Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – October 1, 2021

China’s population could halve within the next 45 years, new study warns
Researchers say previous estimates may have severely underestimated the pace of demographic decline. Census data says the birth rate was 1.3 children for each woman last year – well below the level needed to stop the population from falling.

Ambassador Cao Zhongming Published an Article in the Special Issue of “Diplomatic World” Journal on the Occasion of the 50th Anniversary of the Establishment of Diplomatic Relations between China and Belgium
On the occasion of the 50th anniversary of the establishment of diplomatic relations between the People’s Republic of China and the Kingdom of Belgium, the Chinese Embassy in Belgium and the Belgian “Diplomatic World” journal jointly published a special issue on the 50th anniversary of the establishment of diplomatic relations between China and Belgium. Cao Zhongming, the Ambassador of China to Belgium, published an article in the special issue titled 1971-2021 Standing at a New Historical Start Opening a New Chapter of China-Belgium Cooperation. The full text of the article

China’s ambassador warns Belgian lawmakers as they debate resolutions on Hong Kong
Ambassador Cao Zhongming, expressing ‘serious concern’, complains that the draft resolutions ‘distorted and smeared the Hong Kong national security law’    One lawmaker accuses China of ‘trying to prevent … parliamentarians from adopting any kind of stance on the human rights situation in Hong Kong’

China official tells grid firms to prioritise residential users amid power crunch
A high official of China’s state-asset regulator stated on Friday the county’s energy provide state of affairs stays difficult and urged grid companies to prioritise residential use and guarantee protected operation as winter approaches, stated the State Grid Company of China (SGCC).    In a gathering with high executives together with from the SGCC, Hao Peng, director of the State Property Supervision and Administration Fee (SASAC) requested grid companies to intently monitor provides of thermal coal, pure fuel, hydro and wind energy, stated SGCC, the nation’s largest grid operator.

China orders energy firms to secure winter fuel supplies at all costs
World’s second biggest economy is grappling with power cuts that have affected industrial output

China’s electricity got shut off — here’s why
Widespread blackouts in the world’s second-largest economy have drawn attention to fuel supply problems that could complicate the country’s pandemic recovery. DW unpacks why the lights went out in China.

US firms in China say badly hit by unprecedented power crisis
The power cuts have led to lost business opportunities, cancellation of orders and wastage of raw materials, Ker Gibbs, president of the American Chamber of Commerce (AmCham) in Shanghai said.

China power crisis: Guangdong raising electricity prices for industrial users by 25 per cent in peak hours
Move by southern manufacturing hub could trigger other provinces to raise power prices in the coming weeks, but households and non-industrial businesses may stay exempt   Coal shortage and attempts to meet carbon emissions targets have resulted in power-rationing measures being imposed in most of China’s provincial jurisdictions

China Power Cuts In Late 2021. Will Your Supply Chain Be Affected? [Podcast]
Sofeast’s CEO Renaud Anjoran dives into what’s causing the power cuts around China that are affecting many manufacturers around the country in late 2021. Some manufacturers are having to close for days at a time or work night shifts, but normal people have also been affected, too   Many importers will be wondering: “Is my supplier affected?” and “Will my order be delayed?”  Given that this is affecting most o the major manufacturing provinces the likelihood is that it could cause you problems, so he’ll also give you some tips on what to do if your supply chain is affected.

Explainer: Global energy shortage or a coincidence of regional crises?
Beijing has begun rationing electricity to energy-hungry businesses because of a crunch in coal supply triggered by stepped-up safety checks at Chinese mines which dragged output below year-ago levels for much of the first half of the year. The lower coal production in turn fuelled a steep climb in local thermal coal prices, which have scaled successive record highs this year and are up over 80% year-to-date. Because Beijing sets power prices, coal-fired power plants have been unable to operate economically with such high coal costs, and are shutting down. Goldman Sachs estimated that as much as 44% of China’s industrial activity has been hit by the power shortages. The China Electricity Council, which represents power suppliers, said on Monday that coal-fired power companies were now “expanding their procurement channels at any cost” in order to guarantee winter heat and electricity supplies.

