China Two Sessions 2022 – What to Watch
The annual meetings of two of China’s top political bodies will commence this weekend. Amid growing economic uncertainty, a continued fight against COVID-19, and a complex international landscape, the “Two Sessions” meetings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) have a lot on their plate. The economic and legislative decisions made at these meetings will provide a roadmap for China’s economic and social development in 2022 and are therefore of high importance to any player in the China market. Below we provide an overview of what the Two Sessions are and what policies to look out for over the coming weeks.
China’s Two Sessions to emphasise economic stability amid heightened geopolitical tensions
China’s Two Sessions will be held between 4-5 March. This is a great opportunity for the government to announce supportive economic policies as consumption has weakened. It is also a good chance for the government to emphasise stability at a time when geopolitical tensions are high
China’s slowing economy in spotlight as legislature meets
The annual meeting of China’s mostly ceremonial legislature usually showcases grand, long-term plans The crackdown on debt that Chinese leaders worry is dangerously high has pushed some smaller real estate developers into bankruptcy. One of the biggest, Evergrande Group, is struggling to avoid defaulting on 2 trillion yuan ($310 billion) owed to banks and bondholders. Uneasy apartment buyers have put off purchases, fueling a downward industry spiral. After the growth slump, “the basic policy tone this year has turned to stability,” said He Fan, a professor at Shanghai Jiaotong University’s Antai College of Economics and Management. The “policy pivot” suggests the peak of efforts to control internet companies and real estate debt “are behind us,” Hu and Ji said in a report. Forecasters expect debt to creep back up as banks lend more and Beijing pumps money into the economy through higher spending on public works. “Without infrastructure investment, it is difficult to stabilize the economy,” said He.
‘Two sessions’ 2022: China’s zero-Covid policy under the microscope as leaders gather
China’s top officials will lay out economic policies at the ‘two sessions’ starting Friday, including proposals on virus rules Beijing’s zero-Covid policy is increasingly at odds with rest of the world, which is relaxing coronavirus restrictions
China-Germany investment faces ‘challenges’ as rivalry grows in post-Merkel era
Germany is still a go-to destination for Chinese firms looking to acquire hi-tech goods and cannot be easily replaced, analysts say But China-German investment could be ‘tougher than before’ as relations between Beijing and the European Union worsen
In fast-changing Europe, rage against Russia fuels suspicion of China
Europeans have been galvanised by the Ukraine crisis, and China is not immune from the consequences Even as frustration mounts over China’s rhetorical backing for Russia, EU asks Beijing to help negotiate a ceasefire
China And The West: Dueling Connectivity And Narrative Pitches In Year Of The Tiger – Analysis
Last year, two new plans were launched to counter China’s massive multiyear Belt and Road initiative – the G7’s Build Back Better World last June and the European Union’s Global Gateway last December. They add to a growing list of alternatives, including the United States-Japan-Australia led Blue Dot Network and Japan’s Partnership for Quality Infrastructure announced in 2019 and 2015, respectively. While China is not the first to fund and build overseas infrastructure projects, the scale and scope of its activities are unprecedented. Beijing showed that not only is there burgeoning demand to be met but also much to gain diplomatically and strategically from promoting global physical and digital connectivity. Worried that the success of China’s state capitalism and one-party rule may boost authoritarian regimes elsewhere and engender democratic backsliding, the U.S. under President Joe Biden convened its first Summit for Democracy five months later in December. The two-day meeting brought 100 governments, as well as activists, trade unionists, researchers, experts, and members of civil society and business, to renew their commitment to democracy. President Biden cited “outside pressure from autocrats” that “seek to advance their own power, export and expand their influence around the world, and justify their repressive policies and practices as a more efficient way to address today’s challenges” – a jab at China’s political system – as one of the defining problems confronting democracy today. Expectedly, both rivals did not invite each other to their competing summits. China’s rise surely elicited mixed responses depending on where one sits. Its mass production muscle brought down the cost of many goods, making them more accessible to more people across national borders. Its expanding influence abroad gave traditionally neglected small states room to maneuver as they play off one donor or partner against another. Its growing military projection unsettled established great powers and neighbors with which it has unresolved disputes. Its ability to communicate its narrative and sway supporters, even if tacitly, feeds into its resolve to fight back Western censure. If attendance in the Beijing Winter Olympics is any measure, the country is undoubtedly holding its own. If Xi gets a third serving in the coming 20th Party Congress later this year, expect many of China’s current initiatives like the Belt and Road and its narrative campaign to get more vigor. Indeed, much to the West’s chagrin, China remains in the driver seat, and responses to its behavior will shape international relations in the year of the water tiger.
