China Press Review – June 17, 2019

Press review

Amid the trade war, Asia cannot count on Chinese stimulus to boost growth this time around
While China’s boost to the property sector in 2016 translated into an increase in commodity imports from emerging Asia, this year’s infrastructure-focused stimulus is unlikely to have the same effect. Meanwhile, trade war headwinds are likely to hit exports from the region

China economy slump goes on in May, with industrial growth lowest in 17 years amid US trade war escalation
Industrial production grew by 5.0 per cent in May from a year earlier, down from 5.4 per cent last month and the lowest reading since 2002 Retail sales grew by 8.6 per cent, up from April’s reading of 7.2 per cent, which itself was the lowest rate of growth since May 2003

Exporters, utilities and miners to benefit with yuan likely to weaken beyond seven to US dollar for first time in decade
The last time the yuan devalued beyond this rate was before the global financial crisis in 2008

Yuan likely to drop below rate of seven to US dollar within three months, state-owned lender Bocom International says
Forecast based on positions built by foreign-exchange traders Central bank has no intention of softening currency to fight trade war

China’s foreign exchange reserves rebound in May, gold holdings also rise
The surprise US$6.1 billion increase to US$3.101 trillion came as Beijing also boosted its gold reserves by 1.88 per cent to US$79.8 billion Speculation that China could use massive reserves, mostly US dollar-denominated assets, to counter trade war moves by US President Donald Trump

China consumer inflation in May rises to 15-month high; food prices spike 7.7% as cost of pork rose
China’s consumer price index (CPI) in May rose 2.7% from a year ago, the highest since February 2018.China’s producer price inflation (PPI) rose 0.6% in May from a year ago, in line with economists’ expectations. Food prices rose 7.7% in May from a year ago, while non-food prices rose 1.7% on-year.

WTO suspends litigation over China “market economy” status at Beijing’s request
The World Trade Organization has suspended litigation in a dispute over China’s status as a market economy at Beijing’s request, the panel of three adjudicators said in a statement published on Monday.

Titanic iceberg of world debt could sink a slowing global economy
Debt levels are rising and the fear is that much of the world’s debts are unrecorded, making for a bigger reckoning than official data suggests. This means a bigger crisis should the global economy slow down

China bank loans rebound, more policy easing may be needed
Chinese banks doled out more loans in May to support the slowing economy hurt by a trade war with the United States, with further policy easing likely even amid accelerating consumer inflation.

Chinese banks rejected nearly US$144 billion in loans last year using credit scoring system, central bank says
People’s Bank of China highlights deleveraging campaign in bid to reduce high debt and risky lending after Chinese banks blocked 1 trillion yuan of lending in 2018 Bank also received alerts on outstanding ‘high risk’ loans and also collected non-performing loans

China looks to local asset management companies to help tackle bad loan problem, but Moody’s flags risks
Rapid growth in local distressed asset management companies represents shift from prior model, Moody’s says More than 50 provincial level licensed distressed asset management companies now in operation; most were created in the last three years

The trade war shows China’s economic dream is dying. Beijing now has a choice: open up or stagnate
The US is demanding that China change course and, for all its growth and promises, Beijing is in no position to argue: in tech, it still lags at least 10 years behind the US and doesn’t have the depth of skills to produce its own high-end goods

China Is Bluffing in the Trade War
Chinese leaders say they can effectively retaliate against Trump’s tariffs. They’re wrong.

China Is Bluffing in the Trade War

Chinese state media warns retaliation against US tariffs could ‘become routine’
Taoran Notes commentary also seeks to play down expectations over possible meeting between Xi Jinping and Donald Trump in Japan later this month It says Beijing is showing its determination when it comes to ‘genuine battle preparations’

China’s state media tells US it picked the ‘wrong rival at the wrong time’
‘Stubbornly putting pressure on countries’ is a miscalculation by Washington, People’s Daily commentary says Without the ‘foundation of equality and common development’, gains made by any nation will be short-lived

Communist Party journal lays out China’s trade war stance ahead of possible Xi-Trump talks
Beijing wants a ‘win-win’ deal to end conflict with Washington but will ‘struggle to the end’ if necessary Qiushi, or ‘Seeking Truth’, reflects leadership’s position and is required reading for all cadres

Lessons from an old trade war: China can learn from the Japan experience
In the last half of the 20th century US worries about a rising Japan led to tariffs and technology mistrust Differences in the Chinese experience may predict a different outcome

