Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – March 7, 2022

China sets lowest growth target in 30 years as Ukraine fallout looms
China unveiled a growth target of about 5.5 per cent, its lowest in three decades, as Beijing seeks to buttress its economy after a sharp loss of momentum in 2021 and fallout from Russia’s invasion of Ukraine.  The target reflects lower growth expectations in 2022 compared with pre-pandemic rates as Beijing maintains its strict Covid measures, enforces its “common prosperity” policy to reduce inequality and boost the Communist party’s control over business, and contends with a debt-fuelled real estate crisis. Premier Li Keqiang announced the target at the opening of the National People’s Congress, China’s annual meeting of its rubber stamp parliament in Beijing. It follows year-on-year growth of just 4 per cent in the fourth quarter of 2021 and he stressed that “achieving this goal will require arduous efforts”.  “This is a balancing act. China knows that they cannot rely on infrastructure investment or property investment forever,” said Yeung. “It’s the shifting of the growth model that matters more than anything.” Ben Simpfendorfer, a partner at consultancy Oliver Wyman, added that “counter-cyclical policy can only do so much”.   “What’s needed is more structural economic reform and a lower target will provide that breathing space,” he said.

China: Two Sessions sets a lower GDP growth target
This year’s Two Sessions’ government work report set a lower growth target, and highlights employment as the top challenge. The growth engine of infrastructure investments is confirmed. But we do not think that infrastructure investments in 2022 can replace the loss of consumption. As such our GDP forecast is lower than the government’s target

Self-reliance: China’s top economic priority in turbulent geopolitical times
Chinese premier puts the focus on secure industrial chains and technological breakthroughs    Government offers range of incentives to stimulate innovation

China’s GDP Target Will Be Challenging to Meet, Economists Say
China’s goal to achieve around 5.5% economic growth this year is a challenging one, and will push the government to boost infrastructure investment, stimulate property demand and provide more monetary easing, economists say.      The gross domestic product target is higher than economists’ projection of 5.1% expansion for this year, a growth rate that would be the lowest since 1990, excluding the pandemic year of 2020. The economy grew 8.1% in 2021, when the government set a conservative target of “above 6%.”

China trade looks very mixed
China’s exports and imports continued to increase at a double-digit rate, though slower than the pace seen in December. Moreover, we see very mixed trade flows by items, and some were heavily distorted by export and import prices. When looking at the micro level, we see that inflation has masked the low trade volume

China trade: export growth slowdown in January-February ‘alarming’ despite beating expectations
Exports grew by 16.3 per cent in combined figures for January and February compared to a year earlier   Imports grew by 15.5 per cent in combined figures for January and February from a year earlier

China, Russia trade surges amid Ukraine crisis, but ‘alarm’ as overall export growth slows
Bilateral trade between China and Russia rose by 38.5 per cent to US$26.4 billion from the previous year in combined figures for January and February       Overall, China’s exports grew by 16.3 per cent in January and February from a year earlier, while imports grew by 15.5 per cent

Decade of Miracles: How Xi’s thought steers new chapter of China’s economic growth
A new chapter of China’s economic miracle has been written since the end of 2012, as Xi Jinping’s thought has propelled unprecedented changes toward innovative, coordinated, green, open and shared development.

Europe must chart its own course on China: Chinese foreign minister
With less than a month until the China-EU summit, Wang Yi says the two parties have broad common interests    Lack of direct contact has increased misunderstanding on both sides, analyst says

China’s 2022 Government Work Report: Highlights from the Two Sessions
We look at key points of China’s 2022 Government Work Report, including the 5.5% GDP target, preferential tax policies, government stabilization policies, policies to boost investment and consumption, government spending plans, employment creation measures, COVID-19 prevention measures, climate and environment policy, and measures for elderly care and childcare.  On Saturday, March 5, 2022, the National People’s Congress (NPC) convened for the opening meeting of the annual Two Sessions. The main task of the meeting: to confirm and release the 2022 Government Work Report (GWR). Delivered by Premier Li Keqiang on behalf of the State Council, the GWR is the most important policy document to be released this year as it sets out a vast range of economic and development tasks for the country to pursue over the coming year, including the main 2022 GDP target.

