Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – October 13, 2021

China trade: export growth stronger than expected in September but ‘instabilities, uncertainties’ remain
China’s exports grew by 28.1 per cent in September compared with a year earlier, up from 25.6 per cent growth in August. China’s imports rose by 17.6 per cent last month, year on year, down from 33.1 per cent growth in the previous month.

What is driving China’s e-commerce growth?
China’s retail e-commerce market has been the largest in the world since 2013. Its sales grew 34-fold in the decade to 2020 compared to the world’s ninefold growth. In 2020, its sales stood at US$2.3 trillion, representing just over half of the world’s e-commerce market total of US$4.3 trillion. What has contributed to this remarkable growth? China has the most online buyers and sellers aided by being the world’s most populous nation. At the end of 2020, it had 782 million online consumers, more than twice the US population, the next largest market. Its largest e-commerce platform, Alibaba’s Taobao, has 4.5 million active sellers in the country. In contrast, US e-commerce giant Amazon has 1.5 million active sellers worldwide. China’s e-commerce market is not only large but diverse — providing rich pickings from a variety of brands. Although richer cities like Beijing, Shanghai, Guangzhou and Shenzhen remain important, the main drivers of growth are smaller and less wealthy cities. These cities represent emerging middle-income buyers who have turned to online stores in droves due to limited access to physical retail stores in their cities. They mainly purchase value-for-money consumer and household necessities rather than high-end goods. In China, over 90 per cent of e-commerce sales are done through mobile devices versus 43 per cent in the US. More broadly, China has 932 million mobile internet users representing 99.2 per cent mobile internet penetration. The government considers e-commerce to be a key driver of economic growth. Many of the above e-commerce drivers have been nurtured and supported by the government at different stages of development. High mobile internet penetration has been supported by investment in infrastructure, particularly the accessibility and speed of the internet. Logistical warehousing is made easier by land earmarked for e-commerce logistics in town planning. The government helped pilot agricultural e-commerce value chain demonstration projects. Tolerant financial regulation, at least until more recently, has allowed financial technology to innovate and thrive.   Perhaps the most overlooked factor is the open-mindedness of Chinese consumers toward new technology. China has changed so much and so fast over the last 40 years. As such, its consumers and citizens are well adapted ‘to innovations … unmatched anywhere else’.

‘Key to China’s power future’: cost of solar to match coal power by 2023, scientists say
Solar power, when paired with adequate storage capacity, could meet more than 40 per cent of the country’s electricity demands by 2060, say researchers     Decarbonising the energy system is a priority for China to deal with air pollution at home and global climate change, according to Chinese-US paper

China’s power crisis: European firms brace for situation to ‘get worse’, as electricity shortages rattle supply chains
Some European firms have complained about poor communication and a lack of notification around power outages in China    Widespread power shortages have hobbled industrial output across swathes of the country and threaten to get worse in winter

China’s power problems expose a strategic weakness
 A bread company does not get all the power it needs for bakeries. A supplier of chemicals to some of the world’s largest paint manufacturers announced production cuts. A port city changed the electricity rationing rules for producers four times in a single day.   Electricity shortages in China are raging across factories and industries, testing the status of nations as the world capital for reliable production. The shortage has sparked a national rush to mine and burn more coal, despite authorities promising to curb emissions that cause climate change. And the shortage is calling into question whether Beijing can deliver in the coming months the strong economic growth the Chinese people have been waiting for. The power outage has also highlighted one of China’s strategic weaknesses: it is a greedy and increasingly hungry pig. Economy Nr. 2 of the world relies on energy-intensive industries like steel, cement and chemicals to boost growth. While many of its newer plants are more efficient than their counterparts in the United States, years of government electricity price controls have drawn other industries and most homeowners into delaying improvements.  As the winter warm season comes, which will require China to dig up and burn even more coal, Beijing will have to face whether it will allow factories to continue working with industrial materials for global supply chains.

G20 to reinforce rules on subsidies in move seen to be aimed at China, backs WTO reforms
Group of 20 (G20) trade and investment ministers met on Tuesday in Sorrento, Italy, and called for reinforced rules on industrial subsidies to ensure fair competition     They also said they remained committed to actively work with all World Trade Organization (WTO) members to undertake necessary reforms

China faces cybersecurity talent shortage amid push to secure data and develop the digital economy
A new report from the Ministry of Industry and Information Technology says China’s cybersecurity industry is facing a shortage of highly skilled talent    Beijing has raised cybersecurity scrutiny this year, passing new laws and regulations and launching probes into tech companies like Didi Chuxing

