-like-each-other/ar-AAM6QKU

China GDP: five things to keep an eye on
China’s first-quarter economic surge was primarily a reflection of how hard the world’s second-largest economy was hit by the Covid-19 pandemic early last year, rather than the strength of its recovery.
While gross domestic product grew more than 18 per cent year on year between January and March, its increase over the final quarter of 2020 was just 0.6 per cent. China is expected to post a year-on-year headline number of about 8 per cent when the National Bureau of Statistics reveals its estimate for second-quarter growth on Thursday. The focus, however, will be on signs of economic sluggishness and whether these are worrying enough for the government to adjust policy.
https://tinyurl.com/b93xrzcs

Exclusive | Xi-Biden summit moves closer with senior US diplomat Wendy Sherman’s China visit
The State Department No 2 will meet Chinese foreign vice-minister Xie Feng next week, paving the way for top-level encounter     Visit provides opportunity for engagement ahead of the next phase of the Biden administration’s China policy
https://ph.news.yahoo.com/xi-biden-summit-moves-closer-044959264.html

A Close Reading of China’s Data Security Law, in Effect Sept. 1, 2021
China’s Data Security Law contains provisions that cover the usage, collection, and protection of data in the PRC. Violations will trigger penalty fines and even suspension of business and revocation of license or permits. The person directly in charge of implementing compliance at the company will be exposed to penalty risks – hence businesses are advised to closely read the Data Security Law and track upcoming legislative developments. This is more important as the Data Security Law currently does not provide details on obtaining the approval of the relevant competent authority, or which authorities will have the right to approve cross-border data sharing. Similarly, the Law as it stands does not specify how intermediary service providers will be examined and whether the non-compliance of the data provider will be passed onto the intermediary service provider. Finally, the Data Security Law introduces ethics and social morality as new compliance considerations for companies dealing in data processing activities and the research and development of new data technologies.
https://www.china-briefing.com/news/a-close-reading-of-chinas-data-security-law-in-effect-sept-1-2021/

European Central Bank gives green light to digital euro pilot project
The European Central Bank has said it is taking the next step toward launching a digital version of the euro. The move comes amid a boom in crypto and other digital currencies.    The ECB has stressed that a digital euro would not replace the physical euro. Rather, it would be used alongside it as an additional form of online payment, providing for faster digital transactions that don’t rely on powers outside the bloc.   China has been testing a digital version of the Chinese yuan since last year, and cryptocurrencies like Bitcoin have gained growing institutional acceptance around the globe. Both of these developments, along with a decline in the use of cash, pose a threat to economic stability in Europe, some fear.
https://www.dw.com/en/european-central-bank-gives-green-light-to-digital-euro-pilot-project/a-58251871

EU cracks show after Merkel’s tough Huawei stance snubbed: ‘Working more with China!’
THE EUROPEAN UNION’s cracks are beginning to show after nations within the bloc appeared to snub Angela Merkel’s tough stance on Chinese company Huawei.      The German approach to Huawei largely followed the guidelines the EU laid out in its Toolbox and risk assessment report for cybersecurity of 5G networks which was designed to mitigate potential risks in the European 5G rollout.      And while most EU countries are following guidelines, not all of them appear to be falling in line.     French President Emmanuel Macron last year gave greater control to his cybersecurity agency ANSSI to block 5G contracts between operators and Huawei.      But France’s major telecom operator, Orange, has announced that it will continue to cooperate with Huawei in Africa’s 5G rollout.
https://www.express.co.uk/news/world/1462240/eu-news-angela-merkel-huawei-ban-china-telecoms-france-germany-spain-spt

Beijing pushes Chinese firms to report cybersecurity vulnerabilities early and often amid growing threats
A new regulation seeks to protect computer networks and other information technology infrastructure in the country from cyberthreats    It also forbids enterprises and individuals investigating cybersecurity weaknesses to disclose such information to overseas organisations
https://www.msn.com/en-xl/news/other/beijing-pushes-chinese-firms-to-report-cybersecurity-vulnerabilities-early-and-often-amid-growing-threats/ar-AAM8N4E