US-China rivalry makes rare earths a matter of national security, rather than economics
Should China, a major exporter of these minerals critical to US military capabilities, try to hold the US hostage by threatening a ban, it can be sure America will pay the price, however high, for alternatives

China’s top economic planner refuses to rule out playing rare earths card against US
The National Development and Reform Commission has again hinted that it may block America’s access to the strategic resources as the trade war drags on China produces 90 per cent of world’s rare earths and has warned it will not allow them to be used to ‘curb country’s development’

China’s rare earth stocks are investors’ new hedge against trade war as Beijing rolls out countermeasures against Trump
Expectations that China will cut overseas supply of rare earth have spurred at least 34 per cent gains in linked shares But watch out – share prices could plunge if trade war is settled, analysts say

From rare earths to soy, the trade war will force the US and China to diversify supply
The US has started looking into alternative suppliers for the elements that power hi-tech. Beijing has already done the same with soy, and even a trade war resolution won’t stop this process

Trade war with US could spark global financial ‘chaos’, warns former China central bank governor
Former People’s Bank of China governor Zhou Xiaochuan warns that emerging markets reliant on exports may resort to competitive currency devaluations Ex-central bank chief tells Lujiazui financial forum that reform of the World Trade Organisation could form part of a permanent solution

Five myths about China must be debunked before the trade war with the US can end
Does China force US companies to transfer technology? To what extent does the Communist Party control the Chinese economy? Is Huawei spying for Beijing? Some common misconceptions must be cleared up, before trade negotiations can restart

Trade war casts shadow over China business prospects for US firms like Apple and Boeing
Microsoft and Dell have been warned by Beijing they face dire consequences if they cooperate with Washington’s ban on sale of key technology to Chinese companies Washington’s has already put Huawei on its export ban list, therefore forcing US suppliers to severe the normal commercial ties with the company

China asks state-owned ‘national champions’ to help ‘stabilise’ economy, boost profits by 9 per cent in 2019
The 97 industrial conglomerates under the State-owned Asset Supervision and Administration Commission have been asked to help offset the US trade war impact In the first four months of 2019, the combined profits of China’s industrial enterprises fell 3.4 per cent compared to the same period last year

Indonesia benefiting as China’s shoemakers shift production as US trade war worsens, central bank official says
Bank Indonesia deputy governor Dody Budi Waluyo sees positives as footwear exports to the United States have grown 6.7 per cent at the start of 2019 But Southeast Asian nation is also tipped to join other regional markets in cutting interest rates to counter slowing global growth

Samsung’s last China smartphone factory closing, raising questions about China’s role in global value chains
Huizhou Samsung is the South Korean electronics giant’s last smartphone factory in China but signs indicate it will follow facilities in Tianjin and Shenzhen Huawei, Xiaomi and Oppo have taken hold of the Chinese market, while the US-China trade war is forcing the company towards production in Vietnam and India

Why Would China and Huawei Commit Economic Self-Ruin?
It could be construed as a badge of professional honor that a news broadcaster is open to presenting a wide range of views. This might especially be considered so when the corporate-state media is parochially aligned to portraying an unskeptical right-wing, warmongering bizzaro worldview where left-wing (defined as socialist, communist, anarchist… not Democrats or Liberals who frequently bang the drums of war and toe the neoliberal line), pro-peace types are absent or marginalized to the fringes.

Why Would China and Huawei Commit Economic Self-Ruin?

Infographic: Corporations, startups, and open innovation in China
As hot topics like trade war and so-called capital winter dominate headlines, corporations continue to engage Chinese startups. Some are in fact increasing their “open innovation” efforts, or the practice of looking outside their organizations for new ideas. Many people do not realize that working with startups is rapidly becoming common for all sorts of corporations and can be observed in many industries across China.

Infographic: Corporations, startups, and open innovation in China

‘Weapons of economic warfare’: Huawei has 56,492 patents – and it’s not afraid to use them
Chinese telecoms giant is stepping up pursuit of royalties and licensing fees as US restricts access to American markets and suppliers Huawei is currently engaged in negotiations or disputes with Verizon, Qualcomm and defence firm Harris Corp.

