Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – November 8, 2021

China trade: export growth above expectations in October but ‘Covid-19 cases and chip shortages loom’
The country’s exports grew by 27.1 per cent in the month compared with a year earlier, down from 28.1 per cent growth in September. Economic indicators likely to drift lower in the last quarter of the year, analysts say

‘China is ready’ to make RCEP trade deal tariff cuts
Commerce Ministry says the country is prepared to meet its obligations when the pact comes into effect on January 1. Implementation guidelines have been introduced for local governments and industries, it says

China’s economy is just taking a breather, not stalling
Growth has slowed to 4.9 per cent and housing market confidence has been hit hard by the Evergrande crisis, but the economy will speed up again as the global recovery gathers pace. Beijing’s growth target is within reach, but the economy will rely on export drivers for now at least. China is also fortunate that it can tap into the recovery spreading across the global economy as the world catches up on the backlog of supply-chain shortages. With global trade volumes currently running around 11 per cent higher than a year ago, it’s no surprise that China is enjoying strong demand for its exports as the world replenishes its depleted stocks of consumer items, investment goods and industrial raw materials. Exports from China grew 27.1 per cent year on year, to US$300.22 billion, in October, after a 28.1 per cent surge in September, marking the 13th straight month of double-digit growth in shipments. There are no signs of China’s stellar export boom slowing down. Clearly, China is at the forefront of the bounce-back in global business conditions as the world’s premier manufacturing powerhouse, but other major exporting nations are also cashing in.     China may be transitioning to stronger domestic-led growth under its dual circulation strategy, but it will need to be patient and wait for consumer and business confidence to find a firmer footing. Cumulative government spending in the first eight months of the year is running 3.6 per cent higher than a year ago, while broad M2 money supply growth rose to 8.3 per cent in the year to September. This should be more than enough to keep the economy on an even keel and ensure growth stabilises to around the 6 per cent mark for the foreseeable future

A historic plenum — and what it means for U.S.-China relations
Each Central Committee of China’s Communist Party holds seven plenary sessions over its five-year term, with the sixth plenum of any given Central Committee usually focusing on ideology and party-building. The meeting this year will be no different, but is notable for a resolution on Party history. Taking a broader view of the relationship, the new historical resolution will serve to reaffirm China’s growing international prominence. It will provide the party an opportunity to highlight and celebrate its decades-long economic growth, its increasingly assertive diplomatic posture, and its growing military ambitions. In the wake of the recently released China Military Power Report from the U.S. Department of Defense, this kind of rhetoric may cause American officials to further sound the alarm over China’s global ambitions. Finally, the plenum and resolution will signal Xi’s desire for full control of China. This will represent just one more example of his authoritarian cult of personality, which will color the perceptions of American officials and the broader American public. At least in the minds of many Americans, it could serve to reinforce a sense of an increasingly irreconcilable ideological rift between the two societies.

Xi Jinping’s ‘historical resolution’: what is it and why is it important?
The pivotal document is likely to look back at key events in party history, enshrine Xi’s role as leader, and set a course for the next few decades. It is only the third since the Chinese Communist Party’s foundation 100 years ago, with previous resolutions delivered by Mao Zedong and Deng Xiaoping

Hong Kong stocks retreat as Alibaba drags tech peers lower with eyes on key China political meeting
President Xi, who is also general secretary of the Communist Party, will open the sixth plenary session of the 19th Central Committee on Monday. Stocks decline amid virus outbreak concerns, even as an official report on Sunday showed exports grew faster than expected last month

