Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – October 11, 2021

China presses US to cancel tariffs in test of bilateral engagement
China said on Saturday it pressed the United States to eliminate tariffs in talks between the countries’ top trade officials that Washington saw as a test of bilateral engagement between the world’s biggest economies.

Taiwanese President Tsai Ing-wen says island must ‘resist annexation’ a day after Chinese President Xi Jinping’s call for reunification
Tsai says island and mainland should not be ‘subordinate to each other’ in speech to mark foundation of first Chinese republic     Taiwanese leader says wants to improve cross-strait relations, but warns the Taiwanese people will not ‘bow to pressure’

COVID-19 Is Reshaping Global Pharmaceutical Competition – to Asia’s Benefit
The valuable experience gained by Asian companies during the pandemic could upset the West’s monopoly in high-value drugs more generally, with implications for global access to medicines.    Asia’s pharmaceutical companies are set to emerge from the pandemic as better equipped, more experienced competition for the West. Production agreements and homegrown vaccines are invaluable sources of expertise, technology, facilities, and profits that can kick start research and development (R&D) of new therapies for both COVID-19 and other diseases. Diverse research within pharmaceutical companies produces internal synergies and spillover effects that benefit the development of treatments targeting different diseases. Although such research is notoriously expensive and thus normally undertaken only by the largest firms, the pandemic has generated resources for R&D of COVID-19 treatments that could have further applications. Asia’s pharmaceutical growth spurt comes at an opportune time, as deeper structural shifts in the global drug market undermine the West’s traditional edge. Over the last 10 years, patents have begun to expire on some of big pharma’s most profitable drugs, sapping revenue needed to produce and maintain profits from high-value products. Meanwhile, there has been an enormous growth in emerging markets where cheaper generic drugs are in high demand. These trends are forcing the West’s pharmaceutical giants to diversify toward generic production, where they lack the advantage of IP protections. Now they must compete with well-established generics manufacturers in countries like India and Thailand who are free to produce and sell their own versions of newly “off-patent” drugs at a fraction of the price. Asia’s pharmaceutical companies are in a favorable position to compete in the increasingly lucrative generics market while expanding into higher-value products on the back of the pandemic as big pharma’s portfolio of these products shrinks.   COVID-19 has also produced pressure to reform the current global IP system, which has been criticized for impeding emergency public health responses. Most COVID-related IP is owned by a small group of Western pharmaceutical companies that have engaged in minimal technology transfer to the developing world. In October 2020, India and South Africa requested a temporary IP waiver for COVID-19 treatments with the backing of a group of developing countries. The proposal – which is under discussion at the WTO – was vehemently denounced by Western pharmaceutical companies but received a surprising endorsement from the Biden administration. If successful, the waiver would benefit vaccine competition by divulging technical knowledge on COVID-19 immunizations as well as increasing the supply of affordable vaccines. Even if the waiver is unsuccessful, COVID-19 has increased the likelihood of long-term changes to make IP rules more suitable for addressing future global health crises triggered by our growing encroachment on nature.While innovation by Western pharmaceutical giants delivered vaccines that have been essential for combatting COVID-19, the pandemic could alter global pharmaceutical competition to their detriment. The entrenched concentration of pharmaceutical profit-making in the U.S. and Europe has deep historical roots and will not change overnight, perhaps not even for decades to come. Yet, the opportunities provided by the pandemic to level the playing field and secure more equitable access to medications cannot be ignored, especially given the existing structural changes taking place in the global pharmaceutical market. Like the rest of the world, big pharma must face the reality of a post-pandemic new normal.

China Labor Shortage – HR Strategies to Remain a Competitive Employer
The China labor shortage is driving companies to reassess their HR policies to improve worker retention. In this article, we discuss how the labor crunch is impacting China hiring practices and the strategies companies can adopt to remain competitive.

China-Taiwan tensions: We will not bow to Beijing pressure, says leader
Taiwan will not bow to pressure from China and will defend its democratic way of life, President Tsai Ing-wen has said in a defiant speech amid heightened tensions over the island.