Three Things to Know About China’s “Economic Security”
China’s new approach to economic security bears three features deserving greater attention: its use of industrial policy to address supply chain vulnerabilities exposed by recent US sanctions, a rapid legal and regulatory evolution of its economic security framework, and a significant risk that its new autonomy-focused approach will give Beijing another diplomatic tool for economic coercion.

Looking inward, Chinese Premier Li Keqiang focuses on the national bottom line
Jobs, stability and risk control dominate the priorities for the coming year   Tone shifts on Hong Kong, away from national security to integration in the Greater Bay Area

China to the Rescue?
Surging inflation, a hawkish Federal Reserve and Russia’s war in Ukraine — it’s been a rough start to 2022 for the global economy.  That’s why China setting an ambitious economic growth target for this year stood out as a rare piece of good news. Had China set a 5% growth target as many economists expected, that would have implied a continuation of recent policy settings where a focus on financial risks and debt growth cap room for stimulus. While the 5.5% goal adopted isn’t a mile away from that and still implies restraint, economists say China will need to ease policy settings to achieve it    Historically, China has tended to meet or beat its growth goals. Because this is a crucial political year for President Xi Jinping, where he’s widely expected to make an unprecedented bid to stay on as leader for a third term at a key party congress, there’s even more motivation than normal to make sure the growth target is achieved. Consumer inflation remains tame in China, giving policy makers room to deliver further interest-rate cuts and setting the stage for an even more pronounced divergence with the Federal Reserve’s tightening stance.  Meantime, unspent government funds from last year and juicy state-owned enterprise profits mean fiscal spending can help too, without blowing out the government’s deficit target. But there’s always a cost. Some analysts pointed to the absence of any new hard target for energy use as evidence the focus is now on stimulating GDP growth.Others doubted whether the growth goal can be met without another year of leveraging up — adding to longer-term stability concerns. As for Russia’s war on Ukraine? In past periods of instability such as the global financial crisis and the coronavirus pandemic, China was able to insulate itself and bolster its role as a global growth engine.   The government work report’s vow to “effectively guard against overseas risks” suggests China’s leaders are taking the same approach today.

Russia’s war on Ukraine: ‘It has to be China’ as mediator, EU foreign policy chief says
Europe or US can’t mediate in crisis, so China must play a role, Josep Borrell says  Call accompanied by defence of sending weapons to Ukraine and imposition of harsh sanctions on Russia   terview with the Spanish newspaper El Mundo. But Borrell, who is from Spain, admitted that there were no firm plans by the warring sides and their supporters for outside mediation from China.“We haven’t asked for it and they [the Chinese] haven’t either.” Borrell defended the delivery of European weapons to the war zone and the imposition of harsh sanctions on Russia. ‘These measures were absolutely necessary, he said, regardless of the simultaneous diplomatic efforts to settle the conflict. The arms shipments allow the Ukrainians to defend themselves, to be in a better position to negotiate and, if possible, to reach a ceasefire, the former Spanish foreign minister and ex-president of the European Parliament said.  “And afterwards, diplomacy must play its part,” and here China “must play a role,” he stressed.

Ukraine says China is ready to act as a peacemaker
Ukraine’s declaration that China had assured Kyiv it would help stop the war has renewed focus on Beijing’s potential role in pressuring Russia to back down.  But China’s public comments, the close ties between presidents Xi Jinping and Vladimir Putin and Beijing’s lack of experience in resolving such disputes hint at the hurdles it will have to overcome to do so, said diplomats and analysts.

China upholds its relationship with Russia, says negotiations needed to solve Ukraine conflict
 “The China-Russia relationship is valued for its independence,” Chinese Foreign Minister Wang Yi said according to an official translation. Wang portrayed the bilateral relationship as separate from China’s relations with other countries or regions. He added that the Red Cross Society of China would provide Ukraine with emergency supplies “as soon as possible.”