US and allies must set ‘democratic’ rules for artificial intelligence, Biden administration officials say
‘We can’t let China write the rules for AI,’ Commerce Secretary Gina Raimondo tells Global Emerging Technology Summit      US National Security Adviser Jake Sullivan claims alternative is ‘a vision of the future that says you have absolutely no privacy, no trust, no security’   “There’s a great focus on China. We need to run faster. If we work with allies, we will be stronger,” Raimondo said at the conference, which was organised by the National Security Commission on Artificial Intelligence (NSCAI). “The president is crystal clear and has directed us on his team to reach out to our allies.”
https://www.msn.com/en-xl/news/other/us-and-allies-must-set-democratic-rules-for-artificial-intelligence-biden-administration-officials-say/ar-AAM7iem

Is the EU’s AI legislation a good fit for ASEAN?
On 21 April 2021, the European Union announced draft legislation to harmonise its member states’ artificial intelligence (AI) rules. The legislation’s objectives are potentially desirable for many Southeast Asian countries, especially given the growing concern about the risks associated with AI and intensifying rivalry between China and the United States.
https://www.eastasiaforum.org/2021/07/14/is-the-eus-ai-legislation-a-good-fit-for-asean/

US telecoms carriers can access fund to replace Huawei, ZTE equipment starting on October 29, FCC says
Federal Communications Commission approves rules to guide the allocation of a US$1.9 billion fund established by Congress in December     Carriers with up to 10 million customers are now eligible to apply for the money, raising the previous cap of 2 million users
https://finance.yahoo.com/news/us-telecoms-carriers-access-fund-093000278.html

Cracks in China’s onshore credit market to widen on tighter leverage, slowdown risks
Bonds with a total face value of 99 billion yuan became overdue in the first half, a 35 per cent jump from a year earlier: Wind Information    Banking sources say lenders are trying to avoid writing new unsecured loans to indebted developers following official guidance
https://sg.news.yahoo.com/cracks-china-onshore-credit-market-051742560.html

Didi Chuxing, Ant Group backer Temasek remains ‘bullish’ on China as Beijing cracks down on tech sector
China remains the largest part of the Singapore sovereign wealth fund’s portfolio    Temasek’s net portfolio value hit record US$283 billion in the 2021 financial year
https://ph.news.yahoo.com/didi-chuxing-ant-group-backer-074433514.html

Cathie Wood pares holdings of Chinese tech stocks as she expects valuations to remain depressed amid crackdown
China’s weighting in Wood’s flagship Ark Innovation ETF has plunged to less than 1 per cent from 8 per cent in February   The paring of Chinese tech holdings by one of the world’s biggest thematic fund providers underscores how the sector is losing its allure amid Beijing’s crackdown
https://finance.yahoo.com/news/cathie-wood-sells-china-tech-014248744.html

Beijing approves Tencent’s deal to take Sogou private
China’s top antitrust regulator said Tuesday it had “unconditionally approved” Tencent’s plan to take private Sogou, China’s second-largest search engine after Baidu. The blessing from the State Administration of Market Regulation sent Tencent’s shares in Hong Kong up 3.7% on Wednesday. The deal, valued at approximately $2 billion, was first announced in July 2020.
https://technode.com/2021/07/14/beijing-approves-tencents-deal-to-take-sogou-private/

Guangdong plans to build regional data centre in Shenzhen with coverage of Hong Kong and Macau
Guangdong province lays out Greater Bay Area data plans amid Beijing’s increasing scrutiny of data security and efforts to speed economic digitalization    Lack of clarity on legal framework for data trading is hampering overall big data efforts though, experts say
https://www.msn.com/en-xl/news/other/guangdong-plans-to-build-regional-data-centre-in-shenzhen-with-coverage-of-hong-kong-and-macau/ar-AAM7rma