Taiwan should reduce its trade dependency on China: ROCCOC
President of the General Chamber of Commerce of the Republic of China (ROCCOC) Hsu Shu-po  on Sunday said Taiwan should strive to reduce its trade dependency on China and instead seek to expand in central and eastern Europe. Hsu made the comments during an interview with CNA on Sunday, in response to President Tsai Ing-wen’s National Day address.

podcast : Victor Shih on the Evergrande crisis
China’s real estate giant Evergrande has been making headlines for a while now. Having accumulated more than 300 million USD in debt, Evergrande – one of the largest property developers on earth – is at the brink of collapse. On Monday, trading of Evergrande’s shares was suspended on the Hong Kong stock exchange. The week before, it missed a key bond interest payment. What has caused this pressure on Evergrande? What consequences would an insolvency entail for China’s real estate and financial markets? What kind of toolkit does the Chinese government now have at its disposal to manage the situation? In this podcast, MERICS Director Communications and Publications Claudia Wessling talks with Victor Shih of UC San Diego. He is an expert on Chinese banking and fiscal policies and has recently published an edited book titled “Economic Shocks and Authoritarian Stability.”

ChemChina unit sells Europe’s top solar-panel maker to billionaire Mukesh Ambani’s Reliance Industries for US$771 million
The acquisition will give Reliance a ready global platform and an opportunity to grow in key green energy markets worldwide    Reliance will also support REC’s expansion plans in the US, France and Singapore

China’s power crisis prompts warning from rust-belt despite efforts to boost coal supply, manage electricity
Liaoning has the biggest economy and consumes the most power of the three provinces making up China’s rust-belt industrial region     It has been suffering widespread power cuts since mid-September and it issued its second-highest level power shortage alert on Monday

China Billionaire Guo Guangchang’s Fosun Adds German Private Bank To Global Network
A company controlled by one of China’s better-known billionaires has purchased a German private bank, adding to his international business footprint.   Hauck & Aufhäuser, a subsidiary of Shanghai-headquartered Fosun International, has bought German private bank Bankhaus Lampe in a move that advances Fosun’s ambitions in the global financial services industry, Fosun said in a statement on Friday.

Beyond Evergrande, China’s Property Market Faces a $5 Trillion Reckoning
As China enters what many economists say is the final stage of one of the largest real-estate booms in history, it is confronting a staggering bill: More than $5 trillion in debt that developers took on when times were good, according to economists at Nomura Holdings Inc.
That debt is nearly double what it was at the end of 2016 and is more than the entire economic output of Japan, the world’s third-largest economy, last year.

Evergrande: default alarms put thousands of suppliers, jobs and economy at risk as developer’s IOUs balloon
World’s most indebted developer owed suppliers more than US$103 billion in construction, furnishings and materials sectors on June 30         Evergrande’s founder and chairman Hui Ka-yan, also known as Xu Jiayin in mainland China, turns 63 today

Evergrande’s bid to sell Yuen Long plot, included in Hong Kong’s proposed Northern Metropolis, draws little interest
Evergrande has invested US$1.1 billion on the 2.2 million sq ft plot in the New Territories, which sits within the proposed Northern Metropolis    Evergrande, shouldering more than US$300 billion of liabilities, was reportedly willing to sell it for a US$115.6 million loss

Lenovo withdraws Shanghai mega IPO, in a setback for the fundraising centre stage of China’s technology champions
The Shanghai Stock Exchange (SSE), which manages the Star Market, said it has ceased the review process for Lenovo’s application to sell shares     Lenovo, already listed in New York and Hong Kong, had planned to raise up to HK$13.6 billion (US$1.8 billion) in Shanghai

After China stumble, Italian fashion house Dolce & Gabbana bets on independent future
Dolce & Gabbana plans to remain independent to preserve its creative freedom, as it claws back sales lost to the pandemic and a bungled ad campaign in China   Sales in China have rebounded 20 per cent from last year, but remain lower than before the Italian fashion company’s misstep

Is the US offering a quality alternative to China’s belt and road?
The United States has partnered with the OECD to try to set high standards for infrastructure investment, particularly in the developing world    But the US efforts should not be defined by China’s initiatives, observers say

US has already lost to China in AI fight, says ex-Pentagon software chief
“We have no competing fighting chance against China in 15 to 20 years. Right now, it’s already a done deal; it is already over in my opinion,” the 37-year-old first chief software office for the US Air Force said.

