China Press Review – June 9, 2021

European businesses express alarm over China’s anti-sanctions law that could turn companies into ‘sacrificial pawns’
The EU Chamber of Commerce in China expresses concern at lack of transparency and says the measures are ‘not conducive to attracting investment’.  Beijing has yet to provide details of the legislation, but state media has said it will provide a legal basis for retaliation against sanctions  “The core of this law is to adopt legal means, in line with international practice, and with our country’s emphasis on governing the country according to law.”   The proposed law comes after the US, the European Union, Britain and Canada sanctioned Chinese officials accused of human rights abuses in Xinjiang, prompting retaliatory countermeasures from Beijing.    China has used various tools to respond to pressure from foreign sanctions in the past. In January, the Ministry of Commerce issued a “blocking statute” requiring Chinese companies to report any foreign restrictions on economic or trade activities. The statute also enabled the ministry to issue prohibition orders against compliance.

Could business be caught in the crossfire of China’s ‘legal battle with the West’?
China’s national legislature set to pass draft law meant to give firmer legal footing for counteraction to foreign sanctions    Legislation largely symbolic but there may be fallout for companies on the ground, observers say

Joe Biden’s European diplomatic blitz will have China woven ‘throughout every meeting’
European leaders have concerns about the US president’s hawkish approach toward China, as well as tariffs and travel bans, all continuing from the Trump era   A cornerstone of the G7 meeting is expected to be a ‘green’ rival to Beijing’s Belt and Road Initiative, but China likely won’t be mentioned by name

US Senate passes sweeping bill to counter China tech reach
US Senate lawmakers have approved a massive spending plan to boost technology research and production.   It authorises roughly $250bn (£176bn) in funding for technology research, semiconductor development and manufacturing as well as subsidies for robot makers and chipmakers amid a shortage of computer chips worldwide.

China accuses US of ‘paranoid delusion’ over bill
Beijing on Wednesday accused Washington of “paranoid delusion” after the US Senate passed a sweeping industrial policy bill aimed at countering the surging economic threat from China.

US-China tech war: American tech bill locks Huawei on Washington’s trade blacklist as the company plays up its cybersecurity credentials
The Chinese telecoms giant can only be removed from the Entity List if the US finds that it no longer poses an ongoing threat to critical infrastructure   New bill dashes previous hopes that a Biden presidency would ease certain technology restrictions on the Shenzhen-based company    Earlier this week, Biden added two Huawei financing arms to a list that prohibits Americans from investing in Chinese companies that the administration says have ties to the Chinese military or sell surveillance technology used against religious minorities and dissidents. Investors can no longer buy new securities in these companies on American markets starting from August 2, and existing US investors have been given a year to divest their holdings.JP Morgan said it will exclude Huawei’s dollar bonds from some of its investment indices from the end of next month following the ban, Reuters reported on Wednesday   Amid ongoing US pressure, Huawei is currently facing an uphill struggle to convince partners and clients that its network gear is safe and that it is purely a commercial entity, with no secret ties to Beijing’s security and military apparatus. It has been sideswiped by harsh US sanctions – imposed for national security reasons – that have cut off its access to US-origin technology, particularly the supply of advanced chips to its handset and network equipment businesses.

US-China relations: Biden’s trade strike force sees US turn to aggressive ‘industrial policy’ to counter Beijing
US supply chain review shows willingness to experiment with expansive industrial policy to maintain global hegemony, experts say    Trade ‘strike force’ provides new tools for the Biden administration to target centrally-managed economies like China

US supply chain ‘strike force’ to keep eye on China
The United States will target China with a new “strike force” to combat unfair trade practices, the Biden administration said on Tuesday, as it rolled out findings of a review of access to critical products, from semiconductors to electric-vehicle batteries.     The “supply chain trade strike force,” led by the US trade representative, is looking for specific violations that contributed to a hollowing out of supply chains that could be addressed with tariffs or other remedies, including toward China, White House senior director for international economics and competitiveness Peter Harrell told reporters.

China’s factory-gate price inflation hits near 13-year high, manufacturers pass on surging raw material prices
China’s official producer price index (PPI) rose to 9 per cent in May from a year earlier, compared with 6.8 per cent in April    The consumer price index (CPI) rose 1.3 per cent from a year earlier, compared with a 0.4 per cent rise in April

Chinese factories worried about profits face a record gap between rising production costs and selling prices
While selling prices to private consumers are holding fairly steady, production costs are soaring, cutting into how much money manufacturers can make.     The difference between indexes measuring the speed of increase for both reached 7.7 percentage points in May, the highest on record.   Manufacturers of cars, ships and airplanes are seeing earnings losses, said Larry Hu, chief China economist at Macquarie.

