Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – November 15, 2021

Biden-Xi Will Gather Amid Growing American Wariness Of China
U.S. President Joe Biden and China’s President Xi Jinping will gather virtually on Monday in a bid to find areas in which the two countries can work together. Yet a recent public opinion poll reminds how wary Americans have become of China in the past few years and the complex environment businesses in both countries face. The White House announced the meeting with Xi on Nov. 12, saying “the two leaders will discuss ways to responsibly manage the competition between the United States and (People’s Republic of China), as well as ways to work together where our interests align. Throughout, President Biden will make clear U.S. intentions and priorities and be clear and candid about our concerns with the PRC.”  The U.S. and China made headlines this week during the COP26 meeting in Glasgow with an agreement to work to reduce methane emissions, encourage decarbonization and create regulatory frameworks to reduce greenhouse gases.  In the U.S., meanwhile, Biden’s approval rating this month has sunk to as low as 38% amid problems involving inflation, immigration policy, and the chaotic withdrawal from Afghanistan, to name a few. For its part, China is battling slower economic growth and high debt.
China’s economic heft as the world’s No. 2 economy, GDP growth and relative success at limiting the fallout from the Covid-19 pandemic continue to make it an attractive market to U.S. businesses. American companies are among the largest foreign investors in China; it’s a group that includes Intel, Tesla, GM and Ford. Chinese companies with U.S. investments include BYD, Fosun and Fuyao Glass.

Remove trade war tariffs ahead of Joe Biden-Xi Jinping meeting, US business groups urge
Two dozen American business associations call on the US government to remove tariffs and broaden exemptions    US-China Business Council-led group says the duties continue to cause economic harm to US businesses, farmers, workers, and families    The associations, which represent industries including agriculture, chemistry, medical tech, retail, insurers and information technology, however, have acknowledged the need to address market structure issues with China to ensure American businesses can compete fairly, as well as the need to safeguard American national security.    In recent weeks, the US has resumed talks with China to hold Beijing accountable for its unfulfilled commitment to purchase more American goods under the phase one trade deal signed nearly two years ago.   The USCBC-led coalition said in the letter that it “supported the administration’s initial China trade policy priorities, including enforcing China’s existing commitments”. It also stressed its support for the US to prioritise “making progress on outstanding structural challenges in China that fall outside the scope of the phase one agreement”. They included addressing China’s discriminatory regulations and in areas of intellectual property, services, and competition policy, as well as digital restrictions, and state subsidies, the group said.   American businesses agreed that “forced labour and other human rights abuses should have no place in supply chains, and our members work to prevent forced labour in supply chains in China and around the world”, the group said.

Was U.S.-China Climate Agreement Sign of Things to Come?
At COP26 in Scotland, the American and Chinese climate tsars—John Kerry and Xie Zhenhua—agreed their two countries will work together to slow global warming. There was precious little detail on what form that cooperation might take, but if something concrete emerges from this climate rapprochement, the planet may just have won a reprieve, given that the two rivals combine to produce 40% of global emissions. And if the world’s two largest polluters can make a deal on a project of this magnitude, it raises the prospect of progress in other areas. Next week, Xi and President Joe Biden will be holding another virtual summit.Until recently, neither leader seemed to have much interest in mending ties. Biden could be vulnerable to Republican Party talking points (“going soft” on China) were he to engage too much—so he’s been careful not to provide ammunition. The Democrat has left in place most of the trade tariffs and economic sanctions imposed by his predecessor, and even added a few.
  In China, Xi is now alone at the top. If he extends his tenure as party leader next year, as is widely expected, he will have no peers and no successor. Will he use his Mao-like charisma to speed up the decarbonization of the Chinese economy—and work with Washington to bring the rest of the world along? For now, that’s just a hope. But it’s telling that the prospect of that outcome was enough to lift the mood in Glasgow.