China’s Feb services activity expands at slowest rate in six months
Activity in China’s services sector in February expanded at the slowest pace in six months, as the sprawling industry reels from the government’s tough containment measures to stop the spread of local COVID-19 outbreaks, a survey showed on Thursday. The Caixin/Markit services Purchasing Managers’ Index (PMI) dropped to 50.2 in February – the lowest since August and only a touch above the 50-point mark that separates growth from contraction on a monthly basis – from 51.4 in January. The softer reading contrasted with a slight pickup in the services sector growth in an official survey on Monday, although both results pointed to a still soft expansion as the industry remains vulnerable to disruptions amid China’s zero-COVID approach.
China – Bucking The Trend?
Tectonic shifts that are currently taking place in geopolitics and global markets might have placed China in a unique position as regards its growth outlook. The 2021 growth hiccups and regulatory overreaches forced Chinese authorities to re-deploy pro-growth accommodative policies in a situation when many emerging markets were aggressively tightening and developed markets were moving towards policy normalization. The latest domestic activity gauges – both official and Caixin Purchasing Managers Indices (PMI) – show that the past stimulus started to work its way through the economy.
Amazon Vs. Alibaba: In The Battle Of The Giants, Who Wins?
Financial metrics give Alibaba the advantage over Amazon. From a profit standpoint, Amazon is basically a cloud service with a huge commercial website attached. There are some differences in business direction and approach. Both billionaire founders seem to be MIA.
In China, Fewer Are Willing to Splurge as Economic Worries Mount
Chinese leaders can’t convince people to spend more, threatening plans to reignite growth Now that is becoming a bigger worry for Beijing, which is trying to reignite growth at a time of rising economic uncertainty due to Russia’s invasion of Ukraine and global inflationary pressures.Chinese leaders are widely expected at annual parliamentary meetings starting this week to unveil measures to stimulate more spending, such as doling out consumption vouchers and subsidies on goods like cars. Authorities have also recently eased credit conditions, including making it cheaper for companies and families to obtain loans. China must use every possible means to support a recovery of consumption, such as extending relief measures to small businesses, said Wang Wentao, the commerce minister, on Tuesday.
Hong Kong stocks gain as China seen reviewing zero-Covid stance while Fed eases concerns about tightening pace
China is said to be reviewing its tough zero-Covid stance in the fight amid pressure on the economy Investors remained wary of tech stocks as top regulator said more needed to be done to ensure an orderly market for internet-platform operators
Qualcomm joins forces with TikTok owner ByteDance to pursue advances in metaverse-ready extended reality technologies
The two companies will collaborate on hardware, software and technology road maps to enable a global ecosystem for extended reality technologies XR is an umbrella term for immersive technologies such as virtual reality and augmented reality, which are fundamental to the development of the metaverse
Chinese electric vehicle battery king urges Beijing to speed up lithium mining as global scramble for ‘new oil’ intensifies
Lithium is in short supply as global switch to EVs drives demand for the rare earth metal used in batteries CATL chairman says that China must bolster lithium mining to ensure long-term supply chain security of the rare earth metal
China cools on biodegradable plastic
With the official stance shifting from all-in to wait-and-see, the future of biodegradable plastic in China is uncertain
Hong Kong exchange can collaborate with Beijing bourse to create fundraising platform for Chinese SMEs, advisory body FSDC says
‘Hong Kong’s continued success as an international financial centre depends much on its ability to connect investors to attractive investments at the right price’ The FSDC report also proposes that HKEX revamp second board GEM as an incubator for start-ups
Apple’s decision to stop selling products in Russia puts pressure on other smartphone makers
Apple announced the decision Tuesday along with a number of other actions in response to Russia’s invasion of Ukraine. The move “absolutely” puts pressure on rival firms like Samsung to follow, CCS Insight Chief Analyst Ben Wood told CNBC Wednesday. It may also represent an opportunity for Chinese firms to push deeper into Russia.
