China Press Review – May 7, 2019

Press review

‘No more concessions’. Why is China playing hardball in trade war talks with the United States?
Chinese state media and sources say China will give no more ground in the face of Trump’s tariff threats Liu He’s US trip confirmed for Thursday, and will be shorter than expected

‘Do not even think about it’: Beijing refuses to give in to Trump’s latest threat on trade tariffs
Official opinion in state media suggests US could be pushing for more from talks Defiant Beijing says effect of increased tariffs would be ‘manageable and foreseeable’

European firms risk being caught in crossfire if US and China escalate their trade war
Donald Trump’s latest threat to raise tariffs has increased the uncertainty and risk faced by foreign companies in China

EU lowers growth forecasts amid US/China trade war
The EU’s economic outlook is darkening as global trade fights hit manufacturing and exports, particularly in the bloc’s growth engine, Germany. President Trump’s threat this week–to slap China with more tariffs Friday, barring a trade deal–highlights Europe’s vulnerability to developments beyond its control.

US slams China for backpedaling and says tariffs will go up
Beijing’s trade negotiators to visit Washington on Thursday and Friday

Donald Trump is a business ‘killer’ who ‘never plays by the rules’, say Chinese exporters after tariff threat
US$200 billion of Chinese imports into the United States set to be subject to new 25 per cent tariffs from Friday Chinese Vice-Premier Liu He still expected to be part of the delegation set to arrive in Washington on Thursday for talks

US to raise tariffs on Chinese goods on Friday, Robert Lighthizer says, accusing Beijing of back-pedalling on trade commitments
US negotiators recommending increasing tariffs to 25 per cent if agreement not reached by Friday
Delegation from China will be in Washington from Thursday to continue talks; Vice-Premier Liu He expected to attend

Xi Jinping Wanted Global Dominance. He Overshot.
China wasn’t ready for the trade war with the United States. First and foremost, Mr. Xi has utterly failed to manage the United States–Chinese relationship. In contrast, every Chinese leader since the founding of the communist state in 1949 had recognized the paramount importance of those ties, worked hard to improve them — and reaped huge benefits.

Graphic Truth: Who Wins From A US-China Trade War?
If the US and China lurch into nastier trade war, it would be bad for both of their economies. But some countries would actually stand to gain, at least in the short term, as trade flows between the two largest economies are diverted elsewhere. Here’s a look around the globe at which countries would be the biggest winners and losers.

China trade war ‘will not bring U.S. economy to its knees’: Wells Fargo economist
The U.S. will survive a full-blown trade war with China and the economic consequences are less troubling than some investors fear, according to Wells Fargo Securities senior economist Tim Quinlan.

German economy minister urges United States, China to resolve trade dispute
Germany hopes that an escalation of the trade dispute between the United States and China can be avoided, Economy Minister Peter Altmaier said on Monday, adding that all parties should be careful with implementing unilateral decisions.

If the US and China can’t agree on trade, the Fed may need to cut rates after all
Deflation now. Inflation later? After maximum employment, the Fed’s other mandate is price stability, or keeping inflation in check. Prices haven’t been rising all that much lately, and there are some who worry that the lack of any significant inflation could be another reason that the Fed may have to shift gears and cut rates.

China’s April forex reserves drop for first time in 6 months
April reserves fall $3.81 bln vs forecast of $1.24 bln rise Firmer dollar, changes in asset prices behind April drop Sudden jump in U.S.-China trade tensions puts yuan under renewed pressure Fresh trade uncertainty comes amid signs that China economy may be steadying

China Nowhere Close to Becoming a Global Financial Center for Many Reasons
Meanwhile, if anyone tells you the yuan is about ready to replace the dollar as the world’s reserve currency, write them off as clueless. We have been seeing such stories for a decade or longer, but China isn’t remotely close in at least five areas, and perhaps never will be.

Trump administration accuses China of “reneging” on trade deal commitments
U.S. trade representative Robert Lighthizer said in a briefing with reporters Monday he will put out a Federal Register notice tomorrow saying that the Trump administration will raise tariffs on $200 billion of Chinese goods from 10% to 25%, and that importers will begin paying the new tariffs “the first minute of Friday.”

From Huawei charges to new tariff threats from Donald Trump: jolts keep buffeting US-China trade talks
Mixed messages and the appearance of US disconnect have been the norm during the months of up-and-down negotiations ‘When Trump pays attention, it tends to throw a monkey wrench in the works,’ a US analyst says

Donald Trump should back off from pestering the Fed, but central banks could cut interest rates further
With the US economy still showing signs of vulnerability, money markets are factoring in the possibility that the Fed will cut rates. A coordinated move by central banks in China, Japan and Europe to slash rates would benefit the global economy

Why is the white hot Chinese tech sector cooling down?
Food for thought: tech entrepreneur Lin Liu believes “winter is coming” for tech firms China’s once scorching tech sector is cooling off. “Winter is coming,” laughs Lin Liu, a 29-year-old Shanghai tech worker. Electric vehicles, industrial robots, and microchip production all slowed recently. Big firms like Alibaba, Tencent, and search engine Baidu have slashed jobs. Overall, one in five Chinese tech companies plans to cut recruitment, says jobs site “And I think this slowing down will continue,” says Ms Liu, who’s run a tech start-up and the Slush start-up conferences in Shanghai, Shenzhen, and Nanjing.

Alibaba claimed the number one spot in WPP and Kantar’s annual ranking of China’s most valuable brands, unveiled on Monday. Global communications giant WPP and its market research unit Kantar’s latest “BrandZ Top 100 Most Valuable Chinese Brands” study valued Alibaba at $141 billion, up 59% from the previous year. This marks the company’s first time in the number-one slot since first appearing in the rankings in 2015. Alibaba’s brand value has since grown by more than 136% over the past five years, outpacing the Top 100’s 92% overall growth in the same period, WPP and Kantar said.

