China Press Review – May 8, 2019

Press review

China’s exports suffer surprise fall in April amid heightened trade war tensions with United States
Exports dropped by 2.7 per cent in April, countering a 14.2 per cent rise in March and an economic growth rate of 6.4 per cent in the first quarter of 2019 US President Donald Trump announced on Sunday that the 10 per cent levy on US$200 billion of Chinese goods would increase to 25 per cent this week

China says its April trade surplus was $13.84 billion, far below expectations
China’s overall trade surplus posted a big miss in April, coming in at $13.84 billion, customs data showed. That was far lower than the $35 billion economists polled by Reuters had expected. Dollar-denominated exports also missed expectations in April, falling 2.7% from a year ago. However, April imports unexpectedly rose by 4% from a year ago.

Explained, the role of China’s state-owned companies
In light of the changing global landscape and the Fourth Industrial Revolution, China is transitioning from an investment-driven export economy to an innovation-driven economy reliant on domestic consumption. The role of SOEs has become all the more important in these circumstances, as they have traditionally assisted the government in reforms – even though the new consumption-oriented economy requires a level of flexibility and responsiveness that publicly owned bodies generally lack. China is home to 109 corporations listed on the Fortune Global 500 – but only 15% of those are privately owned. China’s SOEs are enormously bulky and therefore lack flexibility when responding to market demands.

China’s economy: Sure, it’s big, but it’s still emerging
For all of these reasons, investors should continue to watch China in 2019. After all, we’d do well to remember what China has achieved in just one generation – evolving from the world’s factory floor producing cheap trinkets into a technological powerhouse. What’s next? At the very least, a more developed market and more liberal economy. Certainly, growth will slow, but it will still be much faster than in developed markets such as the U.S. and Europe.

US-China trade deal beckons. But can either side be trusted?
The two countries are caught in a vicious circle of mistrust. To break it, Chinese misconceptions of US intentions and American defeatism must both be abandoned.

China’s economic ‘resilience’ without further stimulus questioned after Donald Trump’s US tariff threats
US president announced on Sunday that the 10 per cent levy on US$200 billion of Chinese goods would increase to 25 per cent on Friday ‘People’s Daily’ claimed ‘China’s economic development is resilient enough’ to meet growth target range of 6 to 6.5 per cent for 2019, but economists are not so sure

Stock Blog: Trump tweets cost China stocks about US$1 trillion in market cap
China’s markets have lost US$983.7 billion in capitalisation since late April China’s exports increased 3.1 per cent in April, falling short of analysts’ estimates

WORST CASE SCENARIO: Here’s what it looks like if Trump starts a trade war with China
Wall Street’s top investment banks are preparing clients for the worst case scenario following President Trump’s surprise threat to hike tariffs on Chinese imports.

Nasdaq: The pipeline for Chinese companies listing in the US is ‘stronger than it’s ever been’
There have been 12 Asia-Pacific companies that have listed on the Nasdaq so far this year, raising a total of $777 million at their debuts. “It seems like we will have over 40 IPOs from China, [which] are coming to the U.S. this year. So [2019] could be the strongest year ever,” says Bob McCooey, chairman of Nasdaq Asia-Pacific. “I think the pipeline for IPOs to the U.S. remains as strong, it’s even stronger than it’s ever been,” he tells CNBC.

Fear of Intensifying Trade War Ricochets Through Economy
Fears of an escalating trade war between the United States and China ricocheted through the American economy on Tuesday, sending stocks down sharply and prompting businesses large and small to brace for fallout.

China can keep calm and carry on despite Donald Trump tariff threat, says state media
Economy is strong enough to cope with threats and uncertainties, People’s Daily says Raising tariffs is not a solution and Beijing is willing to negotiate for a mutually beneficial outcome, commentaries insist

Yes, there will be a US-China trade deal
Trump’s previous reality-TV scripts give us clues as to the ending of this episode

Bank of America says there are 5 reasons a deal in the US-China trade war is just around the corner
Bank of America says Trump’s latest actions won’t spell disaster when it comes to the US-China trade war. US tariffs on China are set to increase this Friday, which could cause problems for American businesses and markets. Despite the rhetoric, both sides are motivated to secure a deal, the bank says.