China and the ‘Asia-South America Digital Door’
Chile’s project promoting digital connectivity to Asia has implications for the China-U.S. competition.  In contrast, the United States’ response to increased Chinese involvement in the region has lacked clarity and coordination, and successive administrations have struggled to propose a viable alternative. The recent trip by U.S. development and diplomatic officials to Colombia, Ecuador, and Panama vis-à-vis the Build Back Better World Initiative (B3W) failed to clarify how exactly the G-7 initiative will compete with China’s BRI and help the continent navigate the post-COVID world. Ecuador’s ambassador to Washington, Ivonne Baki, later echoed a widespread frustration about the lack of meaningful engagement when she asserted that “we’re still just the backyard.   t is yet to be seen whether Uruguayan President Lacalle Pou will accept Piñera’s offer and join the Humboldt project, bringing his small nation that bit closer to the Asia-Pacific. However, he has recently opened up the possibility of free trade talks with China, apparently having achieved little success in engaging the United States in similar trade talks over recent years. With a U.S. that is more reactive to Chinese involvement and less concerned about the genuine needs of the continent, nobody should be surprised if South America shifts even further its focus away from the north.

podcast : Will ‘common prosperity’ address China’s inequality?
The concept of “common prosperity” has deep roots in the Chinese Communist Party. It was already used in the 1950s and the late 1970s under different leaderships. On August 17 2021, President Xi Jinping highlighted this concept again, calling for China to achieve “common prosperity”, seeking to narrow a yawning wealth gap that threatens the country’s economic ascent and the legitimacy of Communist Party rule. Since then, there have been simultaneous crackdowns on business sectors and individuals, many of which fall under the umbrella of ‘common prosperity’.   Why is this term being brought up again? Why now? What policies have followed? What does the regime want to achieve? Giuseppe Porcaro is joined by Bruegel Senior fellow Alicia García-Herrero and Minxin Pei, Professor of Government at Claremont McKenna College and a non-resident senior fellow at the German Marshall Fund of the United States to discuss.

Apple’s dependence on China is dangerous, say public advocacy groups
Apple’s dependence on China has been a recurring concern, with trade wars, COVID-19-related supply constraints, and human rights abuses all being highlighted at different times. Now a group of public advocacy groups has written to congressional house leaders to flag their own worries.
The letter was written in response to claims that US antitrust legislation would disadvantage American companies, and even pose national security risks

Can Western Luxury Brands Survive the New China?
American businesses are left in limbo as they lack government support from Washington and are under siege in China.    Aside from adapting to changing consumer demands, the multinational enterprises that stayed in China had to deal with an increasingly hostile business environment.     Instead of solely focusing on Chinese reforms, foreign brands should pay more attention to their challenges in the Chinese economy.

Evergrande crisis weighs on China’s credit growth as financing, lending activities cool
Aggregate financing was 2.9 trillion yuan (US$449 billion), the People’s Bank of China (PBOC) said on Wednesday, compared to 2.96 trillion yuan in August     Financial institutions offered 1.66 trillion yuan of new loans, up from 1.22 trillion yuan in August, after Economists had projected 1.81 trillion yuan

Evergrande crisis: Harbin in northeastern China readies subsidies, eases presale restrictions as housing market scrambles for stability
Harbin is providing subsidies of up to 100,000 yuan (US$15,497) for homebuyers under 35   Developers with good credit profiles are being encouraged to re-embark on presale activity sooner than allowed earlier

Evergrande: China faces ‘challenging trade-offs’ in addressing developer’s debt crisis, IMF says
Early intervention could minimise risk of contagion, reinforce ‘too big to fail’ mentality, IMF says    Evergrande missed three more offshore bond payments due Monday

China has means to address Evergrande default: IMF official
Beijing equipped with tools to prevent financial crisis, says Tobias Adrian While China Evergrande Group missed payments on bond interests for the third time in as many weeks, the International Monetary Fund said in a report Tuesday that the exposure of Chinese banks to the real estate conglomerate appears limited and that the government has the ability to contain the fallout.   With $300 billion in liabilities hanging over its head, Evergrande has until the end of next week to make good on a set of missed coupon payments before a grace period expires and it officially goes into default.    Tobias Adrian, director of the IMF’s monetary and capital markets department, told Nikkei that China is better positioned to address a potential financial crisis than the U.S. had been leading into Lehman Brothers’ failure.

Electric vehicles to drive metals demand higher
Road transportation has seen a growing trend in pivoting towards electrification, especially when it comes to cars. This is a trend that is only set to strengthen, which should drive demand for metals    More than 20 countries and states (US/Canada) have EV sales targets or internal combustion vehicle (ICE) bans for cars or two/three-wheelers. China has also imposed a mandate for EVs to make up 20% of all sales by 2025 and 40% by 2030. Meanwhile, the US is aiming for 50% of new vehicles sold in the US to be electric by 2030.