TikTok and Douyin top global non-gaming downloads in October amid tightening regulatory environment
The success of TikTok in the US is noteworthy as some of the country’s lawmakers are still raising red flags about data security risks from the Beijing parent     Instagram was No 2 with more than 56 million downloads for the month, a 31 per cent year on year increase, the Sensor Tower report said

Chinese tech giants to face cybersecurity reviews for IPOs in Hong Kong, but rules more lenient than foreign listings
A draft regulation from the Cyberspace Administration of China clarifies rules for listing in Hong Kong, but keeps them separate from foreign IPOs    Tech companies seeking overseas IPOs were forced to reassess options this year under cybersecurity review rules for companies with data on 1 million users   Beijing has intensified a cybersecurity crackdown since ride-hailing giant Didi Chuxing listed on the New York Stock Exchange in June in the face of government concerns. Two days after the US$4.4 billion IPO, Beijing launched a cybersecurity probe into the company. Days later, the CAC also launched probes into Full Truck Alliance and Boss Zhipin, two other companies that had listed in New York in June.   The investigations were for “effectively preventing potential national security risks relating to procurement, data processing and overseas listings”, the state-owned Xinhua News Agency said in a report last month.  Since launching the cybersecurity reviews, Beijing authorities have introduced multiple new laws and regulations related to data security, including the measures on overseas listings.

China seeks greater role in setting international rules for digital economy
Foreign vice-minister Xie Feng criticises US efforts to use global legal framework to contain China as he signals Beijing’s desire to set standards     The country has become a major player in the sphere, but strict data transfer rules and concerns over intellectual property have been criticised in the West

China’s crackdown on education, property leave wealthy in crisis mode, and some are looking for an escape route
Beijing’s ‘common prosperity’ movement calls for citizens to share the wealth, but attitudes towards recent dramatic changes have diverged among different social classes and ages   Studies suggest that investor sentiment is becoming more cautious in China, and the public’s willingness to give birth remains sluggish

Without the razzmatazz, will Singles’ Day be able to retain its appeal amid changing shopper habits and new regulations?
The traditionally extravagant event, with multibillion-dollar galas featuring appearances by celebrities, appeared much more low key this year     With more shopping events throughout the year and a change in consumer habits under way, Singles’ Day is changing, analysts say

COP26 agrees new climate rules but China and India weaken coal pledge
  The COP26 Climate Summit in Glasgow has succeeded in getting 197 countries to agree on new rules on greenhouse gas emission limits, but last-minute opposition from India and China is the abolition of coal use and fossil fuel subsidies. Hindered our commitment to.     The meeting’s chair, Arock Sharma, held back tears in the last few minutes as he apologized to other ministers for breaking fossil fuel provisions to appease Beijing and New Delhi. However, the summit was the first time coal or fossil fuels were directly referred to in a COP agreement.

China signs up to combat forest destruction, but critics say it’s not enough
China is among more than 100 countries that have committed to halt and reverse deforestation and land degradation by 2030     But its supply chains fund production of ‘forest-risk’ commodities like palm oil and beef cattle – and that’s a big part of the problem

Plenty of fish in the ocean? Not so around China, says study warning of seafood collapse
Scientists modelled the impact of climate change and overfishing in the South and East China seas by 2100      They say immediate action is needed to enforce sustainable fishing practices and mitigate climate threats