Hong Kong stocks hit four-week high as Alibaba, Meituan soar on bets antitrust crackdown against Big Tech is ending
Meituan’s US$533 million fine is seen as a relief by market participants against expectations for a billion-dollar penalty    Hang Seng Index reached the highest level since September 14, recouping some of the US$1 trillion sell-off since the end of May

China’s power crisis: why is it happening, how bad is it, and what if it continues into the freezing winter months?
China relies on massive amounts of coal to keep people warm, but some provinces can’t even keep the lights on amid high prices, production cuts and Beijing’s determination to cut emissions      Some industrial powerhouses in the world’s second-largest economy are forcing factories to slash production, posing a risk to GDP growth and global supply chains

China’s power crisis spreads pain in stock market, deflates hopes for winter stimulus kick
BNP Paribas lists more losers than winners among mainland and Hong Kong-listed stocks in its report    China will avoid handing out big stimulus in response to demand shock while the clampdown in property and financial sectors persists

Hong Kong ‘naturally’ suited to developing carbon trading products, can leverage Guangzhou exchange link, experts say
With proximity to China and access to global investors, city the top choice for a voluntary carbon trading platform regionally and globally, Hong Kong Green Finance Association executive says    Scale of trading in voluntary carbon offsets currently around US$320 million, CME says

HSBC boss Noel Quinn: Complex geopolitical landscape a ‘fact of life’ for global banks
Clients still want to be international, underscoring the need for lenders who bridge East and West, says bank’s CEO     HSBC has an ‘obligation to comply’ with sanctions, Quinn says

Chinese tech giants led by Alibaba and Tencent donate millions towards flood relief efforts in Shanxi
The donations by China’s Big Tech come as technology firms are under scrutiny by both Beijing and society for putting profits before social responsibility    Donations from China’s Big Tech has reached US$46.6 million so far

Vietnam to Indonesia: the Asian countries hit hardest by China’s clampdown on new coal-fired power plants overseas
Xi Jinping has pledged to the UN that China will no longer build coal-fired power plants overseas, leaving projects across Asia at risk of cancellation   While the decision will be disruptive for some, it will have a positive long-term effect as Asian countries will have to find greener sources of fuel sooner rather than later

Working toward responsible competition with China
The announcement that Presidents Joe Biden and Xi Jinping will meet in a virtual summit before the end of the year have raised prospects that Washington and Beijing can begin to set “guardrails” to prevent U.S.-China competition from tipping into outright conflict. Despite Biden’s emphasis in his speech at the United Nations General Assembly that the United States is “not seeking a new Cold War or a world divided into rigid blocs” and Xi’s statement that disputes should “be handled through dialogue and cooperation,” the intensifying rivalry between the two states has been very much in the spotlight. The current trajectory of U.S.-China relations and trendlines in the Indo-Pacific are concerning, and wise leadership on the part of Washington, Beijing, and the middle powers of the region will be essential to prevent a drift toward zero-sum conflict.

Is there a dark side to China’s high-speed rail network?
Researchers say bullet trains could mean lower economic activity in some western parts of the country   The conclusion is based on analysis of satellite data showing changes in night light

Evergrande, Sinic, Fantasia: a tidal wave of Chinese debt is about to sink Australia’s economic recovery
Seemingly impervious to recessions for decades, cracks started to appear in the Australian economy in 2020 and now it is staring into a deep crevasse     The strategy of digging dirt and selling it to the Chinese to keep the plates spinning needs to be rethought, as the demand from its biggest customer rapidly disappears

