China Press Review – July 9, 2019

Press review

The global economy needs an end to the US-China trade war and increased spending on public services – not more interest rate cuts
The world has been awash with easy money for a decade and interest rates are already dangerously low. To boost bonds and reward savers, global stimulus should involve more coordinated spending on infrastructure, health and education

Could trade war be China’s golden opportunity to transform economy and society?
‘Don’t play the trade war victim’ former Japanese PM advises China Instead, seize the opportunity to transform economy and society

Forget about waiting out the Donald Trump era for a more cordial US president, former top American diplomat warns China
Beijing has misjudged politics’ impact on China policy in the US, says Daniel Russel, former assistant secretary of state for East Asian and Pacific affairs Superpowers’ rivalry has made it difficult for moderate voices in both countries to be heard, he says

Senior Chinese diplomat warns of ‘disastrous consequences’ if US treats China as ‘enemy’
Foreign Vice-Minister Le Yucheng also hits out at Washington over reports some Chinese-American scientists ‘have been treated unfairly’ in the US He tells World Peace Forum problems faced by America are not ‘China’s fault’

What China Experts Miss about China and the US
A competitive stance is essential to working with China. Xi, however, is overplaying China’s hand. If China had waited until it was truly formidable, the world would have little choice but to put up with its unreasonable demands. But the Party selected Xi as a “dynamic” leader who would take risks to strengthen China. Our failure to respond to his challenges has encouraged him to take ever greater risks. He may yet reform his ways, both in China’s interest and his own. But that will only come from more pressure, not less.

U.S., China to relaunch talks with little changed since deal fell apart
The United States and China are set to relaunch trade talks this week after a two-month hiatus, but a year after their trade war began there is little sign their differences have narrowed.

Trump can’t keep tariffs on China and win a second term, says researcher
Should Trump continue imposing tariffs that hurt Americans economically, he may lose the slim electoral edge that previously won him the White House, Firestein predicts

China’s loans to rest of the world worth US$5 trillion, 6 per cent of global economy, new study reveals
The world’s debt to China grew tenfold between 2000 and 2017, from US$500 billion to US$5 trillion, with 80 per cent of emerging nations receiving Chinese funds Kiel Institute estimates that 50 per cent of Chinese overseas funding is outside data captured by World Bank and IMF, raising concerns over transparency

Chinese banks may not have enough capital to lend economy out of slowdown, says Fitch
‘Banks’ earnings in the past few years have only been able to sustain their [required] capital adequacy levels,’ said Fitch executive Grace Wu Beijing is leaning further on the private sector to buffer the slowdown and is requiring banks to lend more to these firms, without raising borrowing costs

Why China’s Debt Defaults Look Set to Pick Up Again
Chinese companies are facing a reality check after years of ramping up debt. A deleveraging campaign that President Xi Jinping began in 2016 to curb risks in the nation’s financial markets has led to a crackdown on unregulated lending — so-called shadow banking — and tighter rules on asset management. That made it harder for some firms to raise funds to repay existing debt, leading to a record number of bond defaults in 2018. There was a respite in the first half of 2019 as the government moved to try to alleviate the liquidity crunch, but China’s default risks are still seen as rising, due in part to slowing economic growth.

China’s central bank buys gold for 6th straight month
The People’s Bank of China added nearly 16 tons of gold to its reserves in May, the sixth straight month China’s central bank has added to its gold reserves. The gold buying binge is part of the Chinese government’s “determined diversification” away from dollar assets, Argonaut Securities (Asia) Ltd. analyst Helen Lau told Bloomberg, adding that retail demand has also increased. China could buy 150 tons in 2019 at this rate of accumulation, Lau said.

China’s rare-earth strategy versus US risks backfiring
As mineral prices rise, drive to build up American industry gains steam

China makes gains against US in high-tech markets
Survey shows Chinese companies boosted shares in 9 sectors last year

China’s tech sector is staring at the possibility of its bubble bursting
The bursting of China’s tech bubble has long been deemed unlikely by bulls who argue that the country’s massive population and substantial national support for the sector would spare startups from the same fate that befell American tech companies in the early 2000s. But the latest figures from China’s tech sector suggest that caution is necessary.