Chinese Billionaires Getting Richer With Clean Energy Businesses
The UN global warming conference COP26 in Glasgow that ended this week attracted the attention of politicians, activists, and media around the world.  The U.S. and China made headlines after an agreement to work to reduce methane emissions, encourage decarbonization and create regulatory frameworks to reduce greenhouse gases. And yet, already, there are plenty of examples of Chinese entrepreneurs working to slow climate change. In fact, green tech billionaires were the big standouts on the new 2021 Forbes China Rich List of the country’s 100 wealthiest entrepreneurs published in early November. More than a quarter of members made their fortunes in industries that are at the forefront of fighting climate change, up from approximately an eighth last year.The country itself, already home to the world’s biggest auto market, boasted 1.3 million sales of EVs in 2020, making China No. 1 globally, according to Statista. The EV share of the local market has increased from six percent last year to 19% last month, according to a report on Saturday in China’s government media. (See related post here.) The country is also one of the biggest suppliers of equipment for the lithium batteries that many EVs are powered on; in the solar energy field, China produces more than 70% of the world’s solar cells and modules.  Among this year’s EV movers are Hong Kong-traded EV maker BYD, backed by Warren Buffett; its shares more than doubled, adding more than $12 billion to the fortune of its founder Wang Chuanfu, who ranks No. 14 this year with a fortune worth $23.5 billion, up from No. 39 last year. XPeng’s New York-traded shares nearly doubled in the past year, lifting chairman He Xiaopeng into the ranks of the top 100 for the first time at No. 76 with a fortune worth $7.46 billion.

What Happens to Luxury if Chinese Consumers Cut Back?
China’s consumers are cutting back on spending as the country struggles with recent economic challenges. But what will this mean for luxury brands? China’s slow growth has been changing its consumption patterns. The aspirational class is increasingly choosing to trade down to middle-market brands and pre-owned luxury goods. The silver lining of this economic downturn is that luxury brands could become even more digital-centric.

China’s SMEs: how important are small firms to the economy, and what challenges are they facing?
Small and medium-sized enterprises contribute substantially to China’s economy, including about 80 per cent of non-government employment    Since the start of the coronavirus pandemic, they have faced numerous challenges, from rising production costs to regulatory tightening   Eager to keep the backbone of the economy afloat, the Chinese government has rolled out tax cuts and other forms of financial support for SMEs.  The State Council, the country’s cabinet, in March extended its loan support scheme for smaller businesses until the end of the year. The scheme provides extensions for loan and interest repayments, as well as credit support.   The measures are intended to make it easier for SMEs to secure loans, which have been difficult to attain for some because they cannot provide mortgage guarantees.
Beijing issued tax cuts last year to relieve operational expenses on SMEs. It also waived employers contributions to their workers’ social and endowment insurance.  In April, the government raised the monthly threshold for value-added tax on small-scale taxpayers from sales of 100,000 yuan (US$15,600) to 150,000 yuan to reduce SMEs’ tax burden.  In October, Beijing said it would defer tax collection for SMEs for three months from November.    Despite the relief measures, SMEs have also been ensnared in China’s unprecedented regulatory clampdowns.   The overhaul of China’s billion-dollar private education sector resulted in bankruptcies and lay-offs at smaller firms.   Regulatory tightening in the property sector, including new property tax and increases in mortgage prices, is also putting pressure on the incomes of smaller firms in real estate and construction industries.  Elsewhere, taxes and production restrictions from the central government’s “common prosperity” policy and its decarbonisation push are presenting operational challenges to SMEs.

China’s semiconductor output drops again in October, signalling bottlenecks amid global chip shortage
Integrated circuit output fell by 300 million units to 30.1 billion in October, but production was up 22 per cent year on year    Disrupted supply chains have hurt efforts to increase production capacity at foundries across China, including new projects from SMIC

Chinese official punished for supporting cryptocurrency mining companies is expelled from Communist Party
Xiao Yi, a top official in Jiangxi province, was found to have illegally supported enterprises for the purpose of crypto mining    Beijing has driven out most of China’s cryptocurrency mining activities this year in a crackdown that kicked off over the summer

China’s Singles’ Day 2021: Three Questions Answered
So here are the three big questions that were answered—for now—by Singles’ Day:— Is China’s growth over? No, although the rate of growth is down from its peak. China’s economy grew at 4.9% in the third quarter from a year ago.— Do China’s consumers have diminished confidence or purchasing power? No, there is a high degree of consumer resilience even with some economic uncertainty. China’s statistics bureau said the country’s retail sales rose 16.4% year on year in the first three quarters of 2021.— Do U.S. products suffer from trade friction or bilateral tensions? No, there have been no calls for boycotts of U.S. goods or ugly displays of nationalism in consumer behavior. Singles’ Day was a reaffirmation of the promise of China e-commerce. Chinese consumers are hungry for what the world has to offer. The external environment, be it economic or political turmoil, does not drive consumer behavior.

