China Press Review – July 3, 2019

Press review

China’s service sector growth slows to lowest level in four months as trade war hits orders, sentiment
Caixin/Markit services purchasing managers’ index (PMI) fell to 52.0 in June from 52.7 in May, indicating further pressure on Chinese firms Impact on exporters remains despite President Xi Jinping and US counterpart Donald Trump agreeing to a trade war truce at the G20 summit in Japan

US-China trade war could reignite any time as ceasefire is a calm in the middle of a storm, say economists, strategists
Despite G20 truce, resolution of trade tensions could be ‘painful’ for both the US and China Trade war is ‘far from over’, according to Bank of America Merrill Lynch

Uncertainty is Certain for China’s Growing Economy
Uncertainty is the enemy of markets, but seems assured for the year ahead when it comes to China’s economic outlook. “China is still the biggest market in the world,” he emphasized. “The world needs China more than China needs the world.” Yet a flat-to-declining working population, changing production chains and technological disruption will shake its economic foundations. “It’s too early to see how this will play out,” he said, adding: “The one thing that we can be certain of is that uncertainty will continue.”

China appears to be the winner of the Trump-Xi meeting at G-20, experts say
U.S. President Donald Trump has touted his “far better than expected” meeting with Chinese President Xi Jinping at the G-20 summit in Japan, but experts say that Beijing appears to have gained an upper hand in the trade war. Trump said after his meeting with Xi that Huawei will be allowed to purchase U.S. products — suggesting a softening in Washington’s blacklist of the Chinese tech firm. But back in Washington and Beijing, both governments appear to be treading Trump’s Huawei announcement with caution.

China’s trade war manufacturing exodus could be hastened by EU-Vietnam trade deal, analysts say
The agreement offers Chinese firms incentive of low-tariff access to the European Union if they set up in Vietnam Deal will eventually cut import duties by 99 per cent, which could also see a flood of European companies seek low-cost manufacturing in Vietnam, at China’s expense

‘Dr. Doom’ economist Nouriel Roubini sees trade war tipping global economy into a recession
“The consequences of this trade and tech war and cold war [are] the beginning of de-globalizaion … and the decoupling of the global economy. We’ll have to redo the global tech supply chain. And eventually by next year, if this escalates, it will be a global recession,” Roubini says. Roubini, head of Roubini Macro Associates, was the economist who famously called the housing bubble. Roubini is pessimistic that the world’s two largest economies will work out a long-term agreement anytime soon.

Economic Watch: China’s economy resilient, rebalanced in H1
China’s economy, though facing headwinds, showed steady growth signalling high quality development in the first half of 2019, as the country’s economic structure continued to optimize.

Fear mounts that Chinese-American scientists are being targeted amid US national security crackdown
‘Any scientist should be very worried because this is hurting US science and technology,’ says a professor who was arrested and is now suing the FBI Concerns are raised about bias and ethnic profiling

Ursula von der Leyen nominated to lead European Commission – but will she be tougher on China?
EU countries’ choice to replace Jean-Claude Juncker gave interview in January in which she said threat from China had been ‘overlooked’ She also said Chinese people would not put up with Beijing’s social credit system in the long run

Is ‘firefighter’ Wang Qishan working behind the scenes on trade talks?
Chinese vice-president tells visiting Mexican foreign affairs secretary that his main task now is helping Xi Jinping with ‘ceremonial diplomacy’ There is speculation he has played a quiet role in negotiations with Washington given his experience in dealing with the US

Huawei founder predicts limited impact from Trump decision to allow sales of some US tech products to the company
The company said it shipped 100 million handsets under the Huawei and Honor brands both domestically and abroad up to May 30

Amazon, Microsoft, and Google plot to pull product manufacturing out of China, deepening the cold war engulfing tech
Google, Amazon, Microsoft, Dell, and Hewlett-Packard are all drawing up plans to move huge chunks of production out of China, Nikkei Asian Review reports. For Google, Amazon, and Microsoft the main areas of concern are games consoles, e-readers, and smart speakers. For Dell and HP, notebooks are where they’re looking to shift production. It follows the Nikkei Asian Review also reporting that Apple wants to reduce its exposure to China because of ongoing uncertainty around the trade war.

China’s 5G edge more complicated than it appears
5G was the focus of the Mobile World Congress Shanghai this year, and I was amazed by how many 5G equipment companies I saw showing off networking equipment. The usual suspects, Huawei and ZTE were there, but they were joined by lesser known tier two and tier three companies—Baicells, Comba, Certusnet, Innogence, Skynetworks, H3C, Ruijie Networks, Raisecom, among others—who brought prototype 5G small cell and open radio access network (O-RAN) products, core cellular network components that will be sold in vast quantities over the next few years as 5G networks are deployed.