China Patriotism Could Launch Anta Sales Past adidas
Chinese sportswear titan Anta Sports could soon surpass the value of its international rival adidas because of rising patriotic spending in China.  sportswear titan Anta Sports could soon surpass its international rival adidas in terms of market valuation. Its annual sales do not come close to adidas’ ($5.5 billion in 2020 vs. $23.5 billion for adidas), but, due to favorable factors, Anta’s share prices increased by 157 percent between 2020 and 2021, putting the company’s market value at $64 billion. By contrast, adidas shares jumped 39 percent for a value of $74.37 billion. If the so-called “Nike of China” continues to overperform, it will soon overtake adidas to become the world’s second most valuable sports clothing brand.
https://jingdaily.com/anta-sales-adidas-china-patriotism/

podcast : China’s Greater Bay Area – Executive Webinar Now Online
The event attracted several hundred high-level executives from around the world.
Staying away from politics, the webinar concentrated on business opportunities within the region and was full of technical detail. It is of use to any international executive looking at where opportunities are within this region – which if it were a country, would be the world’s 5th largest in GDP terms, just slightly behind Germany.The webinar, which lasts for 1 hour and 48 minutes, can be viewed in full here.
https://www.china-briefing.com/news/china-greater-bay-area-executive-webinar-online-access-here/

Hong Kong’s luxury home rents recover as mainland Chinese executives flush with IPO funds drive leasing deals
Rents for luxury homes in Hong Kong jumped 5 per cent in April and May, after falling as much as 13.5 per cent from a record high in August 2109     All districts on Hong Kong Island saw mild rental increments in the second quarter, with Mid-Levels posting the largest rise at 0.7 per cent
https://sg.news.yahoo.com/hong-kong-luxury-home-rents-060444936.html

China designs hypersonic jet bigger than Boeing 737 with wings like Concorde
Researchers used aerodynamic model that contributed to China’s latest space missions     Official timeline aims by 2035 to operate a fleet of hypersonic aircraft that can transport 10 passengers to anywhere on Earth within an hour
https://sg.news.yahoo.com/china-designs-hypersonic-jet-bigger-140543288.html

Chinese quantum computer ‘sets record’ in processing test
Developers say the Zuchongzhi device can do in just over an hour a task that supercomputers would take years to achieve     Results surpass those produced by Google’s Sycamore processor in an experiment two years ago, they say
https://sg.news.yahoo.com/chinese-quantum-computer-sets-record-113348225.html

Biden taps ex-Pentagon official for China tech position in Bureau of Industry and Security
The once-obscure bureau in the Commerce Department has gained attention as Washington escalated its use of export controls against China    The entity list overseen by the BIS has been the primary tool for blacklisting firms like Huawei, ZTE, and Hikvision, among others
https://www.channelnewsasia.com/news/business/biden-taps-ex-pentagon-official-for-key-china-tech-position-15215926

Climate change could bring China more frequent disasters and add a month to Beijing summer: report
As southwest reels from floods and landslides, report shows how climate damage and risk in country’s most dense regions have changed over 60 years     Greenpeace suggests summers could become longer by as many as 28 days in Beijing, 24-28 days in Shanghai and more than 40 days in the Pearl River Delta
https://ph.news.yahoo.com/climate-change-could-bring-china-063111159.html

China wheat harvest up, but quality concerns raised after heavy rainfall
Output of summer wheat, which accounts for most of the country’s production, rose by 2 per cent in 2021 from 2020 to 134 million tonnes      But quality of the new crop in some top growing areas, however, might have been compromised due to bad weather, analysts said
https://www.scmp.com/economy/china-economy/article/3141058/china-wheat-harvest-quality-concerns-raised-after-heavy

US vows to work with Australia to oppose China’s ‘unfair’ trade practices
European Union set to join as third party if dispute between Australia and China moves to next stage at World Trade Organization
https://www.theguardian.com/australia-news/2021/jul/14/us-vows-to-work-with-australia-to-oppose-chinas-unfair-trade-practices