Swift sanctions on Russia won’t stop gas flow to Europe. Will they blunt its war effort?
Being removed from the international payment system will make life more difficult for Russia, but the sanctions have left energy largely untouched The sanctions are expected to still do heavy damage to the Russian economy and could push Russia and China towards alternatives to Swift Depending on the outcome of the war, it is possible that opposition to Swift and Western financial hegemony could prompt closer cooperation between Russia and China. Both countries have sought to create alternatives to Swift. Russia established its MIR system of financial messaging in 2014, but currently it handles only about a quarter of domestic card transactions. China set up the Cross-Border Interbank Payment System, or CIPS in 2015, and 23 Russian banks are members. China is Russia’s biggest trading partner, and an ambitious programme of building new gas and oil pipelines to China is under way. In announcing the sanctions limiting Russian participation in Swift, Western nations declared the sanctions will “collectively ensure that this war is a strategic failure for Putin”. Events in the coming days and weeks will determine whether that is true.
How China’s US$12.3 trillion stock market is insulated from Russia-Ukraine conflict while Hang Seng hits two-year low
Only two companies among 4,400 – Great Wall Motor and Dezhou United Petroleum – have sizeable revenue linked to the conflict region Shares of Great Wall have fallen 6.4 per cent in Shanghai since the invasion, while Dezhou advanced 33 per cent on the back of oil rally
Ukraine war shows West’s declining understanding of the world
Ignorance especially evident in much of the discourse about China This is evident in much of the Western discourse about China, which frequently appears to be based on a very limited understanding of the country, despite its rich history, economic size and political importance. Ignorance starts early in the education process. This then permeates into the broader public discourse, including at the governing level. Only a small minority of those sitting on the U.K. parliament’s cross-party platform for discussions on London’s relationship with Beijing appear to have worked or studied in China. And as per the principle that ignorance breeds excessive confidence, it is no surprise that many of the U.K.’s most virulent anti-China voices have no firsthand experience of the country. But this knowledge gap is not just limited to China. The rhetoric after the U.K. left the European Union that it should become a Singapore-on-Thames reflected a profound misunderstanding of how that Asian city-state functions and the subsequent irrelevance of any such comparison. Although the above examples are from the U.K., this dynamic is a theme across the West. And while the widening knowledge gap may be inevitable and insidious, it comes with long-term dangerous risks. The first is that it leads to a poisoned and shrill debate, with no scope for nuance and understanding, and where ideological dogma fills the void of ignorance. Not only does this frequently create a false narrative, for example, the continued expectation that China’s economy is just a heartbeat away from a Soviet-style collapse, but it embeds tension and rancor in the relationship because dogmatists rarely see the contradictions and hypocrisies of their views. The second is that the widening knowledge gap risks a potentially catastrophic misunderstanding between the West and resurgent powers, particularly China. If Western countries persist in viewing the world very much through the prism of their own ideologies, value and beliefs, then they should not be shocked nor surprised when developments do not accord with their expectations. Especially as this knowledge gap is asymmetrical because China understands the West far more than we understand it. As Western influence wanes, its relative understanding of the rest of the world is being eroded. Those countries that are growing quickly are those we understand less.As such, if Western countries want to avoid any more shocks like the one unfolding in Ukraine, then addressing these widening knowledge gaps has to be a priority, as well as a recognition that our values and priorities have significant temporal, spatial and economic components which not all countries will simultaneously share nor play by.
