Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – November 2, 2021

China consumption: how important is it to the world’s No 2 economy?
As China’s middle class has expanded over the past two decades, consumption has become a key driver of growth    Under its ‘dual circulation’ strategy, Beijing wants consumer spending to become more prominent in future

China’s economy is showing signs of stagflation, economists warn
China’s factory activity contracted more than expected in October, shrinking for a second month, an official survey released on Sunday showed. The latest October manufacturing data shows low production and high price inflation, economists say. “A worrying sign is the pass-through of inflation from input prices to output prices. The input price inflation has been high for many months by now, driven by the rising commodity prices,” Zhang Zhiwei, chief economist at Pinpoint Asset Management wrote.

China’s Economy Faces New Downward Pressures, Premier Li Says
China’s economy faces new downward pressures and has to cut taxes and fees to address the problems faced by small and medium-sized companies, according to the country’s Premier Li Keqiang. Li did not specify the extent of the new “downward pressure” or its cause, but the phrase is generally used by Chinese officials to refer to a slowing economy. He has used the phrase before, including several times in 2019. The economy needs “cross-cyclical adjustments” to continue in a proper range, Li said during a visit to China’s top market regulator, state broadcaster CCTV reported. That phrase is associated with a more conservative fiscal and monetary approach that focuses more on the long-term outlook instead of immediate economic performance.China’s economy has been slowing in recent months due to Beijing’s push to slow growth in the real-estate sector. Li’s remarks came after further signs of weakness in October due to power shortages which weighed on manufacturing, and strict coronavirus controls which put a brake on holiday spending.

China’s economic growth next year to be supported by fiscal policy, ‘limited’ need for ‘aggressive’ monetary easing
Huang Yiping, a former member of the People’s Bank of China’s (PBOC) monetary policy committee, sees average growth this year at around 8 per cent. China’s economy is slowing under headwinds from an energy shortage to a slump in the property sector. “The main job for supporting growth, I think, will be with the fiscal policy next year.” China’s economy is slowing under headwinds from an energy shortage to a slump in the property sector. Surging commodity costs and increasingly frequent coronavirus outbreaks also continue to weigh on domestic demand, with an official gauge showing the manufacturing sector contracted for a second month. The PBOC has refrained from cutting banks’ reserve requirement ratio since a reduction in July, and has kept policy interest rates steady since early last year. However, the Ministry of Finance recently urged local governments to speed up borrowing by the end of November after almost a year of slow bond issuance. Huang said growth is likely to see a further slowdown in the coming months before it turns around. While long-term goals such as deleveraging the property sector and reducing carbon emissions have inflicted short-term pain on the economy, Huang said he is not “too worried” about growth as authorities are now fine-tuning policies in these areas.

As manufacturing and labor weigh on the economy, China’s manufacturing activity slows down
Manufacturing activity in China slowed for a second straight month in October, as the country’s recession and energy shortages spread to the world’s second-largest economy. China’s manufacturing procurement index was 49.2 in October, less than the 50-point spread over the contractor, official data showed on Sunday. PMI data is the latest sign of a worsening economic downturn as it weakens asset construction and high commodity prices weaken industrial demand. The September 49.6 reduction in electricity supply was reflected in the fact that the North Rust Belt from China’s North Rust Belt hit high-tech factories in Guangzhou and Shenzhen.

Further contraction of China manufacturing PMI from policy shock
October’s manufacturing and non-manufacturing PMI demonstrated the effects of intensive policy actions to the economy. We believe that sudden shutdowns of electricity generators is not likely to happen again. Deleveraging reform on real estate developers will continue to put pressure on non-manufacturing PMI

China’s economy slows as Beijing wrestles with debt
China’s economic rebound from the coronavirus pandemic is stalling as President Xi Jinping’s government cracks down on surging corporate debt.      For a decade, the ruling Communist Party has talked about shifting to economy based on spending by 1.4 billion consumers instead of on building factories and apartments. But with each slowdown, Beijing fell back on pepping up growth with more construction and borrowing.

