China Press Review – June 4, 2019

Press review

China’s home-grown brands benefitting from resurgence as trade war shifts focus closer to home
Trend, known as ‘guochao’ in Chinese, sees storied brands reinventing themselves with crossover and ancillary products to entice a new breed of millennial shoppers Warrior trainers and Shanghai M&G Stationery also drawing renewed interest as focus shifts to domestic consumption-driven growth amid the US-China trade war

China’s yuan dropping below 7 to the US dollar is no longer ‘forbidden zone’, analysts say
Former People’s Bank of China governor Zhou Xiaochuan dismissed the importance of keeping the yuan above 7 to the US dollar last week The yuan has stabilised in recent weeks as authorities voiced support for the currency, but weakened by 0.1 per cent to 6.9075 per US dollar on Tuesday

Yuan Watchers Say 7 Is No Longer a Sticking Point for China
Analysts say China will tolerate weaker yuan to support growth Consensus growing days after ex-PBOC governor dismissed level

The U.S. Is Losing Europe in its Battle With China
The major strategic divide over how to deal with Beijing will outlast Donald Trump. “The Americans are out to beat, contain, confront China,” a senior EU official who asked not to be identified told me. “They have a much more belligerent attitude. We believe they will waste a lot of energy and not be successful.” The outlines of what a transatlantic agenda might look like are not difficult to discern. In responding to Belt and Road, the U.S. and Europe could work together to develop common transparency, environmental, and social standards for infrastructure projects, while pooling their financial resources. At the very top of the priority list would be a set of common rules for data privacy and artificial intelligence, alongside joint efforts to make telecommunications infrastructure and supply chains bulletproof against Chinese espionage and sabotage. Regardless of who is in the White House, European countries must prepare for a world in which they will be viewed by Washington through a China prism—much in the same way that Europe was seen through a Soviet lens during the Cold War. If no common agenda is possible, the transatlantic relationship might be headed for even more trouble, Trump or no Trump.

Resolving the US–China trade impasse
Europe is too preoccupied with its domestic concerns while Asia, as the most directly affected region, has more at stake. But China’s efforts to strengthen relations with its neighbours have not been helped by its ambitious Belt and Road Initiative despite the reassurances provided at the recent Beijing summit. The stalled Regional Comprehensive Economic Partnership (RCEP) is yet to provide China with any perceived advantages given the difficulties in forging an agreement among such diverse participants. China is also no longer running such large trade deficits with its Asian partners, so its growth facilitating impact is much less than it was a decade ago Any sustainable solution begins with a political consensus. The best option to bring together both developed and developing countries is the G20. None of the major European or Asian powers have thus far been motivated enough to spur this process forward. China has been reluctant to reach out, worried that this would restrict its flexibility. But Beijing needs to see that its interests would be better served by stressing its commitment to reforms that would entice others to coalesce around a global solution, even if the United States is unwilling.

Resolving the US–China trade impasse

China has a new US trade war weapon, but who and what will be covered, and how will it be enforced?
Beijing has yet to provide details of its ‘entity list’ to punish ‘unreliable’ companies and individuals that was announced last week State media speculates it is a response to Washington’s decision to blacklist telecommunications giant Huawei

Why Beijing isn’t playing blame game with its white paper on trade war
Economist says ‘unreliable entities’ list is about strengthening Beijing’s hand State Council’s paper played to domestic and overseas audiences

China’s Position on the China-US Economic and Trade Consultations: The Full Text of China’s White Paper
The below is China’s White Paper on the US-China trade dispute, as put out by China’s State Council Information Office. We are posting it here because it is important. If you want to see the original, go here.

China’s Position on the China-US Economic and Trade Consultations: The Full Text of China’s White Paper

Xinhua Headlines: Decoupling U.S.-China economies “utterly unrealistic,” disaster for world
More than 900,000 U.S. jobs depend on producing goods and services exported to China and more than 2.6 million jobs in the United States and many millions more in China depend on two-way trade between the two countries, said former U.S. Ambassador to China Gary Locke.

China’s push for self-reliance meets reality of global trade networks
Chinese President Xi Jinping’s push for home-grown innovation underlines the urgency of core technology development China’s biggest imports are electronics, industrial machinery, and information and communication services

A Slower Economy. A Trade War. Now, China Faces Rising Food Prices.
Pork and fruit are costing more even as Beijing reassures the public that supplies are plentiful.