Japan’s Kishida: A Dove in Hawk’s Clothing?
The new Japanese prime minister will find it a challenge to unite his divided party while also winning the confidence of an increasingly skeptical electorate.    Kishida has also been wise to ensure continuity in key government portfolios – most notably in foreign policy and defense – by keeping in place the ministerial incumbents, respectively, Motegi Toshimitsu and Kishi Nobuo. Kishida’s own experience (four and a half years as foreign minister) will stand him in good stead in maintaining a resolute posture on China whether by reaffirmation of the Quad process and the Japan-U.S. alliance, or by embracing enhanced missile defense to counter China’s expansive military power or pre-emptive strikes to offset the threats of a nuclear North Korea. Kishida has even flirted publicly with the idea of a more activist Japanese posture on Taiwan and has endorsed the idea of constitutional revision — a key identity politics litmus issue with right-wing members of the LDP.    Kishida’s approach may, however, be more nuanced than might appear at first glance. Where China is concerned, for example, he has not rejected out of hand Beijing’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and his stress on economic security will doubtless embrace the opportunities as well as the challenges of engaging with China, given Japan’s dependence on the China market for trade and investment opportunities.

From Abe to Kishida: Japan’s Changing Line on China
Amongst such developments, Japan-China ties continued to dominate Japan’s security concerns against its economic outlook. But, with China’s belligerence as a revolutionary revisionist power showing no signs of dissipating, Tokyo has begun to chart a new line on Beijing. What shape is Japan’s China policy poised to take in the near future, especially amidst political turmoil domestically?Now, with seasoned diplomat Fumio Kishida –who has also served as Tokyo’s longest foreign minister among other major charges – becoming Japan’s next leader, his hawkish stand on China clearly highlights that while being a ‘consensus builder’, China’s hopes for a reset in ties with Japan are unlikely to see fruition. Maintaining and building on the US-Japan security alliance (which saw progress under the Biden-Suga bilateral) will remain the key priority for Kishida on the international front, balanced against recognition of China as a security threat. This has been evidenced by Kishida not wasting time in shedding his ‘dove’ image for a more hardline approach towards Beijing, formulating this strategy during his campaign trail itself   The 2021 Defence White Paper by Japan termed China “a matter of grave concern” with a focus on the East China Sea (ECS), China’s new Coast Guard Law (CGL) and ‘gray zone’ maritime strategy. On the economic front, Japan was one of the first countries to move production out of China at the onset of the COVID-19 pandemic. It also launched the Supply Chain Resilience Initiative (SCRI) with partners India and Australia, seeking to build sustainable alternatives to China-centric supply chains in the post-pandemic order while showing a long-term commitment to limiting its own trade dependency on China. . This new reset to the US-Japan alliance, can be broadly identified in two key instances; first being Biden’s call to Suga at the onset of his presidency wherein he emphasized that the alliance extends into the ECS and the second being the Biden-Suga meet in Washington establishing a “US-Japan Global Partnership for a New Era”. Importantly, in a uncharacteristic move for Tokyo, the joint statement with US levied harsh criticisms of China’s assertive actions in the maritime domain, human rights violations in Hong Kong and Xinjiang and mentioned the “importance of peace and stability across the Taiwan Strait” –for the first time in over three decades. Overall, Kishida is poised to follow in Suga (and Abe’s) footsteps –he has reiterated commitment to ensuring success of the ‘Free and Open Indo-Pacific’ policy and highlighted China as a threat of “deep concern”. Kishida has already gotten Biden to re-commit yet again that the US-Japan alliance extends into the East China Sea. He seeks to re-examine laws regarding interoperability of the Japanese Self Defense Forces (SDF) and the Japanese Coast Guard (JCG) –latter being all the more crucial in light of China’s own CGL–ensuring that progress concerning revision of the country’s pacifist constitution moves ahead. While China ‘hopes’ that Kishida will not take the Sino-Japanese relations towards hostility, Beijing will carefully monitor his diplomacy for the near future. Nonetheless, China does note that a return to pre-pandemic Japan-China ties is unlikely, especially as militarist, economic and technological threats from Beijing take focus in public debate in Japan.