China food security: why is it important and what caused November’s panic buying?
China needs to feed 1.4 billion people, but African swine fever, the coronavirus and natural disasters have recently raised questions about food security. Imports play a key role in China’s food supply chain, but Beijing is also keen to boost the nation’s self-sufficiency  “Moderate imports” is a part of China’s official strategy on food security, according to a government white paper issued in October 2019.  Cheng Guoqiang, a member of the National Food Security Policy Expert Advisory Committee and a professor at Tongji University, said the country has to leverage imports to demand because of a domestic planting shortage of 90 million hectares. At the price of being dependent on foreign soybeans, China is able to ensure enough land for self-sufficiency in production of rice and wheat, two major staple crops. China is already the world’s largest importer of food. Since 2014, the country’s grain imports have remained above 100 million tonnes. It imported 128.27 million tonnes of grain during the first 9 months of 2021, up 29.3 per cent from a year earlier.  China imported 3.53 million tonnes of corn in September, up 226.9 per cent from a year ago, while the purchase of foreign wheat dropped 40.4 per cent to 640,000 tonnes in September. China, though, is still a net exporter of rice, meaning it exports more than it imports. Food prices fell by 5.2 per cent from a year earlier in September 2021, down from a fall of 4.1 per cent in August. This was largely due to the price of pork – a staple meat on Chinese plates – falling by 46.9 per cent compared with a year earlier in September. China’s huge hog sector is actually struggling with excess production after millions of small, often first-time, pig farmers entered the industry to capitalise on record profits during a swine-fever related shortage.  Prices are now hovering below the cost of production, with the government urging farmers to cull their herds. China’s top leadership had called for an urgent recovery in the sector following a nationwide outbreak of the deadly African swine fever virus that halved the country’s 447 million-strong herd.  “Now the stock of fertile sows in the country is still 6 per cent more than the normal number, and it is not expected to return to a reasonable level until early next year. It is hoped that everyone will buy more pork and eat more pork, which can not only enrich the nutrition of ordinary people but also alleviate the operational difficulties of farmers,” Chen Guanghua, an official at the Ministry of Agriculture and Rural Affairs, said at a press conference on November 4.  Profits initially boomed in line with higher prices for pork, the country’s favourite meat, but surging output and coronavirus-linked demand interruptions have driven down prices by 70 per cent this year, causing heavy producer losses over the past three months.   More than 2 million small farmers entered the sector last year, according to official data, joining an estimated 20 million small-scale pig producers, while some 16,000 new large-scale farms also began operating.

China’s coal commitments are not enough
At the United Nations General Assembly in September 2021, Chinese President Xi Jinping announced that China would not build new coal-fired power projects abroad. But concerns remain as to whether this promise is too little, too late for the world’s largest emitter to bend the carbon curve in time and meet the goals of the Paris climate agreement.   Following China’s carbon neutral by 2060 pledge, Xi’s promise of halting overseas coal construction had raised hopes that the country was willing to accept stringent emission cutting obligations at the United Nations climate summit (COP26) in Glasgow. It turned out that China formalised its commitment to raising the share of non-fossil fuels in its primary energy consumption to 25 per cent by 2030, higher than a previous pledge of 20 per cent, but not much new was offered besides that.China has been promoting ‘third-party market cooperation’ along the Belt and Road, which refers to economic cooperation among Chinese businesses (including financial sectors) and businesses in relevant countries in third-party markets. Although such third-party cooperation has a focus on green development, it is possible for certain Chinese companies to use foreign partners to bypass the moratorium in a third-party market.  The international community welcomed Xi’s announcement, regarding it a positive step and a good beginning to efforts needed to achieve success at the COP26. US President Joe Biden values such climate collaboration with China, which may open a continuous bilateral dialogue to formulate concrete action between the two countries. But overseas coal prohibition alone is not enough to avoid climate crisis and China needs to find an effective way to cut domestic coal consumption substantially in the 14th Five-Year Plan period. It is still not too late for China, and other major emitters, to propose more aggressive mitigation targets at the COP26 to save the planet.

