Four Questions Regarding the Chinese Economy
China’s economy decelerated sharply toward the end of 2021 and at the start of the new year it was growing at about 4 percent. But some easing of monetary policy and real estate regulations could move it closer to 5 percent. With the all-important Party Congress scheduled for the end of the year, the leaders want steady growth but also stability. The main headwinds are in COVID, real estate, policies toward the private sector, and trade. The situation with the pandemic could become better (mRNAs boosters for the Chinese population) or worse (new variants resistant to Chinese vaccines). On the one hand, in real estate, too much tightening could lead to a collapse in prices that results in panic selling and weakened household wealth and confidence. On the other hand, too much easing could reignite the bubble and lay a foundation for a larger financial crisis. The regulatory crackdown could reach new sectors or leave most of the private economy untouched. In trade, the risk is a re-acceleration of the U.S. trade war, and too weak of a global economy to make up for the re-acceleration by trade with other partners. All in all, it makes for a year of dangerous growth.
China Leadership Gathers as Economic Challenges Mount
China’s annual parliamentary pageant — the National People’s Congress — opens Saturday in Beijing, bringing President Xi Jinping one step close to a precedent-defying third term in power. Amid the pomp and propaganda at the Great Hall of the People, the Communist Party leadership will lay out policies to address the country’s biggest challenges, such as rebuilding growth slowed by Covid. The 3,000-or so deputies always give their ceremonial seal of approval to everything proposed, but that doesn’t mean there isn’t drama. A property slump, a war in Europe and a Covid surge in Hong Kong leave lawmakers plenty to chew on. The fiscal and economic projections released on the NPC’s opening day are some of the most anticipated indicators of the direction of China’s economy. Last year, the government’s target of “above 6%” growth in gross domestic product fell short of the 8.4% increase predicted by economists, as China prioritized reducing debt levels and encouraging innovation over growth. This year, Beijing was likely to set a growth target of between 5% and 5.5%, BNP Paribas analysts said.
Beijing’s Response to the Biden Administration’s China Policy
Developments in the U.S.-China relationship over the past year suggest that both sides acknowledge there are not any simple fixes for neutralizing the other as its most formidable rival and competitor. Instead, both countries appear to be settling in for long-term competition. Going forward, Beijing likely will play to its strengths as it seeks to gain an edge over Washington and others. Beijing identifies its advantages as its growing economic gravity, its strengthening relationship with Russia, its expanding influence in much of the developing world, and its ability to offer solutions to other leaders who feel threatened by social instability. With the National Party Congress looming in Fall 2022, Beijing likely will focus in the coming year on addressing compounding challenges at home and geopolitical headwinds abroad. Recognizing the threats that Washington and other developed countries remain capable of posing to China’s continued rise, Beijing also will look for ways to minimize any damage in its relations as it works to maximize gains in overall influence in the rest of the world. How well China does in navigating this thicket of challenges will inform its ability to achieve its ambitions.
China’s young jobseekers confront challenges, seek new opportunities as economy undergoes profound transition
For fresh graduates, pressure has never been greater in their bid to secure a dream job, but some are cashing in as industries evolve. China is pushing to enhance its manufacturing and smart infrastructure sectors, opening doors for new jobs as a record number of students prepare to enter job market Intelligent manufacturing also looks to be an essential and booming component of China’s economy moving forward. The sector plays a crucial role in China’s ambitious plans to bolster infrastructure. These include expanding 5G networks, rail systems, intercity transport, data centres and AI, among others. The world’s second-largest economy predicted that it would need 9 million specialists in the field of intelligent manufacturing in 2025, according to a report published by the Ministry of Human Resources and Social Security in 2020. Duan Bixin, a 24-year-old project manager at Vertiv, a global manufacturer for infrastructure that enables vital applications for data centres, said he landed his job pretty easily in 2020, and witnessed his company riding the wave of the New Infrastructure Plan, such as by building data centres. Despite a mounting number of China’s college graduates seemingly putting pressure on the nation’s job market, population ageing and economic growth will help create additional space for them while generating new opportunities, experts say. If China maintains an economic growth rate of 5 per cent in 2022, around 11 million new jobs will be created, according to a GF Securities report published last month. According to official figures, China created 12.69 million jobs in 2021. Meanwhile, around 7 million workers will retire from the workforce every year from 2021-25, during the nation’s 14th five-year plan, according to government data. So, even if a record 10.76 million college graduates all chose to immediately enter the job market, the gap will still not be fully filled. In fact, only 56.9 per cent of the class of 2021 chose to take a full-time job after graduation, compared with 75.8 per cent in 2020, according to a survey published by employment service platform Zhaopin in May.