Aukus alliance: what is it, what does it have to do with China, and why is France angry?
The partnership’s founding provoked strong reactions from other countries, who cited security concerns, financial loss and betrayal    It will give Australia nuclear-powered submarines, but is seen as part of a broader plan

A crisis at a property company exposes deep, dangerous, and often unrecognized weaknesses in the Chinese economy.   The implications for Washington are huge. No longer would containing China be the primary focus of U.S. foreign policy, or the dominant theme of its relations with allies in Europe and Asia. It would require a different approach to a different China with a different future.   Another, darker possibility, exists: What if China recedes as an economic competitor but rises as a political one? Fearing his country will be weaker in the future than in the present, and needing a new source of legitimacy to replace economic performance, Xi might turn to nationalist causes and become more aggressive, perhaps making a grab for Taiwan. In this scenario, a China that is more like Evergrande—bloated and flailing—is scarier than a China that isn’t like Evergrande at all.    “There’s a good argument to be made that we’ve seen peak China economically, but we haven’t seen peak China politically or militarily,” Pottinger told me. “It’s one of the reasons that China is becoming more dangerous now.”

No time for US’ James Bond theatrics – let’s talk recoupling, China’s envoy Qin Gang says
Chinese ambassador tells Phoenix TV that the US’ cold war playbook should be left to Hollywood blockbusters   Trade frictions are normal – the key is how to deal with them, Qin says

How the Chinese military’s show of strength towards Taiwan highlights increased ability to target key bases
Military analysts say recent flyovers indicate the PLA can easily send warplanes to the southern and eastern parts of the island    The record number of planes entering the island’s air defence zone may be a sign jets from different units can team up on missions

China raises nuclear submarine stealth game with redesign and tactics to ‘hide ID numbers’
The PLA Navy has reconfigured its new generation Type 094 submarines, capable of firing ballistic missiles that can reach the US mainland    The redesign will make the subs stealthier, quieter, and able to hide ID numbers to confuse observers, a report and analysts say

Beijing reiterates ban on private capital in news media, updating it to prohibit hosting events
A draft document banning private investment in news media now prohibits ‘hosting news forums or presenting awards’     The ban, in place since 2005, has only been selectively enforced, but experts say the new document could cut off an important revenue source

Opinion | Is China’s Xi Jinping repeating Mao’s mistake?
China is in a crackdown mode. From tech to education to real-estate, even gaming has not escaped the reach of the Communist Party of China (CCP). Though the entire and clearest picture as to why the state has resorted to such measures is yet to fully come to light, media reports are rife with claims from experts around the world who say that this is an attempt by the Chinese state to rein in ‘out of control’ sectors and assert its primacy in China’s internal affairs.    Billions of dollars have been wiped out from the wealth of Chinese business tycoons like Jack Ma and their companies. The crackdown in many sectors has investors, both within and outside China, worrying about their money stuck in Chinese financial system. The government, till now, appears in no mood to stop.

From Mao to now: David Shambaugh compares and contrasts China’s leaders
What are the similarities and differences between Xi Jinping and Mao Zedong? Was Deng Xiaoping the People’s Republic’s greatest leader?    Political science professor Shambaugh gives his perspective   China’s poor and deteriorating international reputation – as measured by public opinion surveys such as Pew or the BBC – is the result of several factors, but it is in part the result of the country’s poor human rights record, the incarceration of Uygurs, the recent handling of Hong Kong, its military build-up, its Wolf Warrior public diplomacy, its claims to the South China Sea, its pressure on countries like Australia and Sweden, and other actions.    The government in Beijing certainly should be concerned by the country’s poor image abroad – but the image won’t change until China’s behaviour in the above-mentioned areas fundamentally changes.

What was the revolution that led to the first Chinese republic? And how does the Communist Party view it today?
The Xinhai revolution started 110 years ago and saw the end of the Qing dynasty and the birth of a new China   Reformers grew impatient at the pace of change after years of internal uprisings and defeats at the hands of foreign powers

Is another Cultural Revolution underway in China?
Chinese President Xi Jinping is cracking down on several sectors of Chinese society, including technology and entertainment. This has some Beijing watchers worried a new version of Chairman Mao Zedong’s Cultural Revolution is underway. Here’s everything you need to know.

Alain Gillard
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