Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – October 14, 2021

China GDP: Five things to watch when quarterly data are released
The release of China’s estimate for third-quarter economic growth on Monday comes at a critical juncture for the world’s second-largest economy. The National Bureau of Statistics’ headline gross domestic product figure and other indicators will capture the initial impact of two economic shocks: the debt crisis at Evergrande, one of China’s largest real estate developers, and widespread and crippling energy shortages. Premier Li Keqiang said on Thursday that growth had slowed in the third quarter but did not say by how much, according to Reuters. President Xi Jinping’s administration has done little to relieve the pressures building on the country’s real estate sector, even though it accounts for as much as 30 per cent of total economic output. Beijing has instead seized on what it believes is a “window of opportunity” to discipline overleveraged property developers, which it sees as a grave threat to China’s financial stability.“The emphasis on deleveraging, squeeze on property speculation and energy shortages are likely to have substantially dented China’s already weak growth momentum,” said Eswar Prasad, a former head of the IMF’s China division who is now at Cornell University. He added that Xi and Liu He, vice-premier and the president’s most trusted economic adviser, “seem prepared to accept a marked short-term slowdown in growth as the price for greater financial stability over the long term”.
Here are five things to look out for at next week’s release: Has the Chinese economy ground to a halt on a quarterly basis? What was the Evergrande effect on fixed-asset investment in September? How have power shortages affected industrial production? Will retail sales rebound? But from Xi’s crackdown on China’s private-sector technology groups at the beginning of this year to his willingness to drive Evergrande and other developers to the brink of insolvency, he has shown no sign of moderating his campaign to overhaul radically China’s economic model. Monday’s data release could prove to be an early test of this ambitious policy agenda.

China inflation: factory-gate prices rise at fastest pace on record due to surging coal costs amid power crisis
China’s official producer price index (PPI) rose by 10.7 per cent in September from a year earlier, compared with 9.5 per cent in August   The consumer price index (CPI) rose by 0.7 per cent in September from a year earlier, compared with a 0.8 per cent rise in August   Factory inflation is likely to remain elevated in the coming months, with the full-year increase in PPI likely to reach over 9 per cent, he said. In 2020, China’s full year PPI decreased by 1.8 per cent compared to the previous year, while in 2019, it decreased by 0.3 per cent from a year earlier.  The worsening inflation outlook comes alongside a deterioration in economic growth this year given sluggish consumer demand, tighter property curbs and worsening energy shortages.  Consumer inflation has been benign so far this year having fallen to minus 0.3 per cent in January from a year earlier, in part thanks to falling pork prices and greater competition among downstream businesses. China’s core consumer inflation rate, excluding volatile food and energy prices, rose by 1.2 per cent in September compared with a year earlier, unchanged from August. Food prices fell by 5.2 per cent from a year earlier in September, down from a fall of 4.1 per cent in August. Non-food prices rose by 2 per cent in September, year on year, up from a reading of 1.9 per cent in August. The price of pork – a staple meat on Chinese plates – fell by 46.9 per cent compared with a year earlier in September.

China’s economic slowdown, debt and decline in spending fuel anxiety across the globe
As Chinas economic growth shows signs of slowdown amid Beijings crackdown on its private sector and its President Xi Jinping calling for Common Prosperity, citizens are tightening their purse strings.

China’s explosive export growth likely to slow as other manufacturing markets open up, PPE demand wanes
Many manufacturing countries, such as Vietnam, have now recovered from Covid-19 Delta variant outbreaks and are restarting production     To date, Chinese exports have defied expectations that power cuts, Covid-19 outbreaks and shipping congestion would deliver a hammer blow