Is China’s local government debt a concern and what role do LGFVs play in infrastructure spending?
Local government bonds reached 28.6 trillion yuan (US$4.5 trillion) at the end of September, accounting for 23 per cent of the all the listed bonds in China by volume  Local government hidden debts, mainly LGFV debts including loans and bonds, reached 45 trillion yuan (US$7 trillion) at the end of 2020, according to estimates

White House debates to delay Biden’s plan for tariffs on key Chinese industries
White House trade leaders want higher tariffs on Beijing’s most favored industries, but key advisers disagreed on how to proceed

Washington still searching for a China trade policy
CSIS in Washinton was privileged on 4 October to host US Trade Representative (USTR) Katherine Tai as she explained the Biden administration’s trade policy on China. We learned that Ambassador Tai has lots of tools for dealing with China — none of which she specified — and that how she proceeds will be influenced by how future discussions with her Chinese counterpart, presumably Vice Premier Liu He, proceed. The first of those occurred four days later. Ambassador Tai announced that the tariff exclusion process would resume, which it did via a USTR announcement the next day.   Administration officials are acutely aware that they have no trade policy for the region and that sending an aircraft carrier through the South China Sea every few months is really no substitute. The path described above is available for the CPTPP, and it is only a matter of time before the administration realises it and starts down that road. A complicating factor is China’s application to join. At this point it is impossible to predict how that may turn out, but it does seem clear that it will take a long time to resolve, and it may well spur the United States to move more quickly — although we will not be at the front of the queue.
So, do we have a policy? For China, we have short-term tactics but there is a lot more detail to be filled in before we will really know where the administration is going. For the region as a whole, US policy — as with so many other trade issues — remains ‘under review’.

Some US-China decoupling is inevitable, senior China diplomat warns
Article for Central Party School’s newspaper says technological rivalry will become a key battleground between China and the West    There have been some signs of a thaw recently, but Wang Xiaolong’s comments suggest Beijing has a gloomy view of the future of relations with US

China Urges Stocking Up Ahead of Winter, Prompting Worries Online
A statement from China’s government urging local authorities to ensure there was adequate food supply during the winter and encouraging people to stock up on some essentials prompted concerned talk online, with people linking it with the widening coronavirus outbreak, a forecast cold snap, or even rising tensions with Taiwan.     The Ministry of Commerce urged local authorities to stabilize prices and ensure supplies of daily necessities including vegetables this winter and next spring, according to a statement Monday evening. Chinese households were also encouraged to stock up on a certain amount of daily necessities in preparation for the winter months or emergencies.

From splurge to ‘common prosperity’: Alibaba tones down Singles Day
Alibaba Group’s annual ‘Singles Day’ shopping spree is set for its most sober tone ever this year, as the retail giant preaches sustainability rather than hyping the usual sales boom amid calls by Beijing to promote “common prosperity”.   In 2020, Alibaba expanded what it calls the world’s biggest online shopping festival from a one-day November 11 event into a 11-day extravaganza, with celebrity performances and a sales metric ticking over live on a scoreboard that ended with the news that it had racked up $74 billion in orders, or ‘gross merchandise value’ (GMV), flashing big and bright. This time around, the event comes at a time of much more stringent regulatory scrutiny for China’s biggest companies – including Alibaba – and the call to promote “common prosperity” and curb excess echoing around boardrooms. In 2021, Alibaba is formally promoting “sustainable development” and “inclusiveness”.

China’s Supply Chain Bottlenecks: Winners and Losers
While manufacturers are losing out, logistics companies are making record profits   While the current situation looks likely to persist into 2022, preventing future bottlenecks is on the minds of firms’ leadership teams. Even while firms increasingly have end-to-end supply chain visibility, they are unable to resolve the bottlenecks and instead are left to anguish over containers loitering outside of ports, waiting to be unloaded. Such companies are looking to diversify supply chains and also find more ways to improve supply chain agility.    Agility encompasses the integration of demand and supply, with cross-functional communication that coordinates business planning on a frequent, regular basis. It also requires strong scenario planning to adapt to changing circumstances. This will become increasingly important as climate change takes hold, generating natural disasters, crop failures, and labor migration. The confluence of several shocks, including COVID-19, the energy supply shortage, and rapidly changing consumer demand led to the current crisis, and only agile supply chains will thrive in an uncertain future.

Leaders must commit to green finance at COP26 to avoid climate catastrophe
Greening finance will be front and centre at the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change this November in Glasgow. The main program features a finance day on 3 November, putting finance ahead of the other seven themed days. But there is a danger that leaders’ hopes for ‘mobilising finance’ in the fight against climate change are over-simplistic and over-optimistic. Leaders risk overpromising and underdelivering.    To improve green finance as a powerful tool for reducing climate emissions and increasing climate change resilience in Asia and beyond, leaders at COP26 must make tough choices. They must decide which commitments they will negotiate within the different workstreams and the leaders’ summit. The risk is that leaders will focus on topics that require lengthy discussions. These discussions may not yield (new) results or may produce underwhelming outcomes, such as global emission trading schemes or finance for developing countries.