As China Races to Build Chips, Chipmakers Face ‘Serious Brain Drain’
Lured by higher pay and easier lifestyles, highly skilled engineers are leaving China’s semiconductor factories for desk jobs, insiders say.
Overhaul of online platforms run by Chinese fintech firms including Ant Group ‘went well’, though more work is needed, says regulator
Beijing unleashed a raft of new fintech regulations and an antitrust inquiry into the country’s technology sector late in 2020. Some internet services providers had expanded aggressively into the online finance business in a ‘disorderly manner’, posing ‘major financial risks’.
How China’s ‘Soft’ Brands Are Going Global
Following in the footsteps of manufacturers like Haier and Huawei, Chinese fashion, gaming, and media companies are shaking up global consumption patterns.
China Economy: PBOC sets new payment rules for Alipay and WeChat pay
China is one of the most advanced countries when it comes to the mobile payments. As these businesses have grown, regulators have tightened restrictions on the fintech sector to check risks and ensure financial safety. Wang Siwen has more. All you need to do is scan a barcode with a device to pay or receive money. China issues new payment rules as the government tightens oversight on the country’s fintech sector.
Alternative protein investments nearly double across APAC in 2021, as climate change drives strong consumer demand
Investments in the alternative proteins market reached US$312 million across APAC, a 92 per cent rise that outstripped global growth. APAC has seen strong growth in plant-based and cultivated meat amid greater consumer acceptance, but North America remains dominant in fermented proteins. “Across rising economies in Asia, warning lights are flashing bright red for the future of industrial animal agriculture” GFI’s Gosker said. “Conventional meat production is ill-equipped to handle the escalating regional pressures of skyrocketing protein demand, increased climate disruption, land and water scarcity, and threats of viral outbreaks.” “Business as usual clearly cannot continue,” she added, “which is why forward-thinking stakeholders from both the public and private sectors have begun to rally around more sustainable protein alternatives, including plant-based and cultivated meat.” Two of the most eye-catching deals last year in APAC’s alternative protein industry include Singaporean start-up Next Gen Foods’ record-breaking US$30 million seed funding and Australia-based v2food, which raised US$110 million in Series B fundraising. Both are known for their plant-based meat substitutes. In contrast to plant-based and cultivated meat, where APAC is moving fast, the region still lags far behind on fermentation-enabled proteins, which accounted for more than a third of all alternative protein investments globally in 2021. Regions outside of North America collectively accounted for less than 10 per cent of all fermentation-enabled protein investments, according to GFI. “Given that fermentation-enabled proteins have the potential to almost single-handedly resolve the global protein deficit, APAC start-ups, policymakers, and investors would be wise to view this rapidly expanding sector as an area for enormous regional growth,” Gosker said.
Chinese Self-Driving Truck Startup Secures $188 Million In Funding From Sequoia China And Legend Capital
Autonomous driving truck startup Inceptio Technology has raised a $188 million funding round led by Sequoia Capital China and Legend Capital, the investment arm of Lenovo’s parent company. Other major investors include Hong Kong billionaire Henry Cheng and his family’s Chow Tai Fook Enterprises, Chinese food delivery giant Meituan, Fidelity-backed Eight Roads and Chinese electric vehicle billionaire William Li’s NIO Capital.
