China’s advanced manufacturing upgrade backed to gather pace, driven by top priority status in five-year plan
Beijing outlined a comprehensive plan to upgrade its manufacturing capabilities by 2025 via eight priority areas, including robotics, aircraft engines, new energy vehicles and smart cars. Hi-tech manufacturing and equipment manufacturing outperformed overall manufacturing in March’s official manufacturing purchasing managers’ index (Its emphasis on advanced manufacturing forms an integral part of the country’s 14th five-year plan, which spells out the country’s economic and development goals for 2020-25. Manufacturing accounted for 38 per cent of China’s gross domestic product in 2020, according to official data, and is considered the backbone of the country’s industrial economy. “Authorities will accept moderately slower growth and follow targets less closely as they focus on innovation and more balanced development. Consumption-facing sectors will gain somewhat more policy support, but through gradual structural reforms rather than direct stimulus,”.
China’s currency set for worst month since US trade war
China’s currency is set for its worst month against the dollar in more than a year and a half, as investors fret that a clampdown on borrowing could slow the country’s swift economic recovery from Covid-19. The tightly regulated onshore-traded renminbi fell 1.4 per cent against the greenback in March to about Rmb6.57, marking its worst one-month drop since August 2019, when Washington labelled Beijing a currency manipulator. The recent drop also erased the Chinese currency’s gains against the dollar since the new year. The fall represented a partial reversal for China’s currency after a banner 2020, when demand for the renminbi drove gains of 6.7 per cent. Offshore investors, eager to capitalise on the country’s rapid economic rebound from the coronavirus pandemic, poured more than Rmb1tn into China’s bond and stock markets.
China’s Consumers Boost Its Economic Recovery
–China’s economic recovery picked up a surprising amount of steam in March, boosted by strong domestic consumption and unquenchable foreign demand for Chinese-made goods. The country’s official manufacturing purchasing managers index, a gauge of factory activity, hit a three-month high of 51.9 in March, topping February’s reading of 50.6 and the 50 mark that separates expansion from contraction, according to data released Wednesday by the National Bureau of Statistics. Economists polled by The Wall Street Journal had forecast a reading of 51.2. Last year’s historic contraction sets China up to record a sizable year-over-year jump when it reports first-quarter gross domestic product on April 16. Some economists are expecting China to report year-over-year growth of 15% or more in the first quarter and 8% or more for the full year. Despite the encouraging numbers released Wednesday, some economists questioned the sustainability of the recovery, particularly in the export sector. “The current strength of exports is likely to unwind over the coming quarters as vaccinations allow a return to more normal global consumption patterns,” Julian Evans-Pritchard, an economist with Capital Economics, told clients in a note Wednesday. Nomura economists, too, expect both the manufacturing and nonmanufacturing PMIs to moderate in April. As a result, they said, Wednesday’s better-than-expected numbers were unlikely to affect Beijing’s monetary policy, which has tilted toward not withdrawing last year’s stimulus measures. The economists said they expected “no sharp shift” in the coming months.
Huawei’s grip on China market softens blow of US crackdown
Share of global 5G equipment market rises thanks to domestic sales Huawei Technologies’ dominance of its home market helped it withstand the worst of a U.S.-led international crackdown on its businesses in 2020, as the Chinese tech champion posted an increase in sales and profit. “Starting in Europe, at least 40 telecom service providers did not select Huawei for their 5G rollouts last year; in Canada for example, Samsung was selected to replace Huawei; in New Zealand, Spark selected Samsung and in India Huawei will not be allowed to participate in 5G deployments,” Teral said. Samsung, of South Korea, has emerged as the biggest beneficiary, he added. Huawei said revenue for its consumer electronics business — which includes smartphones, laptops, tablets and other connected devices — grew 3.3% in 2020. Its smartphone shipments, however, dropped 21.5% from a year ago to 189 million units, according to data from IDC. In the final quarter of last year, Huawei was fifth in the world by shipments, behind domestic rivals Xiaomi and Vivo as well as Apple and Samsung. Just a year before, in 2019, it recorded its highest-ever smartphone shipment of 240.6 million units and overtook Apple as the world’s second-largest smartphone maker.