Transition to renewables likely to accelerate after COP26 despite cost and technology challenges, experts say
Natural gas spot prices have more than quadrupled in Europe and Asia due to surging demand, creating ripple effects in coal and oil markets   Renewables accounted for almost 30 per cent of global electricity output in 2020, according to the International Energy Agency

podcast : Can China and the US Cooperate on Climate Change?
Li Shuo, Jennifer Turner, and Alex Wang discuss the role of climate change in China-U.S. relations.

As the world says no to coal, China is poised to lead on green energy finance
China’s deep pockets, experience in financing clean energy and dominance in the solar and wind sectors make it a natural leader in the global energy transition. The opportunities to support green energy finance are also big. In a recent paper, we analysed developing countries’ nationally determined contributions (NDCs) – legally binding targets to reduce greenhouse gas emissions under the Paris Agreement – and found thousands of renewable energy opportunities worth US$800 billion. China could lead by example with a pledge to commit a high proportion of its overseas finance portfolio to financing developing country NDCs.  Some development finance institutions have made hard pledges in this direction, and China should follow suit. Notably, the New Development Bank, of which China is a member, pledged that 60 per cent of its funding would be for renewables back in 2016.  China’s quick and portfolio-based approach to development finance, where fleets of projects are part of an overall strategy, is superior to the slow, project-by-project-based approach of Western-backed multilateral development banks. What is more, given China’s dominance in the solar and wind sectors, it is in Beijing’s economic interest to advance these technologies. Its companies around the world stand to gain handsomely. All this, combined with the deep pockets of China’s policy banks (which provide the equivalent of 42 per cent of the power-generation capacity financed by the world’s 10 largest multilateral development banks), means that China’s overseas development finance institutions are poised to lead on green energy finance.

China’s coal shortage eases after Beijing steps in, report says
The number of Chinese provinces with significant power shortages fell to two in mid-October, down from 18 at the start of the month, a Commonwealth Bank of Australia report said.    “The number of coal power plants with dangerously low coal stockpiles (less than 7 days) has also decreased by 90% in the same time frame,” the analysts said.   Chinese authorities have allowed more production and imports of coal, and cracked down on speculation in soaring prices.  A study published last year showed that although climate change was not a priority for Chinese compared with air and water pollution, they were increasingly concerned about it. The study by two Chinese scholars, based on Chinese and overseas surveys since the late 1990s, found the perception change in China largely driven by persistent air pollution problems and government-led campaigns.   In a Pew Research Centre survey before the 2015 Paris climate talks, most of the more than 3,600 Chinese respondents considered climate change “a somewhat serious problem”. Another poll of 4,000 Chinese people by the China Centre for Climate Change Communication in 2017 found people were more worried about the warming planet than education, economic development and anti-terrorism.     Six years ago, President Xi Jinping attended the Paris climate summit, with pledges to set aside the “zero-sum” mindset on climate change and galvanise greater public support and participation at home. As China tries to convince the world about pledges that China would hit peak carbon emissions by 2030 and reach net zero emissions by 2060, it has yet to offer clues about how it plans to enlist public support, especially from private businesses.   The active support of its population, especially at grass-roots level, will be key to China realising its low-carbon ambition and its plan to quit its coal reliance in particular, which many say would put Beijing in a leadership position. As China produces nearly 30 per cent of global emissions, more than the United States and European Union combined, the world cannot afford to see China fail.

Xi Jinping tells G20 ‘developed countries’ should lead on global emissions
Developed nations should ‘fully accommodate the special difficulties’ of developing countries in global effort to reduce emissions, Chinese leader says     China has the world’s second-largest economy and highest carbon emissions, but it remains a developing country under UN criteria

COP26: China’s leaders make climate change position clear but what do the people think?
Study last year shows climate change is not a priority for Chinese compared with air and water pollution, but they are growing more concerned about it    The support of its population, especially at grass-roots level, is key to China hitting its low-carbon target, and to stop relying on coal in particular

Xi Jinping Climate Change Speech To COP26: Text And Analysis
There are signs that political differences may give way to practical US-China cooperation to meet emissions targets