It’s not China or the US: Here are the trade war’s winners — so far
Vietnam has emerged as the largest beneficiary of a diversion in trade flows as a result of the ongoing tariff fight between the U.S. and China, according to Nomura. Other major beneficiaries from the trade war are Taiwan, Chile, Malaysia and Argentina, the Japanese investment bank says. But Nomura economists say their findings don’t paint the full picture of the economic impact of a trade war.

China underdelivers on financially opening up – Sara Hsu
China promised to open up its financial industry under the pressure of the ongoing trade war. But the industry was not right away impressed: they had heard this song often enough. Financial analyst Sara Hsu looks at how China is keeping its promises this time and says the country is still underdelivering, she writes in China Focus.

Huawei trade ban to test China’s 5G roll-out as Beijing set to issue commercial licences
The grant of licences will come after South Korea, the US, Australia and the UK launched initial commercial 5G services

Can China Develop its Own Digital Infrastructure Without US Assistance?

With the United States having banned certain component parts from being sold to China, targeting Huawei in particular, the media has been analyzing the implications. An excellent article in the Financial Times, “How Blacklisting Affects the Inside of a Huawei Smartphone” contains a cool analysis of where component parts are manufactured and where the intellectual property (IP) originates from.

Nokia has secured more 5G contracts than Huawei
Finnish telecommunications company Nokia said it has secured 42 commercial orders for the next-generation of wireless networks, surpassing its Chinese rival Huawei. Customers are increasingly looking to Nokia to equip their 5G core networks, either to have dual sourcing for the most sensitive parts of their networks or to replace existing providers, said Nokia director Federico Guillen. Huawei has secured 40 5G contracts around the world by the end of March, according to the company while Swedish 5G competitor Ericsson has publicly announced 19 contracts, of which eight are live.

Briefing: Nokia has secured more 5G contracts than Huawei

Huawei sells majority stake in undersea cable manufacturer
Huawei’s parent company has signed a letter of intent to sell a majority stake in its international undersea telecoms arm, which builds underwater cables that support transnational internet connections. The deal will see Hengtong Optic-Electric, a manufacturer of optical communication network products based in China’s eastern Jiangsu Province, take a 51% holding in Huawei Marine Technology. According to Hengtong’s filing to the Shanghai Stock Exchange, however, the deal has not been finalized, and the size of the acquisition remains unspecified. According to its website, Huawei Marine Technology has laid 50,000 kilometers of undersea internet cables across the world’s oceans, but accounts for a small part of Huawei’s overall business, making just $17 million in 2018, around 0.2% of the company’s total profits

Briefing: Huawei sells majority stake in undersea cable manufacturer

China, Germany ‘agree to uphold global multilateral order’ in Berlin talks
They also ‘oppose behaviour that will damage the current order with abusive sanctions’, according to foreign ministry US Secretary of State Mike Pompeo, meanwhile, met his German counterpart Heiko Maas, trying to persuade the country to shut out Huawei

Guangdong governor promises to open up province’s economy further to counter impact of US-China trade war
Ma Xingrui says the province – a vital cog in China’s economy – will be able to cope with fallout from the dispute with the United States Despite governor’s promises, analysts question how far Guangdong will be able to go

Why Influencer Collaborations in China Work
Brands leading the way in influencer collaboration range from huge international companies to upstart labels, but they each have their strong points. For an industry steeped in tradition and heritage, luxury brands in China are doing a terrific job of employing 21st-century social marketing trends. The luxury sector has always been aware of the importance of meeting client demands, and they’ve been quick to respond to changing requirements. Offering one-to-one service and personally tailored communications are intrinsic to attracting and retaining customers in the field.

Why Influencer Collaborations in China Work

How China’s Growing Inequality Will Affect Luxury Brands
The luxury sector appears to be temporarily safe from China’s income inequality. Heritage brands are likely to feel some potentially harmful effects. China is experiencing a period of rapid economic growth powered by a combination of circumstances that includes the government’s anti-poverty campaign fupin kaifa (扶贫开发), a modernized economy, advancing technologies, a country-wide expansion of higher education, and large investments into research and development. But the spoils from this growth haven’t been distributed equally, and wealth disparity in China is growing.

How China’s Growing Inequality Will Affect Luxury Brands

Chinese shoppers swarm Uniqlo stores for latest Kaws T-shirts and bags
Shoppers brawl over garments that resell online for eight times their retail price tag Sale becomes social media phenomena with 450 million hits for #EverybodyKAWS

Hello TransTech fuels Alibaba’s mobility ambitions
It’s rumored (Chinese link) that at a dinner attended by Ant Financial and Hello TransTech (formerly Hellobike) bigwigs, Ant Financial CEO Jing Xiandong cracked open a bottle of Guizhou Maotai, an upmarket brand of Chinese rice wine, Jack Ma had previously gifted him, worth over a million RMB.
What prompted the celebration? The short answer is, by taking the wheel of Hello TransTech’s Series D and every subsequent funding round after that, Jack Ma-controlled Ant Financial secured a critical component of Alibaba’s mobility ecosystem designs.