US-China tech war: FCC commissioner urges tougher steps on Huawei and Xinjiang
Current rules that allow US carriers to buy Chinese telecoms equipment with private funds is a “loophole”, says Brendan Carr Carr also expresses concerns over the potential use of forced labour in Chinese supply chains
China best placed to profit from the world’s move towards a lower carbon future, says HSBC report
It is expected to compete with the US for leadership in deployment of low-carbon technology China’s unmatched production scale in nuclear reactors and batteries means it enjoys unique cost advantages, according to the analysts
podcast : “Chinese Economy Remains a Juggernaut: HSBC’s Neumann”
Fred Neumann, co-head of Asian economics at HSBC Holdings Plc., discusses China’s economic recovery, commodities and PBOC policy. He speaks on “Bloomberg Daybreak: Asia.”
The Friendly Flagship Of The Future
The accelerating digital transformation of luxury retail has led brands to divest in physical flagship stores. Does that mean they’re dead? The flagship store is an integral part of a luxury brand’s strategy to showcase the brand. And in China, it offers instant credibility and a bold statement, so a brand can break through the clutter and reinforce its stature. That raises the competitive pressure for brands to deliver a “wow” flagship store experience to their customers. But the accelerating digital transformation of luxury’s retail landscape means brands are not sure if they should keep investing in physical flagship stores.
The power of China’s multi-brand boutiques
More than 1,000 multi-brand stores have opened across China over the past decade. They play an important role in the country’s luxury fashion system.
China stealing tech, talent due to trade war: Taiwan
The China-US trade war is pushing Beijing to step up its efforts to steal technology and poach talent from Taiwan to boost the mainland’s semiconductor industry’s self-sufficiency, the government of the tech-powerhouse island said on Wednesday. Washington has taken aim at China’s tech industry during the bitter trade dispute, putting sanctions on firms including telecoms equipment giant Huawei Technologies, saying they are a threat to national security. Taiwan is home to a thriving and world-leading chip industry, and the government has long worried about Beijing’s efforts to copy that success, through fair means or foul.
Chinese Banks’ Earnings to Stay Resilient in 2021
China’s economic recovery should help local banks maintain the earnings resilience that was evident in their 2020 financial performance, despite it being the weakest in a decade due to the challenges posed by the Covid-19 pandemic, says Fitch Ratings. Most Fitch-rated banks had lower loan-loss allowance ratios in 4Q20, which mitigated the fall in net profit; the sector’s net profit decline narrowed to 3% in full-year 2020, compared with 8% in 9M20. State banks reported low, but positive, net profit growth in 2020, helped by stabilising net interest margins and the lower loan allowances in 4Q20. Banks’ dividend payout ratios were mostly stable, but core capital ratios were flat or down slightly, as system loans expanded by 13%. We expect bank loans to rise by 12% in 2021, with net profit growth in the single digits.
China’s Big Banks Eked Out Higher Profits in Turbulent 2020
China’s biggest commercial banks managed to eke out small increases in profit for 2020, with a sharp turnaround in their fortunes during the year mirroring the country’s rapid economic rebound from the coronavirus pandemic The quartet — Industrial and Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd. — together account for more than one-third of the industry’s total assets. At Industrial and Commercial Bank of China, net profit grew 1.2% year-over-year to 315.9 billion yuan, the equivalent of $48.1 billion. The giant lender is the world’s biggest bank by assets, according to an April 2020 ranking by S&P Global Market Intelligence.
China energy supply faces ‘no problems’ despite Australian coal ban, Myanmar conflict
Chinese coal imports fell 39.5 per cent in January and 33.7 per cent in February this year, compared to the same period a year ago With a ban on Australian coal, China has turned to imports from Indonesia, Russia and South Africa, while ramping up domestic production
In China’s Export Hubs, a Crackdown on Shady Banks Is Causing Chaos
Chinese traders have long relied on creative financial practices to serve buyers in the developing world. But these informal channels are now being choked off. “Among so many goods exported each year, a huge amount of the payments are made in yuan rather than U.S. dollars,” says He. “The real benefits all go to fraudsters and underground banks.” For He, change is coming to Yiwu, whether the traders like it or not. Officials have been pushing the “transformation and upgrading” of local industry in recent years, as the emergence of new, lower-cost manufacturing centers is undermining the city’s competitiveness. Businesses will need to work out how to adapt to this new reality, he suggests. “Many low-cost manufacturing countries like Vietnam, Mexico, and Turkey are vying to get a slice of the cake,” says He. “The whole industry must come up with new ways to maintain a competitive edge.”
