China Press Review – June 24, 2021

China’s economy to ride out containment efforts by an increasingly anxious US, former official says
Former vice finance minister Zhu Guangyao said China has factored such external challenges as posed by the United States into its dual-circulation strategy. The Biden administration has strengthened strategic competition with China by introducing new stimulus packages, and the US Innovation and Competition Act. According to former vice finance minister Zhu Guangyao, the world’s second largest economy has factored such external challenges into its dual circulation strategy, in which the country will rely more on domestic consumption, technology and innovation for growth. Beijing is keen for China to avoid the so-called middle income trap, a development stage where a country attains a certain level of income but then stagnates and remains at the same level because it cannot progress from low-cost manufacturing into hi-tech industries. China’s economic size accounted for around 67 per cent of the US economy in 2019 before rising to 71 per cent last year, mainly owing to the different performance amid the unprecedented coronavirus pandemic China’s economy expands record 18.3 per cent in the first quarter of 2021 China is attempting to double the size of its economy by 2035 and this growing economic strength allowed it to ride out the tit-for-tat trade was with the US, which partly eased at the start of 2020 as the two sides agreed their phase-one trade deal. Gao Peiyong, vice-president of the Chinese Academy of Social Sciences, acknowledged that China’s development environment is becoming increasingly uncertain and unstable.

Restructuring Your China Company to Survive, Stabilize, and Succeed
In the context of China’s continued growth story despite COVID-19, we look at how businesses invested in the region can strategize to survive and succeed.     The purpose of restructuring in China should go beyond survival from the health crisis. Enterprises in all sectors and industries in China must plan for the next phase when choosing to restructure their business – to adapt to a more competitive market, to be a stronger player in a niche sector, to enter a promising sector more speedily, to reshape the market strategy of the group company, to be in better control of the business, and to keep the corporate structure more nimble and flexible to be more resilient in case of any future setbacks.

How the coronavirus pandemic puts businesses at higher risk of being linked to modern slavery
The pandemic has allowed human trafficking and other types of labour exploitation to flourish, as supply chains were disrupted and traffickers rushed in to fill the void      The financial services and technology sectors have unwittingly become two of the industries most exposed to this issue

No revenge spending in store for businesses from Hong Kong to Singapore as consumers tighten belt for rainy days, AIA survey shows
Some 52 per cent of Hongkongers plan to increase their savings this year despite income erosion, mirroring trends in mainland China and Singapore      AIA unveils results of a January survey on 7,400 of its customers in China and major Southeast Asian economies

China’s Debt Reckoning Hammers ‘Too Big to Fail’ Borrowers
China’s campaign to cut leverage and instill corporate discipline is reshaping the nation’s $12 trillion credit market.       One of China’s most prolific debt issuers hasn’t sold a single dollar bond in 17 months, the longest dry spell since 2013. An investment grade-rated conglomerate mostly owned by the government is facing a cash crunch in a test of state support. Analysts at UBS Group AG and Goldman Sachs Group Inc. now say the notion of ‘too big to fail’ no longer applies in China as defaults this year exceed $23 billion, a record pace.

China’s debt-laden local governments struggle to secure refinancing as investors grow wary of default risks
Bond issuance by local government financing vehicles (LGFVs) has slowed amid growing investor concern about defaults     More local governments have been closing poorly-performing LGFVs and consolidating profitable ones, analysts say  Containing its leverage ratio is one of China’s greatest economic challenges With debt reduction one of the government’s five priorities this year, Beijing has maintained a relatively cautious fiscal and monetary stance during the pandemic, aimed at reducing the amount of liquidity going into speculative parts of the economy, such as real estate.
“Containing its leverage ratio is one of China’s greatest economic challenges,” the Washington-based Institute of International Finance said in a report published Wednesday.   “(Beijing policymakers) can also move debt from weaker hands to stronger hands, for example, from local to central government and transfer wealth from the haves to the have-nots.”Though not deleveraging directly, these policies will help support economic growth and make the debt more sustainable.”

China’s Anti-Foreign Sanctions Law: A warning to the world
Despite its title, the new Anti-Foreign Sanctions Law goes far beyond countering sanctions imposed by other states. It allows for countermeasures against a wide range of actors and actions that China perceives as harming its interests. This brings new risks for political representatives, businesses, NGOs, research institutions and scholars alike, say Helena Legarda and Katja Drinhausen.

