China Press Review – July 6, 2021

When Will China Rule the World? Maybe Never
The Communist Party wants the world to see China’s continued rise as inevitable. In reality, it’s anything but.   It’s in Xi’s interest for the world to see that as the inevitable path. If political leaders, business executives and investment managers are convinced China is poised for pre-eminence, they have a strong incentive to get on the bandwagon—turning Beijing’s prophecy of success into a self-fulfilling one. And Xi has the logic of development on his side. China’s 1.4 billion population is four times larger than that of the U.S. GDP per capita is currently less than 20% of the level in the U.S. It would only have to converge a little more for China to claim the top spot. China’s past development success, as well as that of Asian neighbors Japan and South Korea, suggest that shouldn’t be too tall an order. But as the checkered history of the China’s last hundred years shows, development is not pre-destined. At the 100-year anniversary the focus— understandably—is on the successes of the last forty years. In the earlier decades, the Party’s record on delivering growth was—to say the least—much less impressive. As Xi casts off the constraint of term limits and prepares for a third term as President, some fear a return of the leadership dysfunctions that blighted the earlier period of Communist rule.    If doubts start to creep in, another path is possible. Stalled reforms, fraying global ties, shrinking workforce and financial crisis could keep China indefinitely in second place.

China GDP expected to grow 7.7% in Q2 on exports: Nikkei survey
COVID, weak consumption and tensions with US are seen as key risks    economy is expected to expand by 7.7% in the April-June quarter, boosted by strong exports, according to a survey of 29 economists conducted by Nikkei and Nikkei Quick News.    Although that forecast is lower than the 18.3% recorded in the January-March period (which was, in part, boosted by a low year-ago comparison base), economists generally believe that the growth momentum in the Chinese economy will continue.   Growth estimates for the second quarter range from 6% to 10.5%.On average, economists predict 1.4% growth on a quarterly basis, higher than the 0.6% growth in the previous quarter. The average full-year growth forecasts are 8.6% for 2021, 5.5% for 2022 and 5.2% for 2023.    However, what does matter is whether China can improve its health care and social safety net in time to support the aging population and without dragging significantly on future household consumption growth,” he said.

China’s economic growth to cool at end of year, weighed down by slowing export demand as world recovers
Economists from Nomura believe China’s economy will grow by 8.9 per cent this year, with Standard Chartered predicting growth will reach 8 per cent in 2021   China set an economic growth target of ‘above 6 per cent’ for 2021, and so far has seen a first quarter growth rate of 18.3 per cent, with second quarter data due next week

Xi Jinping, Angela Merkel and Emmanuel Macron throw support behind EU-China investment deal, Beijing says
Each leader expressed hope that the agreement would be approved soon, according to Chinese summary of video call      Macron and Merkel ‘expressed serious concerns about the human rights situation in China’ and forced labour issues    The Chinese summary said France “is committed to continuing to promote cooperation with China in a pragmatic manner, supports the conclusion of the EU-China investment agreement, strengthens cultural exchanges, and welcomes Chinese companies to invest in France”.  A summary of the call issued by German Chancellor Angela Merkel’s office said the three had “exchanged views in particular on the status of relations between the EU and China” and “also talked about international trade, climate protection and biodiversity”.In a nod to the EU’s desire to maintain independence from the United States on its China policy, Xi said that “it is hoped that the EU will play a more active role in international affairs, truly embody strategic autonomy, and jointly maintain world peace”.  In the face of a potential boycott of the Beijing Winter Olympics next year, he added that the three should “develop in the right direction and support each other to successfully host the Beijing Winter Olympics and the Paris Summer Olympics”.