US chip makers, including Qualcomm and Intel, quietly lobby Washington to ease Huawei ban
Executives from US chip suppliers attended meeting with Commerce Department to discuss response to Huawei being placed on government blacklist Out of US$70 billion that Chinese telecoms giant spent buying components last year, US$11 billion went to US firms

China warned its ‘unreliable entities’ list risks undermining foreign business confidence
Sources say plan has generated concern about a lack of transparency and possible abuse of blacklist Measure to target organisations and individuals that pose a threat to Chinese firms or security was announced following US sanctions against Huawei

Where China’s biggest consumption growth is happening
Consumers in so-called lower-tier cities, China’s less-developed urban centers, and rural areas are driving the next wave of consumption growth in the country. As rising incomes lead to an upgrade in lifestyle, these consumers are increasingly looking for higher-quality goods, yet still at reasonable prices. They often search group-buying sites or cross-border e-commerce channels for these deals, giving international brands a chance to capitalize on a major consumption-upgrade trend playing out in the world’s second-largest economy.

What’s missiong in Mary Meeker’s report?
In the recently released “Internet Trends” report from Mary Meeker, her yearly and much-anticipated take on the industry, China was highlighted as a bright spot for growth and a hotbed for innovation. But there were a few important points that she missed. Let’s take a look.

How US-China tech war is rippling through the global supply chain
Hi-tech suppliers are adjusting their business strategies amid the uncertainty caused by the raging trade and tech conflict

Chinese buyers look to delay soybean cargoes from American suppliers
Beijing’s state-owned companies trying to roll about 2 million tonnes of July cargoes into August, source says Contract renegotiations come as the world’s top two economies remain locked in a protracted trade war

Six European mobile wallets to use Alipay’s QR Format
Leading lifestyle and payments app Alipay has partnered with six mobile wallets in Europe to promote the easy use of QR code-based digital payments for travelers both on the Continent and from China.

Internet connectivity is now more important than electricity was last century, says Alibaba’s Jack Ma
The Alibaba executive chairman’s comment follows the release of a comprehensive UN report on ‘digital interdependence’

Alibaba seeks one-to-eight stock split as the first step toward a secondary listing that may raise as much as US$20 billion
Alibaba will split its ordinary shares in a one-to-eight subdivision One ordinary share with a par value of US$0.000025 will be subdivided into eight ordinary shares with a par value of US$0.000003125, increasing the number of ordinary shares from 4 billion to 32 billion

Inside Huawei’s secretive plans to develop an operating system to rival Google’s Android
The OS issue took an extra urgency after the US government in mid-May placed Huawei and its affiliates on a trade blacklist One of the biggest technical challenges for the Huawei OS under development has been its compatibility with Android, people say

Huawei’s Plans for Mobile Domination on Hold, CSO Says
With a US blacklist delaying Huawei’s ambitions of becoming the world’s leading phone maker, a top executive shares how the company will focus on 5G, AI, and ‘internet of things’ to create a smart life ecosystem.

Intel Pushing US To Let It Keep Supplying Huawei, Executive Says
Like search giant Google, the American chipmaker is asking the White House to permit business with the blacklisted Chinese company.

Tmall brings Chinese menswear talent to Pitti Uomo
Tmall this week showcased the creations from some of China’s up-and-coming designers at the latest edition of Pitti Uomo, the biannual menswear trade show in Italy.

China’s loans to other countries are causing ‘hidden’ debt. That may be a problem
An opaque build-up of debt, caused by China’s lack of transparency in issuing loans, could pose a risk to the world economy, experts say. It may also affect investors who are considering bonds issued by those countries, or organizations such as the International Monetary Fund (IMF) which are helping those countries with their debts, according to Carmen Reinhart, a professor at the Kennedy School of Government at Harvard University.

Four charts show how much China’s economy has changed in 30 years

“Look at China after this incident. China has prospered,” he told CNBC’s Sri Jegarajah in a wide-ranging interview. “China, the Chinese people’s living standards are much higher. And we did do the right thing. There’s nothing wrong with it.”

Commentary: China has more influence as a rising superpower but not in all areas
Measuring Beijing’s influence shows mixed results for all the supposed diplomatic sway and billions spent on media, says the Lowy Institute’s Bonnie Bley.

China: “Protecting” the Arctic
Both China’s Arctic Policy and its Belt and Road Initiative seem paths towards what appears to be China’s aim at achieving global hegemony.

French Finance Minister Le Maire: ‘A trade war would mean an economic crisis all over the world, and especially in Europe’
French Finance and Economy Minister Bruno Le Maire says if the trade tensions between U.S. and China continue to escalate, that would have a negative impact all over the world — especially in Europe.