How COVID-19 is undermining international trade law
The COVID-19 pandemic will have a lasting effect on many areas of international lawmaking. In recent years, members of the World Trade Organization (WTO) have struggled to progress the trade agenda or even keep the multilateral system functioning as designed. The pandemic may accelerate the trend of increased protectionism and movement away from liberalism and towards managed trade.   It is not a coincidence that in a time of crisis and growing protectionist tendencies, it is smaller nations trying to develop forward-looking models of quality trade agreements — their survival very much depends on maintaining access to trade.  While some of these agreements purport to guarantee and protect the free flow of data across borders, expansive exceptions for ‘public policy’ purposes might gut the core commitments and allow any and all behaviour to be added or maintained.  Lawmaking during and post-pandemic will be scattered, unpredictable and lead to uncertainty for traders and friction for governments.

China’s Tax Incentives: An Overview of Key Schemes
China’s tax incentives are preferential tax policies offered by its local and/or central governments to incentivize or encourage a particular economic activity or to support disadvantaged business owners or individuals. From the investor’s perspective, these tax incentives are legitimate tools for reasonable tax planning and cost savings. Also, it is a useful indicator of market trends and government priorities.   Since China’s reform and opening-up began in the late 1970s, the country has implemented a series of preferential tax policies, in turn attracting a large number of foreign capital and foreign invested enterprises and effectively promoting the adjustment and optimization of various industrial structures

Focus on China’s uncertain construction sector
October’s growth in industrial production, investment and retail sales was very mixed. Sudden electricity outages will probably not re-occur. But questions remain about real estate policies and the unexplained sluggishness of infrastructure investment and the outlook for 2022

Why APEC still matters —more than ever
The online APEC economic leaders meeting chaired by New Zealand Prime Minister Jacinda Ardern over the weekend underlines just why APEC still matters.  The structure of global power has changed dramatically. This change was in large part wrought by the success of the post-war order itself, as Asia (in particular, China) joined the global trading system to achieve rapid economic growth. The rise of China, with its new economic heft and political clout, is no longer seen within the United States and elsewhere as a cause for celebration but is instead a wellspring of disquiet. The stoush between the United States and China, and China’s coercive trade tactics, have done serious damage to confidence in the global trade regime. These pressures have intensified sharply through the COVID-19 pandemic and its impact on great power tensions and the global economy.  So the background to APEC’s achievements in New Zealand is a continuing, hard-ball game between the major players in the great struggles over how the world should be run today. The protagonists are structured into APEC’s membership, as are China and Chinese Taipei (Taiwan). Throw in China’s and Taiwan’s applications this year to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), for which New Zealand now has coordinating responsibility, for the additional diplomatic toxicity that had to be managed this year. Therein lies APEC’s great value. The United States and China both have skin in the APEC game. The setting in which they must deal is multilateral, and their dealings are on full display to all other 19 members. APEC is not a negotiating forum that delivers formal inter-state agreements or has legal supra-national authority. It gives equal voice to, and requires consensus among, all its members, large, small and middling. It is no accident that the Biden-Xi summit follows hard on the heels of APEC.

China will keep escalating military intimidation of Taiwan, experts say
People’s Liberation Army has more plans afoot to target the island, military insider says     It follows announcement of first joint combat-readiness patrol aimed at Taiwan by fighting unit responsible for contingencies there

China’s nuclear build-up: ‘one of the largest shifts in geostrategic power ever
Philip Davidson, the just lately retired head of US Indo-Pacific command who warned earlier this 12 months that the PLA might take navy motion in opposition to Taiwan inside six years, says folks ought to see the Chinese language typical and nuclear enlargement for what it’s — a piercing wake-up name.    “We have to recognise that the Chinese Communist party is doing everything they said they would do to replace US global leadership with their leadership. Our future prosperity and our security are at stake.”

