Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – November 19, 2021

China needs ‘key reforms’ to support transition to high-quality growth, IMF says
Property deleveraging and Beijing’s regulatory tightening on Big Tech have increased policy uncertainties, and the IMF says financial risks should be clearly addressed. It also echoed growing concerns from domestic analysts and foreign investors about China’s quarterly declines in GDP growth

IMF urges China to tackle financial risks in ‘clear and coordinated’ fashion
must address financial risks in a “clear and coordinated fashion” and temporarily shift its fiscal policy to a neutral stance from this year’s contractionary approach, International Monetary Fund said in a statement released on Friday. “China’s recovery is well advanced, but is unbalanced and momentum is slowing, even as downside risks are accumulating,” the IMF said in a statement from staff involved in the recently concluded 2021 Article IV consultation with China. The IMF blamed the slowdown to China’s rapid withdrawal of policy support, the hit to consumption from COVID-19 outbreaks, recent power outages and a slowdown in real estate investment.

China Property Risks to Economy Can Be Contained, IMF Says
China should be able to contain the economic impact of financial strains experienced by real-estate developers but needs to step-up fiscal support for its slowing economy, the International Monetary Fund said.    Downside risks to the IMF’s forecast of 8% growth in China this year and 5.6% in 2022 “are accumulating” due to factors such as “pandemic uncertainty” and weak consumption, the IMF said in a press release following an annual survey of the world’s second-largest economy

Where Did It All Go Wrong for Emerging Markets?
In a word: China. It makes sense for investors to exit, even if the government proves able to pull off a tricky economic transition.The single biggest reason for emerging market underperformance this year is the Chinese property market. The problems of China Evergrande Group sparked fears of a Lehman-style crisis, or “Minsky Moment.” And the elements seemed to be in place. Lots of developers have sunk money into a wildly over-extended housing industry. The following chart, from Barclays Plc, shows that China’s real estate market is far more overblown than Japan in 1989 or the U.S. in 2006, which is terrifying:  So why should we be calm? Firstly, a critical element in the Lehman crisis is missing: leverage. Adam Wolfe, emerging markets economist for Absolute Strategy Research Ltd., shows that property developers’ funding has come primarily from pre-selling houses yet to be built. Reliance on loans is far less than it was during China’s near-crisis of 2015, and inordinately less than in the U.S. housing bubble: Further, contrary to appearances, the primary problem isn’t wildly overblown valuations. As a share of disposable incomes, house prices have fallen considerably over the last quarter century, as Wolfe shows in this chart. Homebuyers may be getting a bad deal, but they aren’t overstretching themselves Rather, the dilemma is that China has built far more houses than it needs. Such excessive supply will mean losses for developers, and declines in house prices. This isn’t good for the economy, and is reason to expect that growth can no longer continue rocket-like at 6% or more per year. This justifies the downgrading of emerging markets. But the problem seems bad, not cataclysmic:

Growth, Beige Book’s Miller Says
China’s economy is slowing more than people think and the outlook is for weaker growth going forward as the government is unlikely to step in with significant stimulus, according to Leland Miller, chief executive officer of China Beige Book.    “The third quarter was particularly brutal” for China’s economy, Miller said Friday on Bloomberg Television in Singapore. In addition, “we’re going to be looking at much lower growth going forward and it’s going to be because the Party is OK with that.”

China Faces Many Challenges in Keeping Economy Stable, Li Says
China faces “many challenges” in keeping the economy’s development stable with new downward pressures emerging, Premier Li Keqiang said.   Authorities should strive to keep the economy operating within a reasonable range and ensure the overall employment situation is stable, Li said at a seminar with scholars and businessmen Friday, according to a report in state media Xinhua. He said “cross-cyclical” adjustments were needed to support growth.