China digital currency: will Western sanctions against Russia over Ukraine boost e-yuan?
With the Swift system being used in sanctions against Russia, China’s digital yuan payment system could be a replacement, say Chinese researchers The as yet unlaunched point-to-point digital payment system should reduce the need for cross-border financial messaging between banks
China-led Asian Infrastructure Investment Bank freezes Russia lending
Asian Infrastructure Investment Bank (AIIB) said on Thursday (Mar 3) it has put all activities relating to Russia and Belarus on hold and under review in the wake of the current conflict in Ukraine. The Beijing-headquarted AIIB said in a statement that its management would do its utmost to safeguard the financial integrity of AIIB, against the backdrop of the evolving economic and financial situation.
China-backed AIIB puts Russia and Belarus lending ‘on hold’ over war in Ukraine
Russia is a founding member and shareholder of the Beijing-based lender, holding a 6.7 per cent stake China is the biggest member, with a 30 per cent holding in the AIIB, which is seen as a potential rival to the World Bank
China is no match for Russia when it comes to political shock to markets
If China’s regulatory crackdown had markets worried, it is nothing compared to the impact of Russia’s war in Ukraine Hardest hit is Russia itself, where harsh sanctions have sent the rouble into free fall, but central banks everywhere will have to confront the risk of stagflation Long-standing concerns about the regulatory and governance system in China have become more acute, amplified by the government’s deleveraging campaign in the property industry, which continues to pose a severe threat to China’s economy and markets. Despite signs of a shift towards looser policy in recent months, the average yield on a gauge of junk-rated dollar-denominated Chinese bonds – which is dominated by real estate developers – stands at a prohibitive 20 per cent, leaving developers shut out of offshore funding markets.
podcast : War in Ukraine: China-Russia relations
While most of the world condemned the Russian invasion of Ukraine, China abstained, but did not go as far as vetoing the UN resolution. How do Sino-Russian relations affect China’s stance and how are these relations likely to be impacted by recent developments? In this episode of the Sound of Economics Live, Giuseppe Porcaro, Alicia García-Herrero and Elina Ribakova continue our look at the war in Ukraine by examining the state of relations between these two major powers.
Why China Should Want Russia’s Invasion To End
While it is one of the few global powers that has failed to condemn Russia’s invasion of Ukraine, China is also one of the countries that is most threatened by the conflict. As the world’s largest energy importer, China suffers greatly when the price of oil, natural gas, and coal soar as they have in recent days. Beijing is walking a tightrope by trying to shore up international relations and alliances through its sweeping Belt and Road Initiative, while also forging a special economic, political, and ideological bond with Russia as a counterbalance to the superpowers of the Western world. The oversimplification of West versus East as a story of good versus evil and democracy versus authoritarianism is a tempting and overused narrative, but it fails to encapsulate the complex and intricate web of interests, power relations, exploitation, and geopolitics involved in international relations. Resisting the urge to moralize, however, has become increasingly difficult as Russia has invaded Ukraine, drawing the outrage and ire of nearly all of the international community, with the notable exception of China.