China’s May new yuan loans seen falling as central bank scales back stimulus
New bank loans in China likely fell in May, a Reuters poll showed, as the central bank gradually scales back pandemic-driven stimulus to reduce debt and financial risks as the economy shows solid signs of recovery.       Chinese banks are estimated to have issued 1.41 trillion yuan (US$220.54 billion) in net new yuan loans last month, down from 1.47 trillion yuan in April, according to the median estimate in the survey of 29 economists.

Alibaba Cloud offers to build livestream shopping platforms for global clients
Alibaba Cloud on Tuesday unveiled a new service to help global online merchants set up their livestreaming platforms. The e-commerce giant was one of the first to popularize livestream shopping. China is leading the trend in livestream shopping. Alibaba, a leader in the sector, wants to capitalize on its expertise as the model gains popularity outside of China.

Four Chinese Banks fined for property lending violations
The Beijing branches of Postal Savings Bank of China, China Merchants Bank and China Guangfa Bank, and two branches of Shanghai Pudong Development Bank in Beijing have been fined a total of RMB 5.3 million ($828,000) by China’s banking regulator, reports Caixin. The four banks received the fines for failing to review personal consumption and business loans that were used to buy real estate. In addition, they have been ordered to immediately take effective measures to improve credit business procedures, recover loans that violated regulations and hold responsible persons to account.  Staff members responsible for the violations were also fined a total of RMB 350,000, according to Beijing Bureau of the China Banking and Insurance Regulatory Commission (CBIRC).

Coronavirus controls pushing China’s southern container ports to limit, sending freight rates soaring
Ports in Shenzhen and Guangzhou, including Yantian, Shekou and Nansha, plan to keep disinfection and quarantine measures in place until at least next week     Danish shipping giant Maersk said on Tuesday that increased congestion and delays upwards of 15 days are expected at Yantian port

How China’s digital currency is leading the race to displace bitcoin and other cryptocurrencies
As governments grow increasingly wary of cryptocurrencies, centralised digital currencies are seen as a way to streamline key activities and preserve public trust      China’s success with its digital yuan is pushing the rest of the world to create their own digital currencies, putting cryptocurrencies under pressure

China Aims to Have World’s Most Advanced Blockchain Tech by 2025
China aims to have worlds most advanced blockchain technology by 2025 according to new guidelines    In a move contrasting its stance on cryptocurrencies, China has issued guidelines for blockchain development within the country.    China’s Ministry of Industry and Information Technology and the Office of the Central Cyberspace Affairs Commission jointly issued guidelines for blockchain development. They hope to promote the integration of blockchain technology into Chinese economy and society, and accelerate its promotion therein.

China’s new international paradigm: security first
The CCP has established a centralized and unified national security system built around the concept of “comprehensive national security”. Reaching into all areas of policy, the party aims to increase its control over both its internal and external environments.Since Xi Jinping came to power, protecting China’s national security has risen to the top of the party’s agenda. Cooperation and compromise with the West have been set aside in favor of a more proactive mode of action meant to make the world safer for the CCP in the long run.

Party-state capitalism under Xi: integrating political control and economic efficiency
For China’s leaders, the CCP’s centenary serves not only to highlight the party’s own rags-to-riches story, but more broadly China’s economic and geopolitical rise.

The CCP’s next century: expanding economic control, digital governance and national security
In this report, MERICS experts look at three key aspects of CCP governance: The integration of the economy under politics, the role of digitization and the securitization of international relations. You can access the web version of individual chapters via the table of contents below

Hong Kong stocks drop for sixth day on heightened policy tightening risks, US-China tensions
Hang Seng Index slipped for a sixth day, heads for the longest losing stretch since late September 2019     Inflation at factory gates heightened risks to policy tightening while US-China ties appear to have worsened amid aggressive actions on both sides

New Chinese semiconductor firms have tripled in 2021 as Beijing and Washington jockey over technological supremacy
The number of new company registrations in the semiconductor industry from January to May tripled in China, bolstered by generous national subsidies     As China pursues self-sufficiency in semiconductors, Washington is seeking to counter Beijing with a new bill funding domestic fabrication