China’s 5G network to reach 2m base stations this year
Beijing envisions new mobile services in manufacturing, medicine and education. All cities as well as 87% of all rural centers have 5G coverage, which puts (China) in the lead globally,” Tian Yulong, spokesperson for the Ministry of Industry and Information Technology, told reporters Monday. Minister Xiao Yaqing also spoke at the press conference. The ministry said 1.42 million base stations were in place nationwide at the end of 2021. And while the pace of installations will slow by more than 10% from last year, 5G infrastructure investment continues at a high level. China had 520 million 5G-compatible devices in circulation at the end of 2021, more than double the 200 million devices recorded a year earlier. China looks to develop new 5G services in the manufacturing, medical and educational sectors, improving efficiency and quality, the ministry said. The ministry also pledged to strengthen China’s semiconductor supply chain. Its chip sector grew by 30% last year, and plans call for stepped up investment in the industry and greater production capacity. With an eye toward establishing a stable global semiconductor supply chain, ministry officials welcomed investment and other cooperation by multinational companies. China faces hurdles to adopting leading-edge technology amid frictions with the U.S.
Reaching peak carbon early could save hundreds of thousands of lives in China, study says
Researchers say hitting the target before a 2030 deadline would dramatically reduce the number of deaths caused by PM2.5 particles. Chinese and US researchers conclude that the quicker emissions are cut, the greater the long-term benefits.
The Russia-Ukraine War Will Further Fray China-Europe Relations
2021 was a rough year for China-Europe relations. 2022 looks set to be even worse. China has always been aware that siding with Russia is not wise, especially in Central and Eastern Europe (CEE), a region once oppressed by the Russians. Facing the invasion in Ukraine, even the most pro-Kremlin politicians in CEE have turned to condemnation of Russia. China’s lukewarm statements and onlooker role clearly cannot satisfy the CEE governments and publics. Beijing should not be surprised if more of them announce withdrawal from the “17+1” mechanism, China’s platform for CEE cooperation, and turn to Taiwan for closer ties this year. China claims that it is a responsible major power and strives to foster global peace and development; however in the face of aggression, it has been trying to stay detached. European leaders now have reasons to doubt China’s capability to tackle tough international challenges and the credibility of its commitments. Of course, losing some credibility for the sake of other gains is nothing new in international politics, including Europe; the U.S. and U.K. decision to partner with Australia to supersede France’s submarine deal can serve as an example. But with China-Europe relations already facing such severe challenges, any more challenges will make the already precarious trust frailer, and efforts to improve bilateral relations more difficult. The China-Europe relationship is now being sorely tested by the Russia-Ukraine war. For China, if it gears up to play a bigger role in ending the war and bringing peace back to Europe, Beijing could diplomatically benefit from the crisis. However, if China continues to blur its stance and merely watches from the sidelines, Beijing will harvest Russians’ fraternal friendship for sure, but it will also encounter more suspicious and hostile eyes from Europe.
Lesson in courage of Mao-Nixon detente ignored with Putin’s war choice in Ukraine
The 50th anniversary of the Shanghai Communique, signed on the last day of Richard Nixon’s visit to China, is a reminder of courage. Can Beijing take its place as a world leader and help put a stop to the invasion, despite its recent pivot to Moscow? As American historian Margaret MacMillan put it, “Two men [Nixon and Mao] who, for all their faults, possessed the necessary vision and determination, and two men [Kissinger and Zhou] who had the talent, the patience, and the skill to make the vision reality.” With Putin choosing war over peace in Europe, the world needs this kind of leadership and vision more than ever. Beijing, caught in an unexpectedly awkward position, may also have some tough decisions to make. At some point, Chinese leaders must decide if it is in Beijing’s interests to distance itself further from Russia and its alleged war crimes. Beijing’s pivot to Moscow – its “enemy’s enemy” – was driven by a shared interest in countering Washington and its allies, but the invasion of Ukraine calls for a recalibration. China should not be hijacked by the Kremlin’s reckless resort to military force, nor President Xi Jinping’s joint commitment with Putin in Beijing last month to a “no limits” partnership. To truly emerge as a global power, China will have to step outside its comfort zone and play a bigger role internationally. In this case, it could help the rest of the world stop Putin from wreaking havoc in Ukraine and beyond. There may even be an opportunity, however remote, for Beijing to mend its ties with Washington as part of a rebalancing between the US and Russia. The leadership in Beijing would need great courage and a long view – just like Mao and Zhou 50 years ago – to change course for a potential new era for China and the world.