There’s only one person in the world now who can influence Putin, says Stephen Roach
The “best thing” that China could do right now is to broker a peace deal between Russia and Ukraine, said economist Stephen Roach.   “There’s only one person in the world, I think, who has leverage over Vladimir Putin,” he told CNBC’s “Squawk Box Asia.”

China’s foreign minister heralds ‘rock-solid’ relations with Moscow
Top diplomat Wang Yi repeats calls for dialogue to end Ukraine war  “China will continue to play a constructive role in promoting peace talks and is ready to work with the international community to conduct necessary mediation, when necessary,” Wang told reporters Monday in an annual news briefing on the sidelines of China’s yearly meeting of its rubber-stamp parliament. “The friendship between the peoples of our two countries is rock-solid.” Wang, who said China would supply humanitarian aid to Ukraine, added that “solving complex problems requires calmness and rationality, rather than adding fuel to the fire and intensifying contradictions.”  Relations between Beijing and Moscow must be free of “interference from third parties,” Wang said, in an apparent reference to the United States and its allies, which have criticized Beijing’s stance on the invasion.

Beijing warns against ‘adding fuel’ to Ukraine crisis
Wang said the Ukraine crisis is something China does not want to see and that it should be resolved in accordance with the purposes and principles of the UN Charter.    He called for negotiations to resolve the immediate conflict, as well as talks on creating a balanced European security mechanism. He said the US and Europe should pay attention to the negative impact of NATO’s eastward expansion on Russia’s security.

Ukraine crisis: US Secretary of State Anthony Blinken presses Chinese Foreign Minister Wang Yi on Beijing’s stance
The two top diplomats discuss the war in a call as Blinken notes ‘the world is watching’   Wang says that Beijing supports negotiations between Russia and Ukraine

Ukraine invasion: Can China do more to stop Russia’s war in Ukraine?
But the new “no limit” partnership with Russia may not mean an inevitable re-alignment away from the US, its allies and the established world order. It is, after all, an order in which China has sought to do more in recent years; on climate change, on peace keeping. And there are also the politics to consider. Not electoral politics, but the politics of association with a warring nation.  China censors much of what its people can see and read but the severity of the war, which – more than any other conventional conflict – is being documented in often horrific detail, by the minute, on social media, may become an important factor in Beijing’s calculations over its stance on Russia.  Xi Jinping and the other senior leaders around him may conclude that there is, in fact, a limit to the relationship, and they need to step back – or step up and try to play the role of mediator with Moscow. A role that it told Ukraine it was prepared to take on, but which it has yet to show any sign of starting.

Dear China: Whose Side Are You on in Ukraine?
With every passing day, the war in Ukraine becomes a bigger tragedy for the Ukrainian people but also a bigger threat to the future of Europe and the world at large. There is only one country that might have the power to stop it now, and it’s not the United States. It’s China.    If China announced that, rather than staying neutral, it was joining the economic boycott of Russia — or even just strongly condemning its unprovoked invasion of Ukraine and demanding that it withdraw — it might shake Vladimir Putin enough to stop this vicious war. At a minimum, it would give him pause, because he has no other significant ally aside from India in the world now.

Ukraine crisis: US Secretary of State Anthony Blinken calls on China to ‘stand up and make its voice heard’
Blinken points to China’s past support for the ‘sanctity’ of national sovereignty  Comments reflect Washington’s growing frustration with Beijing’s refusal to denounce the Russian invasion

Ukraine invasion: did China known about Putin’s plans, or was Beijing tricked?
It remains unclear what Beijing knew and when about Moscow’s plans, but its implied support for the Kremlin is damaging China’s interests  Observers are divided but there are growing doubts about the competence of Chinese intelligence gathering and strategic decision-making

How sanctions on Russia risk mass destruction of the global economy
Western sanctions threaten to worsen the supply chain, inflation and debt crises already threatening a vulnerable world economy. An obsession with punishing Russia could end up punishing us all   International Monetary Fund managing director Kristalina Georgieva and World Bank Group president David Malpass declared in a joint statement: “Commodity prices are being driven higher and risk further fuelling inflation, which hits the poor the hardest … The sanctions announced over the last few days will also have a significant economic impact.”    That risk is very high. Supply chain disruptions caused by Donald Trump’s trade wars against China set inflation in motion, and it has since gone from a canter to a gallop. Inflation feeds on itself by creating inflation expectations, then pressure on price rises and higher wages.