China boosts daily coal output to new annual high
China has boosted daily output of coal to a new annual high of 11.88 million tonnes after concerted efforts to alleviate a supply shortage as it heads into winter, the powerful state planner said, and production could rise further. The Asian giant’s consumption of polluting coal has drawn scrutiny this week as nations gathered in Glasgow to discuss further measures needed to slow global warming. Beijing, by far the world’s biggest consumer of coal and also the top producer of climate-warming greenhouse gases, is committed to reducing coal use, but only after 2025.  “According to current production increase trends, the daily production rate is expected to soon exceed 12 million tonnes,” the National Development and Reform Commission said on Friday.

Early winter snow in northern China threatens to deepen energy crisis
Colder weather expected to head south after Beijing and other areas hit by early snow as a result of the La Niña climate phenomenon. The country has already seen power cuts and surging energy prices and the cold spell is expected to put further pressure on supplies

China insists it is taking ‘real action’ to tackle climate change after Joe Biden criticises Xi Jinping’s no-show at COP26 summit
Foreign Minister Wang Yi insisted the country is a ‘serious and responsible’ participant in efforts to tackle the problem in call with Spanish counterpart. Beijing and Washington have been indulging in a blame game after US President said it had been a ‘big mistake’ for Xi to miss the talks in Glasgow

China’s self-isolation is a global concern
The most important invited guest at COP26 did not show up. As president of China, Xi Jinping leads a country that emits more carbon dioxide than the US and the EU combined. But, unlike other world leaders, Xi did not give a speech to the climate summit. Instead he submitted a written statement of less than 500 words for the conference website. Xi’s dismissive attitude to the climate talks was not so much Middle Kingdom as middle finger. But the Chinese leader’s refusal to travel to Glasgow for COP26 — or to the G20 summit in Rome, before it — is part of a broader pattern of national self-isolation.

Health Impacts of Climate Change in China Worsening, Report Says
The report in The Lancet said the country has “a unique opportunity” to increase leadership in protecting the environment and health of its people.

China has “long way to go” to meet ecological goals – State Council
China has a “long way to go” on environmental protection, its State Council acknowledged on Sunday, as it announced an “in-depth” fight against pollution with new targets for cleaner air and water and measures to tackle carbon emissions.     The State Council, China’s cabinet, said there had been some improvements in the country’s ecological situation since the launch of its anti-pollution campaign, state news agency Xinhua reported.

China’s sustainable funds post huge inflows amid push to meet carbon targets, Morningstar says
Net inflows into China’s sustainability-themed funds reached US$7.6 billion in the third quarter versus a net outflow of US$928.9 million in the second quarter. Overall, assets under management of ESG funds in China hit US$47.5 billion in the third quarter, up 33 per cent from the previous quarter

Global Brands Wear Green at Annual Trade Show
The keyword at Shanghai Import Fair? Sustainability. Exhibitors at the ongoing fourth China International Import Expo (CIIE) are focusing on sustainability this year, showcasing technologies and products with green themes.    Sustainability has been a hot topic in China since Beijing vowed to reach peak carbon emissions before 2030 and carbon neutrality by 2060.