China’s 5G edge more complicated than it appears

China Mobile Builds Up $4.4bn 5G Industry Fund
China’s largest telecommunications operator China Mobile have been putting things in place to set up a $4.4bn (30 billion yuan) 5G industry fund.

China Mobile builds up $4.4bn 5G industry fund

Tmall updates flagship store format to support growth initiatives
Alibaba’s business-to-customer market place Tmall will introduce a new format for flagship stores on the platform. Dubbed Flagship Store 2.0, the updated format places likely purchases, recommendations on the best discounts, and custom content offerings in a more prominent way. The company plans to launch the reformatted look ahead of the Singles’ Day shopping festival on November 11 but offered no further specifics.

Briefing: Tmall updates flagship store format to support growth initiatives

Alipay is launching a beauty filter for facial recognition payments
Alipay is launching a new beauty filter feature for its facial recognition payment system “Smile to Pay,” in an effort to boost usage among female users. The company told TechNode that a beauty filter will be automatically applied when users scan their faces to make purchases so that facial features displayed on the machines are slightly enhanced.

Alipay is launching a beauty filter for facial recognition payments

Demographic Trends Shaping Luxury in China
In the age of digital transformation when brands rely on analytics to predict consumer behavior, it’s easy to underplay the importance of demographics. Indeed, demographics have conventionalized stereotypes (men love soccer and beer; women obsess over luxury garments) and consumers are more sophisticated than simply an age or income bracket, but that doesn’t imply that marketers should completely ignore statistical analysis. This is especially true in the luxury world, where knowing and understanding every demographic division is the starting point of the conversation. Undeniably Gen Zers and millennials have similar traits and consumer patterns, but that doesn’t imply that they are identical. Market segmentation is a double-edged sword. In the hands of lazy marketers, it can promote stereotyping and overgeneralization, while for the rest, it’s a welcomed tool

Demographic Trends Shaping Luxury in China

Beijing will replace all taxis with electric cars in two years – BAIC
Beijing municipal government will replace all gas-powered taxis with electric cars over the next two years, Xu Heyi, chairman of BAIC Motor Corp, said on Tuesday. Speaking at the first World New Energy Vehicle Congress (WNEVC) in the southern Chinese city of Boao, Xu said that gas-powered taxi replacement is ongoing and the new vehicles are equipped with functions such as fast charging and exchangeable batteries. Last month, the city government released a two-year action plan, requiring local taxi operators to deploy a total of 20,000 new EVs over the next two years. BAIC will supply all the new vehicles.

Briefing: Beijing will replace all taxis with electric cars in two years – BAIC

Stocks Blog: Hong Kong, mainland China markets fall as traders fret about chances for quick resolution to US-China trade war
China Tobacco tumbles after more than 300 per cent gain in three weeks China Vanke hits two-month high on strong first-half sales growth

Hong Kong, China shares fall on trade worries, profit taking
Kweichow Moutai ends back below the 1,000 yuan after hitting that milestone Monday Consumer stocks have been big gainers, and traders went in to pocket profits

Brighter outlook for China’s stock market amid faster market reforms, policy easing, say HFT and HSBC Jintrust
HSBC Jintrust and HFT see a better third quarter for Chinese equities after the benchmark gauge lost nearly 8 per cent from its April peak A new rule allowing back-door listings of technology companies on the ChiNext will raise hopes of more market reforms, HFT Investment said

Between Fed rate cuts and the dominant US dollar, Donald Trump can’t have it all
Has the Trump administration forgotten what happened after Richard Nixon pressured the Fed to pump up the economy in 1972? Also, Washington’s sanctions on other countries might turn them against the US financial system and the dollar

Canadian asset manager Brookfield looks past short-term row as it picks up US$1.5 billion Shanghai project, China’s second largest commercial property deal
The Toronto-based asset manager agreed in April to pay 10.57 billion yuan US$1.54 billion for the Huangpu Centre on the South Bund of Shanghai The Huangpu Centre is a 320,000 square-metre development comprising three office towers, a shopping centre and luxury flats

Washington’s fragile economic plans for the Indo-Pacific
In November 2017, US President Donald Trump unveiled the Free and Open Indo-Pacific Strategy (FOIP) as the country’s policy towards Asia. FOIP differs from the policy approach of previous administrations as it rests on an assumption that the United States and China are locked in strategic competition. This approach means that FOIP also contains economic elements as manifested in 5G technology rivalry and trade wars

Washington’s fragile economic plans for the Indo-Pacific

Indonesia asks China for special fund under Belt and Road – ministers
Indonesia has asked China to set up a special fund within its Belt and Road Initiative (BRI) for investment in Southeast Asia’s largest economy, after offering China projects worth $91 billion (72.41 billion pounds), government officials said on Wednesday.