Ukraine crisis: China stocks upgraded at BCA as onshore market shield funds from wider global sell-off
The Shanghai Composite Index has fallen 3.3 per cent since February 24, compared with wider losses in European and emerging markets BCA upgraded yuan-denominated stocks to neutral after cutting it to underweight a year agoWhile Chinese stocks may still weaken following Russia’s invasion of Ukraine, the pullback is likely to be less severe than in European and other emerging markets, the Montreal-based firm said in a March 2 report. The firm upgraded its recommendation to neutral, after cutting it to underweight a year ago. Inflation risks are contained as supplies from Russia, a major producer of oil, wheat and commodities, could probably continue and even accelerate, the Montreal-based firm said. Policymakers will roll out support measures to counter a slowdown, similar to how it responded to the global financial crisis in 2008 and the European debt crisis in 2011, it added.

Explainer | What is the China-Europe Railway Express, and how much pressure is it under from the Ukraine crisis?
The China-Europe Railway Express, or China Railway Express (CRE), is key logistical cog in President Xi Jinping’s Belt and Road Initiative   It provides an alternative to container shipping for transporting Chinese manufactured goods to Europe via Russia

Russia’s invasion of Ukraine is driving up air cargo costs
Flight restrictions and more expensive fuel resulting from Russia’s Ukraine invasion are driving up airfreight prices. It could mean even costlier goods for consumers, who are already grappling with high inflation.Cargo and passenger airlines have rerouted planes around Russian and Ukrainian airspace or canceled flights altogether. The cost of transporting goods by air has surged since Russia’s invasion of Ukraine last week, just as consumers are already grappling with the fastest pace of inflation in nearly 40 years. Carriers, including KLM Royal Dutch Airlines and United Parcel Service, are filling their planes with pricier fuel for longer Asia routes to avoid Russia due to airspace closures. Jet fuel prices in the United States this week hit the highest in more than a decade.

China must be ‘horrified’ at Ukraine war, World Bank chief says, warning of lasting consequences for Russia
David Malpass says Beijing’s reaction and Western sanctions will influence how Moscow’s future trade relationships develop   The World Bank is preparing a half-billion-dollar loan package for Ukraine, and hopes the money will be ready as soon as next week  World Bank President David Malpass told Fox Business Network that China’s reaction to the war and the Western sanctions imposed on Moscow would be influential in determining how Russia’s future trade relationships develop.  He said the raft of sanctions was having a significant impact on Russia’s interactions with financial markets, while raising questions about its dependence on China and delivering a huge supply shock to world energy and food markets.  China, a major shareholder in the World Bank, had to be “horrified at where this is developing”, Malpass said.

China Plans 7.1% Defence Spending Rise This Year, Outpacing GDP Target
China will spend 7.1% more on defence this year, outpacing last year’s hike and the government’s modest economic growth forecast as Premier Li Keqiang seeks to safeguard the country’s sovereignty, security and development interests.  Li pledged to enhance military training and combat readiness for the People’s Liberation Army, which is developing an array of weapons from stealth fighters to aircraft carriers.  The spending figure, set at 1.45 trillion yuan ($229.47 billion) in the national budget released on Saturday, is closely watched by China’s neighbours and in Washington as a barometer of how aggressively the country will beef up its military.

Chinese splurge on Russian snacks, Ukrainian food in show of solidarity with warring nations
Some Chinese shoppers have been buying Russian snacks and tea online to support Moscow’s invasion of Ukraine    Others have been doing their best to help Kyiv through donations and eating at a Beijing’s only Ukrainian restaurant

Loopholes And Lawfulness: De-Escalating Tensions In The South China Sea – Analysis
Beijing on 1 March completed another military drill in a radius of six nautical miles in the South China Sea in what has become a usual and quite frequent routine of drills and counter-drills, military exercises, overflight entry into sovereign air space, etc., followed by an exchange of censures and warnings. If China is to be deterred from taking a leaf out of Moscow’s playbook in the near future, then the existing international maritime legal regime needs to be made more robust and inviolable.
The South China Sea has witnessed an intensification of turmoil over competing maritime territorial claims over the past decade as China adopts an increasingly assertive stance with respect to its maritime claims. This has resulted in the maritime space of the Indo-Pacific, particularly the South China Sea, in becoming more militarised and by extension, a potential flashpoint.