Chinese Business in Central Asia: How Crony Capitalism is Eroding Justice
China’s economic influence in Central Asia has gained a new character after President Xi Jinping came to power. In almost all economic activities there is a growing Chinese presence, and these actors range from large multinational firms to small businesses. In a region with weak states and institutions, these players push their way and make their own rules. In order to facilitate their operations Chinese businesses pursue numerous strategies through buying political support, hamstringing local courts, damaging the environment with no repercussion, and shortchanging local contractors. Many cases I observed during my research trip to the region in April 2019 demonstrate an emerging new governance with shifting rules.
Don’t doubt Hong Kong’s importance to China, say experts, as they outline strengths that can help country become global tech power
Panel lists academic and scientific benefits city brings to table during high-powered webinar discussing country’s 14th five-year plan But shortcomings also exposed with investment in technology low compared to neighbours on the mainland
EU imposes tariffs on Chinese aluminium producers
The European Union has imposed duties on aluminium products imported from China after an investigation showed that they were being sold at unfairly low prices, the EU official journal said on Tuesday, reported Reuters. The European Commission, which oversees trade policy for the 27-nation European Union, has set anti-dumping duties of between 21.2% and 31.2% on Chinese producers of aluminium extrusions in the form of bars, rods, profiles or tubes. Members of European Aluminium include Norsk Hydro, Rio Tinto, and Alcoa. Duties of 21.2% are imposed for Guangdong Haomei NewMaterials and Guangdong King Metal LightAlloy Technology, while Press Metal International Ltdwill see duties of 25.0%.
Despite Sanctions Tiff, It’s Business as Usual for European Firms in China
China’s dramatic response at the political level has not impacted its courtship of European businesses. Despite the sanctions, the EU in China appears to be operating in a business-as-usual model, as exemplified by a number of events in the week since the sanctions were imposed that brought EU companies and Chinese officials together, with many more still scheduled for the weeks and months to come. With neither side standing too firmly on principle, it says a bit more about the Chinese side than it does about the Europeans. In fact, it says more. The sanctions were placed by one government on another. European businesses by and large are not representatives of their governments.
The importance of China’s hopes for its Belt and Road Initiative (BRI) in Europe cannot be left out of the assessment of China’s reaction to the sanctions. It appears that, now that the diplomatic scuffles are over, the discussion needs to be brushed under the carpet with the rest of the dust. China needs Europe for BRI projects and connectivity far more than the EU needs China’s BRI. And the enthusiasm in Europe to join the bandwagon of BRI nations from Central Asia to the Middle East to Africa has been limited to only a few countries, primarily Hungary, Luxembourg, and Italy. And, as Francesca Ghiretti wrote in The Diplomat, “the BRI has not been as successful as one would have thought, in Italy and elsewhere. But it is not dead.” The fact that BRI is “not dead” in Europe gives the ever-acquisitive Chinese government reason for hope. China will continue its efforts to convince, and coerce if necessary, European governments to accept its overtures to fund projects in Europe, projects which are designed to permanently increase China’s economic, political, and military leverage over the far western region of the Eurasian continent. And if losing face for sanctions on a few senior officials, all of them indeed members of the ruling party of China, is the price, then so be it. From the Chinese point of view, the policies in Xinjiang that have led to the sanctions are not going to change without a change of government. If the only punishment China receives for its utterly awful treatment of the Uyghurs and other minorities is a slap on the wrists of a few probably expendable party apparatchiks, then that can be borne. The real prize is intercontinental connectivity, with China manning the gates.