US-China trade war hits third anniversary, with no sign of Biden easing economic pressure
Three years after the US imposed its first trade war tariffs, they remain in place for most goods under the Biden administration     While the two countries initially sparred over trade, tensions now touch on things like Xinjiang, Hong Kong and human rights  “The trade war will continue, at least for the near future,” he said.   But he added two positive signs had emerged in recent months. China has been buying US agricultural products and Vice-Premier Liu He has spoken to both Tai and US Treasury Secretary Janet Yellen since May. Last month, Commerce Minister Wang Wentao also spoke with his American counterpart Gina Raimondo.   Under the phase one deal, China has committed to buying an additional $98.2 billion worth of covered goods this year on top of 2017 levels, although purchases have fallen behind target, partly due to the coronavirus pandemic.  China’s purchases of US goods from January to May reached only 69 per cent of the year-to-date target based on Chinese import data, and only 62 per cent of the target based on US export data, according to the Peterson Institute for International Economics.  “The administration has not yet tipped its hand as to what it hopes to accomplish.  “Biden’s intention to pursue a US worker-centric trade policy, along with his desire to put human rights at the heart of foreign policy, will ensure that any trade talks with China will be tough going.”  The White House announced last month it would establish a trade strike force led by Tai to halt the “hollowing out” of American industry and the erosion of critical supply chains for products such as semiconductors and medicines.  Bryan Mercurio said he does not expect the supply chain review to affect trade in the short term, as it is private companies and not the US government that imports goods from China.   “In order for any restructuring of the supply chain to take place in any sector, the government will have to make it financially attractive through subsidies or other sweeteners. I do not see this happening on a large-scale basis,” he said.

PODCAST   How should the G-7 respond to China’s BRI?
When the leaders of G-7 countries met in Carbis Bay last month, they announced a new Build Back Better World (B3W) plan to support infrastructure projects in low- and middle-income countries and respond to China’s Belt and Road Initiative.    There are few details of exactly how the B3W partnership will work, and there are questions about whether focusing on infrastructure is the best way for the United States and its partners to counter China on the global stage. In this episode, Howard W. French joins David Dollar to discuss the challenges B3W will face and why the West would be better off competing in areas where it already has relative advantages.

VW, Daimler, Volvo to join on chargers
The truck manufacturing units of Volkswagen, Daimler and Volvo announced on Monday they will team up to build a network of 1,700 charging points for heavy-duty vehicles in Europe using green electricity.    The initial plan foresees a 500 million euro (US$600 million) investment to drive the five-year project, but the companies said they hoped to bring in additional partners and obtain public funding to build additional charging stations for long-haul trucks and buses using batteries.

Huawei bets on chip startups to rebuild supply chain
Huawei has placed bets on dozens of China chip startups, and plans to open its first fab in 2021 as it tries to rebuild its supply chain.   Its investments through venture arm Habo Technology Investment Co Ltd cover virtually every part of the semiconductor industry chain, including IC design, electronic design automation (EDA) software, packaging and testing, and materials, according to a deep dive by financial magazine Caijing.

Didi Loses $22 Billion in Market Cap After China Crackdown
Didi Global Inc. plunged in premarket trading after a Chinese regulator ordered the removal of the company’s platform from app stores, days after a $4.4 billion initial public offering in the U.S.     Shares of the China-based tech firm fell as much as 30% to $10.90, wiping out about $22 billion of market value and taking the stock below the $14 IPO price. They traded at $12.57 as of 6:55 a.m. in New York.

Apple wins privacy battle in China
Tracking system for iPhones developed by Chinese tech groups fails to gain traction

Bitcoin mining has never been easier since China’s crackdown – miners stand to make higher profits
The level of difficulty for mining bitcoin plunged by 28 per cent on Saturday, according to data from, to mark the largest drop in the network’s history   The most noticeable effect of China’s anti-mining efforts may be the acceleration of bitcoin mining outside the country, said cryptocurrency trader Scott Melker

Chinese tech giants bail out with US$1.4 billion government-backed investment in the embattled retailer
The investment into the indebted retailer comes from a consortium led by the Jiangsu government and includes Alibaba, Xiaomi and TCL     The deal adds to the nearly 20 per cent stake already held by Alibaba, which is participating in its first deal since its antitrust fine in April