US response to Ukraine invasion sows further doubts about defending Taiwan if mainland China attacks
Joe Biden has said the US will not send troops in after the Russian invasion, prompting questions over how far Washington would go to stop Beijing A high-level US delegation recently visited Taiwan in what was seen as a tacit show of support for the island

Taiwan Welcomes Pompeo While Watching Ukraine
The former secretary of state’s visit became part of discussions on Taiwan about U.S. support amid the Russian invasion of Ukraine.  But strengthening Taiwan’s military reserves is one idea that the Tsai administration claims it will be acting on in the wake of Ukraine, as well as boosting missile manufacturing capacity. KMT legislator Fu Kun-chi, more often in the news for corruption scandals, has been strident in criticisms of the Tsai administration, calling on the Tsai administration to lengthen the military draft. Meanwhile, the DPP continues to criticize KMT legislators, such as former general Wu Sz-huai, for traveling to China to meet with Chinese government officials. The DPP has cited the dangers of having Wu on the legislature’s Foreign Affairs and National Defense Committee when he has traveled to China to attend ceremonies with Chinese President Xi Jinping. Vice President William Lai, frequently considered a likely successor to Tsai, has also touted the idea of Taiwan joining the Quad. While Taiwan has suggested interest in partnering with the Quad before, the notion of joining the Quad is far less common. Furthermore, with the U.S. Trade Representative Office having stated that it plans to increase trade engagement with Taiwan, Taiwan may have a stronger position to angle for trade talks with the U.S., so as to reassure about U.S. support of Taiwan in the wake of the Ukraine war.

Chinese foreign minister says Taiwan and Ukraine situations are fundamentally different
Wang Yi makes the remarks at his yearly briefing on the sidelines of the annual legislative session    He also says Beijing is willing to act as a mediator in the Ukraine crisis and that China will send emergency aid

China says ‘double standard’ to conflate Taiwan, Ukraine issues
It is a “naked double standard” to seek to conflate the issues of Taiwan and Ukraine as the island has always been part of China and is entirely a domestic matter, China’s foreign minister said on Monday, drawing an angry riposte from Taipei.

China’s diplomacy budget grows while trade deal outlook narrows
A modest increase in spending reverse 2 years of declines for the country’s diplomatic corps    But references to economic agreements with the US and EU have evaporated in this year’s government work report

As war in Ukraine emboldens US protectionists, free trade is losing its ability to hold the peace
Biden is pushing his protectionist agenda as raging shortages and rising prices are made worse by the war, amid US worries over its dependency on China    If a wedge is driven against China, then the consensus over the value of free trade weakens further – along with its power to foster peaceful cooperation

Update: Who Is Winning The U.S.-China Trade War?
Initially, we asked who was winning the U.S.-China trade war? The answer is clear: third countries with deep connections to international partners. This means countries that were able to take advantage of supply-chain shakeups and countries that already had existing trade agreements and large amounts of foreign investment.  For the United States, and China, it appears that the trade war did not result in any major gains. Some analysts believe that it does more harm than good. The U.S. did not see any increased reshoring of jobs and economic activities. Really, the U.S. replaced Chinese imports with imports from alternative countries

China’s trade war with US resulted in loss of USD 550 billion: Report
Amid an economic slowdown, China’s four-year ‘trade war’ with the US has resulted in a total loss of USD 550 billion in import tariffs, the majority of which are aimed at Beijing, a media report said on Saturday. The trade war, accompanied by a slowdown in China’s economy and the impact of the COVID-19 pandemic, has resulted in the World Bank predicting a significant slowdown in the global economy as well as a lower prediction for the economic growth in the United States and China