China must press Russia over Ukraine ceasefire
Russia’s invasion of Ukraine threatens to reshape the world, carving two rival camps out of today’s highly interconnected international order. On one side would be Russia and its “strategic partner” China. On the other would be the US and also a Europe that has tended to consider its relationship with China primarily in terms of commerce. Just over a week ago such a scenario might have been seen as paranoid. But so much has changed since Vladimir Putin launched a full-scale attack on Ukraine that a return to cold war dynamics, more complex than 30 years ago, seems in prospect. Already, the sanctions on Russia imposed by the US, EU and UK are unprecedented. They include planned measures against leading figures — including Putin himself — as well as sanctions on Russia’s central bank and the removal of some of its lenders from the Swift payments system. Other nations also announced moves. In this context, China’s role is crucial. Beijing should be aware that a failure to condemn Russia risks portraying China as an enemy in the eyes of European powers. That may sound extreme, but is in fact logical when Putin is issuing veiled nuclear threats. Yet Beijing should realise that if its state-owned banks provide direct support to sanctioned Russian lenders, they will risk western sanctions on their own international business. The fact that Ukraine’s invasion has not been the pushover Russia may have planned for should also be a salutary lesson for China when it comes to Taiwan. More broadly, China’s general attitude in this crisis will do much to determine how it is viewed. The Ukraine crisis strikes a visceral chord, especially in Europe. A China that backs a brutal regime waging an unprovoked war with democratic Ukraine cannot be excused. Beijing should start clearly and deliberately setting limits on its ties with Putin’s Russia. It should reflect that if cold war dynamics do start to take hold and China finds itself hemmed in to a Russia-China axis, it risks cutting itself off from the most lucrative trading relationships it has. Although its trade with Russia grew last year by 36 per cent to $147bn, this figure amounted to no more than one-tenth of its combined trade with the US and EU. For its own sake, Beijing should be wary of going too far in its support for Putin’s war.
Enemies of my enemy How fear of China is forging a new world order
Until now. Through a surge of repression and aggression, China has frightened countries near and far. It is acting belligerently in East Asia, trying to carve out exclusive economic zones in the global economy, and exporting digital systems that make authoritarianism more effective than ever. For the first time since the Cold War, a critical mass of countries face serious threats to their security, welfare, and ways of life—all emanating from a single source. This moment of clarity has triggered a flurry of responses. China’s neighbors are arming themselves and aligning with outside powers to secure their territory and sea-lanes. Many of the world’s largest economies are collectively developing new trade, investment, and technology standards that implicitly discriminate against China. Democracies are gathering to devise strategies for combating authoritarianism at home and abroad, and new international organizations are popping up to coordinate the battle. Seen in real time, these efforts look scattershot. Step back from the day-to-day commotion, however, and a fuller picture emerges: for better or worse, competition with China is forging a new international order.
How China’s dilemma over Ukraine may loom large at key political gathering
Beijing is in a difficult position, caught between Russia and the West, but experts say it’s unlikely to condemn the invasion or give full support to Moscow The crisis is expected to be among the issues addressed when Foreign Minister Wang Yi gives his annual news conference during the National People’s Congress
Analysis-Ukraine crisis threatens China’s discreet pipeline in military technology
Russia’s invasion of Ukraine is likely to threaten one of China’s most discreet but important strategic relationships in recent years: its use of Ukraine as a source of technology for the expanding Chinese military. Military analysts and diplomats say that although the Ukraine-China link has come under increased pressure from the United States, the current conflict could largely scupper a trade that has helped China’s military modernise over the last two decades. Ukrainian frustration over Beijing’s growing ties with Moscow and uncertainty over the shape of its post-war economy and government could threaten the relationship, they say. “My guess is that Ukraine for some years filled an important niche for China, in that it might have easier to get certain products and technologies that Russian might have been less keen to sell them,” said Singapore-based strategic consultant Alexander Neill. “But China’s own indigenous design and manufacturing capacities have improved and to a large extent Ukraine has probably served its purpose.” Any intensifying U.S. involvement in post-war Ukraine could also complicate the trade. Already, pressure from Washington has had an impact. The Ukrainian government confirmed last year that it would halt the takeover of local aircraft engine maker Motor Sich by Chinese aerospace company Skyrizon due to U.S. concerns of forced technology transfers.
The Asian economies most exposed to the Russia-Ukraine conflict
With only the sketchiest idea of how this conflict will develop, putting hard numbers onto its impact for Asian economies in terms of percentage points of GDP is not something we can contemplate at this point. Instead, we can consider the relative rankings of the channels we have analysed as being the most likely to affect the economies of the region. When we do this, it looks like Vietnam will be the most-affected economy in the region, along with Thailand, Japan and South Korea. At the other end of the table, Australia, Indonesia, the Philippines and Singapore will be the least-affected economies.