COP26: Xi will lay out China’s climate position and pledges in writing
President, who has not left China since the pandemic began, expected to be the only world leader to give COP26 address in writing   UN Secretary General Guterres puts ‘unfulfilled hopes’ of G20 behind him and looks to Glasgow talks ‘to keep the goal of 1.5 degrees alive’

Flexible energy governance is key to China’s decarbonisation efforts
The world is now battling a major energy crisis. Gas and oil price spikes are raging across Europe and the United States, as are coal and power shortages in China and India. While these crises have a common cause — maintaining reliable energy supply during energy transition — China’s power crisis, which has resulted in rationing and industrial production cuts affecting two-thirds of the country’s provinces, is the consequence of unique circumstances.

US and EU strike metals pact to take on ‘China’s steel dumping’
Biden says agreement will restrict market access for ‘dirty steel, from countries like China’    ‘Melt-and-pour’ mechanism to ensure supplies are clearly labelled throughout the production cycle, US official says  The agreement marks a new area of cooperation in the transatlantic alliance that appears to target China.    Late on Saturday, the EU and US secured a ceasefire in their own years-long trade dispute over steel and aluminium tariffs, which EU officials hoped would eventually be permanently ended through the new metals alliance.   Dombrovskis said tariffs on US metals introduced during the administration of former US president Donald Trump would be eroded and replaced by quota-based duties in line with trade flows.   The initiative dovetails with the EU’s broader push for decarbonisation among its trading partners.  The EU official compared the new deal on steel and aluminium to the Carbon Border Adjustment Mechanism (CBAM), a proposed carbon tariff on carbon-intensive products, such as cement and electricity imported by the EU, which has angered China.  “It is the same idea as CBAM, in that everybody has to pay the same costs for decarbonisation,” the official said, adding that nobody would be excluded from the initiative if they met the criteria. Officials also said the EU and US would pause their World Trade Organization lawsuits against each other, but not withdraw them completely since “it is clear that the threat has not disappeared”.   In September, the two parties launched a Trade and Technology Council to strengthen supply chains and to develop next-generation technology such as artificial intelligence.  While China was not named, the agreement refers to “shared democratic values”, “non-market economies that are undermining the world trading system” and “misuse” of artificial intelligence technologies that threaten ”fundamental freedoms”

China’s Geely puts US$23.4 billion research budget behind 2025 goal for electric cars to make up 40 per cent of its production
Four in every 10 Geely cars will be partially or fully electric by 2025, the carmaker’s chief executive Gan Jiayue said on Sunday    The carmaker will set aside 150 billion yuan for research over the next few years, with the goal of developing so-called L5 autonomous driving capability

China EV Maker Zeekr Valued At $9 Bln After Geely Automobile Boosts Stake
Geely Automobile Holdings, the Hong Kong-listed auto maker controlled by China billionaire Li Shufu, has agreed to pay 5.6 billion yuan, or $875 million, in cash and stock for an additional stake of approximately 10% in Zeekr Intelligent Technology that values the electric vehicle start-up at $9 billion.

Electric vehicle batteries: the Li-ion packs that power global marquees from Tesla to Volkswagen and BYD
Four major variants that currently power EVs on the road are known as NCM, NCA, LFP and sodium-ion packs     Tesla supplier Contemporary Amperex Technology plans to go big on sodium-ion batteries, which offer low-temperature and fast-charging advantages

BYD, backed by Buffett’s Berkshire Hathaway, prices follow-up stock sale mid-range to step up research in EV batteries
Chinese electric vehicle maker BYD, backed by Warren Buffett, sets final price of its 50 million stock sale at HK$276 per share   BYD’s second follow-on stock sale in nine months pulls in HK$1.8 billion, as company seeks to strengthen its research capability in electric car batteries

China’s battery makers burnish their safety image as they grab the lion’s share of the world’s market for powering electric cars
CATL is now the world’s largest EV battery maker, with about 30 per cent of the global market, ahead of LG Energy’s 25 per cent, SNE Research said    Chinese brands are fighting an uphill reputational battle against South Korean and Japanese brands, which have the image of being safer