‘Two sessions’ 2022: China urged to ‘accelerate’ mining at major lithium deposits, including in Sichuan
Representatives of China’s lithium industry pitch their recommendations at the ‘two sessions’ policy-setting meetings in Beijing   Sichuan province has one of China’s richest and most accessible reserves of lithium, and sourcing the critical resource there would reduce the nation’s dependency on imports

‘Two sessions’ 2022: Carbon neutrality high on agenda as delegates offer proposals on new energy vehicles, green AI and blue carbon
China will ‘take orderly steps’ to achieve peak carbon emissions and carbon neutrality, and ‘work harder’ to make coal use cleaner, Premier Li Keqiang said on Saturday     Geely Auto founder Li Shufu put forward suggestions on the adoption of methanol-powered vehicles to help achieve carbon neutrality in transport

A reprieve for coal? Xi Jinping urges ‘realism’ on China’s road to carbon goals
Green transition can’t be made overnight and progress must be steady, he says   Focus on stability comes as fossil fuel use rises and Russia’s invasion pushes up energy prices

China moves to assure energy supply amid Ukraine crisis
China’s government is capable of providing sufficient energy despite serious challenges as it will step up production capacity and boost reserves to keep prices under control, state planning officials said on Monday. Energy and global commodities prices have soared to decade-high levels amid fears of supply disruption after Russia’s invasion to Ukraine. But China’s economy remains resilient despite rising risks caused by the crisis, Lian Weiliang, a vice head of the National Development and Reform Commission (NDRC), said at a briefing on the sidelines of a meeting of parliament.   “Geopolitical conflicts and the changes of global energy supply and demand have challenged our safe energy supply,”

Clean energy: US faces big challenges as it takes on China’s supply-chain dominance
The US aims to become a global leader in clean energy manufacturing and innovation to compete with China    Stronger government-led financial support is needed, and the US will still have to rely on China and other countries in the medium run, analysts said

Why China’s electric vehicles are all over Europe
From toys and t-shirts to cars and computers, China is nearing the top of the global value pyramid. Now China’s electric cars are giving premium European brands a run for their money.

China can’t count on global markets for food security, Xi Jinping says
The rice bowls of the Chinese people must be filled with Chinese grain, Chinese president tells national advisers   He says the Chinese socialist system gives the country advantages, especially in contrast with the chaos in the West

China’s e-commerce logistics activities expand in February
China’s e-commerce logistics sector posted steady growth in February as the Beijing Winter Olympics boosted demand for consumption, industry data showed.   The index tracking e-commerce logistics activities stood at 108.9 points in the period, up 0.3 points from January, according to a survey jointly undertaken by the China Federation of Logistics and Purchasing and e-commerce giant

video Mapping China’s 2021 economy: Consumption
China”s consumer market maintained a steady recovery in 2021 despite the impact of COVID-19.  Retail sales of consumer goods registered a robust 12.5 percent rise to over 44 trillion yuan ($6.97 trillion) last year. And the final consumption has contributed 65.4 percent to the country’s 2021 economic growth.

China’s ‘Two Sessions’ 2022: which moguls are in the hot seats over their real estate debts?
Six of the 13 property chairmen attending the meetings will be representing developers that have either officially defaulted or asked creditors for more time    They are likely to face some tough questions about their plans to repay the debts they owe to banks, suppliers, contractors and bond holders

Evergrande crisis: after US$51 billion of defaults, China market rarely this cheap as Value Partners adds to bond fund
Chinese dollar junk bonds have declined every month since August, handing investors a 50 per cent loss over the past 12 months, ICE BofA Index shows     China’s high-yield market is in ‘significant default cycle’ where nearly US$51 billion defaulted in 2021, US$49 billion of them from the property sector: Varde Partners