Chinese experts say new US trade alliances to contain China could backfire and Beijing should push ahead with reforms
China experts say Beijing should accelerate domestic reforms, continue its push to join the CPTPP and double down on efforts to influence global trade rules     Trade leaders in the US, Europe and Japan have agreed to renew their trilateral partnership, advocated by the previous Trump administration

The CPTPP isn’t just a trade deal for Taiwan, it’s a survival plan
When Taiwan made its bid to join the CPTPP in September, a week after China officially declared its interest in joining, there was speculation about the implications of the timing. Taipei could not afford to wait to request entry once Beijing got in the game. Yet the CPTPP is at the heart of mapping out Taiwan’s long-term survival, not just a means to remain competitive in global markets.  Taiwan has thrived to date as a global player despite having only signed a limited amount of trade deals with select countries, including economic cooperation agreements with New Zealand and Singapore. But as the Indo-Pacific becomes the epicentre of integrated deals that will make trade far more efficient, cost-effective, and harmonised, Taiwan is in danger of becoming less attractive for investors precisely because it is not part of the trade networks.    For Taiwan to remain a flourishing and prosperous democracy, it needs not only strong defensive support from its partners, but also their backing to remain an integral part of the global economy. What’s more, its efforts to join the CPTPP must be acknowledged as a political manoeuvre as much as economic policy. By joining the CPTPP, the legitimacy of the Taiwanese government will be advanced, and the international community’s support for Taipei will also be made clear.   At the same time, it offers an opportunity for the 11 CPTPP members to step up to the plate and support Taiwan politically even without the United States. Actively supporting and considering Taipei’s application to join the CPTPP will test the resolve and the political savvy of member countries. Nothing will make more clear the commitment of the international community to defend and protect Taipei than its welcoming of Taiwan as a member of the CPTPP.

Goods Barometer points to slowing trade growth due to disruptions in critical sectors
Following its sharp rebound from the initial shock of the COVID-19 pandemic, global merchandise trade is slowing, with production and supply disruptions in critical sectors dampening growth alongside cooling import demand, according to the WTO’s latest Goods Trade Barometer issued on 15 November.

pdf : World Trade Report 2021    Economic resilience and trade
The COVID-19 pandemic and the prospect of increasingly frequent and more intense natural and man-made disasters raise important questions about the resilience of the global economy to such shocks. The 2021 edition of the WTO’s World Trade Report examines why the interconnected global trading system is both vulnerable and resilient to crises, how it can help countries to be more economically resilient to shocks, and what can be done to make the system better prepared and more resilient in the future.

Are Chinese Celebrities Still Crucial For Luxury Brands?
As 2022 approaches, question marks remain as brands wonder about the long-term effects of the celebrity and fan culture crackdowns of 2021, and whether next year’s National Congress means the crackdown will show no signs of slowing for months — or years. One key question addressed in our recent Insight Report, What China’s Big Celebrity Crackdown Means For Luxury, is whether celebrity-led marketing campaigns even make sense in China’s current business and entertainment climate.      China’s crackdown on celebrities — which culminated in the detainment of luxury brand super-ambassador Kris Wu in August — gets most of the attention, but one of Beijing’s strongest moves this year has been its crackdown on the “fan economy.” At its simplest level, the fan economy is a business model that seeks to profit from fans’ devotion to celebrities. But this translates to more than just fans spending money to see a celebrity’s new film or buy their merchandise — the fan economy in China is, essentially, a two-way street in which a celebrity’s success is gauged by how large, vocal, and enthusiastic his or her fan base is.

China vs video games: why Beijing stopped short of a gaming ban, keeping Tencent and NetEase growing amid crackdown
Since a deadly internet cafe arson incident in the early 2000s, video games have been regarded as yet another “spiritual opium” imported from the West    Despite console bans, censorship, and continued restrictions for minors, China’s video game industry has become enormously successful and influential

podcast : China’s Economy Slowing More Than People Think: Miller
Leland Miller, chief executive officer of China Beige Book, discusses the state of the world’s second-largest economy, its outlook and the government’s policies. He speaks on the sidelines of the Bloomberg New Economy Forum in Singapore with Shery Ahn on “Bloomberg Daybreak: Asia.”

End Trump’s Trade War? Easy Inflation Win Could Backfire on Biden
 Removing tariffs on Chinese imports would lower prices but open the president to Republican attacks.