Can Multilateralism Survive the Sino-American Rivalry?
The US-China trade and technology war has invited comparisons to the Cold War. For international organizations, the lesson of great-power rivalries is to focus on facilitating cooperation toward specifically defined goals, rather than attempting to establish new broad-based rules. It is imperative that the Sino-American rivalry stops short of war. We know from history what can happen when national leaders define rivals as enemies and exploit national grievances for personal political gain. Right now, this tendency is on display in both China and the US. To contain the new strategic competition, the rival powers, along with the rest of the world, should emulate the Cold War-era focus on narrowly defined, specific agreements rather than attempting to craft new broad-based rules. Multilateral organizations such as the WTO and the World Bank could play an important role in brokering such accords, but only if their respective leaderships are bold and creative, and if their stakeholder governments allow it.

Why Greece’s new government is likely to stay close to China
The New Democracy party of newly elected Prime Minister Kyriakos Mitsotakis started the process of building a closer relationship with Beijing over a decade ago Outgoing Syriza government made Greece the first developed nation to sign up for the Belt and Road Initiative

China, Poland vow to strengthen bilateral cooperation
China also encourages its enterprises to invest in Poland, he said, voicing hope that the Polish government will provide a fair, just and transparent business environment for Chinese and other foreign enterprises, Wang added

BRI and China’s International Commercial Courts
SOME COMPARISONS CAN BE MADE BETWEEN THE OLD SILK ROAD and China’s modern Belt and Road Initiative (BRI), which has been dubbed “the New Silk Road”. Some interesting comparisons – revealing both similarities and differences – can also be made between the traditional and modern systems of dispute resolution in China. This column examines the impact of China’s new international commercial courts on disputes arising out of the BRI.

BRI and China’s International Commercial Courts

Moving Your Manufacturing Out of China: The Initial Decisions
The uncertainty surrounding products manufactured in China is causing many foreign companies (especially those that sell their products to the United States) to ask us what they can do to mitigate their risks and where else they could look for getting their products made. See Has Sourcing from China Become too Risky?

Moving Your Manufacturing Out of China: The Initial Decisions

US-China trade war will hit ASEAN economy harder: JCER survey
Quarterly census records fourth consecutive downgrade as uncertainty remains

China’s technology board may unleash speculative frenzy as it starts trading in two weeks
Stocks are likely to soar much higher on debut than the industry average and the benchmark equity gauge The technology and innovation board opens on July 22 in Shanghai

China’s stock benchmark extends biggest drop in nine weeks as interest rate outlook and IPO glut weigh on sentiment
Traders cautious ahead of key data release for June Hang Seng Index extends decline for fifth consecutive session

Will Virtual Banks Benefit Foreign SMEs in Hong Kong?
The Hong Kong Monetary Authority recently announced that it had granted four new virtual banking licenses, bringing the total number of licenses to eight. In comparison to traditional retail banks, new virtual banks will operate almost exclusively online.

Ant Financial’s mutual aid platform adds 25 million users in fewer than 3 months
Users of Ant Financial’s mutual insurance product have surged by around half to 75 million over the last three months while funding has been provided for 597 critically ill users, the Hangzhou-based firm said on Monday.

Ant Financial’s mutual aid platform adds 25 million users in fewer than 3 months

Expat demand for Beijing’s luxury serviced apartments falls as foreign firms scale back their Chinese operations
Many foreign firms have moved their production facilities out of China because of cost concerns, a trend exacerbated by the trade war On the supply side a surge is expected, with between 900 and 1,000 new units set to enter the market by the end of next year, according to JLL

Outlook for Hong Kong retail rents bleak as trade war and protests dampen sales
High street rents in Central fell the most in the second quarter at 3.8 per cent JLL predicts a 5 to 10 per cent drop in rents for high street shops and up to 5 per cent growth for rents in shopping centres for the rest of the year

AllianzGI launches Hong Kong hackathon; nine global start-ups will pitch their AI strategies to fund management executives
Nine teams will present how their AI strategies can facilitate fund management during three-day Cyberport event Inaugural hackathon held as more fund houses embrace AI and big data in the investment management process

10 Reasons Top Chinese Talent Do Not Work For You
All Western companies in China are trying to hire top Chinese talent within their budget. Most companies cannot get what they seek. Virtually all are not consistent. Top candidates want work. Why are they not working for you?