China Cannot Condone Russia’s Aggression in Ukraine
China’s attitude toward the Ukraine war stems from functional calculations, diplomatic and military bonds with Kyiv, strategic considerations, and normative reflection. China is caught in a tough situation where Kremlin’s aggression is at odds with Beijing’s long-standing normative adherence to national sovereignty and the Five Principles of Coexistence, not to mention that China has stressed time and again its respect for Ukraine’s sovereignty. Moscow’s breach of the sovereignty and territorial integrity of Ukraine was premised upon the pretext of a peacekeeping function aimed to protect its citizens allegedly suffering from “genocide” conducted by Kyiv. Amid the Western accusations against Beijing’s own internal human rights record, with some countries invoking the word of “genocide” in Xinjiang, acquiescing to Moscow’s aggression based on unproven allegation of genocide in Ukraine might ultimately be seen as a double standard, and might weaken China’s sovereigntist discourse should foreign actors seek to meddle in its domestic affairs related to human rights violations. On top of that, a deeper tension that China faces here is how to reconcile its strict adherence to sovereignty on the one hand and its echoing of Russia’s interpretation of the indivisible security doctrine enshrined in the 1990 Charter of Paris on the other. Even on March 1, China’s Foreign Ministry spokesperson still emphasized at a press conference that “a country’s security cannot be at the expense of that of the others” and that “Russia’s legitimate demands should be considered and duly settled after five rounds of NATO expansion.” The ensuing question is: Does NATO’s defiance of Moscow’s interpretation of indivisible security justify the latter’s current unprovoked intrusion into Ukraine’s territory? If China truly respects Ukraine’s sovereignty, would it not also be the case that it ought to respect a sovereign country’s choice to participate in any international arrangement it wishes? As long as China is reflecting upon the normative tension between the country’s long-standing international promises and the indivisible security doctrine, it is likely that it will not embrace the Kremlin during the ongoing crisis.
Ukraine presents opportunity to test China’s strategic outlook
Decisions undertaken by Washington and Beijing in the coming months could have outsized influence over the trajectory of U.S.-China relations, and indeed the international system, for coming decades. At its core, the question confronting both countries is whether the U.S.-China relationship remains capable of being confined to an intense interests-driven competition. The more China clings to Russia following Russian President Vladimir Putin’s barbarism in Ukraine, the stronger that calls will grow in the United States and elsewhere to treat China and Russia as interchangeable enemies bent on imposing their violent might-makes-right vision for the world. To some, the outcome of this question already is foregone. As this thinking goes, President Xi Jinping made China’s choice when he jointly issued a communique for reordering the international order with Putin on February 4 in Beijing at the outset of the Olympics. Both leaders pronounced that the China-Russia relationship knows “no boundaries.” Many American analysts assume Putin used the meeting to secure Xi’s support for his plans in Ukraine. China therefore must be viewed as having blood on its hands for enabling Putin’s efforts to alter the international order from the muzzle of a gun. Both China and Russia must be treated as common enemies in an ideological contest between democracy and authoritarianism.
Russia’s invasion of Ukraine leaves China facing a difficult balancing act
What a difference a few weeks make. In early February, Vladimir Putin and Xi Jinping proclaimed after a “warm and friendly” meeting in Beijing that the friendship between Russia and China had “no limits”.
But on Tuesday, it was clear that Beijing — professing to be “extremely concerned about the harm to civilians” inflicted by Russia’s invasion of Ukraine — was starting to attach limits to its affinity with Russia. Wang Yi, China’s foreign minister, said that China “deplores the outbreak of conflict between Ukraine and Russia”, according to an official Chinese statement that followed a phone call between Wang and his Ukrainian counterpart, Dmytro Kuleba. Such language marks a crucial shift, analysts said. “China is now gradually shifting its position from initial ‘indifference’ to express its frustration about the Kremlin’s military recklessness,” says Yu Jie, senior research fellow on China at Chatham House, a UK think-tank. “Wang Yi’s remark marks a clear signal to reframe its association with Russia at least in its diplomatic rhetoric,” Yu adds. In a nutshell, Russia’s invasion of Ukraine presents China with an almost impossible balancing act. On the one hand, its deep relations with Moscow are classified as a “strategic partnership”, denoting ties that embrace joint military exercises and transfers of military technology and a common antipathy towards what both countries see as the threatening eastward expansion of Nato.