China’s semiconductor talent shortage poses biggest obstacle to Beijing’s chip self-sufficiency ambitions, SMIC founder says
Richard Chang Rugin, founder of chip maker SMIC, sees no easy fix for the low supply of semiconductor talent in the world’s second-largest economy    China’s chip self-sufficiency efforts are also complicated by the global semiconductor shortage and tensions between Beijing and Washington

Alibaba’s era of exceptional growth is over as Chinese consumer spending power weakens, say analysts
The Chinese e-commerce giant’s adjusted profit fell 39 per cent in the September quarter, marking the first such decline in 22 quarters     Competition from rivals Pinduoduo and, as well as online sales by live-streaming platforms like Douyin, have squeezed profit margins

Alibaba warns of slowdown in Chinese consumer spending
Alibaba’s US-listed stocks fell more than 10% after the e-commerce group drastically lowered its sales forecasts due to slowing growth in consumer spending in China.     In Thursday’s quarterly results, Alibaba expects sales growth of 20-23% in 2022, compared to the previous forecast of 30% growth after experiencing “softer market conditions”. Said.    Recent Chinese Economic data I am drawing a dark picture of the country’s growth prospects. August retail sales were up only 2.5% year-over-year, well below economists’ forecast of 7%, the slowest increase in 12 months.  Alibaba is also working with new start-ups that are trying to intensify competition with established rivals such as Pinduoduo and and take market share

Hong Kong stocks tumble, dragged down by Alibaba’s poor quarterly earnings report
The e-commerce giant is on track to post its largest single-day percentage decline on record     The Hang Seng Index retreated 1.8 per cent at noon on Friday, falling for the third day in a row

Alibaba Q2 Revenue Up 29% YoY; Invests in Future Growth
International commerce & cloud computing see surge in revenues      Group invests in Taobao Deals, Local Consumer Services, Community Marketplaces and Lazada as it builds future winners

EU-China Opinion Pool: Rethinking EU-China climate cooperation
During the climate conference COP26 in Glasgow, leading European stakeholders often referred to climate policies as an area in which EU-China cooperation is indispensable. However, what this cooperation entails in practice remains elusive. Climate cooperation between China and the EU needs an overhaul. It is vital that we coordinate at the political level, but we need to be clear-minded about where concrete cooperation is effective – and where we should challenge China to do more. The more successful areas of cooperation are in science, standards and green finance. The EU and China, and not least the climate, stand to gain if we coordinate our standards defining, e.g., green tech.    Coordinating on common carbon pricing is an issue we should move on fast, since it will become central to trade relations. Scientific exchange is an important part of advancing our knowledge about climate change, and collaboration among energy agencies has real impact on our understanding of each other’s strategies and pathways to respond to it. In green finance, we could be more ambitious in linking resources to finance clean energy in developing economies and in areas where switching to renewables needs to be aided. Both sides already have mechanisms in place.  We also must accept that, on certain issues, China will not move as fast as we would like. It is important to lead by example, and possibly accelerate commitments through the market – via competition. The Carbon Border Adjustment Mechanism (CBAM), and to some degree the supply chain law, both still in the making, have the potential to create market pressure on Chinese producers to become more sustainable. Beijing seems to become less responsive to political pressure, and so market mechanisms and competition are probably the best mechanism we have left. This goes hand in hand with more investment in our own research and tech sector, to stay competitive in key future technologies. China is betting on green tech competition, and we should engage in that competition – for the sake of the climate.