Evergrande Is Face Of Zombies Stalking China’s Economy
Kaisa is in certain ways China Inc.’s patient zero. In 2016, it became the first Chinese builder to default on dollar bonds. A dubious honor no mainland company wants on their Wikipedia page. Today, it’s China’s No. 27 developer by sales, but No. 3 in dollar debt with more than $11 billion outstanding. Now Kaisa says it’s suffering “unprecedented pressure on its liquidity” as property markets sink and credit-rating companies flag troubles in Asia’s biggest economy. And it’s a sign that the turmoil befalling Evergrande, Fantasia, Kaisa and who knows who else is a symptom of China’s troubles, not the underlying cause.   As is often the case, many observers are looking at China’s 2021 through the lens of Japan’s bad-loan crisis in the 1990s. The biggest parallel is that China’s regulators, like Japan’s 25 to 30 years ago, are treating the symptoms of excesses, not the forces behind them.  Obviously, neither China’s leaders nor Kaisa’s management internalized the big lessons from 2016. Or, for that matter, those from China’s stock-market meltdown in the summer of 2015. The chaos passed, but the imbalances festering under the surface remain. The 2021 manifestation is a rash of default scenarios in China’s most important domestic industry. Accounting for one-third of Chinese growth, the nation’s property sector is equivalent in size to Japan’s entire $5 trillion economy.  This gets at the zombie question China skeptics have long been asking. Make that a $5 trillion question. Some call it “Japanification,” that dreaded scenario when an economy falls and can’t get up via conventional monetary and fiscal tools. China, of course, has revived itself again and again to great effect these last 25 years. It sailed around the 1997 Asian crisis with enviable skill. It avoided the worst of the 2008 global crisis and the 2013 “taper tantrum.” It is among the first major economies to recover from the Covid-19 era. Yet China is still more about the quantity of growth than the quality. For all Beijing’s talk of major reform, China is still far too reliant on exports and rising property values to ensure stable or productive growth.To be sure, Beijing’s crackdowns on Big Tech and real estate are aimed at reducing risks and excessive leverage. But too much of that focus is on the top-down, not the bottom up. China’s real vulnerability isn’t Jack Ma’s Ant Group, Ma Huateng’s Tencent Holdings or Cheng Wei’s Didi Global. The real threat is old-economy property giants cooking up a subprime crisis with Chinese characteristics. The ones run by the superyacht set drowning in more debt than China Inc. can handle.

How China’s tech bosses cashed out at the right time
In China, there are no clear signs of selling as when Chinese President Xi Jinping personally began to attack the industry. So when Xi complained in March that relentless homeschooling was a “stubborn illness” that puts undue pressure on Chinese children and their parents, at least two Chinese tutoring companies. The head of the company started selling stocks in New York. In one of the previously unreported transactions, a paper company holding a stake in GSX Techedu executives, whose market capitalization in New York was about $ 24 billion at the time, was 100 million just three days after Xi spoke. We have begun selling $ 19 million worth of shares. The sale is one of the hundreds of records reviewed by the Financial Times, one of the first to see when and how executives of New York-listed China’s largest tech company trade shares. It is one. In public, GSX CEO Larry Chen, who appears to have nothing to do with the shell company he sold, promised to buy $ 50 million in stake with his own money at the end of March. Showed confidence in his business. But one close to GSX said its leaders knew at the time of trade that Beijing was considering stricter regulations on the industry.

New China data transfer rules to be costly for foreign companies
Business groups worry about vague terms in draft regulations Proposed rules to tighten control on the transfer of data from China are likely to raise costs significantly for foreign companies operating in the country, lawyers say.   Under the draft of Measures on Security Assessment of Cross-Border Data Transfer published by the country’s top internet watchdog last month, companies will be required to conduct a security review before they transfer any “important” data overseas. But “important” is left undefined.  Companies will have to sign contracts with their overseas partners spelling out how Chinese data will be protected and submit the agreements for regulatory review. In effect, foreign companies will need to invest time and money in creating separate systems for handling Chinese data. Violators of the proposed rules could be subject to fines of up to 5% of their previous year’s revenue, or 50 million yuan ($7.81 million).  The new rules would also seem to conflict with Beijing’s recent applications to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement, regional pacts that are intended to help promote digital trade. “Given that we are in an increasingly digital economy and China says that it wants to join CPTPP and DEPA, this seems to me really inconsistent with those objectives that would actually help China’s case to be more open,” said Ross, who is also chair of the policy committee of the American Chamber of Commerce in China. Said Wei, “China’s Personal Information Protection Law is more strict than the EU General Data Protection Regulation, and the draft measures will greatly restrict the data flow in multinational companies and make compliance more costly.”   Added Ker Gibbs, president of the American Chamber of Commerce in Shanghai, “We are concerned that China tends to put laws in place that are very vague, as we don’t want to see these laws being used to either target foreign companies or impede our business operations.”

