Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – November 18, 2021

Property, Covid-19 challenges to remain with China’s economic slowdown to continue in 2022
China’s economy grew by 4.9 per cent in the third quarter of 2021 compared with a year earlier, down from the 7.9 per cent growth seen in the second quarter. Fitch Ratings has cut its forecast for China’s growth in 2021 to 8.1 per cent, while the US ratings agency has also lowered its 2022 GDP growth forecast to 5.2 per cent

After Biden-Xi summit, what next for US-China trade war?
Reductions in tariffs possible down the line, but no return to pre-Trump status quo, analysts say.

Europe decoupling from China ‘wouldn’t be right’, Angela Merkel says
German chancellor warns it would be damaging and says it’s important for cooperation to continue    She also says Germany’s initial approach to some partnerships with China may have been naive, but ‘these days we look more closely’

Germany may have been naive on China at first, Merkel says
Germany may at first have been naive in some areas of cooperation with China, but should not sever all connections in reaction to growing tensions, Chancellor Angela Merkel has told Reuters.

China and the future of coal: the big burning global climate question
Beijing was among the notable absences from an agreement to phase out coal use and stop building power plants fired by the fossil fuel     The country’s action will play a large part in whether the world realises its goal to cap global warming

China at COP26: Coal, Methane, and 1.5 Degrees Celsius
China’s commitments and reservations at the climate talks in Glasgow reflect the unique challenges and possibilities the country faces in its pursuit of peak carbon.

China key player in green hydrogen energy push
Hydrogen energy is a potential game changer in the search for practical renewable power. The ability to convert water, the most abundant resource on Earth, into a clean energy source is the stuff of dreams.    The field has promising applications already in powering vehicles, with the majority of research and development taking place in China. The country has a strong track record of making other green technologies, such as solar power, more accessible, with many hoping that the same will be true for hydrogen

For China, Evergrande slump may be harder to shake than Covid
With property accounting for about 25% of China’s GDP, its woes exert a significant drag on the broader economy

China walks a tightrope on property clampdown
China’s property sector, a major driver of economic growth, has weakened sharply this year as Beijing cracks down on speculators and indebted developers in a broad push to ease financial risks, with prices of new homes down for the first time in six years.

Covid-19 antiviral pills show promise, but will they be game changers?
Encouraging interim results have been announced for two oral drugs, with Merck’s approved for use in Britain this month   Experts say they could have a significant impact on the pandemic, but a lot will depend on how well they work in the real world

Alibaba net income plummets 87 per cent, with first adjusted profit decline in more than five years
Alibaba net income fell 87 per cent for the September quarter, worse than estimated, as it ploughed money into Taobao Deals and Lazada      The company’s cloud business grew 33 per cent, however   Late last year, Chinese regulators pulled the plug on a planned initial public offering of Ant Group in Shanghai and Hong Kong, less than 48 hours before the highly anticipated start of trading. Alibaba owns about one-third of the internet finance company, which has been ordered to restructure by the regulators.
Alibaba was fined US$2.8 billion in April for abusing its dominant market position, and subsequently has had to stop demanding exclusivity from its vendors. Chinese regulators have also been pressing big tech companies to open up their “walled gardens”, the term used for their closed ecosystems in which all operations are controlled by the tech giant.Alibaba’s net income dropped 8 per cent year-on-year in the June quarter, while it reported the first quarterly net loss in nine years after the antitrust fine in the March quarter.    Last month, Alibaba founder Jack Ma visited a research institute in the Netherlands in his first overseas trip in more than a year, the Post reported, citing people familiar with the matter. Ma retired as Alibaba’s chairman in 2019, on his 55th birthday.