Thailand on track for double-digit rise in Belt and Road investment flows from China
Thailand will experience a double-digit increase in Chinese investment from the Belt and Road Initiative (BRI) in the next decade after witnessing an inflow of US$24 billion from Chinese investments in the past 10 years, a Chinese bank executive predicts

MIT scientists decry crackdown on researchers of Chinese origin
Massachusetts Institute of Technology (MIT) scientists of Chinese origin spoke to Nature about the increasingly toxic environment on US college campuses and institutions as the government’s crackdown on foreign influence in research has reached a fever pitch. The scientists describe unfair treatment at the hands of government officials, including surprise visits from law enforcement. Additionally, an open letter recently published by MIT’s president Rafael Reif details how “faculty members, post-docs, research staff and students… feel unfairly scrutinized, stigmatized and on edge — because of their Chinese ethnicity alone.”

Briefing: MIT scientists decry crackdown on researchers of Chinese origin

Looking for a used home in Shenzhen? Be prepared to pay extra as sellers want more after land sales fetch record prices
Property agent says prices of flats in Shenzhen are expected to rise by at least 5 per cent as sellers hold out for more

Censorship is closing China’s young minds
Students can resist Xi’s crackdown, even in modest ways, with global support

Justin Trudeau is ‘confident’ Donald Trump spoke to Xi Jinping about Canadians detained in China at G20 summit
Relations between China and Canada deteriorated following the December arrest in Vancouver of Meng Wanzhou, a top Huawei official Chinese authorities have since arrested two Canadians on suspicion of espionage and blocked imports of Canadian agricultural product

Why China No Longer Needs Hong Kong
The mainland Chinese economy now dwarfs the city’s, and rivals are usurping its status as a hub of global finance.

China protests to Britain over British Foreign Secretary Jeremy Hunt’s warning on Hong Kong agreement
Chinese foreign ministry accuses Hunt of interfering in the city’s affairs and of harbouring ‘colonial illusion’ Hunt said joint declaration was a legally binding agreement ‘to be honoured’ and threatened ‘serious consequences’ if it wasn’t

Violent protests are a blot on Hong Kong’s reputation as a stable business hub, says Hopewell’s Gordon Wu
Violent protests are definitely not good for the city’s business environment, says the chairman of Hopewell Holdings

Hong Kong protests: Did violent clashes sway public opinion?
The actions of protesters who burst into Hong Kong’s Legislative Council have divided opinion A splinter group of protesters smashed their way into Hong Kong’s legislative council on Monday, breaking glass walls, defacing paintings and spraying graffiti. It was denounced by the city’s leader as an extreme use of violence, but how do residents feel about what happened?

Hong Kong’s businesses, markets kept calm and carried on even as city streets were choked with biggest protest rallies in history
Hong Kong’s benchmark Hang Seng Index rose 7.1 per cent since an estimated 1 million took to the streets on June 9, compared with the 2.8 per cent drop in the gauge during the 79 days of Occupy Central in 2014 The stock market and property sales, two proxies of Hong Kong’s mood, showed that the city wasn’t about to let street rallies get in the way of a good deal

China’s middle income claim causes uproar as Weibo users ask ‘why am I not that rich?’
Propaganda piece from the National Bureau of Statistics stirs up online controversy after claim China’s nominal gross national income per capita for 2018 was US$9,732 Agency forced to respond after topic attracts over 200 million followers, with Beijing facing a delicate task of portraying itself for China’s 70th anniversary

Chinese tourists still love Los Angeles despite overall decline in visits to US
Travel and hospitality businesses say the stream of visitors from China has been helped by their efforts to promote the city on Chinese social media They also say that Los Angeles is still a top destination because of its reputation as the entertainment capital of the world

Baidu’s Robin Li has bottle of water tipped over his head by attendee at Beijing event as he gives presentation
Baidu’s founder Robin Li has come under pressure recently after the company reported its first-ever quarterly loss

US criticises Chinese ‘missile launches’ in South China Sea
The US has accused China of conducting missile launches in the South China Sea, describing Beijing’s actions as “meant to intimidate”

China’s ‘disturbing’ missile tests contradict vow not to militarise South China Sea, says US
Launch undermines claim to want peace in the region and is designed to intimidate other claimants of the disputed waters, Pentagon says Chinese government had warned ships not to enter area between Spratly and Paracel islands for five days while military drills took place

Understanding the Logic of China’s Virtual Love Trade
Young Chinese are buying, selling, and providing emotional care — all over the internet.

Alain Gillard
Information Officer
Service Asie Pacifique
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