China cracks down on ‘characteristic towns’ that misused land, real estate while racking up massive debt
An initiative to develop towns outside megacities was launched five years ago as part of China’s urbanisation push, but improper planning has plagued projects. Latest move comes as Beijing is striving to reduce high local government debt and excess that collectively pose a serious threat to China’s economy

China’s imports will be affected by long delivery times
Imports grew slower than exports in October and we believe delivery time will continue to play an important role that distorts this data for next month. China faces policy challenges, and thus imports could rise slower. As such net exports will remain on the rise, which helps GDP growth. Covid is the biggest risk to port operations that will affect trade

Huawei sells key server business as US sanctions continue
Huawei has completed a transaction to sell its server division that produces x86 architecture servers, a Nov. 5 company information change showed. The owner of a Huawei subsidiary that runs the company’s x86 server business has been changed to a consortium based in Henan province, according to Chinese corporate information platform Tianyancha. The new major shareholder of the company, Henan Information Industry Investment Co. Ltd., is a subsidiary of Henan provincial government’s finance department. Huawei is not able to source x86-based chips from companies like Intel due to US sanctions.

Big Pharma Eyes Openings Brought by ‘Healthy China’ Plan
China has launched a campaign to tackle a looming health crisis by 2030. Global drug makers are looking to get on board.

China’s luxury goods market: how big is it, and what impact has the coronavirus pandemic had?
China accounts for more than a third of the global luxury goods market and its share is forecast to grow as more households earn upper-middle class incomes    While retail spending during the pandemic has been sluggish, many Chinese have looked to luxury shopping as an alternative to experiences like holidays

The High-Tech Cosmetics Set to Tempt Chinese Consumers
Global beauty firms are turning to high-tech offerings — from lipstick printers to lab-made human enzymes — to gain an edge in the increasingly competitive Chinese market.

China Plans to Sell Euro Bonds
China is preparing to sell euro-denominated bonds, weeks after it raised $4 billion in dollar bonds at cheap rates despite slowing economic growth.

Which are the best mobile banking apps in the world? Hong Kong’s services top Asian rankings but lag Western peers
Hong Kong banks dominate the regional top 10 spots in a survey, taking seven spots, while Singaporean lenders occupy the remaining three places   However, Hong Kong’s lenders are behind Western peers, according to the survey by a Paris-based management consultancy previewed by the Post

A silent revolution is underway in Hong Kong’s fintech industry, helping city catch up to Greater Bay Area neighbours
From faster payments to Wealth Management Connect, Hong Kong has adopted a number of measures in recent years to bolster fintech bona fides    City’s banking apps lagged behind European counterparts in 2021 Mobile Banking Benchmark report

Forestry-backed carbon credit trading faces hurdles in Asia despite COP26 pledge by global leaders to halt deforestation, says WWF-Hong Kong
Finding projects of the right quality and scalability poses a challenge, according to the head of environmental finance at the conservation organization    More than 100 global leaders pledged at the recent climate talks in Glasgow to halt and reverse deforestation and land degradation by the end of the decade

Team behind censored spreadsheet exposing brutal 996 Big Tech work hours deletes project after widespread crackdown
A viral spreadsheet called WorkingTime detailing hours at Big Tech companies has disappeared from platforms operated by Tencent, Kingsoft and Zhihu    The project remained accessible on GitHub until it was deleted on Friday, after the team previously suspended updates

Nasdaq-listed ChromaDex, backed by Li Ka-shing, eyes China’s health care market with its flagship Tru Niagen anti-ageing supplement
ChromaDex links up with Sinopharm t push Tru Niagen via e-commerce channels, plans to seek approval to sell in mainland retail stores  China’s market for such supplements is seen surging to 27 billion yuan by 2023 from 5.1 billion yuan in 2020, iiMedia forecasts.