Despite Evergrande’s woes, investors are worrying more about US policy missteps than China’s
With inflation concerns and a contentious debt debate on their hands, the pressure is on Fed policymakers to raise interest rates and withdraw asset support without undermining the fragile economic recovery   While Chinese policymakers wield considerable influence over the fate of Evergrande, the Fed can do little to ease the supply-side constraints that are fuelling concerns about the risk of stagflation. The pressure on America’s central bank to keep a lid on inflation while supporting the recovery is particularly intense given that Republicans and Democrats strongly disagree over the severity of the threat posed by the surge in prices, with the former in the “persistent” camp and the latter in the “transitory” one.   Right now, however, the risk of a US debt default, however remote, is likely to dominate the headlines, given that the brinkmanship is set to continue until the eleventh hour.   When it comes to the threat of a costly policy misstep, Washington looks like a more dangerous place than Beijing.

What Evergrande signals about China’s economic future
Under Xi Jinping’s new economic agenda ‘common prosperity’, China is cracking down on indebted real estate developers like Evergrande

Evergrande and energy shortages are shaking China’s economy. Here are the most exposed countries.
Tighter regulations are creating economic headwinds in China, particularly in property and energy. Morgan Stanley said Asian economies are most exposed, followed by commodities giants such as Russia.The bank found that the US should suffer little, given that trade is not a major part of its economy.

Meng Wanzhou has weathered the storm and returned home but have the clouds lifted for Huawei?
Huawei’s CFO returns to a Huawei transformed by US sanctions, as it moves deeper into software and cloud amid smartphone and overseas 5G pressures    Meng’s release has lifted spirits at the company but analysts question whether it signals a real shift in Huawei’s fortunes amid US-China tech tensions  The Huawei ban will have a result soon, and the two sides [US and China] might have already had a comprehensive scheme for it before Meng was released,” said Xie Zhaohui, a telecoms industry expert who runs the well-known blog ICT Interpreter. He added there could be a ZTE-type deal, where Huawei’s crosstown rival paid a fine to end a US export ban also put in place for a violation of Iran sanctions.
“If I were Huawei, I’d be hoping for a solution as soon as possible,” Xie said. The sanctions on Huawei were implemented by former US president Donald Trump at the height of trade tensions with China. President Joe Biden has largely kept up the pressure on Chinese technology firms this year, and the Chinese telecoms equipment maker remains severed from advanced chips and chip-making tools that rely on US technology.Before being toppled from its perch, Huawei sold network gear to 45 of the world’s top 50 carriers, serving over a third of the world’s population. The company was also China’s top smartphone brand, beating out top foreign names such as Apple and Samsung and an array of younger domestic competitors, like Xiaomi and BBK Electronics’ suite of popular brands Vivo, Oppo and Realme.
Times have changed though. Huawei had just 10 per cent of China’s smartphone market in the second quarter, down from 72 per cent in the same quarter last year, before it sold its budget brand Honor, according to Counterpoint Research. Eric Xu Zhijun, Huawei’s rotating chairman, said at a press conference in Beijing last week that US sanctions have led to at least US$30 billion of losses for Huawei’s smartphone business a year, and it will take many years before the company can cover this with gains elsewhere.  Arisa Liu, a senior technology research ­fellow at the Taiwan Institute of Economic Research, said she does not see Meng’s release as a substantial turning point in the US-China tech war.
“The US and China each know that their relationship down the road will be difficult to restore to the previous state, and that there will only be ebbs and flows in the current in future,” said Liu.

China to block ‘core’ industrial, telecoms data from leaving the country
The Ministry of Industry and Information Technology has drafted new regulation to bar the transfer of crucial industrial and telecoms data outside China    The ministry is now soliciting public feedback on the proposed regulation until the end of October

FX Daily: China’s yuan is the surprise winner in the energy panic
CNY has had a good week, likely benefitting from the narrative that the PBOC will welcome a stronger currency to shield China from soaring energy prices. That’s a key topic today, as markets turn their focus to ISM manufacturing while still monitoring political events in the US. The USD may stay supported as equities exhibit more weakness