Australia vows to help US defend Taiwan from Chinese attacks
In an interview with The Australian newspaper, Peter Dutton said that Chinese leaders had been “very clear about their intent to go into Taiwan” and that Canberra had to improve its ability to deter Beijing and be ready to join the US military if it took action.

Zero-Covid countries have run out of road
The parameters of Delta are remorseless. A variety of estimates recommend that with out countermeasures the variant has a fundamental copy quantity, a measure of what number of new instances every an infection will trigger, of at the very least 5. That suggests that even with a superbly efficient vaccine, 80 per cent of a inhabitants have to be inoculated to attain so-called herd immunity, a state wherein the illness can not unfold. China is near that stage of vaccination — one other coverage success for Beijing — however none of the Covid-19 vaccines is completely efficient, and China’s homegrown vaccines seem like among the many much less potent. The underside line is that Covid elimination is solely not doable. Even with an efficient vaccine drive, the Delta variant is just too infectious and too entrenched around the globe. Regardless of what number of instances a rustic eliminates the illness, it should come again and preserve coming again. At this stage, due to this fact, border closures and draconian lockdowns merely postpone the second when Covid-19 will inevitably turn out to be endemic in a inhabitants whereas limiting citizen’s freedom. Such restrictions can not stop its unfold eternally. Shopping for time made sense in the course of the look forward to vaccines. Now, although, shopping for time buys nothing.   Zero-Covid insurance policies are sometimes well-liked. The absence of Covid-19 is, in spite of everything, a state a lot desired. However an ongoing drive for zero-Covid will increase worry of the virus, whereas lowering the motivation to get a vaccine, since if the virus is eradicated there will probably be no want. Simply months in the past, zero-Covid countries gained reward for his or her coverage success. Now they’ll win plaudits for the talent with which they go away it behind.

With all eyes on the Indo-Pacific, a burgeoning tech alliance is taking shape in the Euro-Atlantic
On September 29-30, in a converted steel mill in Pittsburgh now serving as a startup accelerator, three top Biden cabinet members and two top EU officials huddled to launch the U.S.-EU Trade and Technology Council (TTC). The TTC — if it takes root — could be a Euro-Atlantic answer to the Quad in the Indo-Pacific: an embryonic tech alliance and a building block for a new democratic tech arrangement.   When looking at the tech-foreign policy nexus in political Washington, all eyes seem to be on the Indo-Pacific — particularly China. But in data, software and hardware, the U.S.-EU relationship remains an equally if not more important tech corridor. For a sense of proportion, Euro-Atlantic data transfers are 55% greater than those between the U.S. and Asia.
With the TTC, the Euro-Atlantic partnership now has a strategic venue to take advantage of this massive democratic, digital corridor, particularly in light of the global geotech race in which the U.S., China and the EU are the three primary actors.

US physicist Michio Kaku eyes the future of space travel, China’s ambitions and the need for a new treaty
In Talking Post, futurist Kaku predicts a democratisation of space travel when mum-and-dad tourists take off    But without new laws to catch up with the rapidly advancing technology, ‘any competition between the great powers is dangerous, inherently’, he says

China to develop new heavy icebreaker for ‘Polar Silk Road’
Design to be finished by 2025, ministry says, while ‘significant breakthroughs’ also expected in building huge salvage ship    The vessels will be used to support the country’s expanding maritime activities

China population: rural families unwilling, unable to have more children faced with ‘life of inferiority’
In the past, a higher fertility rate in rural areas compensated for a low rate in China’s cities, but demographers say that is no longer the case   The cost of living, including education and housing, are putting a new generation of rural migrant workers off having kids

Thoughts of Chairman Xi Bode Ill for the Press
There are differing ideas what “journalists’ first duty to the country” should be    of how journalism should work. On November 8, the first day of the 6th Plenary Session of the party in Beijing, the Chinese state news agency Xinhua published a letter in which Xi outlined his thoughts on patriotism and journalism.