China will become world’s largest carbon market after national trading starts this month
Derivatives related to emissions allowances may be added   China is set to become the world’s largest carbon emissions trading market in terms of the volume of greenhouse gases it handles, once the national-level exchange opens later this month, a Chinese official said on Wednesday.
https://www.globaltimes.cn/page/202107/1228677.shtml

Raw sewage from Chinese fishing vessels is damaging South China Sea coral reefs and can be seen from space, claims US firm
Effluent is visible from satellite images, says US firm Simularity, echoing ex-US navy captain’s warning that 2,000 tonnes of waste are discharged monthly  The company has been monitoring more than 200 Chinese fishing vessels anchored for months in Philippine-claimed waters near the Spratly Islands
https://sg.news.yahoo.com/raw-sewage-chinese-fishing-vessels-150026620.html

Germany says China’s Covid-19 vaccine diplomacy has political purpose
Foreign Minister Heiko Maas says countries receiving Chinese vaccines are under pressure to accept ‘clear political demands’      Maas was speaking on a visit to a Pfizer production facility in the US    “Those alternative are the vaccines we have available and which we of course want to make available to as many countries and regions in the world as possible. (That way) the Russians and the Chinese can’t continue to conduct their difficult vaccine diplomacy in this fashion, which only has the purpose of increasing their own influence and not necessarily to save people’s lives in the first instance.”   While he did not provide any specific examples, Taiwan has accused Beijing of using the delivery of its shots to pressure countries into dropping their support for the self-ruled island, which it claims as its own.
Chinese officials said recently their country is providing Covid-19 vaccines to nearly 40 African countries, but said this was being done for purely altruistic reasons.
https://www.scmp.com/news/china/diplomacy/article/3141042/germany-says-chinas-covid-19-vaccine-diplomacy-has-political

Coronavirus: in China, some places are barring the unvaccinated from entry
Dozens of counties and cities have announced new rules requiring registration and proof of vaccination to go into public venues      People who cannot be immunised for medical reasons are exempt, as are those waiting for a second jab or anyone under 18
https://sg.news.yahoo.com/coronavirus-china-places-barring-unvaccinated-143532721.html

China targets teens in coronavirus vaccine drive in race for herd immunity
Some provinces are starting to inoculate children aged 12 and over    Guangxi says people under 18 are an important part of building an immune barrier
https://www.msn.com/en-xl/news/other/china-targets-teens-in-coronavirus-vaccine-drive-in-race-for-herd-immunity/ar-AAM6NhO

As China and Ukraine vow infrastructure cooperation, Kyiv offers to be Beijing’s ‘bridge to Europe’
Volodymyr Zelensky has restated Ukraine’s position supporting the unity of China and Xi Jinping said China supported the territorial integrity of Ukraine   Analyst says there is growing criticism in ‘the Ukrainian political and expert community to the practices and approaches of China’   Earlier this month, Beijing and Kyiv signed an investment deal   on roads, bridges and railway projects, days after the Ukrainian government   abruptly removed its signature   from a statement urging China to give independent observers immediate access to its  Xinjiang  region. It raised speculation that Beijing had used vaccine diplomacy to push Kyiv to change its position over the  Xinjiang  issue that had drawn sanctions from a number of Western countries.  “Other constraints on Sino-Ukrainian investment cooperation are the availability of alternative financing … the negative experience of China’s investment cooperation, which led to the creation of so-called debt traps, and the growing critical attitude in the Ukrainian political and expert community to the practices and approaches of China.” https://www.scmp.com/news/china/diplomacy/article/3141107/china-and-ukraine-vow-infrastructure-cooperation-kyiv-offers