Hit by Xinjiang cotton backlash, H&M aims to ‘regain trust in China’
Swedish company says it is working on plans for material sourcing amid criticism over its forced labour concerns in far western region Industry has reached a tipping point from which there is no return, supply chain company chief executive says
Chinese government-run facial recognition system hacked by tax fraudsters: report
A group of tax scammers hacked a government-run identity verification system to fake tax invoices The fake tax invoices from the criminal group were valued at US$76.2 million
China warned 25-year deal with Iran is ‘hugely risky’ despite hope it will boost influence in Middle East
Beijing is hoping to boost its influence in the region, but the agreement may cause concern in other countries – especially those hostile to Tehran Some observers question whether it is worth Beijing tying itself to a country that is diplomatically isolated and whose economy has been hit by sanctions
11 things you may not know about Asia’s territorial disputes
From the South China Sea to Taiwan, the Diaoyus and the Kurils, the India-China border and Singapore and Malaysia’s friction over airspace and maritime boundaries, ere are Asia’s biggest territorial disputes explained
Chinese loan terms ‘hamper post-virus debt talks’
China’s loans to poor countries in Africa and Asia impose unusual secrecy and repayment terms that are hurting their ability to renegotiate debts after the coronavirus pandemic, a group of US and German researchers said in a report on Wednesday.
Extradition judge is told she, not minister, must decide if US has jurisdiction over Meng Wanzhou’s actions in Hong Kong
The case against Meng showed the US had wrongfully engaged in a ‘power grab’ to regulate the conduct of Chinese nationals in Hong Kong, her lawyer said Whether the US had a right to prosecute Meng was a legal decision, not a political one, judge is told, and the US ‘doesn’t make law for China’
Debt-trap diplomacy? Report finds China can cancel loans if displeased
China’s contracts give lenders broad scope to cancel loans or accelerate repayments if debtors’ policies are deemed contrary to Chinese interests, researchers find Loans have become more secretive and usually prevent borrowers restructuring, according to ‘How China Lends’ report
Why South Korea is balking at the Quad
As great power competition intensifies, South Korea is coming under pressure to choose between the United States and China. At the same time, recognising its waning dominance in the region, Washington is probing the willingness of allies and partners to join a like-minded democratic coalition in confrontation with China. South Korea’s lukewarm attitude towards the Quad-plus does not imply a diminishing commitment to the US–South Korea alliance. South Korea still wants to deepen bilateral relations with the United States beyond the traditional military domains. South Korea is also likely to channel its support for the Biden administration’s forthcoming strategy on the Indo-Pacific, as it aligned its New Southern Policy with the Trump administration’s ‘free and open Indo-Pacific’ strategy. But if China continues to encroach on South Korea’s vital security interests indefinitely, a time may come when Seoul is no longer a ‘weak link’ in the US-led East Asian security triangle.
Hong Kong electoral revamp: opposition camp faces steep hurdles in running for legislature and winning will still leave them on the sidelines
Beijing wants ‘absolute control’ over governing and now holds political fate of pan-democrats in its hands, say analysts The overhaul will leave them with handful of seats at most, and that is provided they first win approval from vetting committee Saudi Arabia – one of Iran’s biggest rivals – would be watching closely to see how much oil China bought from Iran, he said, adding Beijing would need to reassure other regional players that Iran was not the only one getting the focus. “China does not choose sides in the Middle East, and its policy of non-alignment remains unchanged. The minister’s visit to the Middle East also shows that China has taken a more proactive attitude in the Middle East and will invest more diplomatic power and resources in the region,” he said. Wang also visited Saudi Arabia, Turkey, the United Arab Emirates, Bahrain and Oman duri
Coronavirus: Chinese, WHO scientists were ‘in it together’ in Wuhan
Liang Wannian, who led Chinese side in joint investigation, dismisses claims members of international team were denied access to data Report on inquiry was delayed ‘not because of any interference or our laziness’ but because those involved were ‘striving to ensure its quality’, he says
Chinese soccer investment retreats from Europe
Chinese money, which five years ago poured into European soccer at a meteoric rate, is now returning home just as quickly as it went abroad.
The Digitization of China’s Working-Class ‘Palaces’
Workers have built new cultural spaces online, in poetry forums and on short-video apps, but the work they produce is rarely taken seriously.
Tencent’s China Literature wants to woo 100,000 American and Canadian writers
China Literature, the country’s biggest web novel publisher, plans to boost its North American business with English works Online fiction has proven to be a profitable business in China
Beijing painting America as an ‘evil empire’. Biden must counter China at a cultural level
Xi Jinping wants to push the narrative that the ‘Chinese miracle’ has been possible only because of the role played by the CCP in guiding the Chinese people.
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