China’s tech stock comeback faces earnings test from Alibaba, Meituan amid slower growth and tougher regulations
Alibaba, Meituan, Kuaishou, Baidu are expected to post weaker earnings in the quarter ended September 30     Report cards to test new-found optimism among tech fund managers after a 14 per cent rebound from this year’s low in October

Intel shelves plan to take over GlobalFoundries’ abandoned chip plant in Chengdu, sources say
Intel’s proposed takeover of the abandoned joint venture factory in Chengdu was intended to fast-track the company’s expansion plans in China    The deal could have revived one of the country’s major foreign-invested semiconductor projects   GlobalFoundries had earlier planned to produce 300-millimetre wafers in the 65,000-square-metre facility, in which the firm had a 51 per cent stake and the rest controlled by an investment vehicle of the Chengdu government. Total investment in this facility was expected to reach US$10 billion.  In the prospectus for its planned public listing in New York, GlobalFoundries said the Chengdu government is seeking compensation for losses from their failed joint venture. The US firm said it has set aside a provision of US$34 million in June to settle the potential compensation, and is in talks with the Chengdu government to settle the claim, according to the prospectus that was published in October. Intel’s proposed takeover of the abandoned GlobalFoundries factory, however, was never made official across the company, according to a current Intel employee who declined to be identified. This employee indicated that there are many Intel vacancies in Chengdu posted on job recruitment sites since early this year    The way Intel has apparently stumbled in its bid to fast-track its China expansion plans reflects the difficulties for multinational companies in trying to navigate the uneasy relationship between Washington and Beijing.  In October, the investment promotion bureau of China’s Ministry of Commerce held talks with Intel, STMicroelectronics, Infineon Technologies and other firms to discuss setting up a working group to facilitate “cross-border semiconductor investment” in Beijing’s latest move to ensure chip supply chain security.  But China’s efforts are increasingly at odds with Washington’s tech export policy orientation. Republican hardliners in Congress are pressuring the US Commerce Department to fortify export controls to keep critical American technology from being exported to China.

Russia’s energy deals with China may backfire on the Kremlin
The simultaneous energy crunch in Europe and China — the two biggest markets for Russian hydrocarbons — has provided Moscow with an opportunity to lock in a lucrative new gas deal with Beijing. The arrangement will enable Russia to sell gas to China from the same fields that supply its European customers. This poses a challenge for EU energy security. Yet over time, a growing reliance on the Chinese market will create challenges for the Kremlin, too, if it wants to avoid a one-sided dependence on Beijing.

Why China’s longest high-speed railway is slowing down
The 1,776km Urumqi-Lanzhou line runs through the Gobi Desert, where severe sandstorms may be causing drag and damage to trains, a study finds    Creative engineering to tackle the problem won’t come cheap, but money is just one of many considerations, a railway scientist in Beijing points out

Automechanika Shanghai 2021 changes its show dates
Automechanika Shanghai, set to take place from 24 to 27 November 2021, pushes back its show dates due to a recent onset of COVID-19 cases in various provinces and cities in the country. A new date for one of Asia’s most influential automotive trade fairs will be announced in due course.

Beijing, Moscow in talks to develop coal deposits in Russia
Russia’s deputy prime minister also says the country supports a ‘further increase of coal supplies’ to its neighbor    It comes as China is trying to secure power supply for the winter months as it slowly recovers from an energy crisis

China and Russia Cooperate on Rival to GPS
Integration between China and Russia’s satellite networks will have major implications for the United States.   In response to growing Chinese and Russian capabilities, the United States recently launched its fifth GPS III satellite, the next generation of satellite designed for greater accuracy and resistance to jamming and spoofing. The satellites are reportedly eight times more resilient that their predecessors, but analysts disagree on whether the enhanced resistance is sufficient to protect again electronic warfare with some advocating a GPS alternative. The U.S. intelligence community assessed in 2021 that “Beijing is working to match or exceed U.S. capabilities in space,” but less attention has been given to countering China’s “space diplomacy.”   China and Russia’s plans to place additional ground stations in third countries is both an instance of space diplomacy and a security concern for the United States. This step could make Beidou and GLONASS more attractive global navigation satellite systems for host countries, incentivizing cooperation with China and Russia. On the security side, any technologies requiring satellite signal could become vulnerable to Chinese and Russian data collection, an issue of particular concern with Beidou, which uses a two-way signal that also transmits the user’s position.   Bilateral cooperation between China and Russia is here to stay but unlikely to result in seamless, broad-based collaboration. Full integration of GLONASS and Beidou is improbable, but progress with the ground stations indicates that China-Russia satellite integration is worth watching.