Trade talks face moment of truth as US pushes China on subsidies
Beijing’s state support for core industries remain as sticking point in negotiations

China Is Losing Its Grip on Companies Due to Trump’s Trade War
Delta Electronics is expanding in India, Taiwan and elsewhere Trump’s tariffs are forcing a re-think among global suppliers

Trade war pushing companies from China to Vietnam, but experts warn they may have missed the boat
Rising land and labour costs, bottlenecks at ports, traffic jams on roads and diminishing manufacturing capacity are leading to saturation in parts of Vietnam Other parts of Asia, including Malaysia and Batam in Indonesia, emerge as alternative manufacturing hubs to Vietnam

To protect US trade, Donald Trump needs to stand firm on intellectual property protection demands with China
If the US loses its technological edge, the trade war is irrevocably lost. Not just Trump but many Americans believe it would be better to have no deal at all than one that fails to satisfy the US on the intellectual property issue

The Panama Canal Could Become the Center of the U.S.-China Trade War
Panama’s strategic and symbolic importance place it at the heart of growing trade tensions.
The Panama Canal Could Become the Center of the U.S.-China Trade War

Donald Trump’s crackdown on Chinese investment in US sparks huge shift into venture capital
Chinese FDI to the US dropped 83 per cent last year to US$5 billion, report shows
Investors facing tough scrutiny turned to VC deals; others pulled out of US

Donald Trump’s 25 per cent tariffs may be the difference between life and death for some US companies
US president sent shock waves through global markets when he announced the 10 per cent levy on US$200 billion of Chinese goods would increase to 25 per cent Trade representative Robert Lighthizer set to kick in tariffs on Friday after the US accused China of reneging on some of its commitments during recent talks

China’s stocks fall to 10-week low amid trade war fears and data showing slower exports growth
The Shanghai Composite Index dropped 1.1 per cent to 2,893.76, while the Hang Seng Index fell 1.2 per cent to 29,003.20, a six-week low

Donald Trump’s crackdown on Chinese investment in US sparks huge shift into venture capital
Chinese FDI to the US dropped 83 per cent last year to US$5 billion, report shows Investors facing tough scrutiny turned to VC deals; others pulled out of US

Chinese FDI in the EU’s Top 4 Economies
Chinese foreign direct investment (FDI) in the European Union (EU) has increased over 17 times from 2010 to 2016. This was followed by a drop in investments due to controls introduced on capital outflow by the Chinese government in the last two years. Still, 2018 FDI numbers showed that Chinese investments were 12 times higher than in 2010. Moreover, the investments targeted specific sectors like energy and technology, which is why several EU member states have come to suspect an underlying political motive. This is more so within the EU’s four largest economies – the United Kingdom (UK), France, Germany, and Italy – cumulatively, they received 70 percent of all Chinese FDI to the EU since 2000. All of them have tightened their investment screening processes, except for Italy, whose current government reversed previous policies that were skeptical of China.

China ‘puts Europe trade deal on back burner’ to put out US tariff fire
Uncertainties over talks between Washington and Beijing have overshadowed progress with Brussels, source says

How to understand China’s economy
A key issue with China’s GDP figure is its comparability with that of other developed economies, especially because of its lack of volatility.

US bets on different mobile airwaves from rest of the world – and that might cost it the 5G race
The stakes are high for the US to put its mobile infrastructure expansion in order as it competes against China for 5G leadership

China April bank lending seen moderating, policy support still on track: Reuters poll
New bank loans in China likely pulled back in April from strong levels the previous month, but may still outpace the historical trend as the central bank keeps up efforts to support cash-strapped smaller companies, a Reuters poll showed. Chinese banks are expected to have extended 1.2 trillion yuan ($177.24 billion) in net new yuan loans in April, falling from 1.69 trillion yuan in March but still ahead of 1.18 trillion yuan in the same month last year, a median estimate in a Reuters survey of 32 economists showed.

China Defaults Hit Record in 2018. 2019 Pace Is Triple That
This year is shaping up to be the biggest by far for defaults in China’s $13 trillion bond market, highlighting the widening fallout from the government’s campaign to rein in leverage.

China Starts Trading of Defaulted Corporate Bonds
After record defaults on corporate bonds, China is allowing the trading of matured defaulted bonds for the first time on two state-owned financial-asset transaction platforms. The first completed transactions were in matured bonds of China’s second-largest defaulter of last year, Wintime Energy Co. Three transactions with a total face value of 282 million yuan ($41.6 million) of Wintime’s defaulted bonds were conducted in February and March at Beijing Financial Assets Exchange.