China’s antitrust watchdog to block Tencent’s merger of Huya and Douyu
Tencent has failed to come up with sufficient remedies to meet SAMR requirements on giving up exclusive rights, according to sources familiar with the matter     The internet giant recently withdrew the original merger application and refiled it to the SAMR

E-Fapiao Compliance Management in China and Regulatory Requirements
The increased adoption of e-fapiao (e-invoice) and the digital transformation of China’s tax system have made it possible for companies to genuinely consider creating a paperless working environment and achieve accounting and tax automation in the future. However, in the early stages of this dig

A blueprint for Hong Kong’s economic future
Just like the rest of the world, Hong Kong is doing their best to control the spread of COVID-19 and protect public health. Creating a safe environment for the citizens of Hong Kong is essential, but what does this mean for Hong Kong’s economic future?    To close out this discussion, the panelists share their worries and their hopes for the future. The common consensus is Hong Kong is an amazing and remarkable city with a lot to offer the world. It also has great baselines including rule of law, transparency, and a strong international community. Some of the worries about the future include the continued need to protect public health, and the pressing need to make policy changes that help Hong Kong businesses thrive.

Taiwan’s China dependency is a double-edged sword
Taiwan’s remarkable economic performance in 2020 is something to celebrate given most countries globally plunged into recession because of the COVID-19 pandemic. Taiwan’s GDP increased by 3.11 per cent in 2020 compared to the global average of negative 4.5 per cent. It is the first time in three decades that Taiwan has achieved a growth rate greater than China’s. But political debate broke out over one key element that enabled this achievement. Taiwan’s GDP growth in 2020 was mainly underpinned by an increased trade surplus and domestic investment. Exports increased to a record-breaking 4.9 per cent in 2020, with China (Hong Kong included) receiving close to 44 per cent of Taiwan’s exports, a 12 per cent increase from 2019. This makes China Taiwan’s single most important trading partner and a key source of trade surplus.    For Taiwan, there are several key implications of this situation.     First, pressure to diversify supply chains will likely increase for those companies that are currently located in China with majority US clients. In the long run, both investment and investment-led trade between Taiwan and China will likely decline. Taiwan may be able to leverage this situation to secure its position in the new supply chain.     Second, as all major economies are pursuing similar ‘import substitution’ policies on semiconductors, Taiwan’s semiconductor-led exports to China and elsewhere will likely decline as well. Foundries such as the Taiwan Semiconductor Manufacturing Company can mitigate these challenges by diversifying production facilities globally, but the impact on Taiwan’s trade surplus and GDP growth will be significant.     Instead of worrying about trade concentration, Taiwan should concentrate on defining strategies for and finding solutions to these structural changes that are unfolding rapidly.

Dire Straits: Taiwan’s fragile status quo
For Taipei, Beijing, and Washington, the current standoff is about national identities as much as territory, argues Hanns W. Maull.  Most fundamentally, China’s strategy of embracing Taiwan economically and luring it into unification on the basis of the “one country, two systems” formula has failed. Despite or because of Beijing’s heavy-handed efforts to influence the outcome, Taiwanese President Tsai Ing-wen and her independence-minded Democratic Progressive Party (DPP) won the recent elections. Support for reunification has withered and united the country against unification. Taiwan wants to govern itself in order to realize its democratic, Taiwanese identity.