China-US Tensions Put Nuclear War Back in the Spotlight
A nuclear arms race isn’t new, per se, but it does help refocus our attention on dangers that have long been with us.    As experts in the field have observed, the purpose of China’s sudden nuclear acceleration might well not be to win, or even to fight, a nuclear war. The point is to establish and maintain a credible deterrent – a front-of-mind presence in adversarial decision-making circles, if you will – in order to open the space for more aggressive moves at the conventional or unconventional non-nuclear level. (Russia’s recent push for highly unconventional systems like the Poseidon super-torpedo and a nuclear-powered cruise missile are harder to explain on these lines, since Moscow already has a massive and deeply survivable nuclear arsenal.)   To be clear, none of this is good news. Regardless of how much policy attention is paid to them, the very existence of nuclear weapons creates an inherent possibility of nuclear war, through accident, misunderstanding, miscalculation, or – most likely – a combination of all three. Adding new systems, especially those with seemingly game-changing capabilities, changes the balance of deterrence, which is already a fragile thing, held as it is between untrusting and frequently uncomprehending adversaries. It is not at all clear what tactical advantage is worth that level of risk.

The United States’ US$1.2 Trillion Infrastructure Bill: How Does It and ‘Build Back Better’ Act Compare with China’s BRI?
In real terms, the US infrastructure bill details domestic infrastructure expenditure of about US$120 billion per annum. China’s 2021 domestic infrastructure expenditure is estimated to be about US$131 billion. In addition to that, China is estimated to have invested some US$85 billion annually overseas in infrastructure development since the BRI began. Neither the United States nor the European Union comes close. There is no comparison to China’s Belt & Road, there is little appetite to actually competing with it, and when it comes to comparisons, Biden’s infrastructure bill may be worth more at US$120 billion than China’s US$85 billion, but the difference is the US is spending it on itself, whereas China exports its infrastructure funding.

Chinese man convicted for stealing aviation trade secrets
A Chinese intelligence officer has been convicted by a US jury of plotting to steal secrets from aviation companies, according to the US justice department.    Xu Yanjun was found guilty of five counts relating to economic espionage and trade secret theft. He faces up to 60 years in prison and fines of more than $5m (£3.7m). Xu was first arrested in Belgium in 2018 and is possibly the first Chinese operative to be extradited to the US for trial.

Beijing: US Spying Charges Against Chinese Citizen ‘Pure Fabrication’
China on Monday labeled the charges against a Chinese citizen convicted in the United States of stealing trade secrets as “pure fabrication.”

Chinese history lesson lays the groundwork for Xi’s third term
Xi Jinping has summoned hundreds of senior Chinese Communist party officials to Beijing for a meeting that is expected to pave the way for his unprecedented bid for a third term in power next year.   The annual autumn meeting, or plenum, of the party’s Central Committee will review and approve a rare “resolution” on Chinese history, and comes just four months after Xi presided over an elaborate celebration of the 100th anniversary of the party’s founding.

Xi Jinping is rewriting China’s history
The radiant image of China’s top leader, Xi Jinping, greets visitors to museum exhibits celebrating the country’s decades of growth. Communist Party biographers adoringly recounted his rise, though he gave no sign of retreating. The most recent official history of the party devotes more than a quarter of its 531 pages to its nine years in office.

How Washington’s hawkish China policy alienates young Chinese
A college student from China says to his American classmate: “I want to study propaganda in the United States.” “There is no such thing as propaganda in the United States,” the American student replies. The Chinese student says, “Yes, that’s exactly what I want to study.” The joke reflects growing cynicism, criticism and disappointment among young Chinese regarding domestic governance and foreign policy in the United States. The drastic deterioration of U.S.-China relations over the past two years has aggravated and reenforced suspicions, fears and animosities. Blame games, propaganda wars and conspiracy theories have arisen from both sides of the Pacific.

Alain Gillard
Information Officer
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