China Press Review – March 19, 2019

Press review

US-China trade war hit US economy by $7.8bn
The US-China trade war has roiled markets and hit the US economy by $7.8bn (£5.8bn), according to a new study by the National Bureau of Economic Research (NBER)

US-China trade war could slash US$1 trillion from US economy in a decade warns Chamber of Commerce
New study from the US Chamber of Commerce finds that should tariffs increase, US gross domestic product, employment, investment and trade will all decline Research focuses on the information communications technology sector, which is set to be among the hardest-hit by a prolonged trade war

Tariffs Raise Concerns Among Business Leaders
In response to the U.S. – China trade deal meeting delay, American business leaders continue expressing concerns, stating that the end of the tariff impact is far from over and continues to negatively impact business operations. Freedom Partners Executive Vice President Nathan Nascimento commented on the current situation, adding that damages brought on by the tariffs situation affects growth, job creation, and more.

Tariffs Raise Concerns Among Business Leaders

The US and China must end their trade war so the world can work together to restore economic order
From out-of-control US deficits to Europe’s sluggish growth and China’s over-reliance on exports, the world has problems it will take cooperation to address, and the trade war is a big distraction

EU accelerates moves to block China’s market access
European countries want ‘reciprocity’ in big projects from power lines to metros

Member states support tougher stance toward China despite warnings
EU’s foreign affairs ministers expressed their “full support”on Monday (18 March) to the EU’s new stance toward China, described as “systemic rival”, as the bloc seeks to rebalance its economic and trade relationship with Beijing.

Italy’s courting of China has operatic undertones
Despite the thunderous background music from the EU and the US, Rome sees economic advantages in BRI deal

Italy may be ready to open up four ports to Chinese investment under ‘Belt and Road Initiative’
Prime Minister Conte seeks to assure Italians national security will be safe after deals Chinese President Xi Jinping expected in port city of Palermo as part of state visit

Italy’s Embrace of China’s ‘Belt and Road’ Is a Snub to Washington
Beijing’s revamp of Silk Road routes could boost port cities such as Trieste.

Trieste : A Forgotten Italian Port Could Become a Chinese Gateway to Europe
Despite American objections, Italy is set to become the first Group of 7 nation to participate in Beijing’s vast One Belt, One Road infrastructure project.

China’s push into Europe is looking like a rough ride
When the leaders of China and 16 countries in central and eastern Europe gather in southern Croatia early next month, Beijing will be looking to one project as a symbol of what they can achieve. The project, the Peljesac Bridge, is funded by the European Union and is being built by a Chinese state-owned firm. When completed, it will be the longest bridge in Croatia, with the second-longest span in Europe.

Chinese investment in Europe continues decline
Trend attributed to growing political and regulatory backlash against China’s western presence

In Search of ‘Real’ Data on China’s Economy
Technology to the rescue: new sources of data help researchers and analysts shed more light on the Chinese economy. Information about economic activity is a key ingredient for policymaking and business decisions. However, official statistics in China have long been criticized for lack of transparency, data collection problems at the grassroots level, and frequent data manipulation. The inadequacy and insufficiency of official statistics have created a desperate need for alternative data. In an attempt to meet the market demand for data, investment banks, academic researchers, and media have raced to deliver their own estimates on various aspects of the Chinese economy (the banking and financial system, real estate markets, consumer markets, etc.). However the recent advent of new technologies can be a game-changer for the industry. It has created new opportunities for data collection in China and produced a plethora of indicators that are capable of satisfying the growing demand for quantitative measures of economic activity.

Asia firms spend less and save more as China economy slows
Corporate spending in Asia is likely fall for the first time in three years, a Reuters analysis of Refinitiv data showed, as businesses conserve cash in the face of a stalling Chinese economy, an unresolved trade dispute and Brexit uncertainty.

Where progress with China is most likely—and where it isn’t
In three areas, China’s actions have gone beyond what reasonably could have been expected: currency and global imbalances, climate change, and nuclear non-proliferation (especially regarding Iran and North Korea) In two areas, the outcomes are about what should have been expected: intellectual property rights protection and development assistance; and on three issues, China has failed to do what we want: market access, militarization of the South China Sea, and democracy and human rights.