Understanding China’s pettiness complex
Mean-spirited tough-guy antics have won Beijing nothing but bad press   For such powers, a facade of strength is more important than anything else. In China’s case, its traumatic history as a weak nation bullied by other great powers may explain why its leaders are so quick to take offense. But more fundamental is that Chinese rulers feel so insecure about their power and status that they need to overcompensate with a tough-guy image. Another way of understanding Chinese petty bullying abroad is to see it as the logical extension of domestic autocratic practice. The ruling Chinese Communist Party is used to getting its way at home and tolerates no opposition or defiance. Why should we expect it to behave differently abroad, unless it faces a stronger power it cannot kick around? As a regime that seized and kept power with violence, the party is a firm believer in a law-of-the-jungle mindset where might makes right. So weak nations must pay respect — or else. Sadly, petty bullying sometimes works, vindicating Beijing’s calculations. Although it frequently fails to coerce even weak nations into submission, Chinese bullying works like a charm in cowering foreign companies, such as airlines, hotel chains and consumer brands, that are afraid to lose their access to China’s massive domestic market. Since pettiness seems to be baked into Chinese foreign conduct, even as its leaders seek respect and status, we should expect this behavior to continue. Victims — countries as well as companies — will pay a price. But so, ultimately, will China. At a minimum, petty behavior cancels out whatever positive effects China’s largesse may produce. People remember bad headlines more than feel-good stories. More importantly, Beijing’s petty bullying will lose friends and alienate people around the world and help the U.S. build a compelling case to confront and contain China. If China finds itself isolated, it only has its pettiness complex to blame.
https://asia.nikkei.com/Opinion/Understanding-China-s-pettiness-complex

Japan would ‘lose badly’ if it defends Taiwan secessionists
Japan is continuing to provoke China on the Taiwan question as its annual defense white paper released on Tuesday mentioned Taiwan stability for the first time.     Chinese observers warned that if Tokyo defends Taiwan secessionists or tries to interrupts China’s national reunification, it would “lose badly and the consequences would be unbearable.”
https://www.globaltimes.cn/page/202107/1228585.shtml

Chinese engineers killed in Pakistan bus blast
“China has asked Pakistan to thoroughly investigate the truth as soon as possible, capture the perpetrators, punish them severely, and effectively protect the safety of Chinese personnel, institutions and projects in Pakistan,” he said.
https://www.bbc.com/news/world-asia-57837072

Can Pakistan secure Chinese investment in restive Balochistan province?
Pakistani PM Khan recently said he would like to reach out to Baloch separatists, who vehemently opposed Chinese-funded projects in the western Balochistan province. Will negotiations allay insurgents’ concerns?
https://www.dw.com/en/can-pakistan-secure-chinese-investment-in-restive-balochistan-province/a-58262975

To Improve Governance, China Ups Control Over Its Grassroots
Taking lessons from how villages and neighborhoods managed the pandemic, the government is drawing them closer to their superiors.    The Chinese state is changing how its lowest rungs in the bureaucratic hierarchy fit into the country’s political system.    A new document released Sunday by the Communist Party’s Central Committee as well as the State Council, China’s Cabinet, vows to strengthen the authority of rural townships and urban subdistricts and place them under more direct leadership of the party.
https://www.sixthtone.com/news/1007977/

Vogue China Wants to Put a New Face on Chinese Fashion
The magazine’s new editorial director, Margaret Zhang, has won praise after launching a campaign to promote diversity in China’s fashion industry.
https://www.sixthtone.com/news/1007968/

Asia’s wealthy heirs, family offices bet on women in business with ‘gender lens’ investing
Gender lens investing is part of a growing trend among Asia’s rich families, as young generations inheriting wealth put their money to work     Its growth comes as workforce participation, discrepancy in salaries and access to capital between women and men worsened amid the pandemic
https://www.straitstimes.com/business/banking/asias-wealthy-heirs-are-backing-women-in-business

Chinese City Shuts All Tutoring Schools for Young Children
Many children in China spend their evenings and weekends taking extra classes.
https://www.sixthtone.com/news/1007990/

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