COP26: Chinese climate adviser rates Glasgow summit a success, saying it ‘achieved good progress’
Going into the talks, China sought a ‘powerful, balanced and inclusive result’, green energy workshop told   ‘US-China joint declaration provides new impetus for COP26 and it leaves room for future cooperation

China-US Developments
It’s the most complex international relationship and it’s going to get more convoluted as time goes by. But this week allowed for some movement at least. Biden and Xi had a call, no breakthroughs, much reiteration of standing positions. But there was an agreement with caveats on each country allowing journalists from the other place to operate in their territory—we’ll see how that plays out, it’s a long way to go to get back to where it was. A lot of Chinese reporting by US organizations and others has moved offshore. Meanwhile, it seems there was a prisoner exchange—one American for seven Chinese. Interesting balance there. And both sides said what they wanted to say on Taiwan, which is so much more high-profile as an issue today than it has ever been. But anyway, slightly more positive vibes all round as this week ends.    In other news, Wang Qishan said that China can’t develop alone, and the country got a new stock market, based in Beijing, and who would have guessed it, but the first few IPOs took off like rockets.

Xi-Biden summit lays groundwork, but ‘significant challenges’ remain in trade talks
US business lobby expects future talks to cover more equitable market access, easing travel restrictions, SOE subsidies and China’s WTO obligations    Chinese analysts question how far negotiations can progress amid anti-China rhetoric on Capitol Hill and simultaneous containment efforts by Washington

US-China tech war: Xi Jinping doubles down on ‘technology security’ measures as part of nation’s five-year plan
China’s ruling Communist Party wants to ratchet up tech security measures in line with national development efforts    It stressed the importance of self-sufficiency in advanced technologies amid tensions between Beijing and Washington  ignalled the drive for self-reliance and domestic production in April last year, when he indicated that the country’s industrial supply chains would not be disrupted even in critical times.The US government’s trade sanctions on Huawei Technologies Co, the world’s largest telecommunications equipment maker and formerly China’s biggest smartphone vendor, have been widely cited as a warning shot that the country must develop its own technologies to cut reliance on foreign suppliers.   China, meanwhile, implemented this year new rules and regulations restricting cross-border data flows and enforcing data localisation. These are covered by the Data Security Law, which took effect on September 1, and the Personal Information Protection Law, which was rolled out on November 1.     The tightened data regime, however, has not prevented Beijing from efforts to step up development of digital trade.  Recent developments that have raised the urgency for China’s tech security involve semiconductors.    Plans by South Korean manufacturer SK Hynix to overhaul a huge factory in the southern city of Wuxi so it can make memory chips more efficiently are in jeopardy because US officials do not want advanced equipment used in the process to enter into China, according to a Reuters report that cited sources.  US semiconductor giant Intel Corp, meanwhile, shelved its expansion plan in the southwestern city of Chengdu because of Washington’s security concerns.   Those situations echo the message of an opinion piece published by the state-run Science and Technology Daily in April. It said: “The work of technology security has never been as important as today, and achieving high-standard technology security has never been as urgent as today.”

Chinese EV maker Xpeng unveils SUV with semi-autonomous driving system
G9 ‘an essential part of our exploration of smarter, safer, greener and sustainable mobility’, CEO says   Firm plans to launch SUV in the third quarter of 2022, says person familiar with the matter

Xi-Biden summit: upbeat tone not enough to ease Southeast Asia’s concerns about great power squeeze
Many countries in the region are concerned about being forced to pick sides as the great power rivalry continues     A day after the virtual meeting, Singapore’s Prime Minister Lee Hsien Loong warned that Taiwan remained a potential flashpoint

China’s top trade negotiator Liu He meets foreign business dignitary in Beijing for first time in two years
Meeting comes amid growing debate over when the world’s second-largest economy will reopen its borders    Ben Keswick, executive chairman of Jardine Matheson, also met with vice-premier Hu Chunhua in Beijing this week   Keswick said that China has achieved remarkable results in its response to the Covid-19 pandemic, and that its economy is full of vitality. “Jardine Matheson attaches great importance to the Chinese market and is willing to continue strengthening its business development in China”, Keswick was reported as saying by Xinhua.  Jardine Matheson had no further comment on the meeting when contacted by the Post. Chinese Commerce Minister Wang Wentao on September 29 virtually met with executives from 15 British companies, including HSBC, Burberry Group, Standard Chartered, Jaguar Land Rover, Prudential, Diageo and Reckitt.   He urged Chinese and British companies “to do the right thing” in the face of challenges to China-UK ties.