Where progress with China is most likely—and where it isn’t

The World Bank’s Role in the Transformation of China’s State Sector: Part Two
In the past four decades, China has transformed from a Soviet-style planned economy to one in which the market plays an increasingly greater role. As the private sector has flourished, state-owned enterprises have also undergone great changes to adapt to the market economy. Zhang Chunlin, lead private sector development specialist at the World Bank Group’s Trade and Competitiveness Global Practice, describes the role the World Bank has played in helping China’s state sector to transform. Caixin will publish his article in four parts, covering topics including the corporatization of SOEs, the commercialization of state ownership, dividend policy and state capital management. You can read part one here.

‘Gray rhino’ risks in China’s financial sector rising: central bank official
The “gray rhino” risks in China’s financial sector are rising and regulators will step up efforts to control them, a senior official at the People’s Bank of China said in remarks published on Monday. Chinese policymakers have warned of potential “gray rhino” events – highly obvious yet ignored threats – as the nation faces increasing uncertainties as the economy slows amid a trade war with the United States.

Don’t ignore Xi’s warning about black swans and gray rhinos
China’s high-growth days are over; Stable growth must be the new priority

Information consumption vital to China’s economy
Last year, China’s information consumption rose 11 percent year-on-year to 5 trillion yuan ($745.39 billion), accounting for 6 percent of the GDP, according to the Internet Society of China.

Nobel Prize winner Richard Thaler says China should use ‘nudge theory’ to improve the lives of citizens
More carrot and less stick would help China achieve better results from government policies and services to improve the lives of its citizens, according to Nobel Prize-winning economist Richard Thaler.

Why the yuan will rise, even though China faces a ‘tough economic battle’ in 2019
Expect China’s fiscal loosening and foreign investment reform to lift the yuan, especially as the effects of US stimulus from last year continue to wear off and a trade war settlement looms

Sichuan Airlines Cargo will operate full freight flights to Brussels Airport in April
Brussels Airport is set to welcome Chinese carrier Sichuan Airlines Cargo in April. The airline is based at Chengdu Airport, and has chosen Brussels Airport as its first full-cargo destination in Europe.

Digital China in 2019: Trends and recommendations
Depending on who you ask, China has overtaken, or will overtake, the US as the world’s largest economy.

Digital China in 2019: Trends and recommendations

US announces supercomputer plan as rivalry hots up with China
China is also planning a multibillion-dollar investment to upgrade its supercomputer infrastructure by 2020 to regain leadership

China rejects ‘groundless’ US warnings over Huawei as it seeks to ease Europe’s concerns
Foreign Minister Wang Yi dismisses claims tech giant could be used to spy on West ahead of meeting with EU counterpart China is trying to ease European nerves after Brussels started to take an increasingly tough stance towards Beijing

Why the price of Europe following the US’ Huawei boycott may be far too high
There may be no way to exclude China from the process of building wireless networks, and there is definitely none without setting 5G development back significantly

US warns Brazil about Huawei equipment for 5G
US officials warned their Brazilian counterparts on Monday about security concerns about using Huawei Technologies equipment during talks in Washington, Reuters reported, citing a senior American official. Brazilian officials took part in several meetings with US security experts on how Huawei equipment could undermine their country’s security, the US official told reporters. A Brazilian official said that Brazil did not want to get in between the United States and China on the Huawei dispute, and that there are no barriers for Huawei in Brazil at the moment.

Briefing: US warns Brazil about Huawei equipment for 5G

Like it or not, you can’t avoid our products: Chinese media to India
India’s manufacturing industry is still underdeveloped and it doesn’t have the ability to produce competitively, the Global Times has opined. That’s why its long-running attempt to boycott Chinese products has failed so far, an opinion piece in the state-run newspaper says.