Putin’s War Has Killed China’s Eurasian Railway Dreams
But Russian President Vladimir Putin has likely put an end to that dream. Poland is home to train routes connecting China to Europe along the New Eurasian Land Bridge. This railway corridor that crosses all of Eurasia — running through Kazakhstan, Russia, and Belarus — has become an important branch of the Belt and Road Initiative (BRI), dubbed the iron silk road. The image of Chinese trains crossing Eurasia and bringing Chinese goods to European consumers has been intensely promoted by Beijing and has become an important part of the BRI brand. But almost half of those routes pass through Russia—and could be massively impacted by European sanctions following Russia’s invasion of Ukraine. In 2017, around 40 freight routes connected China to Europe. Today, the number has almost doubled to 78 lines, reaching 180 cities in 23 European countries. Not only has the number of routes and cities increased but also the number of trips. In 2016, there were only 1,900 trips; in 2021, that number reached almost 14,000 trips. As this number skyrocketed during the pandemic, so did the value of goods transported by these freight trains—from $8 billion in 2016 to $74.9 billion in 2021. The trend was ascendent even during the pandemic, rising by 50 percent in 2021 from around $50 billion in 2020. This was a big boost to the railway routes China has tried hard to support, promote, and make profitable. With more than 50,000 trips now made (in 2021, a train was leaving every 30 minutes), half of them during the pandemic period, China-Europe freight trains also developed new hubs.. Consider two other factors: the considerable worry Russia’s invasion generated in Europe, which could affect consumer confidence; and the fact that sanctions and counter-sanctions could considerably increase energy prices, thus diminishing consumers’ purchasing power when it comes to discretionary spending on goods imported from China. This second factor could also impact consumers in other countries—especially in the United States, the other important Chinese export market—as well as Chinese consumers themselves, who will face higher energy bills. Decreased demand for Chinese exports because of higher energy prices and geopolitical anxieties combined with a ban on goods crossing Russia via the New Eurasian Land Bridge, a container crisis, supply chain issues, and maritime transport concerns could provide the final stroke for China’s annual growth target in its most politically important year. This butterfly effect connecting Russia’s invasion of Ukraine and China could soon prove disastrous for China’s BRI railways and economy. Putin may not only kill, for the moment, Poland’s dream of becoming a commercial hub between China and Europe, but he may also destabilize what was once one of China’s most successful BRI projects: the New Eurasian Land Bridge, which is now passing near a war zone.
Xi unlikely to ditch his ‘best friend’ Putin despite Ukraine pressure
Vladimir Putin’s brutal tactics in Ukraine are ratcheting up international pressure on Chinese president Xi Jinping, whose “no-limits” partnership with the Russian leader and reluctance to criticise Moscow’s aggression stands in stark contrast to global condemnation and isolation of the Kremlin.
On Tuesday, Ukraine put Xi’s administration on the spot after the two countries’ foreign ministers spoke by phone. Dmytro Kuleba, Kyiv said, asked Wang Yi “to force Russia to stop its armed aggression against the Ukrainian people”, citing Beijing’s strong relationship with Moscow. “[Wang] reaffirmed China’s unwavering support for Ukraine’s sovereignty and territorial integrity,” Kyiv added. “He assured Kuleba of China’s readiness to make every effort to end the war on Ukrainian soil through diplomacy, including as a permanent member of the UN Security Council.” Last week, China declined to support a UN resolution condemning the invasion, opting to abstain instead.