How portable global internet connectivity can solve business travellers’ biggest headache
Forecasts in 2020 suggest advanced connectivity could boost productivity and job creation and lift global gross domestic product by up to US$2 trillion by 2030     Economic opportunities have stimulated fast development of telecommunication firms eager to provide hyperconnectivity solutions, including Cloud SIM technology   Digital connectivity is a huge business and it’s growing faster – literally by the day. In the US alone, the internet sector contributed US$2.1 trillion to the economy in 2018, about 10 per cent of the nation’s annual gross domestic product (GDP) according to the Internet Association, a lobbying group representing tech companies including Google and Facebook.   The digital economy – economic activities related to the internet around digitalisation or hyperconnectivity – was worth US$11.5 trillion in 2016, or 15.5 per cent of the global GDP, Oxford Economics, an independent consultancy focusing on global economic forecasting, reported. It estimates that the digital economy will account for 24.3 per cent of global GDP by 2025.

China’s carbon neutral goal: Shanghai aims to have 10,000 hydrogen-powered cars on roads in 2023
City planning nine scenarios to boost the use of hydrogen-powered vehicles, official says    Shanghai had 1,200 such cars on its roads at the end of last year

Scott Morrison presses G7 to rein in China
G7 nations must overhaul global trade rules to stop powerful countries using economic coercion, Australian Prime Minister Scott Morrison said on Wednesday ahead of a meeting of the group’s leaders in Britain.     As Australia’s shadow trade war with its largest trading partner China shows few signs of abating, Morrison told the Perth USAsia Centre that the global rules-based order is “under serious strain”.

China can level its education playing field by letting non-profit online academies bloom
Over 10 million Chinese students have just taken the university entrance exams, a system that seems fair but is shot through with inequality, exacerbated by the rise of private tutoring      High-quality, non-profit online tutoring could help underprivileged students make the cut

Australian PM Morrison calls for WTO reform to punish ‘economic coercion’, in veiled reference to China trade dispute
Speaking before the G7-plus summit in Britain, Morrison is rallying support for the modernisation of global trade rules and ‘freedom over authoritarianism’   His remarks come amid a deterioration in Sino-Australian relations that has seen Beijing slap restrictions on billions of dollars of Australian exports

China-Australia relations: trading relationship still strong with growing divide between ‘rhetoric and reality’
China’s total imports from Australia in May rose more than 55 per cent from the previous month to US$13.6 billion, while exports rose just over 1 per cent    The Australian Chamber of Commerce and Industry says political posturing between the two countries does not reflect the actual appetite for trade

China says it supports cultural exchanges with Japan after academics branded ‘traitors’
Foreign ministry says they are ‘common practice’ and conducive to developing relations between the two nations    Chinese intellectuals who took part in a programme partly funded by Tokyo have been attacked on social media

Chinese man arrested after breaking quarantine rules to see Covid-positive parents
Guangzhou police say the man could face criminal charges after he hid the visit from health workers     Authorities have meanwhile warned Guangdong residents to comply with mass testing requirements Mass testing is under way in the southern city of nearly 19 million people and strict lockdown measures are in place for parts of Liwan, the worst-hit district. Officials on Tuesday said nearly 28 million tests had been carried out in the past two weeks, with 40 positive cases found.  There have also been cases elsewhere in Guangdong province – in Foshan and Shenzhen – since the outbreak emerged on May 21, with the total infections now at 120. Officials said 19 new locally transmitted cases were recorded on Monday, including nine in Guangzhou that were previously classified as asymptomatic.

Explainer | Who are China Communist Party’s ‘No 1 hands’ and why is Xi Jinping reining them in?
Provincial party chiefs have seen their power eroded through a series of sweeping reforms instituted by Beijing    The term is believed to have originated in the ancient Chinese secret societies to denote leadership positions   While the guidelines state they apply to “all levels”, its articles only include instructions for how the Central Committee and Politburo members should supervise the cadres under them – namely provincial and ministerial-ranked officials – without mentioning how the top echelons are monitored.     It therefore does not appear that party chief Xi’s power will be reined in under the guidelines.    Just last October, the Central Committee released a separate set of draft regulations for its members to follow. They strengthened the general secretary’s grip on power, by allowing him to set the meeting agendas of the 25-member Politburo and its seven-member standing committee.   The Politburo is the decision-making body of the party, and its standing committee – which includes the general secretary – represents the apex of power in China.

Why China’s youth are ‘lying flat’ in protest of their bleak economic prospects
Young Chinese fed up with gruelling work hours, conspicuous consumption and skyrocketing house prices are protesting by doing the bare minimum     The social resistance movement called ‘lying flat’ is worrying authorities, who see it as a potential threat to China’s dream of national rejuvenation

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