Asia’s consumers on the move: The future of mobility
However, new forms of mobility, such as ride hailing, follow a very different pattern. Penetration depends much less on income: consumers who cannot afford to own a car can still access private-vehicle-based mobility because it is relatively inexpensive, so price is not a barrier. In countries with relatively lower incomes, such as Indonesia and Malaysia, the penetration of ride hailing is much higher than in higher-income nations such as Japan and South Korea. Asian companies have driven high penetration rates and created many of the region’s large technology players, including Didi in China, Grab and Gojek in Southeast Asia, and Ola in India. As new forms of access have emerged, mobility value pools in Asia may go through a pivot point where growth shifts to new forms of mobility and different regions (Exhibit 2). In China and Japan, McKinsey’s Center for Future Mobility estimates that value pools for private-vehicle sales are likely to hit their peak over the next two decades. In three different scenarios of technology adoption, private-vehicle sales in Japan are expected to peak in this decade, whereas in China they are expected to peak in five to 15 years.2 In an accelerated mobility transition scenario, private-vehicle sales are expected to peak in China and Japan as early as the first half of the decade. In a delayed mobility transition scenario, private-vehicle sales could remain stronger for longer. This scenario assumes that no new regulations reduce congestion and emissions, autonomous-vehicle technology will not be ready by 2030, and consumers show a strong preference for private-vehicle ownership and have low eco-sensitivity. In such a scenario, the private-vehicle share of total value pools in the industry may decline by as little as 5 percent.

Kuaishou’s Su Hua to step down as CEO, following moves by ByteDance and Pinduoduo founders amid China’s tech crackdown
The 39-year-old Kuaishou Technology co-founder said he wants to focus on developing long-term strategy for the owner of China’s second-largest short video app     Cheng Yixiao, who created the app in 2011, will take over as CEO, and Su will remain as chairman with voting rights unchanged

Kuaishou founder’s exit adds to the queue of tech CEOs who have quit in 2021 as regulatory pressure mounts on short video industry
Su Hua joins a growing list of Chinese tech billionaires who have chosen to remove themselves from the limelight this year after becoming super-rich    Su will remain as the chairman of Kuaishou but his departure from the CEO role comes at a time when the short video industry in China is facing a regulatory storm

China’s chip champion: can SMIC lead Beijing’s quest for semiconductor self-sufficiency?
Many of SMIC’s engineers, as well as key senior managers, were recruited from Taiwan, with TSMC being a primary target for talent    SMIC’s lack of access to EUV technology will mean it cannot produce more advanced chips, hindering its attempts to catch up to TSMC

How China’s property crackdown is being felt in a remote city steeped in Communist Party lore
Beijing’s push to reduce excessive borrowing in the property sector and tame house prices is hurting regional finances      The policy tightening could be related to the current political cycle ahead of the 20th Party Congress, some analysts say

Evergrande crisis: Central China Real Estate, Yango Group make last-ditch efforts to avoid bond defaults as Beijing piles on the pressure
Central China Real Estate (CCRE), based in Henan, said it had wired the funds to its trustee for a bond payment due this month      It was among developers summoned to a recent meeting where they were told by regulators to make preparations to pay their offshore debt      Persistently tightening governmental policy, multiple credit events, and deteriorating consumer sentiment have resulted in the temporary shutdown of various refinancing avenues for the sector and put enormous pressure on our short-term liquidity,” Yango said. “The current sharp downturn in the financing environment…has limited our funding sources to address the upcoming maturities.”    Last month China’s central regulators summoned a number of developers and demanded they pay their offshore debt on time. CCRE was one of those in attendance at the meeting, according to sources familiar with the situation.    Meanwhile Fujian’s foreign exchange watchdog gave Yango the green light to transfer its funds offshore, where they could be used to repay outstanding debt.     A third of China’s property developers could see their liquidity “acutely strained” in the worst case scenario as weaker sentiment and new government regulations weigh on their funding sources, with a “real” risk of default as some US$84 billion in debt is set to mature by the end of next year, S&P Global Ratings warned last week.

Can Chinese developers overcome the Evergrande infection? Moody’s sees confidence deficit while analysts make turnaround bets
China Vanke, Country Garden and Greenland are among property stocks trading at multi-year lows due to the Evergrande ‘infection’   A lot hinges on what China does with its policy tools, Bocom’s Hong Hao says

China’s Neo-Nationalism Poses Risks for International Businesses
Companies and firms that used to straddle both the West and China with ease – like LinkedIn and Mayer Brown – are now finding themselves in uncharted territory.  From now leading up to the National People’s Congress of March 2022, we predict that Xi will continue to drive up nationalism by using populist policies against private enterprises. Political considerations for the CCP would be paramount, trumping economic ones. Foreign firms would find themselves ever more at risk in this new market environment, as they continue to be squeezed between the West and China.