China Needs To Pop Its Property Bubble – Analysis
It is possible that government’s measures may come too late and may unintentionally lead to a disorderly collapse of the bubble. Yet the authorities still have a few aces up their sleeve. The central bank has already started marginally easing monetary policy and interest rates, encouraging banks to lend more. If necessary, it could also relax limits on bank lending to developers and households mortgages. If push comes to shove, regulators could also relax the restrictions on financing developers by extending the deadline for meeting the “three red lines.” Despite being cash strapped themselves, some local authorities have stepped in already to finance the completion of Evergrande’s projects and make payments to its contractors. In the extreme scenario that the forced deleveraging of developers spirals out of control, bringing about a massive correction in prices and activity, China can still do what other countries have also done to delay the inevitable outcome of the mess of a collapsed property bubble. It can transfer the nonperforming real estate debt from the balance sheets of banks to a special asset management company (AMC) at a discounted value and then recapitalize the banks. Such operations do not require great fiscal strain, thanks to the “magic” of modern banking—where the required equity capital represents only a small fraction of total bank assets (about 6 percent in Europe)—and thanks to the government guarantee of the debt issued by AMCs. For example, at a total debt of 360 percent of GDP and real estate loans in excess of 40 percent of GDP, Spain’s debt metrics were marginally worse when its property bubble burst in 2009 than China’s are today. Eventually, the fiscal cost to transfer banks’ bad assets—mortgages and developer loans—to the AMC called SAREB and recapitalize them was a manageable 5–10 percent of GDP. Having a public debt of about 45 percent of GDP in 2021 (95 percent of GDP including off-budget obligations, according to the International Monetary Fund [IMF]), China could—for now—afford a similar fiscal effort. China also holds vast foreign exchange reserves of about $3.4 trillion (25 percent of its GDP) as of the end of 2020 and enjoys a much higher savings rate than Spain. Moreover, China can always buy time by pushing for business consolidation in the real estate sector and ask some of its large state-owned enterprises to acquire bad assets from troubled developers, spreading the cost of a potential crisis. This appears to be happening already in Evergrande’s restructuring process since its debt default in December.

‘Two sessions’ 2022: the metaverse development should be spearheaded by the central government, delegates propose
NPC and CPPCC delegates have proposed the state take a central role in developing the metaverse to guard against social and financial risks      State media have previously warned about hype surrounding the metaverse, making it an unlikely topic for China’s largest annual political gathering   The metaverse presents systemic risks involving data security, legal governance, the overhyping of blockchain, social ethics and technology, Liang said. “Legislation should be strengthened to build and perfect the legal compliance of smart contracts and transactions involving digital property, and focus on preventing legal and ethical issues that arise from the metaverse.” he added.   Tencent CEO Ma Huateng, who is also an NPC delegate, similarly warned that the meteoric rise of the metaverse, non-fungible tokens and Web3 have brought new risks to finance, technology and social governance at a time when the virtual and physical worlds are merging, according to his published proposals.

What next for China’s dynamic zero-Covid strategy?
There are signs that the country is looking for a middle path between tough restrictions and living with the virus   But Hong Kong’s mounting cases and the need for stability complicate the equation, observers say

China to stick with zero-Covid policy, but the rules may be ‘refined’, premier says
‘Routine’ pandemic control measures to continue, Li Keqiang tells NPC, but also hints at adjustments to balance growth needs    Hong Kong’s Covid-19 crisis could convince central leaders of the risks of easing rules too soon, observer says

4 Signs That China May Open its Borders
Hong Kong is currently dealing with its worst outbreak of COVID-19 since the pandemic began in 2020, so China will remain cautious when it comes to easing restrictions on the mainland. Nonetheless, there are still a few signs to show that the Middle Kingdom is preparing to move away from its current COVID-19 policy. On March 3, 2022, China Southern Airlines announced that they would start direct flights between the UK and China on March 17. Not long after the news, the Civil Aviation Administration of China (CAAC) approved Virgin Atlantic to also trial direct flights. This is good news for Chinese nationals, or anyone with a Chinese visa currently in the UK, as they can travel to China without having to board a connecting flight and undergo further COVID-19 testing. The somewhat extortionate prices are not ideal. However, should the trials go ahead smoothly, more airlines may follow suit and the price of tickets will likely go down.