China’s top science and technology advisory commission emerges from the dark as Beijing charts future economic course
The members, function and organisation chart for the commission remain unknown as the Chinese government has disclosed little information about the body    China’s Politburo has requested the body to project ‘the future trends of international and domestic technology development’

Can China Join the Digital Economy Partnership Agreement?
China recently applied to join the Digital Economy Partnership Agreement, a trade agreement aimed at improving collaboration and trade in the digital economy signed by three Pacific countries – New Zealand, Singapore, and Chile. There are many ways in which China would stand to benefit from joining the agreement, but the country’s recent tightening of data laws may stand in the way of its accession. We provide an overview of what the Digital Economy Partnership Agreement contains and discuss China’s chances of success.

China’s Antibiotic Exports Soar to Record $3.7B
IndexBox has just published a new report: ‘China – Antibiotics – Market Analysis, Forecast, Size, Trends And Insights‘. Here is a summary of the report’s key findings.   Antibiotic exports from China, the largest supplier worldwide, peaked at $3.7B in 2020. Over the past decade, China’s exports steadily grew at an average annual rate of +2.5%. India, the Netherlands and Viet Nam constitute the leading importers of antibiotics from China. Viet Nam recorded the highest growth rate of import value from China over the past decade. Last year, the average antibiotic export price amounted to $44,258 per tonne, increasing at an average annual rate of +4.4% from 2010 to 2020.

China Oceanwide’s retail investors look to Blackstone deal for hope
Chinese private investors were nervous about the news when US private equity group Blackstone announced in June that it would acquire Massachusetts-based media and research firm International Data Group.      The $ 1.3 billion transaction, which closed on Wednesday, will transfer funds to China Ocean Wide Holdings, a former owner of IDG and a real estate developer with an international footprint and a range of outstanding debt.    This sale is a rare link between global trading and the plight of individual investors exposed to China’s vast scale. Real estate industryDevelopers such as Evergrande and Kaisa are struggling to respect billions of dollars in debt.    Oceanwide’s need for cash also highlights the risks of China’s huge wealth management industry, where some real estate developers raise money without constantly disclosing the amount in their financial statements.

Why Chinese tech giants are embracing the metaverse despite state media warnings
Bilibili says it has great potential to develop the metaverse after Tencent and NetEase made similar declarations     The People’s Daily cautions investors against falling into what it sees as a market hype around the metaverse

Becoming Shein: Chinese Retailers Eye the Global Fast-Fashion Market
The boom of Shein-like startups, boosted by COVID-19, reflects structural changes in China’s supply chain. Environmental experts say they should also shoulder greater social responsibilities.

Biden-Xi journalists deal faces criticism
This week’s CW dives into one of the “deliverables” from Monday’s virtual meeting between Presidents JOE BIDEN and XI JINPING, looks at the history and optics of the Biden-Xi meeting Zoom rooms, and unpacks the key takeaways from the 2021 annual report of the U.S.-China Economic and Security Review Commission.

The Sixth Plenum and the Rise of Traditional Chinese Culture in Socialist Ideology
The CCP is turning to traditional culture to bolster its rule and guard against the spread of Western values.  After much anticipation from China observers, the Sixth Plenum of the 19th Party Congress was held in Beijing during the second week of November. During the plenum, the CCP passed the Resolution of the Central Committee of the Communist Party of China on the Major Achievements and Historical Experience of the Party over the Past Century. One of the most significant changes in the resolution is that it elevates the importance of Chinese culture and values.The Resolution moves beyond the conventional “socialism with Chinese characteristic as the adoption and practice of Marxism in China” rhetoric and places Chinese culture at the front and center of Chinese socialism. It praises Chinese culture as a significant advantage of the Chinese nationality and calls for its continuation and development. Chinese political system. Joseph Fewsmith identifies a primary challenge to the Chinese government: the tension between CCP’s unitary political leadership and the increasingly diversifying society in China. Economic development causes the rise of different interests in different social groups, which leads to a pluralized society. However, traditional Chinese culture does not address this problem. Rather than accommodating diversity, it enhances a unitary system of moral values and forces everyone to conform to it. Thus, it reduces political inclusiveness and decreases the government’s ability to meet rising popular demands. Promoting and even forcing a single moral belief will inevitably alienate a significant portion of society.  Furthermore, the rise of individualism and liberalism is a natural result of economic growth. Increasing socioeconomic development, including higher incomes, more education, urbanization, and a shift toward white-collar jobs, led to a worldwide increase of individualism since 1960. Solely blaming Western infiltration indeed misunderstands this global trend. Individualism and liberalism can also serve as important sources of creative destruction, which leads to intensive growth. Suppressing and stigmatizing them might stifle innovation and economic development.