US Treasury’s FX Report preview: Four countries to meet manipulation criteria
China has been quite central in the recent FX Reports. In this edition, we estimate that China will meet two criteria (current account and bilateral trade) but not the FX intervention one. China’s current account surplus edged above the 2.0% threshold (according to our estimates) in the 12 months to June 2021, for the first time in five years.

Terence Corcoran: The new China syndrome
Canadian business joins the push for greater state control The first priority is the need to suspend principles. As Barton said at the CCBC meeting, Canadian business leaders should get into China “regardless of one’s outlook on it.”  To deal with these government-determined market outcomes, “foreign companies perform best in China when they understand policy trajectories and craft their business strategies accordingly.” Canadian firms will also “need to take extra care to avoid running afoul of tightening national security regimes and become comfortable with a higher degree of government scrutiny. The 14th FYP is the definitive document for understanding the key trends that will shape Chinese economy in the short to medium-term future. In order to succeed in China, Canadian companies will need to firmly grasp both the opportunities and challenges presented by the new policy directions outlined in the 14th FYP and craft their China strategies accordingly.” There is no doubt China, with close to 1.5 billion people and an economy that has been semi-liberalized with the introduction of some market forces and limited economic and political freedom, will continue to expand in years to come. The underlying implication of the CCBC analysis of the Chinese economy, however, is that its value and strength come from the country’s neo-fascist economic model rather than from the liberal economic reforms introduced in recent decades. The thinking trend at the CCBC voiced by Barton effectively puts faith in greater government authority, planning and control to produce economic growth and well-being. It’s a growing belief backed by Xi Jinping in China, but also around the world, including in Canada.

Shanghai continues to invest in biomedical industry as companies flock to the city
Shanghai’s rising position as a prime location in the biomedical industry is expected to be further boosted by continuous incentives and the commitment of multinational players to the local market.    Research activity, clinical studies and applications for innovative treatment have been booming in the city in recent years. Last year, Shanghai’s biopharmaceutical industry was valued at 600 billion yuan (US$92.94 billion) with a gross industrial output of 140 billion yuan.     The upbeat market sentiment has proved to be appealing to overseas players looking to deepen their local operations in China.

Global economic recovery ‘really quite unique’, IMF says, amid supply chain disruptions and price increases
Global economy is expected to grow 5.9 per cent this year before slowing to 4.9 per cent in 2022, according to the International Monetary Fund (IMF)     But the overall figures mask large downgrades and ongoing struggles for some countries, including the United States, Germany and Japan

Joining CPTPP: What China Needs to Do and Comparison with the RCEP
We examine China’s bid to join the CPTPP, the challenges it needs to overcome to gain membership, and differences between the RCEP and CPTPP agreements.  China has formally applied to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreement in September 2021. This comes less than a year after it signed the Regional Comprehensive Economic Partnership (RCEP) agreement with the other 14 countries in November 2020. As mega free trade agreements (FTAs), the CPTPP and RCEP share similarities in aspect of their membership and aspiration. They have seven common members, and both encourage their member states to slash tariffs, offer greater market access, and promote easier trade and investment.

China ‘overly optimistic’ on relations with US, Beijing adviser says
There may be signs of a thaw, but tensions won’t significantly ease in the foreseeable future, according to Shi Yinhong      The international relations expert says the US won’t stop trying to contain China, especially its military and tech development

Xi Jinping gambles on economic tumult to cement his legacy
Chinese president Xi Jinping appears to be sailing into an economic storm of his own making, as one of China’s largest developers teeters on the edge of bankruptcy and manufacturers grapple with power shortages across the country.    But aside from minor course corrections, analysts and government advisers expect Xi to take advantage of what he has termed a “window of opportunity” to press ahead with difficult structural reforms.   If successful, it will be the latest in a long series of bold political gambles — from the elimination of term limits on the presidency to his pursuit of “common prosperity” — that have made him China’s most feared leader since Mao Zedong. It has also put him on the cusp of an unprecedented third term in power at the Chinese Communist party’s 20th congress late next year.   Common prosperity is particularly risky, as Xi’s determination to rein in property prices and reduce income inequality could do more harm than good to the world’s second-largest economy.
“Xi is warming up for the congress,” said Henry Gao, a China expert and law professor at Singapore Management University. “He wants people to remember him for many things, but especially for achieving common prosperity. [His predecessors] were able to get China on the fastest speed train for economic development but didn’t do much for common prosperity.”