COSCO takes stake in Hamburg Port terminal
Chinese state-owned firm, COSCO Shipping Corporation Limited (COSCO) has gained a foothold in Hamburg, Germany’s largest seaport. On Sep 21 it was confirmed that COSCO subsidiary, COSCO Shipping Ports Limited (CSPL), will take a 35 percent stake in Container Terminal Tollerort GmbH (CTT). Antitrust authorities have yet to approve the deal. COSCO is the world’s third largest container carrier measured by capacity, and the fifth largest port terminal operator in terms of throughput.6,7 It was born in its current form, through the complicated merger, in 2015-2016, of COSCO with its rival, China Shipping Group (CSG), emerging as a formidable national champion.8Beijing’s declared ambition of becoming a global “maritime power”10 includes the development of China’s maritime industries and merchant navy – a strategy that is clearly in line with the interests of COSCO’s executives and shareholders. Chinese firms control 10 percent of European shipping There are three Chinese companies involved in European ports: COSCO, China Merchants Port Holdings Company (CMP) (招商局港口控股), which is the world’s sixth largest terminal operator, and Hutchison Port Holdings Limited (Hutchison) – a private Hong Kong group that is the world’s number two operator. Of these, COSCO is the most relevant actor – it is the only operator that is also a shipping carrier, and it is the only state-owned Chinese actor with controlling shares in European terminals. Although the takeover has not been without controversies, Piraeus under COSCO’s leadership has become the busiest port in the Mediterranean and the fourth busiest in Europe, up from 17th place in 2007.11

Taiwan’s CPTPP Bid Will Test the Resolve of the Indo-Pacific
Taiwan’s application is a test case of how a high-stakes gambit in the Indo-Pacific can move forward without the United States.    Yet even as Taipei is far more accession-ready than Beijing, China has already protested loudly against Taiwan’s intentions, declaring that it is politically unacceptable for Taiwan to join the CPTPP.  While other member countries including Japan, Australia, and Canada have voiced their support for Taiwan’s application to join the pact, the prospect of accepting Taiwan without China remains shaky. Even the possibility of both Taiwan and China joining the pact simultaneously – as was the case two decades ago when the two governments joined the WTO at the same time – seem more difficult to fathom, given the shifting power dynamics in China’s favor since 2001. But whatever decision is taken with regards to the accession of China and Taiwan, one thing is clear: the United States will not be part of the decision-making process, nor will it have the ability to push for Taipei’s accession behind the scenes at a time when the regional order of the Indo-Pacific is in flux.     How and whether Taiwan can join the CPTPP in the face of China’s wrath will be a test case of the will of smaller countries of the Indo-Pacific in defining strategic relations with Beijing without the United States.

Beijing urges French senators to consider China relationship and rethink trip to Taiwan next week
Senator Alain Richard is expected to lead the French Senate Group for Exchange and Studies with Taiwan from October 4 to 11       Analyst points to impact on China’s relationship with Czech Republic and Lithuania after those countries engaged with Taiwan

Gauging the Mexican view of US-China rivalry
As US public opinion of China drops to historic lows, China has an opportunity to enhance relations and shape public perceptions through America’s neighbour Mexico. But is the Mexican public interested?
Still, China has succeeded in expanding its influence in the Western hemisphere without Mexico, a country in which Chinese investment has stalled over the last two decades. And outside a few Mexican research institutions such as Cechimex, Mexico seems to lack the public, private and academic institutions to fully engage with China.    Although public health cooperation between the two countries is unlikely to spill over into significant Chinese investment in Mexico, Washington should prepare for a future in which US–Mexico tensions provide greater opportunity for Chinese influence in its southern neighbour.

Coronavirus: China wants permanent quarantine centres built for inbound travellers
City governments have been told to provide 20 rooms per 10,000 people in dedicated facilities by the end of October     Guangzhou is already making the shift away from using hotels with a new facility due to open with more than 5,000 rooms

Apprenticeships in China: New Vocational Education Incentives
In June, new incentives were released by multiple government authorities to encourage companies to start training programs and apprenticeships in China to up-skill the country’s workforce, considered necessary to enhance capacity for advanced manufacturing and high-tech innovation.