China’s historical resolution puts focus on rising national security threats, pledges ‘fight to the end’
Resolution says ‘China’s ability to maintain national security is insufficient, the ability to respond to various major risks is not strong’     It praises President Xi Jinping’s holistic approach to national security and Beijing’s security efforts in Hong Kong, Taiwan and Xinjiang  Xi Jinping stressed that national security was a “top priority”, the resolution said, adding that Xi had put forward a holistic approach to national security – an important part of Xi Jinping Thought on Socialism with Chinese Characteristics for the New Era – which he first introduced in 2014 and covers wide-ranging security issues such as political, military, technological, cyberspace, ecological, nuclear, overseas interests, outer space and biological security.   Xi founded the party’s National Security Commission in 2013, and has chaired it since.   The resolution stated that Xi had urged all party members to enhance their “fighting spirit and capacity” and to guard against and defuse various risks.    A “centralised, high-performing, and authoritative” leadership system for national security has been improved, the resolution said, referring to the establishment of the National Security Commission under the Central Committee  The resolution said the party must fight back when confronted with types of external encirclement, suppression, disruption and subversion.
“Constant concessions will only invite more bullying and humiliation,” it said. The party has tried to raise public awareness about national security issues and consolidated the public line of defence. China rolled out a new anti-espionage regulation in April, allowing the national security authority to list companies and organisations susceptible to foreign infiltration and require them to boost security measures.  The spirit of the sixth plenum and the resolution regarding national security has been quickly passed to the state security organs.  On Friday, during a conference explaining the plenum chaired by minister of state security Chen Wenqing, the ministry said it would “discard illusions, prepare to fight” and “dare to struggle and be good at struggling” to protect the country’s national security, echoing Xi’s comments in September that Chinese officials should “discard their illusions” about having an easy life and “dare to struggle” to protect the country’s sovereignty and security.   “The great rejuvenation of the Chinese nation has entered a key phase, and risks and challenges we face are conspicuously increasing,” Xi said. “It’s unrealistic to always expect easy days and not want to struggle.”

US panel on China policy recommends several steps to deter Beijing from invading Taiwan
US-China Economic and Security Review Commission takes hard line, with chair saying ‘the Chinese government deepened its embrace of aggression … and coercion’    Annual report’s analysis of challenges facing Beijing include China’s income inequality, technological dependence on the West and growing distrust overseas  The report acknowledged China’s undeniable successes, including elevating hundreds of millions of its citizens out of poverty. But in the centennial year of the party’s founding, it added, this has emboldened party leaders and fuelled their belief in China’s supposedly inexorable rise. The bravado also masked some deep insecurities, the commission suggested, as expectations rise in advance of 2049, modern China’s centenary: beneath the party’s belief in its own pre-eminence is a fear that missteps could jeopardise its domestic control and global influence. And rather than express satisfaction with their accomplishments, party leaders appear focused on threats from “enemy forces” at home and abroad, it added.   The report reviews a range of challenges Beijing faces. Domestically, those include rising debt, income inequality, demographics, still-significant technological dependence on the West and looming fears over corruption and how much its people believe party ideology.   Abroad, China faces growing distrust and opposition from a range of nations over its human rights record, economic coercion and “Wolf Warrior” diplomacy.   The USCC report was released as lawmakers on another China-focused panel, the Congressional-Executive Commission on China, warned that democracies were failing to counter efforts by Beijing to export its censorship regime and surveillance technologies to other parts of the world. “The speed of [China’s] technological development and deployment is outpacing the response of democratic governments to monitor it, to understand it, to respond to it [and] to set standards for it,” Senator Jeff Merkley, the Oregon Democrat who chairs the CECC, said at a commission hearing on Wednesday.

China Still Struggling To Manage Debt Expansion Following 2008 Crisis, Claims USCC Report
In the wake of Beijing’s stimulus-led recovery from the COVID-19 pandemic, China’s debt burden has further increased, claimed the USCC report

USSC 2021 Annual Report to Congress
Topics this year include the CCP’s ambitions and challenges at its centennial, China’s influence in Latin America and the Caribbean, the CCP’s economic and technological ambitions, the Chinese government’s evolving control of the corporate sector, U.S.-China financial connectivity and risks to U.S. national security, China’s nuclear forces, Chinese military capabilities and decision-making for a war over Taiwan, Hong Kong’s government embracing authoritarianism, and a review of economics, trade, security, political, and foreign affairs developments in 2021.