China’s Xi Jinping speaks with Germany’s Angela Merkel in diplomatic push
Talks with German chancellor arranged at Chinese president’s request to discuss issues related to COP26 climate summit, European diplomat says   Speculation grows that Xi will not travel to Europe for G20 summit this month or the climate meeting in November

Amid U.S.-China Chill, Harvard Moves a Top Language Program to Taiwan
Harvard University will move a popular Chinese-language program to Taipei from Beijing amid a broad chill in academic and cultural exchanges between the United States and China.  The program’s director, Jennifer L. Liu, told The Harvard Crimson that the move had been driven by a perceived lack of friendliness on the part of the Chinese host institution, the Beijing Language and Culture University. Harry J. Pierre, a Harvard spokesman, said, “The planned move of this program from Beijing to Taiwan has been considered for some time and reflects a wide array of operational factors.”

Beijing accuses Taiwanese President Tsai Ing-wen of demanding equal ‘state-to-state’ treatment
Beijing says her comments that Taiwan should not be ‘subordinate’ to the mainland had revived the doctrine first adopted by Taipei in 1999     Tsai is reported to have played a prominent role in formulating the theory, which Beijing says cannot exist alongside the one-China principle

China Says U.S.-China War Is Imminent
China has now publicly announced that, unless the United States Government will promptly remove from China’s Taiwan province the military forces that it recently sent there, China will soon send military forces into that province, because, not only did the U.S. secretly send “special operations forces” onto that island, but because, “since the US has exposed the news through anonymous officials, it has taken a step forward to undermine, from covertly to semi-overtly, the key conditions for the establishment of diplomatic relations between Chinese mainland and the US.” That statement — threatening to cut off diplomatic relations with the U.S. — comes from the Chinese Communist Party’s newspaper, Global Times’s editorial, on October 8th. Its editorials speak for the Chinese Government, at least as much as statements from the U.S. White House speak for the U.S. Government.

‘Worst yet to come’: China’s new dark warning to Australia
A stern editorial from a Chinese news outlet has said “the worst is yet to come” in China-Australian relations after a controversial act from a former PM.   “From forging a new security alliance with the US and the UK targeting China to Abbott’s meddling in the Taiwan question, Australia, a country that relies heavily on trade with China, has persistently prodded the most sensitive nerve of its biggest trading partner. “With politicians in Canberra continuing to act and sound increasingly hostile toward China, the worst is probably yet to come,” the editorial said.    “But Canberra should bear in mind that it is cutting off its nose to spite its face, as meddling in the Taiwan question is a dead end. Beijing has both the determination and capability to shore up the irreversible trend of national reunification.”

With all eyes on Taiwan, tensions are building on another Chinese frontier: India
China’s increased military activity in the Taiwan Strait may have grabbed all the headlines in recent weeks, but thousands of miles to the west, another simmering territorial dispute on the country’s borders looks more likely to boil over first.     Just 16 months ago, Chinese and Indian troops fought a deadly hand-to-hand battle in the Himalayas along the Line of Actual Control (LAC), the ill-defined de facto border between the two nuclear powers.  And now, tensions appear to be rising again.

A China strategy
Unfortunately, to the best of my knowledge, there have been no such efforts made in South Korea to better understand China, leaving the country panicked when bad things have occurred, as we saw in 2016 and afterwards.  A China strategy, if it were in place, would have guided South Korean entrepreneurs, tourism sector workers, singers and actors not to be over excited about business opportunities there. It would have recommended them to diversify the regions or countries they were active in, so that they might have been able to minimize any possible fallout from China retaliating economically.   Nations or peoples have power when every person or every state depends on them. Such nations will be tempted to abuse this power if they feel that they are influential enough to change others’ courses of action. This is what China has done, and South Korea has had no option but to deter it with the absence of a China strategy.

podcast :Gunnar Wiegand on the EU’s Indo-Pacific Strategy, AUKUS, and Taiwan
Over the course of the past weeks, the EU’s agenda was filled with Indo-Pacific related developments ranging from the successful release of the EU’s Indo-Pacific strategy to shock linked to cancellation of the French military sales to Australia and announcement of the AUKUS alliance. In this episode, we talk with Mr. Gunnar Wiegand, the Managing Director for Asia and the Pacific at the European External Action Service, who is at the forefront of the EU’s engagement with the Indo-Pacific region and China.
The conversation touches on a range of strategic issues related to the EU’s ambitions and capabilities in the region, EU-China relations in the Indo-Pacific, EU-Taiwan ties and transatlantic cooperation.

China wants ‘non-discriminatory’ treatment of Huawei, as survey says 76 per cent of Canadians want the tech company banned from 5G
Support for Huawei playing a role in Canada’s 5G infrastructure has plummeted since 2019, according to a Nanos poll      The findings come after China released Michael Kovrig and Michael Spavor, whose treatment was viewed by Ottawa as hostage diplomacy

ia Zhangke and the Stories Men Tell Themselves
The director’s latest documentary suffers from a fixation on the self-mythologizing of ordinary men.

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