The Arctic Geopolitics In Disarray: Fallout Of The Ukraine War – Analysis
When environmental scientist Jessica Moerman said, “What happens in the Arctic doesn’t stay in the Arctic,” she was only referring to the sensitive polar region’s role as the “frontline for climate change.” Moerman reminded: “It may seem like it’s far away, but the impacts come knocking on our front door.”    Given the tempo of withdrawals, freezing and halting resorted to by the Western firms in the Arctic energy sector, Russia might explore alternative channels for investment and exploration. China could be a possible investor, but it is not yet clear, in spite of its political support to Moscow, whether Beijing would come up with major investments in the energy sector in Russia to offset the sanctions. However, trends in China-Russia trade may provide some indication that there could be some possibilities. According to a report, bilateral trade between the two countries exceeded the $100-billion mark for three successive years, and China continued to be Russia’s top trading partner. The report says that energy and agricultural trade witnessed a steady growth, with Russia emerging a top energy supplier for China and agricultural exports reaching a record high of $5.55 billion. Yet, in terms of investment, Russia ranked only No.13 among foreign destinations for Chinese investment at $12.8 billion (two years back), according to the Chinese official data. But experts suggested that the figure could be raised to a “much higher level, given the massive opportunities in a wide range of areas, including energy, agriculture, manufacturing and technology.” Meanwhile, Chinese experts continued to put the full blame of the Ukrainian crisis on the West. For instance, an analyst writes in Global Times

‘Two sessions’: China targets human trafficking in wake of ‘chained woman’ scandal
Premier says a crackdown and more support for social welfare is coming to tackle the crime   Li Keqiang also takes aim at bureaucratic officials who fail to address the public interest

Chinese Women Bear Grim Cost of Exclusion From Power
A viral video of a mother chained by her husband to a freezing hut has revived anger about human trafficking and the government’s failure to stop it.

The Lawfare Podcast: China’s Illicit Economies
In the national security world, including on Lawfare, a lot of attention gets paid to China’s tech sector and other parts of its economy. Comparatively less attention is paid to China’s illicit economies, illegal trade involving China and other countries around the world. But China has been involved in numerous acts of transnational criminal activity with occasionally lax enforcement, and there’s a new series of Brookings papers and blog posts about this very subject.  To talk it through. Jacob Schulz sat down with Vanda Felbab-Brown, the director of the Initiative on Nonstate Armed Actors and a senior fellow in the Foreign Policy program at Brookings, and Madiha Afzal, a fellow in the Foreign Policy program at Brookings. They talked through the project and papers that each of them have written on the subject, including one on illegal wildlife trafficking, one on narcotic precursor trafficking and one on human trafficking.

Xi Jinping calls for China’s ethnic groups to ‘stick together like pomegranate seeds’
Speaking to Inner Mongolians at the annual legislative meeting, Chinese leader says unity is necessary to build the country   He also tells them they have a responsibility to maintain border stability and urges coordinated efforts to control Covid-19

How Weibo Became a Diplomatic Battlefield
Diplomats and lobbying groups from around the world are increasingly active — and combative — on the platform

Fake news driving wedge between Chinese and foreigners, top Beijing adviser says in call for ban
Rampant sharing of fake information has had ‘serious impact’ on interests of China and its society, CPPCC Standing Committee member says    Jia Qingguo seeks laws banning the sharing of such misleading information   It also comes as public opinion towards China in developed economies is at its lowest in decades, as suggested by recent polls. The trend is also marked by a high level of nationalism among China’s public.   Chinese internet regulators are strict about content originating in and related to China, but have generally turned a blind eye so far to conspiracy theories and fake news about foreign governments and societies.    Conspiracy theories, especially those related to the United States, have a massive online Chinese audience that sees the world as a zero-sum game between China and the West. Scholars and journalists have warned about overconfident nationalistic youth displaying a hostile online attitude towards the West, the US in particular.  In a survey published in November by the Carter Centre’s US-China Perception Monitor, 62 per cent of Chinese held unfavourable views of the US, rising to 63 per cent among those aged 16 to 24.

Alain Gillard
Information Officer
Service Asie Pacifique
Place Sainctelette 2
1080 Bruxelles
Tél 02 421 85 09 – Fax 02 421 87 75
Copyright © 2020 awex, All rights reserved