China Press Review – March 21, 2019

Press review

Trump threatens to extend tariffs even if China trade deal is reached
As the trade war between the US and China continues, Trump says tariffs will be kept in place to ensure China ‘lives by the deal’.

The Endless China Trade War
The President likes tariffs. That’s what he says. That’s how he acts. It may be time to believe him. A second implication of the President’s China-tariff warning is confirmation that the administration continues to handle the negotiations badly. Here we have to perform our own analysis, rather than relying on the President’s statements, since he will inevitably describe himself as a masterful negotiator

China, US prepare for final push in trade talks, as dates set for Beijing, Washington meetings
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing next week as sides race against the clock to reach an agreement But Washington’s demand for an enforcement mechanism remains a stumbling block, analysts say

China’s New Foreign Investment Law and Forced Technology Transfer: Same As it Ever Was
Does this provision resolve the current dispute between the United States and China regarding forced transfer of technology? Absolutely not. This provision merely states what has been the law in China for many years. In the 90s, it was common to condition approval of Sino-Foreign joint ventures with the requirement that the foreign entity in the proposed joint venture transfer its technology to the joint venture entity as part of the foreign investment. Under that system, foreign investors were given substantial incentives to invest in China, including reduced land and rent costs, reduced utilities costs, freedom from various forms of taxation and tariffs, and reduced employee salary and social benefit obligations. In exchange for these substantial benefits, it was commercially reasonable for the Chinese side to require the foreign company engage in technology transfer. It was not exactly a forced transfer; it was more like an even commercial trade

China’s New Foreign Investment Law and Forced Technology Transfer: Same As it Ever Was

Taiwan is finally luring companies back from China after more than 15 years of trying
Higher costs and dodging trade tariffs from the US-China trade war are key reasons for Taiwanese firms moving back home Since January, 14 firms have applied to invest (US$1.29 billion) which would create 4,400 jobs, with 14 projects pending approval

EU leaders to discuss ways to limit Chinese influence at summit dinner
The European Union will discuss a more defensive strategy on China on Thursday, potentially signaling an end to the unfettered access that Chinese business has enjoyed in Europe but which Beijing has failed to reciprocate.

There is no place like Rome for President Xi
But Italy’s plan to join China’s Belt and Road Initiative has triggered concerns from the EU and the US

Italy takes a shine to China’s New Silk Road
China has bought up a majority stake in the Greek port of Piraeus – and Italy might be next
China’s president lands in Rome on Thursday, where he is expected to sign a landmark infrastructure deal that has raised eyebrows and suspicions among Italy’s Western allies.

Chinese firms may face barriers to winning Europe’s public contracts as leaders call for new law
Member states call for ‘reciprocity’, after their companies could not bid for projects in China despite EU accepting Chinese bidders Text for public procurement rules to be discussed at European summit starting on Thursday

Debt worries increase for China’s middle class as unemployment rises
China’s unemployment rate jumped to 5.3 per cent in January and February, while household debt now makes up 52 per cent of gross domestic product.

Rich, autocratic China is too powerful an adversary for any democracy
In this new cold war, the US and other democracies that abide by fair and open rules of engagement cannot stop China claiming its place as the world’s No 1 superpower. Where will that leave the rest of the world?

E.U. Faces Internal Division as Xi Visits the Continent
Chinese President Xi Jinping is set to visit Europe on Thursday for a six-day trip to Italy, Monaco, and France. As Xi looks to strengthen ties with individual countries in the region and expand his signature Belt and Road Initiative (BRI), members of the European Union are showing sharp divisions in their stance towards China. The Wall Street Journal’s Marcus Walker reports that France and Germany are preaching caution as the two countries lead the shift towards a more guarded approach to Beijing, while Italy and others welcome greater economic cooperation with China:

E.U. Faces Internal Division as Xi Visits the Continent

Chinese companies must Europeanize for Europe
Empowering local executives and engaging with the public can help allay suspicions

China’s Massive Gig Economy
The Chinese government estimated that by June 2011—the latest year for which statistics are available—there were 37 million dispatch workers in enterprises in the country, accounting for 13.1 percent of the total workforce. A little over half (52.6 percent) of the sampled dispatch workers were rural migrants, while the rest were workers with urban household registration. According to the law, a dispatch worker’s employing entity is an agency rather than the company where they work. Thus, in the legal realm, the “user of the work”—the company that actually directs workers’ day-to-day tasks—is separate from the “employer of the person,” with which workers have their employment contracts.

China’s Massive Gig Economy

Huawei: The Hi Tech Geostrategic Gambit
The fears about Huawei’s technology are hiding a power struggle, a hegemonic dispute over technology. So far the accusations of espionage against this corporation perhaps are valid in theoretical sense, but unprovable in facts, leaving them as mere speculation. The accusations by the US against Huawei of the threat of espionage are unbelievable and hypocritical in some sense, a speech marked by a double standard… Who represents the threat?