What drives high-profile disappearances in China
The disappearance of tennis star Peng Shuai in China following her accusation of sexual assault against a former top Communist Party official has shined a spotlight on similar cases involving political dissidents, entertainers, business leaders and others who have run afoul of the authorities.     A look at those cases and the background on such actions.

China to meet ‘challenges’ to giant Belt and Road initiative
China will strengthen risk prevention and control in its giant Belt and Road Initiative (BRI) infrastructure project linking the country to the rest of the world, state media quoted President Xi Jinping as saying today.    The BRI presents opportunities, but the international environment has become increasingly complex, spurred by increased technical and industrial competition, environmental changes and the Covid-19 pandemic, Xi was quoted as saying. China should “actively respond to challenges, utilise advantages and avoid disadvantages”, state media quoted Xi as saying without elaborating.

One Belt, One Voice: Chinese media in Italy
The Chinese Communist Party’s (CCP) efforts to improve China’s image abroad have led to an internationalization of Chinese media and collaborations with media from foreign countries. Italy is no exception    Most concerning is the fact that ANSA publishes the translated version of the news from Xinhua without editing it. In other words, ANSA serves as a platform for Xinhua’s propagandistic material that reaches the Italian public. Most recently, ANSA published Xinhua news congratulating China on honoring its promise to host a zero emission Olympics. The article used lavish language such as “great,” “pride” and “gratitude”, highlighting also the positive aspects of China hosting the games and ignoring the controversy around the Olympic games. The collaboration calls into question the reliability of information and creates fertile ground for disinformation. In this case, the article promoted Beijing’s agenda to avoid the games being boycotted

Beijing promotes ideal of clean, civilised internet as it seeks increased international cooperation in cyberspace
The ‘China Cyberspace Civilisation’ conference showcased the country’s success in censoring online information that the state deems harmful or unhealthy    President Xi Jinping exhorted the Communist Party, government bodies, online platforms and netizens to ensure the civilised development of the internet     US internet company Yahoo stopped all its remaining online services in mainland China earlier this month, marking its final retreat from the country, weeks after Microsoft Corp’s LinkedIn announced its exit from the world’s second-largest economy because of greater compliance requirements.The timing of Yahoo’s shutdown of its few remaining online services in China coincided with the roll-out of the Personal Information Protection Law, one of the world’s toughest on personal data security, which has been compared to the General Data Protection Regulation in the European Union.  Recently, cyberspace watchdog CAC drafted a new regulation that would punish individuals and institutions for helping internet users bypass the country’s Great Firewall and access censored information from overseas.    China has also maintained a tight grip on sources of online content. CAC has published a new “white list” of government-approved internet news providers, including hundreds of mobile apps as well as the Weibo and WeChat social media accounts directly managed by government bodies and media groups overseen by the Communist Party’s Central Propaganda Department.

podcast : Xi Jinping’s Resolution on History, with Valarie Tan
Just hours after China’s president Xi Jinping met virtually with US president Joe Biden on November 16th, Chinese state media released the text of the Chinese Communist Party’s  new “Resolution on History”. In the week prior, top leaders in the party convened to approve the document – only the third of its kind – elevating Xi to the stature of former leaders Mao Zedong and Deng Xiaoping. Nothing will stand in his way should he seek a third five-year term at next year’s Party Congress.

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