Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – November 30, 2021

Tracking China’s Economic Recovery: Data from January to October 2021
On October 15, China’s National Bureau of Statistics (NBS) released its main economic indicators up to October. Several indicators, namely industry value-added output, retail sales, investment, and employment, showed that economic operations continue to maintain a recovery trend, and the main macro indicators are generally within a reasonable range. Although the Chinese economy still faces challenges in the property sector, strong performance on exports and retail sales as well as recovery from industrial electricity shortages give reason for confidence in the country’s investment climate. In this article, we look at how China is navigating its ‘steady recovery’, discuss existing challenges, and what this all translates for foreign investors. Economic growth indicators better than expected   In general, the total value of imports and exports of goods was RMB 31,672.7 billion (approx. US$4955.13 billion), up by 22.2 percent year-on-year (y-o-y) in the first 10 months. Although the external environment has become more complex and vulnerable to various uncertainties since the beginning of 2021, China’s exports exceeded expectations, providing a cushion for its economy.

‘Made in China’: Patriotic consumption on the rise
In China, patriotic brands are popular. Not so long ago, the label “Made in China” was synonymous with goods of poor quality, but today it is a driver of consumption. Western brands’ share of the Chinese market is shrinking every year, supplanted by local alternatives. In a move encouraged by the authorities, buying Chinese-made products has become a way to show support for the country, the economy and its traditions. Our team on the ground reports.

US-China tech war: Beijing’s efforts to catch up in advanced chips on hold as country’s attention turns to mature nodes
Only TSMC, Samsung and Intel have stayed in the race below 10nm, so it makes sense for Chinese firms to focus resources on mature chip tech, say analysts     In recent years Chinese suppliers have made some progress in developing high-end photoresists, key materials used in the lithography process

Semiconductor nationalism is on the rise across Asia
Self-sufficiency, independence, indispensable. You’ve probably heard these words regularly in the context of the semiconductor chip industry for the past 18 months. Governments and their top technology companies in major economies such as the United States, EU, Japan and China are accelerating efforts to develop in-house core technologies with essential components that do everything from smartphones and refrigerators to missiles. Until recently, Asian countries, like the United States and the EU, have been critical of China’s promotion of onshore chip production with significant national funding. The big change brought about by the pandemic is that they are now beginning to imitate it.   National security concerns and worsening Sino-US relations have changed the tone, alongside the global chip supply shortages discussed in connection with the pandemic.   For those who haven’t followed what China has done in recent years, here’s a brief report

China’s Covid-19 port quarantine for shipping crew stokes delays ahead of Lunar New Year
Global shipping giants have told customers they are temporarily halting some bookings due to a suspension of service by feeder operators in southern China  Analysts say weeks-long suspension of services is likely to have ‘ripple effects’ on road congestion and flow of goods during the Lunar New Year period  As part of China’s zero tolerance approach to the Covid-19 pandemic, long quarantine times for sea crew have caused growing discontent among shipping firms, especially as the industry is already struggling with disruptions such as port congestion and a lack of workers globally.
Crew members of ocean vessels must quarantine for at least 21 days after they disembark at ports in northern China, and 14 days in southern ports, such as those in Guangdong, a shipping company manager said on condition of anonymity. Many ports in China even prohibit crew from disembarking.
For Chinese seafarers getting off at overseas ports, they need to quarantine locally for two to three weeks before they can fly back to China. Once they arrive, they must still go through at least two weeks of hotel quarantine – depending on local regulations.

Europe and the US: From Divergence to Convergence on China?
Just as importantly, while a tough stance toward China is shored up by a bipartisan consensus in the U.S., the EU is much more fragmented in this respect. Washington appears to have endorsed Brussels’ definition of China to a certain extent as well as adopting a nuanced tone, but it is still more inclined to confront China than Europe is. Biden has a limited room to maneuver with a likely hostile opposition-controlled Congress after the mid-term elections next year, and the United States may even see a Republican president again in 2024. Conversely, the EU will probably remain ambivalent vis-à-vis China in the years to come. At present, all eyes in Europe are on Germany’s new coalition government. While Merkel’s predominantly economy-first approach is expected to be somewhat recalibrated and Berlin won’t mince its words on human rights issues, a major overhaul is unlikely in the short run. It is this level of complexity of the conceptual framework one needs to take into account to understand the different lenses Europeans and Americans use to look at China. Europeans have long preferred to play the middle between Washington and Beijing, and are reluctant to be squeezed between two elephants. Time will tell how deep the apparent convergence on China is and whether the transatlantic partners are talking more than walking together in the way they perceive the new rising superpower.