China’s quest for global climate leadership
Climate change is a grave challenge for global governance and human survival. Yet due to the exorbitant cost of reducing carbon emissions, few powers have demonstrated political and economic leadership until recently, when a number of major carbon emitters — the United States, China, the European Union, Japan and South Korea — announced their carbon neutrality pledges. The European Union first committed to carbon neutrality, which might have spurred others to follow suit.   Over the years, China has gained enormous know-how and revenue through participating in the Clean Development Mechanism, a UN emissions trading scheme that allows an industrialised country with an emission-reduction commitment under the Kyoto Protocol to implement an emission-reduction project in developing countries.   Additionally, China will launch a nationwide carbon trading market in Shanghai by June 2021. It will help China play a leading role in global carbon trading and financing — an indispensable part of its quest for global climate leadership. In the long run, China may welcome foreign players, including those from the United States and Europe, to trade carbon reduction credits on this platform.   For a long time, major powers used others’ inaction as an excuse for not capping their own domestic emissions. Now, in the pursuit of global influence and leadership, great powers are raising self-imposed mitigation targets to show international responsibility and soft power. On the one hand, China and western countries will continue to compete in renewable and other green technology sectors, while on the other, they may have to cooperate, or at least reach consensus, on key mitigation and adaptation imperatives to control emissions and save the planet.

China ‘needs a future coal industry, not a future without coal’
China’s strategy to achieve net zero will require large-scale deployment of carbon capture, usage and storage (CCUS) to remove CO2 from coal-fired power generation and from hydrogen production, energy experts said at June 22 forum.

Huawei, ZTE under consideration for European 5G infrastructure
Telecommunications group A1 Telekom Austria is still amenable to considering embattled Chinese tech firms Huawei and ZTE for new 5G infrastructure in several European countries, according to one of its top executives, reported Reuters. Governments in Europe have been increasing scrutiny and controls on Chinese firms developing 5G network infrastructure after diplomatic pressure from Washington. However, Telekom Austria is yet to feel any of that pressure in the majority of the nations it operates in.   “For us it is very important to have markets where we have Chinese vendors to test the performance of the different networks in real time,” Chief Operating Officer Alejandro Plater told Reuters in an interview.

Container port resumes Shenzhen operations
After a month of interruptions to global supply chains and a resulting leap in shipping rates caused by a COVID-19 outbreak, Yantian International Container Terminals will resume normal operations in Shenzhen, reported Caixin.   After Yantian International closed three berths at its port, a part of the Port of Shenzhen, on May 21 to deal with the outbreak that affected some of its workers, the company have announced that all berths at the Yantian port will be fully operational from Thursday. The port has been avoided by major shipping lines such as A.P. Moller Maersk A/S and Mediterranean Shipping Co., due to slowdowns caused by increased health and safety checks. This has had a knock-on effect on other ports around the globe.   The disruptions in Shenzhen, the world’s fourth-busiest container port, have sent shipping costs to record highs. Spot rates for 40-foot containers to Los Angeles from Shanghai jumped 11% this month, according to Drewry World Container Index, while Shanghai to Rotterdam rates are up 10%, said Caixin.

Tencent takes quiet path through China’s tech turbulence
In a torrid year for Chinese Big Tech, it has been more or less business as usual for the country’s most valuable tech company, and its founder, now China’s second-richest man. Tencent, the $730bn social networking and gaming giant, and Pony Ma, its 49-year-old chief executive, have avoided significant public censure at a time when Alibaba, Ant Group and Meituan have faced serious questions from regulators over their businesses and market power. Tencent is unlikely to escape unscathed, according to officials who are quietly putting together a case against its music business, but Ma’s low profile and close attention to government relations have put the company in a good position during negotiations. “Keeping quiet will help you make a fortune,” said two Tencent employees, citing a golden rule for China’s entrepreneurs popularised by the former Communist party leader Jiang Zemin. By contrast, his outspoken former rival, Jack Ma, has barely been seen in public since regulators halted the $37bn initial public offering of Ant Group, his fintech company, last year.