China mulls ‘end to foreign ownership limits’ on financial firms, signals bold effort to remove barriers in reform plan
PBOC governor Yi Gang said he supports Shanghai-based pilot scheme that will scrap foreign ownership limits in firms providing securities and fund management services Top financial regulators outline measures to broaden market access, remove barriers

Hong Kong stocks rise after historic protest, government climbdown on extradition proposal restore confidence
The Hang Seng Index snaps three-day losing streak after city chief apologises, suspends controversial bill China stocks end mixed, with ones linked to malaria treatment climbing

Shanghai exchange moves to curb speculation even before trading starts at Nasdaq-style tech board, introduces suspension rules
Shares on Star Market to trade freely for first five days, after which they will be subject to upside and downside limit Exchange will suspend trading for 10 minutes if a stock jumps or falls by 30 per cent and 60 per cent during intraday trading

Hong Kong top destination for Chinese IPOs, but new Shanghai tech board poses threat, Baker McKenzie says
Chinese companies expected to raise US$6.8 billion in Hong Kong in first half, says law firm New Shanghai technology board could be a challenger for Chinese tech unicorns

Trade war effects leave China less room to tighten property curbs, say analysts
China’s real estate sector has been rife with rumours the government will further rein in the booming market, but some analysts say this is unlikely

Pain of tariffs and sanctions behind China and Russia’s push to dethrone the US dollar
Russia is looking to launch yuan-denominated bonds, and has agreed with China to work on settling more of their bilateral trade in the yuan or the rouble Other trading partners suffering from US sanctions and along China’s belt and road map are also open to de-dollarisation

Why the Putin-Xi bromance is a sign of things to come for Russia and China
While the two presidents are keen to highlight their personal relationship, their countries are likely to develop a closer economic relationship in future

Chinese middle class expects yuan to decline amid trade war, eyes offshore investment to secure wealth
Poll conducted for Bank of Communications finds number of households planning to buy foreign-currency assets has risen by 4 per cent Respondents have shown cautious stance on economy, investment prospects, analyst says

Japanese companies rediscover Dalian’s charms
Chinese government works hard to woo investors in face of US trade war

China’s promise of responsible belt and road investments is in the hands of its bankers
All along the belt and road, from Myanmar to Peru, ignoring community feedback is costing Chinese investors dearly. China’s banks and financial institutions need to quickly adopt an accountability framework for Chinese investments abroad

In Duisburg, China expands trade influence in Germany
As one of the end points for China’s vast new global trade route, the former industrial city of Duisburg is well known to many Chinese businesses. Many Duisburg residents are optimistic about Beijing’s growing influence.

Hong Kong to become a hub for catastrophe bonds as Greater Bay Area takes shape
Cross-border reinsurance business seen as growth market for Hong Kong Increased urbanisation in storm prone areas in China highlights the need for catastrophe bonds

Trade war effects leave China less room to tighten property curbs, say analysts
China’s real estate sector has been rife with rumours the government will further rein in the booming market, but some analysts say this is unlikely

Selling to Millennials and Gen Z in China: You are Only as Good as Your Last Experience!
When it comes to selling luxury in China, most brands do not focus enough on creating an actual luxury experience. And in part, this is why most brands are not as successful as they could be in China. In my brand audits, there is one recurring theme. Most western companies replicate their winning playbooks from other regions in the Chinese market with too few adjustments. This includes both organization setup and go-to-market. And then they are surprised that it does not work.

Selling to Millennials and Gen Z in China: You are Only as Good as Your Last Experience!

The Birth of Chinese Modern Luxury? 4 Homegrown Brands that Show Potentials
From silk and jade to redwood furniture and Cheongsam (also known as qi’pao), ancient China has never been short on producing luxury goods that are widely sought-after by the rest of the world for its craftsmanship, artisanship, and top-notch quality. However, when it comes to modern luxury such as apparel, haute couture, leather handbags, etc, China is still working its way up the global supply chain.

The Birth of Chinese Modern Luxury? 4 Homegrown Brands that Show Potentials

Chinese Millennials are Rewriting the Future of Luxury Brand Experience
One-third of global luxury sales come through Chinese consumers between 18 and 30 years old. China’s personal luxury goods market is estimated to increase by 6% over the next five years. It is no question that these consumers are changing the face of the luxury experience in China and globally.

Chinese Millennials are Rewriting the Future of Luxury Brand Experience

A Brand Audit is the Only Way to Reach Millennials
This is one of the most powerful questions brand leaders can ask themselves. What do we sell? It sounds banal, perhaps even stupid. But it is crucial to have this clarity.