Decarbonization in the United States and China: Fast and Furious Enough?
There is much anticipation surrounding the upcoming COP26 and expectations are high for China’s climate negotiators’ plans to meet Xi Jinping’s 2060 goals. With China responsible for roughly 25 percent of annual global greenhouse gas emissions and the United States at 15 percent, all eyes will be on these two nations in Glasgow this November. People everywhere are wondering if we will hear more empty promises, or if we will finally see meaningful actions to limit climate change.Overthrow of China’s dirty king coal?  Starting with China’s economic reforms in the 1980s, the country’s “miracle growth” has been powered by cheap coal. With more than 1,000 existing coal plants, coal accounts for 56.8 percent of China’s energy consumption and half of its CO2 emissions. Air pollution from coal emissions costs China up to 500 billion dollars in lost productivity and 1.7 million early deaths per year.
As a result of that air pollution, China saw a dramatic rise in environmental protests from 10,000 “mass events” in 1994 to 128,000 in 2008, until public security crackdowns swept the country. Then, in 2013, the airpocalypse hit Beijing and other northern cities with small particulate (PM2.5) pollution from coal and car emissions reaching more than 30 times the WHO recommended healthy levels. The government launched a war against pollution in 2014 and thanks to new laws and stringent top-down mandates, air pollution has fallen by 25 to 35 percent in most major cities. Yet 42 of the top 100 polluted cities are still in China.

Evergrande crisis: Beijing not likely to let developer collapse even as it gets tough, analysts say
The property developer has missed three interest payments and will default if it fails to pay US$119 million by October 23     The government, which wants to avoid a bailout, is trying to find a way to penalise the company without creating a sectorwide panic, analysts say

Evergrande crisis: Guangdong province moves to ensure social stability, issues notice warning homebuyers of potential risks
Provincial regulator warns homebuyers about transferring money to bank accounts not designated by the local government, among other warnings    The notice is aimed at protecting homebuyers’ rights but is likely to worsen developers’ cash flow problems

Alibaba Makes Its Taobao App More User-Friendly for the Elderly
Alibaba Group’s online marketplace Taobao this week rolled out a new version of the shopping app that’s more accessible for senior users.   Piloted ahead of China’s 11.11 Global Shopping Festival, Taobao’s “senior mode” features larger text and icons, simplified navigation and voice-assisted technology, which allows senior citizens to search for products using voice commands.

Various Elements of E-Commerce
As e-commerce, which includes both research and purchasing, gets more user-friendly, it becomes more difficult for firms to sell in the digital era. Superior user experience, online performance, and marketing techniques simultaneously enhance brand awareness and engage customers of e-commerce competition. These three competitive areas have become the three pillars of e-commerce, and any online merchant must prioritize them.

Microsoft to shut down LinkedIn in China
The company will launch a China-specific app later this year   The news comes after a Chinese internet regulator told LinkedIn in March to better regulate its content and gave them a 30-day deadline, the Wall Street Journal reported.

China stocks slip amid looming stagflation risk after producer inflation accelerates to 26-year high
Producer prices jumped 10.7 per cent year on year in September, the fastest pace since November 1995, National Bureau of Statistics data showed    Shanghai Composite Index closed 0.1 per cent lower, while the broader CSI 300 Index eased 0.3 per cent

French Ambassador to China Discusses ‘Good France’ Food Event
Given the deep passion many in France have for cuisine, it’s perhaps not surprising that French gastronomy was inscribed by UNESCO on its List of Intangible Cultural Heritage in 2010. 
Since 2015, an annual event entitled ‘Good France,’ also known as ‘Goût de France’ (Taste of France) in French, has brought that very gastronomy to 156 countries across five continents, including here in China.  Nowadays, a whole host of French restaurants can be found across the Middle Kingdom, largely in first- and second-tier cities. Getting French food into the Chinese market is not without its difficulties. For one thing, translating the names of French dishes into Chinese can be challenging even for the most adept of linguists.   However, in spite of any difficulties, both French and Chinese people are united by their shared passion for food.  The sixth edition of the ‘Good France’ event runs from Thursday, October 14 until Friday, October 22 and gives diners a chance to indulge in a range of dishes. Participating restaurants are in Beijing and Qingdao.