Aso walks back claim Japan would join US in defence of Taiwan if mainland Chinese forces invade
Gaffe-prone deputy prime minister had said aggression against the island could be seen as a ‘threat to Japan’s survival’ and that deploying the Self-Defence Forces would therefore ‘not be strange at all’   He later backtracked, saying any clashes should be resolved through diplomacy. Beijing issued a stern rebuke, saying Japan’s ‘obsession with Taiwan’ showed it had not learned the lessons of history

China’s military modernisation continues with new commanders’ swift promotions
Quartet promoted to lead commands and branches gain rank less than two years after previous promotions, in break with tradition    Western and southern theatre commands, ground force and strategic support force have new commanders   Chinese President Xi Jinping, who chairs the Central Military Commission (CMC), introduced a military overhaul in 2015 to turn the PLA into a nimble and capable fighting force, with the ultimate goal of building a world-class modern army on a par with their American counterparts in the next three decades.Deng Yuwen, former editor of Communist Party publication Study Times, said Xi needed to reshuffle the military leadership before the party’s National Congress next year.   Hong Kong-based military expert Liang Guoliang said he expected more promotions and retirements to be announced in the near future, and Xi’s top priority should be reshuffling the CMC leadership.“Both of the CMC vice-chairmen, Zhang Youxia and Xu Qiliang, are over 70 – the maximum retirement age – next year, meaning the four CMC members, or those generals retired from the five theatre commands and service forces, will become hot candidates,” Liang said.   “I think [one of the four CMC members] Admiral Miao Hua, 65, who is well-known for his problem-solving skill, may replace Xu Qiliang as one of the CMC vice-chairmen, while the other one should be much younger than him.”

German think tank chief arrested on charges of spying for China
Accused identified as Klaus L accused of passing on confidential German government information to the Chinese secret service   The political scientist was allegedly contacted by Chinese intelligence services on a trip to Shanghai in 2010

What Xi Jinping’s speech marking the Communist Party centenary means for the world
Xi painted a benign image of China as a ‘peace-loving’ nation, but he also delivered an unambiguous warning to its adversaries      While India and contemporary Russia were not mentioned in the speech, they will affect Beijing’s options in managing the hegemony of the US and its allies   Whether China can begin “a new journey towards realising the second centenary goal” in defiance of the larger global orientation and sanctity of norms will be dependent on the policy choices made by Xi. The period from now to 2049 can be more animated for China and its principal interlocutors than envisioned, as regional and global challenges coalesce and collapse in the contemporary geopolitical churn. Climate change and Covid-19 are just the tip of the iceberg.

The GenZ Grads Helping You Help Yourself
There are always errands to be done. For a small fee, these supervisors will push and prod you to succeed.

China’s ‘one-child’ Policy Left Elderly Lonely, Financially Unstable & Childless: Study
Millennials now in China are more unwilling to start a family, as they complained about high costs of raising children and disruption to work.

Song Ta Scandal Puts Art World’s Sexism on Full Display
The recent exhibition and subsequent removal of an artwork where women were rated by their looks hints at the continued influence of China’s ‘bad boy’ generation of artists.  Thankfully, there are some signs that this situation is starting to change. A number of female artists, curators, and researchers have risen to prominence in recent years, and OCAT Shanghai and UCCA organized solo exhibitions by Yang Yuanyuan and Cao Fei, respectively. While these shows were headlined by women artists and included reflections on gender issues, neither fit neatly into the category of “women’s art”: Yang is known for documenting the struggles of the Chinese diaspora in America, while Cao uses virtual and augmented reality to interrogate our increasingly digital lives.
Real criticism doesn’t always require rebellion. Sometimes, it’s enough to delve into complexities of the past, present, and future to bring to light fragments that have been overlooked by the establishment. That, and not brash “bad boy” posturing, is where the future of Chinese art lies.

China launches first ‘meta-human’ virtual influencer Ayayi
The market for virtual influencers is rapidly expanding in China which is bringing improved technology and more realistic virtual images.   In May, Ranmai Technology created AyayiChina’s first ‘meta-human’, i.e. an extremely realistic digitalised human. Ayayi’s appearance is much closer to a real human than existing virtual idols. Advanced technology enables her skin texture to adapt to different lighting and shadows, simulating that of a real person.

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