Huawei: The Hi Tech Geostrategic Gambit

Huawei’s US government lawsuit may lift the air of ‘mystery’ around the Chinese telecoms giant
The US Congress has banned federal agencies from using equipment made by the Shenzhen-based firm due to national security concerns v Professor He Weifang says the case ‘would be fantastic’ if it helped reveal details of Huawei’s ownership structure and relationship with the Chinese government

More than half of China’s tech spend goes to 5G
China is expected to spend $256 billion on technology goods and services this year, with 5G to account for 57% of this, according to a report by research firm Forrester. The country has outspent the US in the 5G field by around $24 billion since 2015, with China’s three major telcos unveiling plans to launch commercial 5G networks by next year. The report said that China’s investment in telecommunications would remain robust and it was “best positioned” to win the global race in 5G implementations this year.

Briefing: More than half of China’s tech spend goes to 5G

China to be the world’s biggest 5G market with 460 million users by 2025: report
China will become the world’s largest 5G market, with 460 million users of the next-generation superfast network by 2025, China daily reported Thursday, citing a report given by the Global System for Mobile Communications Association (GSMA). pushes further into smart cities, offering social credit and AI-powered tools to local governments in China
The move comes amid Beijing’s call for deeper integration between AI and the real economy

Xiaohongshu fights fraudulent reviews on user-powered e-commerce platform
E-commerce platform Xiaohongshu, also called RED or Little Red Book, is cracking down on online sellers offering to boost views and fan counts after reports from users. For Xiaohongshu fraud allegations, if unaddressed, could prove especially harmful. The largely for females social platform is centered on product reviews and recommendations posted by users.

Xiaohongshu fights fraudulent reviews on user-powered e-commerce platform

The China Tech Bubble Is Dead. Long Live the China Tech Bubble
Offshore private equity funds struggled to compete with a wave of onshore money. Now it’s retreating, and the water looks more inviting.

Alibaba’s AI Labs to invest $15 million in Chinese dialect project
Alibaba’s AI Labs announced on Wednesday that it’s going to invest RMB 100 million ($15 million) in research and development projects around Chinese dialects. The unit will create a Chinese dialect database through dialogue-based sample collection from a dedicated app and smart speakers. The company’s smart speaker Tmall Genie will learn to recognize the dialect common in the southwestern Sichuan province first, and then cover all major dialects in the future. To achieve the goal, the company is partnering up with government institutions, linguistic experts, and universities.

Briefing: Alibaba’s AI Labs to invest $15 million in Chinese dialect project

Alibaba to run its entire business on the cloud
“Currently, 60-70% of Alibaba’s businesses run on Alibaba’s public cloud platform,” said Zhang. “Within a year or two from now, we expect 100% of Alibaba’s businesses to run on the public cloud.”

Alibaba to run its entire business on the cloud

Tencent to advance investments in core infrastructure, frontier technologies amid video gaming slowdown
The internet giant capped 2018 with a quarterly profit that missed analysts’ estimates

In China, paying others to play games for you is big business. Tencent is not amused

MMR boosting services, known as dailian in Chinese, is available for several Tencent games on platforms such as Dailiantong and Dailianmao. Customers, referred to as “boostees,” can place orders for a specified increase in rankings on the platform, which will then assign each order to a “booster.” All of the platforms claim to be using “professional” boosters, offering customers money-back guarantees if boosters fail to complete the order.

In China, paying others to play games for you is big business. Tencent is not amused

Consumption vitality of China’s tier-1 cities
Hangzhou surpassed Beijing and Shanghai in terms of GDP per capita. Beijing was the most active city compared with Shanghai, Shenzhen, and Hangzhou. Beijing has invested the most in fixed assets while Shenzhen is the fastest-growing one.

Slowdown or not, China’s luxury goods still seeing high-end growth
Despite well-documented concerns over an economic slowdown in China, the country’s luxury goods market is still seeing opulent growth according to a new study. Behind secular and demographic tailwinds, the luxury sector is set to continue its torrid expansion in the face of volatility as it’s quickly becoming a defensive economic crown jewel.

Slowdown or not, China’s luxury goods still seeing high-end growth

Fashion for China: More local brands and new technologies
Whoever visits the Chinese fashion metropolis Shanghai and the fashion fair Chic Shanghai (12 to 14 March ) there, gets very different impressions: In the high-gloss shopping malls of the city one western brand follows another, from Gap to Denham, from The Kooples to Damir Doma. The luxury brands have been there for a long time anyway. With a few exceptions, however, the 1,365 national fashion brands that presented themselves at Chic Shanghai are not found in the malls. The reason: The Chinese clothing industry is just at the beginning to develop own brands for the domestic market.