China/Ukraine: siding with Russia puts food security at risk
With so many mouths to feed, understandably China eyes self-sufficiency of food supply as important. It has successfully stepped up domestic grain production in recent years. But the country has some way to go. Russia’s invasion of Ukraine must worry Beijing given the primacy of Ukrainian exports to Chinese food security. China is the world’s largest agricultural importer. Local production falls short of its needs and Ukraine’s crops help fill the gap. Last year, China imported a record 28mn metric tonnes of Ukrainian corn, more than double from the previous year’s 11mn. Ukraine is blessed with highly fertile black soil — more than a quarter of the global share — enabling it to produce more than 80 per cent of Chinese corn imports. China has little leeway. Its grain supply shortfall should reach about 130mn tonnes in the next three years. Any resulting scarcity of animal feed would cause even more problems for local food inflation.
Russia-Ukraine conflict has a limited impact on China’s food prices
China is the world’s second-largest consumer of corn, but only 9.4% of domestic corn consumption in 2021 came from imports, according to Citi. Only 5.9% of China’s wheat consumption last year was imported, the report said. China’s heavy reliance on domestically produced wheat and corn does not mean the country is immune to price increases. Prices of imported wheat and corn have surged, according to Chinese media reports. Soybeans are the only major crop where China relies heavily on imports — 84% of domestic consumption in 2021, mostly from the U.S. and Brazil, according to Citi.
EU-China Opinion Pool: What should the EU’s anti-coercion instrument look like?
The dispute between China and Lithuania and Beijing’s unofficial economic sanctions have put the question of economic coercion high on the EU’s agenda. While the bloc has launched a case against China at the World Trade Organization (WTO), many observers are calling for the EU to speed up the adoption of a new anti-coercion instrument (ACI).The European Commission’s proposal for a new anti-coercion instrument (ACI, presented on December 9, 2021) could not have been more timely. Gas imports from Russia could be weaponized in a Russian response to European sanctions over the invasion of Ukraine. In addition, China is boycotting imports from Lithuania and even Lithuanian components used in German exports directed towards China. So, the need for such an instrument seems clear. The next question is whether the current design is appropriate, namely not too much and not too little. Too much would make it an instrument that creates distortions in trade which may be more costly than the specific coercion-through-trade problem we want to address. Too little would mean that the desired effect – to prevent coercion altogether – is not achieved.As we stand, it seems to me that the latter risk is greater. The European Commission’s long-standing support for the multilateral trading system is the starting point for ACI. In other words, due account has been taken in the Commission’s proposal so that ACI is WTO-compatible and seen as a complement to the WTO’s dispute-settlement system. Instead, the risk of enacting an ineffective instrument is higher, for the simple reason that the ACI is designed as a tool of last resort. As such, it can easily be put to use too late and, thus, not act as deterrent. Given the lightning speed at which the EU’s external environment is worsening and the urgent need to have the ACI available as an option, it is very important to accelerate passage through the EU Parliament and the Council – hoping that the tool remains intact. That, in itself, is of course not guaranteed.
China to limit news notifications to licensed publishers after weeks of discussion about human trafficking and Ukraine
A draft regulation open to public feedback this month would make service providers responsible for the content of push notifications The regulation comes after news of an apparent case of human trafficking resulted in a surge of anger online in the middle of the Beijing Winter Olympics
Virtual host debuts on JD.com, can AI take over as China’s top live streamer?
Whilst Li Jiaqi, the country’s top online salesman for cosmetic products seems to have had a monopoly on China’s live streaming sales to date, the recent debut of a virtual beauty live streamer, Xiaomei on JD.com serves as a reminder that the battle is not yet over.
Scientists call for China to protect world’s first gene-edited babies
He Jiankui was jailed for his experiment on human embryos after the three girls were born A new proposal suggests a research centre be set up and funds allocated to look after them
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