China’s first comprehensive legislation on personal data protection
On 1 November, China’s first Personal Information Protection Law came into force. The new law gives a specific definition of “sensitive personal information”, which includes biometric information, medical and health records, religious beliefs, financial accounts, etc.  This new law covers rules for the processing and cross-border transmitting of personal information, and the corresponding penalties for violation, as China begins its journey into privacy and data.  With heated discussion about online privacy in China, the new law comes right on time. One of the main concerns amongst Chinese people is the profiteering on big data, online platforms use the algorithm to offer higher prices to existing customers.

Yahoo makes final China exit amid tightened regulation in world’s biggest internet market
The US internet company discontinued access to its few remaining online services in mainland China on November 1     Yahoo, which launched its Chinese internet operations in 1999, closed its last remaining physical presence in the country in March 2015

Chinese state-owned think tank flags national security risks of metaverse, citing potential political and social problems
The metaverse will have implications for ‘political security’ and its development requires government regulation, state-run think tank says      This buzzword became more popular during the Covid-19 pandemic, when people confined to their homes took to video games like Fortnite

Chinese version of Fortnite to close in November
Fortress Night, the Chinese version of the popular game Fortnite, is to close later this month.

Why is Coca-Cola the fastest growing brand in China in 2021?
Coca Cola, the carbonated soft drink manufacturer, has recorded a net revenue of $10 billion for the past three months ending on 1 October. This is a 16 per cent year-on-year increase and exceeds the market expectations of $9.75 billion, as according to the company’s release on 27 October. This “continued momentum” of growth is mostly fuelled by the performance of the company’s key market in the Asia Pacific – China.

Bauxite Prices in China Leap Up After Military Turmoil Took Hold in Guinea
IndexBox has just published a new report: ‘China – Bauxite – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.In September, the price for Guinean bauxite in China reached its highest point in 18 months. The military coup in Guinea has caused concerns that shipments from the country will decrease and instigated the spike. Guinea is the world’s primary bauxite supplier, making up more than half of all exports. In case there is a decline in supply from Guinea, China may expand imports from Australia. An increase in bauxite prices could lead to costs for aluminum on China’s domestic market to grow as the country imports nearly 57% of the bauxite it consumes.

China’s video gaming industry on edge as government approval of new game licences remains in limbo
The latest freeze in new game approvals in the world’s biggest video gaming market reached 100 days as of Friday, the longest since a nine-month hiatus in 2018     Industry regulator the National Press and Publication Administration has not published a list of approved new titles since the end of July

Chinese bank earnings spared from property distress as Evergrande and troubled peers pose threats to loan quality
Chinese banks’ third-quarter results mostly beat estimates, averting property distress as bad loan ratios improved slightly    Analysts say loan quality will come under the microscope as developers continue to face a liquidity squeeze, barring any policy easing    Below is a summary of key third-quarter banking results earlier this week.    Bank of Communications posted a 38 per cent increase in net profit to 22.3 billion yuan from a year earlier, the strongest gain among the six biggest state-controlled banking groups. Its NPL ratio was 1.6 per cent versus 1.87 per cent for the sector.   Industrial and Commercial Bank of China’s net profit rose 10.6 per cent to 88.3 billion yuan from a year earlier. Its NPL ratio declined to 1.52 per cent from 1.54 per cent at the end of June.   Profit at China Construction Bank increased 15.6 per cent to 78.9 billion yuan from a year earlier. Its NPL ratio declined to 1.51 per cent from 1.53 per cent on June 30.  Bank of China’s earnings increased 13.2 per cent to 50.7 billion yuan, with its NPL ratio marginally lower at 1.29 per cent versus 1.3 per cent on June 30.  Agricultural Bank of China’s net profit rose 14 per cent to 64.4 billion yuan. The lender trimmed its bad loans to 1.48 per cent of total lending, a drop from 1.5 per cent on June 30. Postal Savings Bank’s net profit rose 22.5 per cent to 23.5 billion yuan, from 19.2 billion yuan while its NPL ratio was unchanged at 0.82 per cent.