Former US military leaders cast doubt on ‘strategic ambiguity’ Taiwan policy
Ex-officers who served in the Indo-Pacific call for the US to make its defence intentions clear in hopes of deterring an attack by mainland China   ‘If you’re talking about a strategic competition, it’s dangerous to be ambiguous because someone will miscalculate somewhere’

Peng Shuai: Doubt cast on email from Chinese tennis star
The head of the Women’s Tennis Association (WTA) has cast doubt on an email released by Chinese state media attributed to tennis player Peng Shuai.

US should expand investment restriction on Chinese company to protect investors and national security, government advisory panel says
Commission says that the US should require additional risk disclosures from Chinese companies as well as from US brokerage firms     The group says Beijing’s crackdown on technology companies has led to billions of dollars in losses for US investors

L‘Oréal China apologises after complicated Singles’ Day deal angers shoppers
Singles’ Day shoppers complain that L’Oréal’s promotions steered them away from the best possible deal Two of China’s top live-streaming influencers denounce the French beauty giant for allegedly misleading customers

Dior under controversy for inappropriate portrayal of Chinese models in Shanghai Exhibit
Dior’s latest exhibition in Shanghai, Art’N Dior, attracted nationwide attention from well-known celebrities to Chinese consumers for the wrong reasons. However, this long-awaited campaign event has now put the brand at risk of losing the world’s second-largest luxury market. One piece of photography on the exhibit sparked anger amongst local people for uglifying a Chinese lady with an evil-looking face, raising the question of what Dior sees as a Chinese woman? The original idea was to restore the ancient Chinese aesthetics and infuse it with the modern Dior handbags, but this did not come across. Instead, the lady featured in the photo is perceived as a provocation from the brand, with many Chinese people left insulted by the art. Many Chinese consumers compared this female image with other stereotypes created by foreign brands, even with disgusting zombies, highlighting the concerns the Chinese market faces with international brands and their assumptions of beauty. 
When promoting brands in a foreign country, playing on cultural differences can be helpful, if you can make it right. Dior is not the first to anger Chinese customers with inappropriate handling of Chinese models After many failed cases, international brands should pause and think about the authentic beauty of Chinese people and how to present it. Otherwise, insensitivity and ignorance will only harm the brands themselves, with China a large market for luxury brands to compete within. If these brands cannot navigate the market successfully they have every chance of not just losing income but of potentially irreparably damaging their economy within China.

Taiwan opens de facto embassy in Lithuania, despite angry reaction earlier from Beijing
Taiwan pledges to ‘cherish and promote this new friendship based on our shared values’ with Baltic state   Beijing has stepped up efforts to get other countries to limit their interactions with Taipei, or cut it off altogether

China’s Belt and Road Initiative: ‘Go,’ A Game Beyond Chess – OpEd
Since Xi’s ascent to power, China has taken an aggressive and expansionary approach, reasserting its claim on the disputed territories as “sovereignty issues” where “it would not concede an inch” and China is likely to remain the biggest challenge for India and the world at large. China’s New Border Law “stipulates that the sovereignty and territorial integrity of the People’s Republic of China are sacred and inviolable”. China is now the world’s leading economic power  and it is the leading trading partner of nearly every country including India. China has been manoeuvring its pieces into position on the global canvas using trade, infrastructure and the BRI to dominate what the Western world so far considered their domain . Countries need to selectively stay away from China’s trade dependencies by diversifying their economic trade.  China’s strategy of the silk noose around India from every direction has to be tackled with a counter-strategy. Quad(s) is one recent development along with synergizing other earlier associations. India must make friendly moves towards countries which are increasingly threatened by China like Japan, Australia, Taiwan, Malaysia, South Korea, Singapore, Vietnam, Nepal, Bhutan and Sri Lanka. The like minded community of Nations have to finally  come together to counter the Chinese further ‘Go’ ‘Go’ into territories of economically weak nations. India has to play a different game of Chess strategy and economic trade Chanakyaniti to counter China’s expansionist designs.

Alain Gillard
Information Officer
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