All relationships need worked on – trade relations between the EU and China are no exception, argues Iuliu Winkler
European Parliament watching with concern as China increasingly becomes a rival and strategic competitor, says INTA Committee vice chair

China’s BRI Lending: $385 Billion in ‘Hidden Debts’
Beijing’s rivals and critics claim that the BRI is part of a grand strategy to build alliances, project influence, and reshape the international balance of power. But what we find is that Beijing is using its overseas lending program to solve internal economic problems. Beijing’s international lending program has soared to record levels because of domestic challenges – specifically, an oversupply of foreign currency, high levels of industrial input overproduction, and the need to secure natural resources that the country lacks in sufficient quantities at home. It has responded by ramping up dollar- and euro-denominated lending at or near market rates; contractually obligating its overseas borrowers to source project inputs (like steel and cement) from China; and allowing countries to secure and repay loans with the money they earn from natural resource exports to China. There will soon be greater choice in the infrastructure financing market, which could lead to some high-profile defections from the BRI. The U.S., the U.K., and the other members of the G-7 are increasingly positioning the BRI as the low-quality infrastructure option and their own Build Back Better World (B3W) initiative as higher quality option for countries that want to undertake infrastructure projects based on principles of sustainable and transparent financing, good governance, public sector mobilization of private capital, consultation and partnership with local communities, and strict adherence to social and environmental safeguards.

What is holding back artificial intelligence adoption in Europe?
To accelerate the roll-out of AI technology across the European Union, policymakers should alleviate constraints to adoption faced by firms, both in the environmental context and in the technological context.   The potential of AI to boost productivity is today internationally recognised. It implies a competitive advantage for those businesses that manage to leverage AI’s potential at scale early on. Aside from the EU, many economies have published national AI strategies and plans to foster AI advancement, in particular the US and China (Zhang et al, 2021). Given this international attention, we aim to understand how the EU is doing in comparison with other economies in terms of AI adoption, and in particular whether the barriers we describe are universal, or whether they are holding back EU companies in particular   exed to 100 for the highest value among the three economies. On skills availability, the EU appears well-equipped for frontier AI research, thanks to an extensive talent pool of academic researchers (Figure 7). However, the relative international impact of EU-based AI studies appears to be declining, surpassed by China, which has doubled its share of global citations since 2013 (Zhang et al, 2021). Crucially, the EU appears unable to leverage this expertise for AI adoption by the private sector. The indicator for skill intensity in business is based on the average number of AI researchers employeesoyed in the economy’s top AI firms, which in the US is almost twice as high as in the EU (Castro et al, 2019)9 . Given the low AI adoption rate among US firms (Figure 6) it may well be, however, that AI research skills in the US private sector are highly concentrated in a few industry leaders, a hypothesis for which Wang et al (2021) recently found evidence

China Sets Up New Anti-Monopoly Bureau
The new State Anti-Monopoly Bureau is expected to strengthen law enforcement in the platform economy, data security, technological innovation, and the protection of people’s livelihoods. The Chinese government believes it necessary to thoroughly implement fair competition policies; continue to strengthen supervision and law enforcement in areas, such as platform economy, technological innovation, information security, and people’s livelihood protection; resolutely oppose various forms of monopoly and unfair competition; prevent the disorderly expansion of capital; and protect the legitimate rights and interests of market players and consumers – in order to promote the healthy development of various market entities to create a good competition and business environment.    State-owned Xinhua News Agency has reported that the new State Anti-Monopoly Bureau will create a more transparent and predictable competitive environment for over 150 million market participants.

Clinical supply chains: How to boost excellence and innovation
Clinical trials have increased in number and have become more complex, decentralized, and patient-centric. While this puts pressure on clinical drug supply, it also brings new opportunities.

The China angle in the coalition treaty of Germany’s future government, with Mikko Huotari
The coalition treaty of the Social Democrats, Greens and Free Democrats was sealed in November after almost two months of negotiations. It contains several references to China. For the first time ever, sensitive issues like the human rights situation in Xinjiang, the erosion of rights in Hong Kong, and the tensions involving Taiwan are mentioned explicitely. In this podcast, Claudia Wessling, Director Communications and Publications at MERICS, is joined by MERICS’ Executive Director Mikko Huotari to discuss implications of the coalition treaty for Germany’s future China policy.

Eritrea Joins The Belt And Road Initiative
The north-east African country Eritrea has signed an MoU with China to join the Belt And Road Initiative. The MOU was signed on November 25 by the Chinese Ambassador Cai Ge and Eritrea’s Foreign Minister Osman Saleh. Eritrea is strategically important as it has access to the Red Sea, the Suez Canal and to Europe, as well as to waters in the Arabian Gulf and on towards the Indian Ocean.

How China Made Inroads Into The British Commonwealth
With Barbados becoming a Republic, China is now financing a long-time British trade asset, but solutions are at hand for London

UK spy chief: ‘The risk of Chinese miscalculation through overconfidence is real’
Richard Moore, the new chief of British secret intelligence service MI6, warned that China’s growing military strength and its desire to resolve the Taiwan issue pose a challenge to global stability.  Tensions between the West and China have escalated in recent years as Beijing and Washington continue to see the world differently.  China’s own intelligence services are “highly capable,” Moore said, adding that they continue to conduct large scale espionage operations against the U.K. and its allies, often targeting those working in government or on research of particular interest to the Chinese state.

The Simpsons: Tiananmen episode not found in Hong Kong
An episode of The Simpsons that refers to the Tiananmen Square massacre is reported to be missing from Disney’s streaming service in Hong Kong.

Alain Gillard
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