Chinese fintech firms cosy up to banks as collaborators instead of disrupters they shift towards retail banking
Fintech firms are increasingly positioning themselves as banks’ tech partners, rather than disrupters As Chinese banks increase focus on their retail business, more are seeking to grab market share through piggybacking on fintech’s online platform and technologies

World’s biggest polluter, China may yet blaze trail on environment
Country leads way with plastic-waste import ban and green tech, but Belt and Road draws ire

China’s northeastern rust belt struggling to retain population as economic slowdown speeds up exodus
Tieling and Fushun, two cities in Liaoning province, highlight the problems of shrinking cities in China’s northeastern rust belt Small city governments struggle to adjust development plans for declining population as local resources dwindle and youngsters seek life elsewhere

Report: Talent flocking to ‘new first-tier cities’
“New first-tier cities” like Hangzhou in Zhejiang province, Chengdu in Sichuan province and Nanjing in Jiangsu province have become popular destinations for talent in the past three years, a new report said.

Oracle to layoff around 1,000 employees in China R&D center
US tech giant Oracle will lay off about 1,000 Chinese employees. A human resources representative announced the decision Tuesday in an internal meeting, according to Chinese media citing some company sources. Specifically, there’s speculation that Oracle’s China Research and Development Center would be closed soon. The Beijing branch of the center accounts for at least half of the cuts and further job reductions are expected in July, the media reports added. The center also has facilities in Shenzhen, Nanjing and Dalian.

Briefing: Oracle to layoff around 1,000 employees in China R&D center

Buying European Luxury Brands
When acquiring European Luxury Brands, Chinese investors are looking primarily for prestige and heritage that they can cash in on as soon as possible. They all dream about the Louis Vuittons and the Guccis of the world — and the profits that come with them. It seems to be quite easy at first: You buy a famous brand, and then money comes automatically, right? But it’s important to remember: even Gabriel Chanel had to go through some very tough times before becoming an iconic brand. Things aren’t easy, and raising brand prestige takes a long-term commitment.

What Chinese Investors Don’t Get When Buying European Luxury Brands

World alcohol consumption on the rise as China’s thirst grows
Chinese will surpass the US for per capita intake by 2030, research shows, but Moldova claims top spot for now

China’s millennials search for ways to pool savings as property in Beijing, Shanghai soars even further out of reach
Less than 20 per cent of millennials have been able to purchase a home without having to rely on financial backing from their parents, survey shows

Wheelock gets second time lucky, finds buyer for house in Asia’s priciest address after offering extra sweeteners
House 16 at the ultra exclusive development on The Peak has been sold for US$91.74 million, 0.3 per cent cheaper than the earlier reneged deal

Chinese cash fuels vast luxury car laundering scheme in Canada
Report finds explosion in Canadian grey market worth US$410 million last year More than 4,000 fake buyers help China’s wealthy dodge sales taxes

Belt and road diplomacy
The real issue is whether with this “opening up” of the BRI, China will lose control and, therefore, influence, transforming an initiative that was seen as sinister into a benign development financing agenda. There are, however, as yet no signs of such a turn. China is still in “ideological” control despite the concessions it is making. Some of those concessions will protect its own exposure. Moreover, China’s interests seem to define the structure of the nebulous BRI. The initiative which is now seen as consisting of “Six Corridors, Six Roads”, clearly has China as its central hub, creating as it unfolds a widening sphere of Chinese influence, with Chinese design but multilateral participation and financing that make every Chinese dollar travel that much farther.

Private investment crucial for BRI
New sources of financing critical to fill funding gap, says Citibank vice-chairman

How China sees Vietnam’s tilt toward America
Hanoi’s bid to forge an equidistant position between China and US is arguably no longer working, raising the prospect of a Beijing backlash

Is she their prisoner or their boss? Huawei CFO Meng Wanzhou’s private jailers act like bodyguards, obstructing and photographing journalists
Guards from Lions Gate Risk Management act as Meng Wanzhou’s jailers in Vancouver, but their actions raise questions about where their loyalties lie In one incident, guards drove an SUV towards journalists in their car to block them from following Meng

Beijing Urbanizes, and a Much-Loved Bird Vanishes From the City
Habitat disruption and a lack of prey are forcing iconic long-eared owls out of the capital — but locals are finally starting to give a hoot about protecting them.

China’s gag on Trump tweets raises doubts about its global market ambitions
A global stock rout earlier this week reminded investors about the power of the U.S. President’s Twitter account, but in China, where selling was heaviest, a ban on media coverage of his comments has raised questions about Beijing’s push to internationalise its capital markets.

Alain Gillard
Information Officer
Service Asie Pacifique
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