Foreign investors tiptoe back into Chinese stocks
Alarm over Xi’s regulatory crackdown gives way to fear of missing out   Chinese equities, one of the most shunned asset classes among global investors this year, are regaining favor, with institutions from Fidelity to BlackRock tipping stocks again.   China’s main share index shows signs of recovery after flirting with bear market territory since a peak in February. Some investors eschewed the country amid Beijing’s regulatory crackdown. But investors anticipate a policy loosening to combat China’s economic slowdown, and various strategy notes hail Chinese valuations as compelling.   “The swiftness of this regulatory clampdown has led to a period of broad volatility and negative sentiment toward China,” said Paras Anand, chief investment officer for Asia Pacific at Fidelity. “It has led to many parts of the market looking oversold from a long-term perspective.” The strength of other Asian markets this year contrasted with the weakness in China, he said.   “As we head into the fourth quarter and the early part of next year, we see a significant scope for recovery in Chinese markets,” Anand said.   Analysts at HSBC and UBS, two banks that are fast expanding in China, concur. The analysts changed their view on Chinese shares to buy from sell in late October. Nomura said it prefers China over India. China’s CSI 300 Index rose 0.9% in October, its second consecutive rise after three months of declines. Net buying reached $5.1 billion by month-end, the most since May, through the Stock Connect scheme that links Hong Kong with Shenzhen and Shanghai markets. Buying through Stock Connect accounts for about 70% of foreign portfolio flows.

Chinese city boss removed from provincial role after summer’s devastating floods
Xu Liyi, Zhengzhou’s party chief, as been removed from the top decision-making body in Henan province    The change has not been officially linked to the floods, which killed at least 292 people in the city and prompted an investigation into the disaster response

How War With China Begins
A cold war is already under way. The question is whether Washington can deter Beijing from initiating a hot one.    The U.S. and its friends can take steps to deter the PRC, such as drastically speeding the acquisition of weaponry and prepositioning military assets in the Taiwan Strait and East and South China Seas, among other efforts, to showcase its hard power and ensure that China can’t easily knock out U.S. combat power in a surprise attack. At the same time, calmly firming up multilateral plans, involving Japan, Australia, and potentially India and Britain, for responding to Chinese aggression could make Beijing realize how costly such aggression might be. If Beijing understands that it cannot easily or cheaply win a conflict, it may be more cautious about starting one.    Most of these steps are not technologically difficult: They exploit capabilities that are available today. Yet they require an intellectual shift—a realization that the United States and its allies need to rapidly shut China’s windows of military opportunity, which means preparing for a war that could well start in 2025 rather than in 2035. And that, in turn, requires a degree of political will and urgency that has so far been lacking.   China’s historical warning signs are already flashing red. Indeed, taking the long view of why and under which circumstances China fights is the key to understanding just how short time has become for America and the other countries in Beijing’s path.

Taiwan’s leaders need to coalesce around a defense concept
For Taiwan, credible deterrence against Chinese military aggression requires the alchemy of multiple elements. These include a strong will to fight among the population, powerful military capabilities, and close coordination with other actors — including the United States and Japan — whose vital interests would be affected by any conflict. One of the most important elements, though, is strong and sustained internal cohesion in support of a clear defense concept.

Beijing accuses US of ‘sabotaging’ Taiwan Strait peace and warns EU it is putting good relations at risk
Foreign Minister Wang Yi responds to Washington’s call to give Taiwan greater UN role by saying it has no international status except as part of China    Beijing also hits back at Brussels after EU leaders criticise its ‘unjustified’ attacks on Lithuania over its relations with Taipei

China’s first virtual talk show hostess makes a debut
The first Chinese talk show hostess born in the metaverse – Mei Se Tian – made her debut on stage this 4 September through the tech giant Tencent’s news platform.The name of the virtual comedian is a homophone for the pronunciation of her birth date in English, “Mei Thirty”, which is May 30th. The digital character was created by a Chinese emerging anime company, called Shan Xiao Ying Hua, with her debut show being Mei De Shuo, or Nothing to Say in English.Nothing To Say is a talk show in which multiple topics are discussed, ranging from fashion and life vlogs to mental health and animation.

Why everyone frets about China
A slew of new and even radical policy changes, introduced in the past year alone, is enough to cause concerns even among Beijing’s most sympathetic observers and diehard supporters

Shanghai Disneyland Gets a COVID-19 Scare on Halloween
The spooky Halloween ambiance turned a bit too real for many at the theme park over the weekend.

Alain Gillard
Information Officer
Service Asie Pacifique
Place Sainctelette 2
1080 Bruxelles
Tél 02 421 85 09 – Fax 02 421 87 75
Copyright © 2020 awex, All rights reserved