China’s Outreach to Russian Economy Extends Only So Far
China leader Xi Jinping and Russian President Vladimir Putin recently declared that the partnership between their two countries had “no limits,” but there are constraints on how much Beijing can aid Moscow as it faces Western economic sanctions. China is Russia’s largest trading partner, making it a closely watched factor as the US and its allies seek to hobble the Russian economy after Mr. Putin launched his invasion of Ukraine last week. Beijing, which vehemently opposes Western sanctions against Moscow, has recently taken steps to purchase more Russian energy and agricultural products, but those moves will take years to fully bear fruit. Once they do, they will still fall far short of the amount that Russia stands to lose if Europe closes the door to Russian energy and agricultural products. Beijing will also likely be wary of doing anything that could provoke further confrontation with the West and heap additional pressure on its economy at a time when Chinese leaders are trying to maintain stability ahead of a closely watched Communist Party congress this year, where Mr. Xi is expected to seek a precedent-breaking third term as leade.
Ukraine invasion: China’s TikTok does a delicate dance to keep Brussels, Moscow and Beijing happy
TikTok has not faced a ban in Russia, but incurred the wrath of Moscow by blocking the account of state news outlet RIA Novosti just days before the invasion. While the short video app has positioned itself as an apolitical platform for people to share fun clips, it has been caught in geopolitical controversies before.
Zhengzhou is first Chinese city to ease second-home buying restrictions as local authorities try to reverse property market slump
The city in Henan province sold 6.5 billion yuan (US$1 billion) worth of homes in January, about half the value that changed hands a year ago. Analysts are expecting more large-scale loosening measures will be seen in different cities, even big ones like Zhengzhou.
Hong Kong’s budget offers glimpse of how city can lead China in green and sustainable investment
In addition to providing support for local businesses beset by the pandemic, the 2022-23 budget promises to channel investment into strengthening ties between Hong Kong and the Greater Bay Area, and into making the city a hub for the development of a regional green economy Green finance is a child of the digital age, and that presents a huge opportunity for Hong Kong even as we continue to fight the Omicron variant. Given the vast costs involved in mitigating the impacts of climate change and transitioning away from the high-carbon economy, particularly in Asia, Hong Kong has an opportunity to become the clearing house for international capital coming into the region. The work the Hong Kong Monetary Authority has been doing, often in collaboration with institutions like the Bank for International Settlements, to position the city at the leading edge of green finance is starting to pay dividends. When taken in combination with the enormous need for green investment over the border in mainland China, we expect this opportunity will continue growing as we move towards “3060” – peak carbon by 2030 and carbon neutrality by 2060. Much of the immediate focus of that financing is going to be in the Greater Bay Area. The area already has an economy larger than South Korea, and will remain the world’s most dynamic economic zone as Beijing focuses resources and research funds on the region as part of its plan to become more self-sufficient. It was good to see the government actively seeking to boost connectivity with the Greater Bay Area in this budget, including working with mainland regulatory authorities to create a “network link-up” platform to pilot cross-border fintech and extend the utility of the three Connect schemes. That includes potentially expanding the quotas for the Wealth Management Connect scheme, a move that would not only make Hong Kong more attractive to mainlanders looking to diversify their asset portfolios, but also to regional players looking to buy into China’s success story.
China-Australia relations: Canberra to ‘robustly defend’ itself in WTO case after Beijing escalates tariff dispute
The World Trade Organization (WTO) has agreed to establish a dispute-settlement panel to address Beijing’s complaint against Australia. Australia imposed anti-dumping tariffs on imports of wind towers, stainless steel sinks and railway wheels between 2014 and 2019.
Australia’s biggest bank scales back stake in Chinese lender amid continuing bilateral tension
Commonwealth Bank of Australia has sold 10 per cent of its stake in the Bank of Hangzhou, in a move many attribute to worsening trade relations. Commonwealth Bank of Australia is the latest to reduce its stake in a Chinese bank, even as US and Europeans try to get deeper into the market.
Developers tap NFTs to promote projects, as property, cryptocurrencies and the metaverse converge
Developers could use NFTs to showcase a property, create an exhibition or virtual twins of physical projects in the metaverse, Colliers executive says. No Hong Kong or China property firm is currently using NFTs, but New World Development’s Adrian Cheng has recently invested in virtual real estate.
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