A Brand Audit is the Only Way to Reach Millennials

UBS was kicked off a $1 billion bond deal because China is angry about a joke a senior economist made about pigs
UBS and China are in a bitter dispute over an economic briefing which officials in Beijing have interpreted as a racial slur. The dispute appears to have had real costs for UBS: on Monday it was excluded from advising one of China’s biggest state-owned companies on a billion-dollar bond deal.

Forget ‘996,’ Ant Financial employees say they are working ’10-12-6′
“I can’t bear the days at Ant Financial anymore. It’s been non-stop ‘10-12-6,’” an anonymous user wrote in a post dated June 6. “I worked on the May 1 holiday and again on Dragon Boat Festival. And I feel bullied working with a bunch of people who “fling black pots’ at each other, snatch opportunities, and take credit for them… I’m really tempted to just quit and find another job,” the user added. “Fling the black pot” is internet slang that means to blame someone else.

Forget ‘996,’ Ant Financial employees say they are working ’10-12-6′

Foreign start-ups eye China’s vast digital health care market, but finding the right revenue model holds the key to success
Start-ups such as Boston-based Biofourmis have partnered with local health care platforms like Jianke, giving the company access to its vast customer base

Hong Kong extradition protests: ‘one country, two systems’ is good for business – and for Beijing
Never mind the naysayers, there are reasons to be optimistic about Hong Kong’s future as the locus of choice for international business in East Asia Not least of them is that its special status allows Beijing to do all the trade-related things it cannot or will not do for itself, writes Tom Holland

How technology is helping China’s fight against the encroaching deserts
China began its anti-desertification efforts in 1978 Since its launch in 2016, Ant Forest has attracted 500 million users who have helped plant 100 million trees

K-beauty: is China falling out of love with Korean cosmetics?
Home-grown brands and those from Japan are growing ever more popular with mainland consumers, while K-beauty exports are slowing South Korean cosmetics are also seeing an overall drop in sales, as Chinese consumers ditch the one-size-fits-all aesthetic to embrace individual looks

In China Teamwork Matters More Than We Think
In China teamwork matters more than we know. Note the survey results. Harvard Business Review came out with a recent study that is surprising by any measure.

In China Teamwork Matters More Than We Think

To Ease Health Care Burden, China Promotes Private Clinics
A new guideline aims to make private medical facilities more accessible to patients and more widely covered under the national health insurance scheme.

Chinese youth can’t be blamed for their missing sense of history – they don’t know any better
The patriotic fervour and self-righteous attitude that some overseas Chinese students have displayed, at the expense of other people’s rights and freedoms, is the result of years of imbibing Communist Party propaganda

Donald Trump says ‘it doesn’t matter’ if Xi Jinping agrees to meeting at G20 because US is ‘collecting billions in tariffs’ from China
US president insists Chinese exporters bear burden of tariffs despite economists agreeing costs are largely borne by US consumers Trump again accuses Beijing of manipulating value of yuan to cushion impact of US duties

Hong Kong’s young protesters back with a vengeance as all-out chaos erupts on city’s streets following anger at extradition bill
Police fire tear gas and rubber bullets at protesters laying siege to downtown areas in clashes that leave more than 70 injured US President Donald Trump says he hopes Hong Kong and Beijing will be able ‘to work it out’ and that he is impressed by size of Sunday’s mass rally

China ‘to avoid Trump attempt to play Hong Kong protest card’ at G20 talks with Xi Jinping
A meeting between the two leaders has yet to be confirmed Mass rallies in the city will no doubt be a talking point if they do

Hong Kong’s extradition law mess: don’t blame Beijing, blame naive Carrie Lam
In underestimating the pushback from Hongkongers from all walks of life, the chief executive has shown a lack of political antennae She could have avoided much of this quagmire had her government not bypassed proper procedures and, instead, consulted the public

Ask law reform body to review extradition matter
Contentious issue should by taken up by the respected legal commission that could mediate between conflicting demands and interests of the community

A state-run Chinese newspaper is presenting alternative facts on Hong Kong’s protests
Headlined “HK parents march against US meddling,” the report said that a group of 30 people marched yesterday (June 16) to the US consulate, with one member of the group saying that it was “despicable that some US politicians repeatedly interfered in the extradition law matter.”

Xi’s Hong Kong headache darkens chief Lam’s future
US ups pressure on China as protests influence Taiwan election

Are China and US racing towards inevitable military confrontation in outer space?
Beijing is still behind in terms of its space-based military capabilities, but the gap is closing fast, experts say US law now prohibits Nasa from communicating with China’s space agency

Alain Gillard
Information Officer
Service Asie Pacifique
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