Jack Ma’s Ant in talks to share data trove with state firms
Fintech giant Ant Group is in discussions with Chinese state-owned enterprises to found a credit-scoring company, reported the Wall Street Journal. The plan would place Ant’s proprietary consumer data under the purview of Chinese regulators.   The new company, which may be brought into existence as quickly as the third quarter of 2021, could see Ant relinquishing some control over the data it holds. Alipay, Ant’s app in which you can spend, borrow or invest money, has over 1 billion users and the company maintains data records of said users’ financial habits.   The talks between Ant, which is controlled by billionaire Jack Ma, and Chinese state-owned companies are likely to result in the formation of a joint venture that would be licensed as a credit-scoring company. Ant and regulators have also been discussing whether the firm should be run and controlled by Ant or state-owned companies, according to people familiar with the matter.

China belt and road ‘not ideological’ foreign minister tells conference
Wang Yi’s remarks to 29 partner countries appear to be a response to G7 alternative’s emphasis on values   Wang announces the initiative will prioritise green projects and form platform for Covid-19 vaccine distribution

US-China tension: Washington no longer sees Taiwan as a problem in ties with Beijing, says diplomat
Deputy head of the American Institute in Taiwan says US views island as an opportunity to promote free and open Indo-Pacific       US President Joe Biden’s administration has moved to restate US support for Taiwan

China ‘unlikely’ to try taking Taiwan in next two years: US general
Joint Chiefs of Staff chairman Mark Milley says he sees no reason for ‘out of the blue’ attack on the self-ruled island     Milley’s assessment is that Beijing currently does not have the capability or intent to seize the island in the immediate future

China-Australia relations: Beijing says Canberra ‘distorting trade of goods’, in new WTO complaint
Move by China comes after Canberra last week lodged a World Trade Organization (WTO) complaint against China’s moves targeting Australian wine exports   Australia initiated 87 anti-dumping and anti-subsidy investigations against China from 1995-2020, while China initiated four against Australia in that time

Australia vows to ‘vigorously defend’ itself against China WTO complaint
China takes Australia to World Trade Organization over measures targeting imports of railway wheels, wind towers and stainless steel products

Canadian lawmakers want audit of Hong Kong officials’ assets and ‘personal connections’ under Magnitsky sanctions programme
A letter lists 10 potential targets for sanctions, including Hong Kong’s chief executive, chief secretary, financial secretary and secretary for justice      Twenty MPs and senators signed the letter to Canadian Foreign Minister Marc Garneau

China tries to turn tables on West after criticism by UN Human Rights Council members
Beijing says it is ‘concerned by the violations of the rights of refugees and migrants by countries such as the United States, the UK, Australia and Canada’   UN sessions on migration and housing provide the latest battlegrounds for continued geopolitical sniping

US bans imports of solar panel material from Chinese company over Xinjiang forced labour allegations
US Commerce Department on Wednesday ordered a ban on US imports of a key solar panel material from Chinese-based Hoshine Silicon Industry over forced labour allegations   It also restricted exports to Hoshine, three other Chinese companies and the paramilitary Xinjiang Production and Construction Corps (XPCC), saying they were involved with the forced labour of Uygurs and other Muslim minority groups in Xinjiang

Taiwan should join Australia in trans-Pacific trade bloc, Canberra told
Including self-ruled island in CPTPP trade bloc would help Australia diversify supply chains away from mainland China after extended period of conflict      Current state of Australia’s trading partners and activities ‘is so backward that it is embarrassing’, one expert says

China-Australia relations: Beijing says Canberra ‘distorting trade of goods’, in new WTO complaint
China has lodged a complaint with the World Trade Organization (WTO) against Australia for its anti-dumping and anti-subsidy duties on imports of Chinese railway wheels, wind towers and stainless steel sink products.    The move by China came after Australia’s contesting last week of anti-dumping duties imposed by China on wine exports, which had followed an earlier complaint over China’s anti-dumping and countervailing duties imposed on Australian barley exports.    Canberra and Beijing have been locked in a tit-for-tat conflict since April 2020, and bilateral relations have deteriorated to their lowest point in decades.