10 Reasons Top Chinese Talent Do Not Work For You

Wumart and Yonghui are in the final round of bidding to buy control of Metro’s business in China, sources say
Wumart and Yongui are among the suitors in the final round of bidding for control of Metro’s business in China Tencent is in talks to join Yonghui’s consortium, which also includes Hillhouse Capital

Retail decline in the US and Britain can’t be blamed on e-commerce alone. Look at China
The continuing closure of shopping malls and high street stores in the West stands in sharp contrast to the integrated model, a mix of online and bricks-and-mortar retail, now spurring an industry boom in China

China taps into global expertise in climate change battle against increasing floods and drought
First overseas office for top pedigree climate adaptation experts opens in Beijing While much work has been done on mitigation, focus turns to adapting to changing circumstances of global warming

Douyu moves listing from NYSE to Nasdaq
Game live-streaming platform Douyu has switched its IPO to the Nasdaq Global Select Market from the New York Stock Exchange, according to the company’s SEC filing on Monday

Douyu moves listing from NYSE to Nasdaq

Former Bitmain CEO launches cryptocurrency financial services startup
Wu Jihan, co-founder and former CEO of China’s Bitmain, the world’s largest crypto-mining rig producer, has launched a new cryptocurrency startup, hoping to piggyback on a surging Bitcoin price.

Former Bitmain CEO launches cryptocurrency financial services startup

Trade war hits Singapore’s Temasek as returns plunge
State-run investment firm bets on tech startups to lift future returns

Swine fever in China among risks to food markets, warn UN food agency and OECD
Experts forecast a 5 per cent fall in Chinese pork output this year, but say it should return to previous levels in 2020

Online or Offline? It’s All the Same for Millennials and Gen Z
Data for 2018 estimates that online penetration for luxury in China stands at almost 60 percent for Gen Zers (those born after 2000), roughly 40 percent for millennials (those born between 1980 and 2000) and only 25 percent for Gen Xers (born between 1960 and 1980). A necklace was recently sold by a luxury brand for $400,000 — an impressive feat by any measure — yet that necklace wasn’t sold in a high-end jewelry store in Shanghai, Paris, Monaco or New York, but, surprisingly, on the online luxury retailer Moda Operandi, according to a report in Vogue Business. This is remarkable since most luxury brands still primarily rely on sales via their classic brick-and-mortar stores.

Digital Luxury Drops in China: Why They Work
There are signs that the “drop” model could be here to stay, at least as long as streetwear culture thrives among young shoppers in China.

Artificial intelligence could help ease China’s healthcare woes: Pingan CEO
Artificial intelligence (AI) can ease the strain on China’s overburdened healthcare industry while increasing access to higher quality health services, said Ericson Chan, CEO of Pingan Technology.

Artificial intelligence could help ease China’s healthcare woes: Pingan CEO

Huawei granted mapping license for autonomous driving push
Huawei obtained a permit last Friday allowing the tech giant to draw up high-definition navigation maps in China, a move that will aid the development of simulation software for autonomous vehicles.

Huawei granted mapping license for autonomous driving push

China’s tech giants battle for smart speaker supremacy as price war rages on
While Amazon dominates the US smart speaker market with its Alexa-powered devices, competition in China remains fierce as some of the country’s biggest names in technology engage in an ongoing price war to vie for market share. China supplanted the US as the largest market for smart speakers globally earlier this year. Sales hit 10.6 million units in the first quarter, a recent report from research firm Canalys shows. The country accounted for just over half of all sales of the devices globally in the first three months.

