China Press Review – June 11, 2021

How China is losing the narrative in the global coronavirus recovery
A new narrative has taken hold in markets, driven in part by the remarkable progress in deploying vaccines in the US, UK and Europe. Meanwhile, China’s renewed focus on deleveraging has taken the shine off its swift recovery, sowing uncertainty about vulnerable parts of the financial sector.

US sheds light on latest China trade talks, raising concerns about ‘unfair, market-distorting industrial policies’
China’s Commerce Minister Wang Wentao spoke with his American counterpart Gina Raimondo on Thursday     Spokesman Gao Feng refused to provide any details of the topics discussed, while the US Department of Commerce did not immediately release a statement

China credit slowdown ‘happening faster than expected’ even as bank loans rose unexpectedly in May
Banks extended 1.5 trillion yuan (US$235 billion) in new yuan loans in May, up from 1.47 trillion yuan in April and beating analysts’ expectations of 1.41 trillion yuan     Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 11 per cent in May, the weakest pace since February 2020

China fights back against Western sanctions and blacklists
On June 10, the National People’s Congress Standing Committee enacted China’s first “Anti-Foreign Sanctions Law,” which was first proposed in March. Chinese legal experts say it will finally start levelling the playing field and give Beijing the kind of legal powers that Washington and Brussels already have at their disposal. State-owned media outlet Global Times framed the new law as a response to Washington’s “aggression” in an article about the US competition bill.  “Beefing up the legal instruments for countering foreign sanctions and extra-territorial effects of other countries’ jurisdiction is a priority of China’s legislative work this year. China’s regime to impose and counter sanctions is still much less expansive compared to those of the US and the EU. Chinese state media also highlighted the move from administrative decisions to a more formalized framework as a boost for the legitimacy of China’s actions. Companies doing business with China must be prepared to face a growing number of pitfalls there and in the US, as they may be caught in the crossfire between conflicting sanctions regimes and blacklists

China reveals details of new anti-sanctions law
China passed a law on Thursday to counter foreign sanctions, as it strives to resist US and EU pressure over trade, technology, Hong Kong and Xinjiang.

China’s yuan could become world’s ‘currency of choice’ by 2050 under dual circulation plan
Market entities will use the yuan for cross-border purposes as China’s economy integrates with the rest of the world, according to former deputy central bank governor Hu Xiaolian     China’s dual circulation plan places a greater focus on the domestic market, and is its approach to adapting to an increasingly unstable and hostile outside world

Alibaba Deploys 1,000 Delivery Robots As E-Commerce Booms in China; Accelerates Digitization of Hainan
Alibaba Group said it plans to deploy 1,000 robots across Chinese university campuses and local communities over the next year as it steps up efforts to deliver packages faster and more cheaply. The e-commerce giant’s research arm, Hangzhou-headquartered DAMO Academy, together with the group’s logistics arm Cainiao, have started mass-producing the small robots, known as ‘Xiaomanlv’. The group also elaborated on its plans to develop larger, self-driving trucks to expand the radius of its deliveries. “Autonomous driving technology is becoming a core technology in the digital era,” Alibaba’s Chief Technology Officer Cheng Li said. Package deliveries surpassed 40 billion across mainland China this year up to June 1, close to the total number of deliveries for all of 2017, according to China’s Post Office, as the coronavirus pandemic spurred online shopping.

China’s watchdog tightens rules for $1 trillion cash management market
China’s banking and insurance regulator issued rules on Tuesday on wealth management products for cash, tightening oversight of the $1 trillion market. China Banking and Insurance Regulatory Commission banned such products from investing in stocks and convertible bonds and said the leverage level of each product should not exceed 120% normally, according to a statement on the regulator’s website.

Beijing’s blockchain supremacy plan gives shot in arm to start-ups, although dampers remain on bitcoin
China’s MIIT and CAC published a plan this week to create an “advanced blockchain industrial system”    Blockchain is being used in China in a wide variety of fields, such as smart city and government initiatives

Asian markets’ coronavirus divide: bright prospects for China, Japan as tourism-dependent economies struggle
Asia has come to be regarded as a global vaccine laggard, but clear differences are emerging between markets in the region based on vaccination rates    Among economies where vaccine take-up has been sluggish, those that rely on tourism will be harder hit

China’s inflation fears could spoil the party
In a departure from the global financial crisis when China’s government triggered an infrastructure boom with massive stimulus, policymakers have taken a more conservative approach to managing the world’s second-largest economy as it emerges from the pandemic. While construction and the property market are still booming, China’s leaders are determined to ensure the country’s huge debt pile remains manageable.  Officials have signalled a crackdown on commodity price speculation and the People’s Bank of China is taking a cautious approach to stimulus. Figures out this week showed credit growth continued to slide in May due to policy tightening. The central bank will also need to ensure the rising yuan does not become a problem.