China’s Next Politburo   Who are the candidates expected to take China into the 2030s?  
The Chinese Communist Party’s ‘Sixth Plenum’ has just concluded, which as we suggested beforehand, gave President Xi Jinping more kudos in the annals of Chinese Communist Party history by linking him directly to the elevation of the “immortals” – namely Mao Zedong and Deng Xiaoping. While certain mischievous Western media suggested Xi’s non-appearance at COP26 was due to an ‘internal power struggle’ it turned out to be far from the truth. Xi’s elevation creates a direct line to him from Mao via Deng and effectively reduces the influence of the further two remaining political factions prior to Xi’s accension – those of Jiang Zemin and Hu Jintao.

Xi Jinping has rewritten China’s history, but even he can’t predict its global future
The Communist party has anointed him the most powerful leader since Mao, but how will he deal with drying deserts and an ageing society?  Xi’s personality cult, while very real, does not make him the equivalent of Vladimir Putin, who has built a political system around himself   Meanwhile, the shape of Xi’s China at home is becoming ever clearer. The limited liberalism of the Jiang and Hu eras, where some dissent was allowed online and universities could debate democracy and constitutional change, even if discreetly, has largely disappeared. China’s fledgling civil society, tackling issues from climate change to Aids treatment, has been absorbed and neutralised by the state. So far, however, the ability to provide growing living standards along with a genuine pride felt in China’s rising global status seems to have kept the middle class broadly satisfied. But there are problems to come. A confrontation with the US is still unlikely, but it would devastate China’s economy as well as lives globally. Climate change and water shortages still bedevil China’s urbanisation, a reality that may lie behind the sudden, late agreement at Cop26 between Washington and Beijing to cooperate on these issues. The demographic fallout from the one-child policy means that China will have a society older and more in need of healthcare from the 2030s. Xi’s position looks unassailable now, but even all-powerful leaders cannot countermand the drying of the deserts or the decision of families in tiny flats not to have babies.

China’s Communist authorities reinvent state capitalism
IT MIGHT BE confused for one of the world’s savviest tech investors. The portfolio of China Internet Investment Fund (CIIF) is the envy of venture capitalists everywhere. It owns part of ByteDance, the Beijing-based parent of social media group TikTok, and Weibo, the Twitter-like platform. It has a stake in SenseTime, one of China’s most advanced artificial intelligence (AI) groups, and Kuaishou, a popular Chinese short-video service. The firm’s investment list reads like a who’s who of the industry.

China’s VPN providers face harsher punishment for scaling the Great Firewall under new data regulation
The Cyberspace Administration of China drafts detailed new rules prohibiting the provision of tools for accessing censored overseas websites    The regulation marks the country’s strictest attempt so far to clamp down on unauthorised VPN    However, early versions of China’s internet blocking system, which was created in 1998 and went online around 2003 according to a now-deleted Global Times interview with the “father of the Great Firewall” Fang Binxing, were not as technologically advanced, and related laws were only sporadically implemented.  A large crackdown on VPNs did not happen until 2017, when the Ministry of Industry and Information Technology carried out a major inspection on internet service providers. That year, Apple removed 674 VPN apps from its app store in China, the Californian company told US senators in 2017.  While regulations have so far targeted VPN developers and providers, users have also been punished. In 2019, a man living in Shaoguan, Guangdong province was fined 1,000 yuan for using a VPN app.  “Individual VPN users should be cautious, as there are legal risks to bypassing the wall for whatever reason,” said an article published by Shanghai-based Wintao Law Firm in January this year.

China’s quarantine: how long, what does it cost and what is the food like?
Rules on the length of quarantine, and where you must spend it, differ from city to city, but here is what to expect   Arrivals in China also need to know which documents to prepare and how to get an all-important health code

Alain Gillard
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