Hong Kong’s weak dollar is a victim of northbound investments rushing into the stock exchanges of Shanghai and Shenzhen
The Hong Kong Monetary Authority has spent nearly US$1 billion this month to prop up the local currency, keeping it within a trading band against the US dollar Equity investors are selling the Hong Kong dollar to buy yuan for trading in Chinese stocks through the Connect schemes

Hong Kong’s limited partnership regime may attract funds to set up domicile, boosting city’s role as Greater Bay Area private equity hub
Despite private equity managers raising and advising capital in the city, none uses a Hong Kong fund structure and opt instead to domicile in Cayman Changes to limited partnership regime could bring more funds and managers to Hong Kong, and keep systemic risks in check, lawyers and analysts say

Greater Bay Area creates uncertain future for China’s largest fabric market and its 100,000 employees
Guangzhou’s Zhongda market with its 20,000 merchants is being relocated 100km away to Qingyuan to make way for Beijing’s grand technology plan The five square kilometre market, one and a half-times the size of New York’s Central Park, is being replaced by an international innovation centre to rival Silicon Valley

Nuclear shares soar after China plans to invest US$12 billion in new reactors for first time since 2016
The four new reactors will adopt China’s domestically developed Hualong One third generation nuclear reactor design, an official statement says

The Hermès Way: From Saddles to Sino-Markets
With annual revenue of roughly $6.8 billion, global luxury sales leader Hermès has defied the odds by continually growing its market share in China, even as the market undergoes its first slowdown in over a decade. That, of course, begs the question: What is Hermès doing that everyone else isn’t? For the answer, you have to start at the beginning.

The Hermès Way: From Saddles to Sino-Markets

Prada Becomes the Latest Victim of Declining Chinese Tourist Shopping
The Italian luxury fashion house Prada SpA’s latest earnings release may have surprised some analysts, but those who have been watching Chinese shopping habits abroad weren’t so shocked. Prada is not the first, nor will it be the last, luxury brand to suffer from the a declining shopping trend among Chinese tourists — one that’s affecting 2019 much in the way it did 2018.

Prada Becomes the Latest Victim of Declining Chinese Tourist Shopping

China Retail Sector – Growth, Trends and Forecast (2019-2024) by Product Category, Distribution Channel, and Market Dynamics
The “China Retail Sector – Growth, Trends, and Forecast (2019 – 2024)” report has been added to’s offering. The Chinese retail sector is projected to witness a CAGR of 10.6% by 2024. The market is segmented by product category, distribution channel, and market dynamics. China’s economy appears to be stabilizing gradually, boosted by rising industrial production and higher foreign currency reserves. However, questions loom large over its market status and sovereign risk rating. Chinese retail sales were up by 9% in 2018 versus a year earlier, roughly in line with that reported in the past year.

Online retail fuelling rapid rise in sales of fake goods, says OECD
The report pinpointed China as by far the biggest country of origin for fake goods, and at the centre of a complex web of other countries used for shipping illicit goods. India, Malaysia, Pakistan, Thailand, Turkey and Vietnam were also identified as major sources of illicit goods, although considerably behind China. China was the top producer of fake goods in nine out of 10 categories, including the most popular category, footwear, where as much as 27% of all goods seized could be traced back to the country, according to the report.

Can the Belt and Road Initiative Be Green?
China’s Belt and Road Initiative is foremost the country’s bid to improve economic integration with economies across Eurasia and into Africa. But, the project—while extraordinary in scale and reach—poses many questions, particularly around its commitment to the environment. Notably, can China successfully dovetail its BRI-related investments with its Paris Agreement targets? Or, instead, are these efforts mutually exclusive?

Recruiting China – What is Up?
Recruiting ChinaI have written quite a bit about the state of recruiting in China. I think each company has enough on its plate and has its own thinking on the recruiting problem. It is quite reasonable. Let me say what I see in China among Western companies here.

Recruiting China – What is Up?