Australia’s war drum to nowhere on Taiwan
Recent comments made by Australian officials about Taiwan over the past few weeks are less statecraft and more reminiscent of a fictional account of the leadup to a Third World War.  Perhaps it is best for Canberra not to make too much ‘noise’. Australia cannot on its own substantially affect a resolution of the situation in the Taiwan Strait through diplomacy. In order to avoid a nightmare scenario in the Pacific, Australian politicians should calm down their rhetoric while scrupulously communicating the need for dialogue and diplomacy aimed at a peaceful resolution of regional tensions.   At a time when Australia is reeling from Chinese economic coercion and accused of ‘sabotaging’ bilateral relations, adding more points of contention is not advisable. With China freezing several channels of communication with Canberra and conducting repeated incursions into Taiwanese airspace, the road ahead to persuade Beijing to take a more measured approach is already difficult enough without adding unnecessary obstacles.

Senior Taiwan and US officials move to resume trade talks
US trade representative Katherine Tai and her Taiwanese counterpart John Deng discussed plans to resume talks on the trade and investment agreement     The process stalled under Donald Trump and the Biden White House has not said whether it wants a trade deal – but the talks risk Beijing’s anger

Where China went wrong in Central and Eastern Europe
Lithuania’s decision to opt out of the China-led 17+1 mechanism has laid bare participating countries’ frustrations    Apart from conducting relations bilaterally despite the existence of the platform, China has focused only on leaders in power, an approach that has backfired   China’s strongest relations in Central and Eastern Europe are with Hungary and Serbia, but these ties are driven by China’s robust relationship with their leaders Viktor Orban and Aleksandar Vucic. If they were to be replaced by opponents, as has happened elsewhere, relations with China would falter. This was the case in Romania and Greece.  Apart from disillusionment over the lack of investment and promises that were not lived up to, which have started to define the 17+1 mechanism, another hurdle for China is its conflict with the US and its growing disagreements with the EU, which pressure or encourage countries to distance themselves from Beijing.

US pushes “Blue Dot” scheme to counter China’s Belt & Road
The US is promoting an infrastructure initiative involving Japan and Australia that would provide less developed countries with an alternative to China’s giant Belt and Road Initiative (BRI).

Breaking | US urged to abide by One-China principle in top diplomats’ phone call
China’s Yang Jiechi calls for stability in the Taiwan Strait in first conversation with Secretary of State Antony Blinken since Alaska meeting   Beijing’s opposition to politicisation of Covid-19 origins also stressed

China may not be a member of the G7, but it’s dominating the agenda
China, and the ideological challenges posed by its rise, is set to be among the most pressing topics facing leaders of the G7 when they gather in England on Friday.   Support from the UK and possibly other G7 members will add weight to Biden’s push for a reexamination on the origins of the virus, including new scrutiny on the lab leak theory. Beijing lashed out at Biden’s call last month, accusing Washington of “political manipulation to shift the blame.”  The summit is also reportedly expected to see the launch of a green alternative initially pushed by Biden to rival China’s Belt and Road Initiative, with an aim to support sustainable development in developing countries.

The incredible shrinking G7
With the rise of China and India, the group of seven economic powers is struggling to remain relevant.

Global chess
Chess and Go are both games of strategy and risk and sometimes the play develops slowly and sometimes there are sudden developments which redefine the whole board. This week includes three plays which are pretty much in the redefinition category. First, the US Senate passed a bill providing more than $250 billion to ensure the US has a competitive edge over China, particularly in areas such as artificial intelligence, quantum computing and semiconductors. And it was a pretty bi-partisan vote, too. Baby steps, perhaps, compared to the centrally-planned strategies of China, but a solid start. Next comes the meeting of G7 leaders which is currently in progress, at which one of the most important topics will be the extent to which the US and Europe will be able to coordinate their approaches to both Russia and to China. It’s too early to say how that plays out—after the Trump years, it is understandable that the Europeans are skeptical. But on the other hand, the meeting members are presumably also considering the consequences of failure to achieve a united front. Third? The Chinese government is making progress with legislation which will allow for retaliation against foreign sanctions, or “discriminatory measures by a foreign country in accordance with the law,” as Xinhua put it. That has the potential to push decoupling forward quite a few steps.    In other news, the threat of a US ban on TikTok and WeChat was removed in a way which leaves open the possibility that they are both subject to controls and supervision. As all apps should be, of course. especially Facebook, in our view.

Explainer | Communist Party is not China’s only political party – there are eight others
Their leaders are chosen by the Communist Party, and none has openly opposed the ruling party or pushed for substantial reform   But their status has its roots in the 1949 birth of the People’s Republic of China, and they help to perform a consultative role

Could China’s ‘Tigers’ and ‘Flies’ Include ‘Watchdogs?’
Charges against former anti-corruption chief’s top aide could blemish himThe prospects of Wang Qishan, the former head of China’s anti-graft campaign, appear in question, with his former right-hand man facing massive bribe-taking charges, raising questions as well over the effectiveness of the nine-year drive by Chinese President Xi Jinping to stamp out endemic corruption.

China’s ‘elf ear’ cosmetic surgery increasingly sought by young people seeking a thinner, slimmer face
China’s cosmetic surgery market climbed from about 64.8 billion yuan (US$10.1 billion) in 2015 to nearly 177 billion (US$27.7 billion) in 2019   Doctors warn the risks include infection, cicatrices, asymmetrical ears, infection, allergic reactions, blood clots and skin necrosis

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