China’s tech giants battle for smart speaker supremacy as price war rages on

China is less open than ever
In diplomacy as in life, people tend to expect reciprocity. That doesn’t mean having to carry out exactly the same actions, but if someone does something helpful, you generally want to do something in kind. And if you do something undesirable, you can’t complain if something unpleasant happens to you. It’s the way of the world, in areas as diverse as diplomatic horse-trading and parenting. Yet China seems to be going out of its way to refuse any reciprocal exchanges. Everyone knows that the Great Firewall excludes substantial portions of the Western internet. (There is never any reason given, but the assumption that it must be on security grounds is spurious: how could Dropbox be a national security threat? Perhaps coincidentally, domestic firm Tencent has a rival cloud memory storage application. And I remain stubbornly sceptical that Spotify poses any risk to anyone).

China’s Free Plastic Ban, 10 Years On
Survey shows that the country’s “free plastic ban” has been less than effective.

Pathways to a low-carbon China
Study projects a key role for carbon capture and storage. When it’s rolled out, China’s carbon market will initially cover the electric power sector (which currently produces more than 3 billion tons of CO2) and likely set CO2 emissions intensity targets (e.g., grams of CO2 per kilowatt hour) to ensure that its short-term NDC is fulfilled. But to help the world achieve the long-term 2 C and 1.5 C Paris goals, China will need to continually decrease these targets over the course of the century.

How to address NIMBY issue in China?
The fierce opposition by local people against a proposed waste incinerator in Yangluo in the Xinzhou district of Wuhan, the capital city of Hubei Province, is the latest conflict facing NIMBY (Not in My Backyard) opposition. This incident once again shows that garbage disposal is a major issue that must be recognized in China’s urbanization process.

Beijing demands US halt biggest arms sale to Taiwan of Donald Trump’s presidency
Pentagon agency approved US$2.2 billion sale on Monday – the fourth since Trump took over at the White House Taipei government says deal shows US support against Beijing threat and normalises US arms sales to Taiwan

Hong Kong extradition bill ‘is dead’ says Carrie Lam
Hong Kong leader Carrie Lam has said the controversial bill that would have allowed extradition to the Chinese mainland “is dead”.

‘The bill is dead’ but Hong Kong protesters are not appeased by Carrie Lam’s declaration
Experts say level of distrust in the city’s leader is so deep that protests will continue

Sweden refuses request from China to extradite former official Qiao Jianjun
Swedish court says he will not be sent back to China due to the risk that he would face persecution because of his political activity Qiao is accused by Beijing of embezzling millions of dollar

US asks Swiss courts to extradite Chinese scientist accused of stealing drug secrets
Xue Gongda is accused of helping his sister Joyce Xue Yu to steal US$550m worth of information from the British drug firm GlaxoSmithKline Former diplomat says case cannot be compared to that of Huawei’s Meng Wanzhou because suspect is on a lower level and Swiss courts will resist US pressure when decided on merits of case

China’s Winning This Mini Trade War
Japan’s move to restrict exports of certain materials to South Korea only hurts the big players and helps Beijing.

US-China Competition and Cooperation: The Long View
Identify the top three takeaways of the recently released “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China 2019.” First, the report notes that China’s military modernization and restructuring are a component of a comprehensive, long-term effort to achieve Chinese preeminence in the Indo-Pacific region

China Losing Public Relations Battle With U.S.?
Chinese authorities have maintained strict control over the domestic narrative on the trade war by prohibiting websites from publishing related news and commentary and issuing propaganda notices with granular coverage guidelines for domestic media outlets. While this strategy has allowed the government to shape the trade war conversation within China, it may be causing China to lose the global public relations battle with the U.S. Prominent Chinese economist Yu Yongding and others have argued that China’s highly restrictive media strategy has effectively allowed the U.S. to dominate international press coverage on the issue. From Sarah Zheng at South China Morning Post:

China Losing Public Relations Battle With U.S.?

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