The Road Ahead For China’s Automobile Industry
For the first time in memory, China’s unit vehicle sales declined in 2018, registering a 2.8 percent year over year decline. Although sales were cumulatively positive through September, they began declining on a monthly basis in July, and then completely fell out of bed in the last three months of the year. The industry’s downward trend has continued into this year, with vehicle sales declining by 17 percent in February, the eighth consecutive monthly sales decline. While two months of sales data is not necessarily dispositive for the year as a whole, China’s auto industry is clearly in a funk.

The Road Ahead For China’s Automobile Industry

Geely sees speed bumps ahead as its car sales and earnings sputter while China’s economic engine loses power
Geely sold 44 per cent fewer cars in December, compared with the same month in 2017, as a trade war with the US and China’s economic slowdown gave customers cause for pause China’s car sales sputtered last year, falling 2.8 per cent, the first annual decline since 1992

Hopes of compromise as China and the European Union seek common green bond rules
Agreement on standards would be rare deal as relations between the trading partners fray on other fronts Even as disputes in their bilateral relationship pile up, officials from China and the European Union hope to find common ground on one key global issue: issuance standards for “green” bonds dedicated to financing environmentally friendly projects.

China’s air quality worsens as national PM2.5 level rises 5.2pc in January and February
Just 83 of 337 cities monitored meet national standard in first two months of 2019, according to environment ministry survey Average PM2.5 reading in 28 cities in pollution control region of Beijing-Tianjin-Hebei more than 10 times WHO’s safe level

As China’s economic growth engine slows, is its war on pollution losing steam?
Facing pressures such as the trade war, a global economic slowdown and a decline in domestic consumption, China’s leaders are looking to boost the economy. Balancing this impulse with environmental protection will be challenging

How academic progress in China and the West will suffer as a result of growing mistrust
Universities in the US and elsewhere have responded to growing suspicion of Chinese intentions by cutting joint programmes and restricting Chinese researchers It surely won’t be long before China begins to curtail student numbers abroad

Two Sessions signal Chinese government support for blockchain
Blockchain was on the agenda at the annual Two Sessions meeting of China’s legislature. Delegates and political leaders also discussed cryptocurrency, calling for efficient, clear and strict regulations. For non-currency blockchain, representatives expressed enthusiasm about a wide range of applications, which will likely receive state support. We count nine applications specifically named

Two Sessions signal Chinese government support for blockchain

Setting Up Your Own Factory in China: The Basics
There is an old saying about how lawyers do well when times are good and lawyers do well when times are bad. The only bad times for lawyers are when there is little to no change at all. In spite of the trade tensions, China’s declining economy, and just the overall uncertainty, our China lawyers have of late been getting a stream of requests from companies (mostly European for some unknown reason) looking to set up their own factories in China. These are mostly companies that supply parts to multinational manufacturers that make products in China. These manufacturers are pressuring their suppliers to set up factories in China, presumably out of tariff concerns.

Setting Up Your Own Factory in China: The Basics

China vs. Taiwan: ideological war goes global
Taiwan fighting back against Beijing’s containment overseas

Over 1,700 projects worth $1trillion fall under China’s ambitious One Belt, One Road Initiative (OBOR)
Annual Investment Meeting 2019 to host AIM-OBOR Forum With more than 1,700 projects worth USD 1 trillion, China’s ambitious One Belt, One Road Initiative aims to positively impact 4.4 billion people, or 65 percent of the world’s population that equals to about 40 percent of the global gross domestic product (GDP). Spanning across to 70 countries across Asia, Europe, Africa, and Oceania, the One Belt, One Road Initiative has been allocated over $340bn in construction contracts secured by Chinese companies.

Can Finland’s forests withstand Chinese-driven growth?
There are currently five major forestry-related projects underway in Finland driven, at least in part, by Chinese investment.

6 dead after explosion at Chinese pesticide plant
Blast at Chenjiagang Tianjiayi chemical plant damages nearby residential buildings, school and dozens of vehicles Magnitude 3 earthquake detected

China invites European diplomats to visit Xinjiang as backlash grows over Muslim camps
‘Informal’ offer made as Beijing tries to defend its policies in region where it has been accused of locking up more than a million mainly Uygur detainees

Bullet train propaganda points to Xi reign beyond 2022
China asks citizens to study revised constitution for ‘new era’

China wants soft power. But censorship is stifling its film industry
Beijing-based film director Huang Han has had one of the worst weeks of his life, courtesy of the Chinese government’s strict censors. He says his independent, low-budget romance flick, set for an online domestic release in 2019, has been hit by an insoluble problem: how to show the male protagonist smoking without giving the cigarette screen time.

Alain Gillard
Information Officer
Service Asie Pacifique
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