Hello TransTech fuels Alibaba’s mobility ambitions

Investors say ‘capital winter’ will prune China’s overheated tech sector
Over the past year, companies and startups in China’s tech sector have been chilled by what many refer to as a “capital winter”—a significant slowdown in investment and fundraising activities—aggravated by political and economic uncertainties as well as growing caution towards major Chinese tech firms.

Investors say ‘capital winter’ will prune China’s overheated tech sector

Tencent’s biggest shareholder says Chinese tech has been a ‘bloodbath’ — but the future looks bright
Naspers, a South African consumer internet company, owns a 31% stake valued at roughly $126 billion in Chinese tech giant Tencent. In an interview at the Money20/20 Europe conference on Monday, Naspers CEO Bob van Dijk said China’s tech scene has been a “bloodbath” in recent months. Van Dijk blamed trade tensions between the U.S. and China but said he’s not worried about Tencent.

Tencent leads $40 million investment in UK fintech firm True Layer
Chinese internet giant Tencent is leading a $40 million funding round for TrueLayer, a London-based startup that has built a developer platform which allows third parties such as fintech and retail companies to access bank APIs and consumer data. Other potential backers include Singapore’s sovereign wealth fund Temasek.

Briefing: Tencent leads $40 million investment in UK fintech firm True Layer

Asia Loses Confidence in US Leadership
American influence appears to be in precipitous decline across Southeast Asia as the Trump administration stumbles from crisis to crisis at the same time Chinese influence under increasingly aggressive Chinese leader Xi Jinping waxes across the region.

Asia Loses Confidence in US Leadership

Swine fever to hit pork market for years to come as millions of pigs are culled, say experts
The disease has already hit most provinces in China, reducing pork production by 30 per cent according to some estimates

Indexes fall in China, Hong Kong as nationwide audit jolts drug firms while farm stocks are pounded by pests and swine fever
Hang Seng posted its fifth straight day of losses, while Shanghai was down for a fourth consecutive day Analysts say traders want clear signals from US and China on resolving their differences

Is China a new alternative to US hegemony?
The world is experiencing a paradigm shift from unipolarity to a bipolar power struggle between China and the well-established superpower the United States. In order to achieve its ambitions, the Chinese regime launched the ambitious Belt and Road Initiative, which has become recognized as a “New Silk Road,” in 2013 to counter the presence of the US in Asia as well as across the globe. The huge influx of investment under the BRI has opened the door for many countries that had been desperate for direct foreign investments.

Making Sense of Five Years of China’s Belt and Road Initiative
For China, the best way forward on the BRI would be to make it more inclusive and financially transparent. If Beijing wishes to make the BRI a success, it must add a multilateral dimension to it while abiding with international laws and norms that relate to finances, territorial disputes and the protection and sustainable use of global common goods. Doing so would contribute to China’s position as a responsible stakeholder and make its BRI more acceptable.

Making Sense of Five Years of China’s Belt and Road Initiative

Getting China Wrong, Yet Again
A new Council on Foreign Relations report presents China in a distorted light. This passage suggests that China is a brutal aggressor that ruthlessly employs political, economic, and military tools to coerce its neighbors and violates international law as part of a dangerous plot to challenge American dominance. In fact, Beijing’s main strategy is “the Chinese Dream” whereby the country continues to modernize, developing its science and technology to become a more prosperous country and offer its citizens a better life. China wants to become a more influential voice in international affairs, which is not surprising given that the Eurocentric “international community” has ignored Beijing’s voice for so long despite China having one fifth of the Earth’s population.

Getting China Wrong, Yet Again  

Chinese travellers told to raise safety awareness in US travel advisory
It comes a day after warning about visa issues for students seeking to study in America

Tiananmen: China rebukes Pompeo on 30th anniversary of protests
China has rebuked US Secretary of State Mike Pompeo for remarks he made on the 30th anniversary of the Tiananmen Square protest.

Quiet reminders of Tiananmen in China’s capital of forgetting
Beijing shows no obvious signs of the protests three decades ago but there is still some awareness of what happened

Alain Gillard
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