China’s box office is becoming a multimillion-dollar headache for Hollywood studios as US-China relations show no improvement
Seventeen US films have been released in China this year, down from 30 last year and 52 in 2019, according to Maoyan’s data     Some of the top-grossing US releases including Walt Disney’s ‘Black Widow’ and Warner Brothers’ ‘Space Jam’ have yet to receive premiere dates    Dune may have received favourable treatment because it’s a co-production with Legendary Entertainment, an arm of China’s Dalian Wanda Group, said Chris Fenton, an author and former movie executive. The Bond film, meanwhile, may be helped by its ties to Universal, whose corporate parent will broadcast the Beijing Winter Olympics in February, he said.  The months ahead will decide whether US filmmakers can reclaim the market share they lost, but they face competition from important local titles. The Battle at Lake Changjin, an epic about the Korean war, is expected to be one of the year’s biggest films.   While next year could bring better results for US films in China, the country will continue to present challenges for US studios, according to Stanley Rosen, a professor of political science at the University of Southern California.   “They don’t need Hollywood as much as they used to,” Rosen said. “Given the Sino-American relationship now, they can afford to play hard to get and keep Hollywood thinking about what they need to do to ‘fix’ the relationship.”

The End of China’s Rise   Beijing Is Running Out of Time to Remake the World
Plenty of evidence supports this view. China’s GDP has risen 40-fold since 1978. China boasts the world’s largest financial reserves, trade surplus, economy measured by purchasing power parity, and navy measured by number of ships. While the United States reels from a shambolic exit from Afghanistan, China is moving aggressively to forge a Sinocentric Asia and replace Washington atop the global hierarchy. But if Beijing looks to be in a hurry, that’s because its rise is almost over. China’s government is concealing a serious economic slowdown and sliding back into brittle totalitarianism Partly owing to resource scarcity, growth is becoming very expensive: China must invest three times as much capital to generate growth as it did in the early years of this century, an increase far greater than one might expect as any economy matures.  Private firms generate most of the country’s wealth, yet under President Xi Jinping, private firms are starved of capital. Instead, inefficient state-owned enterprises receive 80 percent of government loans and subsidies. China’s boom was spearheaded by local entrepreneurs, but Xi’s anticorruption campaign has scared local leaders from engaging in economic experimentation. His government has essentially outlawed negative economic news, making smart reforms nearly impossible, while a wave of politically driven regulations has squelched innovation. China’s official GDP growth rate dropped from 15 percent in 2007 to six percent in 2019, before COVID-19 dragged growth down to a little over two percent in 2020. Even those figures are overstated: rigorous studies show that China’s actual growth rate could be as low as half the government-listed figure.  Worse still, most of China’s GDP growth since 2008 has resulted from the government’s force-feeding capital through the economy. Subtract stimulus spending and China’s economy is hardly growing at all. Productivity, the key ingredient for wealth creation, declined ten percent between 2010 and 2019—the worst drop-off in a great power since the Soviet Union in the 1980s.. The result, unsurprisingly, is out-of-control debt. China’s total debt jumped eightfold between 2008 and 2019. We know how this story ends: with investment-led bubbles that collapse into prolonged slumps. In Japan, excessive lending resulted in three lost decades of negligible growth. In the United States, it caused the Great Recession. Given the size of China’s debt mountain, its downturn could be even worse. The problems that the massively indebted Chinese property developer Evergrande is now experiencing may simply be signs of things to come. China faces an increasingly hostile world. Many observers believe China is throwing its weight around today because it is so confident in its continued ascent. Xi certainly appears to think that COVID-19 and political instability in the United States have created new possibilities to advance. But the more likely—and much scarier—possibility is that China’s leaders are determined to move fast because they are running out of time. What happens when a country that wants to reorder the world concludes it might not be able to do so peacefully? Both history and China’s current behavior suggest the answer is: Nothing good.

When China wants to be feared
SURPRISINGLY OFTEN, Chinese diplomacy resembles an iron fist in a silk glove. Depending on political winds back home, China’s envoys learn to balance fist-waving threats with silken words about peace and friendship. Just now, the gloves are coming off.

Alain Gillard
Information Officer
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