Taiwan’s foreign minister says ‘we need to prepare’ for military conflict with China
China’s escalating military intimidation of Taiwan shows the self-governed island “needs to prepare” for a possible military conflict, Taiwan’s Foreign Minister Joseph Wu said in an exclusive interview with CNN.
His warning came one week after the island reported the largest daily incursion by Chinese military planes into Taiwan’s self-declared Air Defense Identification Zone (ADIZ). The incursion — by 28 Chinese warplanes including fighter jets and bombers — did not violate Taiwanese sovereign airspace or international law, but it was seen as show of strength by China’s People’s Liberation Army.  “As Taiwan decision makers, we cannot take any chances, we have to be prepared,” Wu told CNN in Taipei on Wednesday. “When the Chinese government is saying they would not renounce the use of force, and they conduct military exercises around Taiwan, we would rather believe that it is real.”

‘Taiwan must be aware future lies in reunification’
Taiwan needs to be clearly aware that its future lies in “reunification” with the mainland and that it cannot rely on the United States, Beijing said on Thursday, responding to questions on a massed incursion by PLA warplanes last week.

How China Will Try To Unmask U.S. Submarines In The Western Pacific
In mid-July, the latest in a series of classified seminars will be held at the Charles Stark Draper Lab adjacent to MIT’s campus to educate naval personnel and contractors about how to hide U.S. warships from the prying eyes of enemies.   But one subject that likely will bulk large in the July seminar is how to cope with rapidly growing efforts by the Chinese Navy to find, fix and defeat undersea warships in its marginal seas.    China’s geographical circumstances dictate that if is to expand the reach of its military power, the movement, at least initially, will need to be eastward—into the Pacific Ocean.    That inevitably means a confrontation with the U.S. Navy, which has dominated the Western Pacific since World War Two but is gradually losing ground as China outpaces America in naval shipbuilding.

China plans to send its first crewed mission to Mars in 2033 and build a base there
China plans to send its first crewed mission to Mars in 2033 as it continues to boost its space ambitions in a battle with the U.S. China is planning regular crewed missions to the Red Planet and wants to build a base there.

Chinese academic under fire over ‘historical nihilism’ remarks
Ge Jianxiong apparently defended the Communist Party’s tight grip on narratives, setting off a rare public discussion     One historian says it was ‘shameless’ for him to change his stand, but Ge says he pointed out an inconvenient truth

Overseas restaurant chains take advantage of China’s dining boom, even as Covid-19 shuts down branches in the rest of the world
While restaurants around the world have struggled with the pandemic, China saw a record number of new outlets in 2020    Savvy Western chains are opening branches in Shanghai and Beijing, even as places elsewhere are closing

How a cute baby elephant sheds light on China’s quest for soft power
Xi Jinping has called on officials to promote the image of a ‘lovable’ China, a word that in Chinese literally means ‘cute’  And cuteness – with its power to evoke empathy – does have universal reach, as cat lovers and Western media outlets following the adventures of 15 Chinese elephants can attest to

China’s Communist Party at 100: the secret of its longevity
Ruthlessness, ideological agility and economic growth have kept it in power
The third cause of the party’s success is that China did not turn into a straightforward kleptocracy in which wealth is sucked up exclusively by the well-connected. Corruption did become rampant, and the most powerful families are indeed super-rich. But many people felt their lives were improving too, and the party was astute enough to acknowledge their demands. It abolished rural taxes and created a welfare system that provides everyone with pensions and subsidised health care. The benefits were not bountiful, but they were appreciated.   Many Chinese also admire the party’s strong hand. Look, they say, at how quickly China crushed covid-19 and revved up its economy, even as Western countries stumbled. They relish the idea of China’s restored pride and weight in the world. It plays to a nationalism that the party stokes. State media conflate the party with the nation and its culture, while caricaturing America as a land of race riots and gun massacres. The alternative to one-party rule, they suggest, is chaos.   The most dangerous threat to Mr Xi comes not from the masses, but from within the party itself. Despite all his efforts, it suffers from factionalism, disloyalty and ideological lassitude. Rivals accused of plotting to seize power have been jailed. Chinese politics is more opaque than it has been for decades, but Mr Xi’s endless purges suggest that he sees yet more hidden enemies.  The moment of greatest instability is likely to be the succession. No one knows who will come after Mr Xi, or even what rules will govern the transition. When he scrapped presidential term limits in 2018, he signalled that he wants to cling to power indefinitely. But that may make the eventual transfer only more unstable. Although peril for the party will not necessarily lead to the enlightened rule that freedom-lovers desire, at some point even this Chinese dynasty will end.

Alain Gillard
Information Officer
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