Starbucks’ Chinese rival Luckin Coffee seeks to raise up to US$586.5 million in US initial public offering
Luckin Coffee currently operates 2,370 stores and plans to open 2,500 more this year as it tries to displace Starbucks as China’s largest coffee chain The company intends to list on Nasdaq under the symbol ‘LK’

Can Gucci Find a Market for their Bizarre Brand of Beauty?
Much of that business is a result of China’s massive younger generations. Though the country’s Gen-Z customers aren’t able to purchase luxury accessories and apparel yet, they can afford to buy Dior’s Addict lipstick or Chanel’s Le Blush Crème De Chanel. That’s why it’s essential for today’s luxury brands to have affordable accessories — because this part of the market in China can drive future growth. After all, the girl who buys lipstick today is the one that could afford to purchase luxury bags, shoes, and apparel tomorrow, and she will prioritize familiar luxury brands that have already made her feel beautiful.

Can Gucci Find a Market for their Bizarre Brand of Beauty?

Tencent Cloud aims to quadruple overseas revenue in 2019
Tencent is aiming to increase overseas revenue for its cloud computing arm by four to five times this year, said Da Zhiqian, vice president of Tencent Cloud. Servicing Chinese gaming companies looking to tap opportunities in foreign markets is a major driver behind its global ambitions, Da said. A presence in overseas markets will also serve as an advantage as Tencent’s other business units expand beyond China, he added.

Briefing: Tencent Cloud aims to quadruple overseas revenue in 2019

China EV Startup Is Said to Seek $500 Million in Fundraising
Chinese electric-car startup Byton is close to clinching funding from investors led by state-owned China FAW Group Co., as it prepares to begin sales in the country’s burgeoning new-energy vehicle market, according to people familiar with the matter.

Tesla’s increased dependence on China hurts its investment story: analyst
Tesla’s recently announced $2.7 billion capital raise is a “bridge” solution, and the company needs to begin manufacturing and selling lower-cost vehicles in China, according to Morgan Stanley analyst Adam Jonas. However, he said that the electric vehicle (EV) maker’s increased dependency on China and robotaxis undermines its investment story. Morgan Stanley said it doesn’t expect significant deliveries of Tesla’s Model 3 until the first quarter of 2020.

Briefing: Tesla’s increased dependence on China hurts its investment story: analyst

Big 3’s challenges on rise in China
Detroit automakers are facing an uphill battle in China as technology proliferates the Asian market and President Donald Trump continues to up the ante on tariffs, says a one-time industry executive-turned-consultant.

Economic Watch: China steps up support for SMEs via structural tools
China announced a targeted cut in reserve requirement ratio (RRR) in its latest attempt of using structural tools rather than an across-the-board stimulus to help cash-strained small businesses.

Doing Business Overseas? Have you Checked your Trademarks
We are going to form our own trading company. We will register all the important trademarks of our employers in China in the name of that trading company. When we get fired, we will register “their” marks with China customs and completely shut down their Chinese operations. It will serve them right for being so stupid and lazy.

Doing Business Overseas? Have you Checked your Trademarks

China’s rust belt cities shrouded in uncertainty as exhausted natural resources shake China’s foundations
With economically extractable coal exhausted and a lack of technology and capital to safely mine deeper underground, mines are shutting down one by one Bureaucratic, state-run mentality that goes back to Japanese dominance early last century hindering efforts to revitalise China’s earliest industrial success

What’s in China’s New Belt and Road Recalibration?
Though Beijing’s attempt to adjust its BRI approach is notable, the actual extent and impact of this recalibration remains to be seen.

China defends rejigged ‘Belt and Road’ initiative against EU criticism
“The ‘Belt and Road’ cooperation is entering into a new stage,” the Chinese ambassador to the EU Zhang Ming promised on Monday (6 May), questioning the EU’s reluctance to join China’s massive infrastructure programme.

Chinese physicist says revolutionary technique means alloys can be developed in hours instead of years
Inspired by early colour television, method can create thousands of alloys quickly Leader of Beijing team says a ‘revolution in material science’ is close to hand

US creating own supply chain for new battle with China after trade war ends, Foxconn chief Terry Gou says
‘Avalanche’ of openings on mainland China to push US ‘to do all it can to establish a supply chain of its own’, says the aspiring Taiwanese presidential candidate Beijing and Washington to keep up competition for top tech, especially in artificial intelligence

Recognise Taiwan’s title and then we’ll talk, Foxconn billionaire Terry Gou tells Beijing
Presidential hopeful takes a stand on ‘Republic of China’ after critics question his sovereignty credentials Foxconn chief’s investments on mainland and close contact with mainland leadership have brought him under intense scrutiny

China roots out its ‘gaokao migrants’ as university entrance exam nears
Crackdown on students registering to take the exam in a different province to improve their prospects, sometimes by faking residency status Competition is less fierce in sparsely populated regions

100 years of Western hypocrisy: how the ghosts of 1919 still haunt China as it forges its own development path
The failure of the Paris Peace Conference not only led to another world war, it also taught China to be wary of the US-led global order. It triggered the May Fourth Movement and a brand of nationalism that is still potent today

Three Monkeys Means Something Different in China
In China (and Japan) the monkeys are called the Three Wise Monkeys. In the West we see these monkeys as not taking responsiblity and failing to take ownership. The three monkeys mean something different in China, and we need to think about that. We really need to think more when we hire and promote in China. So much is happening that Western managers often fail to see or fail to face. The result is way too much politics and improper behavior which the wise monkeys will never help you find.

Three Monkeys Means Something Different in China

Alain Gillard
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