Chinese student receives 10-year sentence for scamming
A court in the central China province of Hunan has sentenced a college student with the surname Wang to more than 10 years of imprisonment and fined him RMB 80,000 (around $11,900) for scamming Chinese online retailer out of RMB 1.1 million in 2017. Wang, along with accomplices, exploited an identification loophole in JD Finance’s credit payment service, Baitiao, and created multiple fake Baitiao accounts in order to buy electronic devices on credit and resell them online. JD fixed the issue in 2017.

Briefing: Chinese student receives 10-year sentence for scamming

Why China Should Start Planning for Legal Euthanasia
After a series of high-profile cases, China must grapple with the ethics of euthanasia.

China’s bright bond future casts shadows
As Chinese local bonds prepare to enter the Bloomberg Barclays aggregate index in April, unleashing an estimated US$5 billion monthly in foreign investor inflows, with the renminbi forecast also strengthened from the previous 7 per dollar, the International Monetary Fund (IMF) and government counterparts in Beijing released a several-hundred-page study on the market’s “bright” future despite opening and building challenges ahead.

WeChat shuts more than 2,500 accounts for illegal loan activity
China’s most used messaging app, WeChat, has shut down over 2,500 user accounts and more than 1,000 group chats since the beginning of the year over illegal credit and loan activities, according to an announcement posted on the official account of WeChat Security Center.

Briefing: WeChat shuts more than 2,500 accounts for illegal loan activity

China’s crackdown on internet finance hurts online lender Dianrong
China’s peer-to-peer (P2P) lending industry has been in crisis mode ever since the government began to clamp down on it more than two years ago. Many smaller players have shuttered their doors as a result of industry consolidation. The more established platforms, even those with a pedigree, have not been spared from the aftershocks of the increased regulatory scrutiny.

China’s crackdown on internet finance hurts online lender Dianrong

Estee Lauder sues NetEase Kaola for brand infringement
Estee Lauder China is suing NetEase’s cross-border e-commerce platform, Kaola, for allegedly selling MAC brand cosmetics without authorization, the latest in a series of disputes the Chinese tech company is facing concerning product authenticity.

Estee Lauder sues NetEase Kaola for brand infringement

China Performs Country’s First-Ever 5G Remote Brain Surgery
A Chinese surgeon collaborated with Huawei and China Mobile to operate on the brain of a Parkinson’s disease patient 3,000 km away using a 5G connection, the first time such an operation has taken place in China.

Shutting the gates of academia: American universities cut ties to Huawei and Confucius Institute
The University of Minnesota ends programmes with both after US government efforts to restrict the relationships Decisions made in a political climate of growing concern and suspicion about China, encouraged by the Trump administration

European militaries ‘will do more to counter assertive China’ in Indo-Pacific
Naval operations expected to increase to protect freedom of navigation in key trade route amid concerns over China’s island-building and military activities EU leaders to discuss 10 proposals to seek balanced relationship with China, while President Xi Jinping is due to travel to Italy and France

China ‘helped defuse Pakistan-India tension’ after Kashmir attack
Beijing promoted peace talks as New Delhi and Islamabad threatened to fire missiles at each other, Chinese foreign ministry says

China’s Xi Urges Teachers of Political Courses to Tackle ‘False Ideas’
Chinese educators must respond to “false ideas and thoughts” when teaching political and ideological classes, President Xi Jinping said, in a sensitive year that marks the 30th anniversary of student-led protests around Tiananmen Square.

China’s Xi Urges Teachers of Political Courses to Tackle ‘False Ideas’

Xi Jinping tells Chinese teachers to help ‘nurture support’ for Communist Party rule
Educators asked to instil patriotism and strengthen courses on ideological and political theory at all levels – from primary schools to universities Xi has sought to tighten the party’s ideological grip on campuses and curb the spread of ‘Western values’ since he took power

Chinese artist Ye Yongqing breaks silence over plagiarism row with Belgian Christian Silvain amid legal action threat
Renowned painter denies claims he copied works by Belgian Christian Silvain three weeks after they were first made and says he has contacted lawyers Chinese art world was rocked by accusation against high-profile figures whose buyers are believed to include Bill Gates and Rupert Murdoch

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