TikTok owner ByteDance’s valuation reaches US$400 billion in anonymous trades posted online as IPO remains elusive
Anonymous trades published and facilitated by 36Kr show ByteDance’s valuation has fluctuated between US$325 billion and US$450 billion in recent months   Online sellers say they expect ByteDance’s value to climb even higher, but the company’s internal buy-back scheme values it at US$200 billion  ByteDance’s IPO plans remain up in the air after China made significant changes to regulations concerning overseas listings. Following a cybersecurity probe into ride-hailing firm Didi Chuxing, launched days after the company went public in New York, Beijing introduced a draft regulation that would require any platform operator with at least 1 million users to apply for such a review before listing overseas.     ByteDance’s short video app Douyin, the Chinese version of TikTok, alone had 600 million daily active users as of August last year, the latest official numbers available. Before denying it had IPO plans, ByteDance explored options for listing Douyin in New York, a move that looks even more unlikely under the current regulatory environment.   Following an August report by the Financial Times that the company was looking to list in Hong Kong by early next year, ByteDance again denied that it had plans for an IPO

The real question about China for investors
China’s crackdowns against the property sector and its technology giants have jolted financial markets, sparking a debate about whether or not China is still “investable”.  Longer-term bullish investors argue that Beijing’s commitments to economic growth and market liberalisation remain unchanged. They maintain recent actions such as tougher rules on property developer debt loads are efforts to reduce froth in the sector. Necessary adjustments in credit risk pricing will improve the functioning of China’s financial markets over time.   In contrast, bearish investors argue that under Xi Jinping China’s fundamental political objectives have changed and maintaining growth and liberalising capital markets are now less important to the country’s leadership than goals related to “common prosperity”. They claim this summer’s campaigns, including the attacks on technology firms and education and tutoring businesses, imply that China is increasingly unsafe for investor

Chinese firms leading the way on green package delivery
Chinese e-commerce has grown rapidly in recent years, but not without costs to the environment. Between 2010–2020, China’s retail e-commerce sales grew about 34-fold compared to the world average of ninefold, while the number of packages delivered in the country increased 36-fold to 83.4 billion. This growth has brought economic and environmental costs from traffic congestion, pollution and packaging waste, especially at the ‘last mile’.

US now top bitcoin mining hub following months-long crackdown in China that has pushed out cryptocurrency operations
The Cambridge Bitcoin Electricity Consumption Index shows China’s crackdown on bitcoin has successfully pushed mining activities to other countries   The US now makes up 35 per cent of the global bitcoin hash rate, followed by Kazakhstan and Russia with 18.1 and 11.2 per cent, respectively

Climate change: Hong Kong companies face challenge as global guidance on reporting greenhouse gas emissions change
The Task Force on Climate-Related Financial Disclosures (TCFD) released new guidance asking companies to change the way they report their emissions     It is a tall order for businesses in Hong Kong because there is a lack of guidance on how to approach the recommendations in general, according to analysts

Australian exports to China defy trade sanctions
The value of Australian exports to China continues to surge, despite Beijing targeting them with trade sanctions.   New Chinese government trade data showed that high commodity prices are fuelling the boom in value of exports to the economic superpower, the Australian Financial Review reports.
Chinese imports from Australia jumped 50 per cent year-on-year to $20.36 billion in September.

Moving beyond the US–China Cold War cliche
A bipolar world is emerging as the US–China rivalry dominates virtually every aspect of international politics. Bipolarity tends to exaggerate ideological hostility and encourages attempts to build exclusive alliances. Casting the rivalry as a battle between democracy and autocracy, the Biden administration has increased public criticism of China’s human rights violations and countered Chinese manoeuvring in the Pacific.   China has spent enormous sums to modernise its military which still can hardly match the US or project itself globally. But China does not have to match US power to sustain the rivalry. Going far beyond the tottering command economy that defined the Soviet Union in its final years, China has built advanced and broad-based technology and a dynamic, globally competitive economy. Unlike the Soviet Union, China is far from an ideologically disillusioned and exhausted power. With Chinese suspicion of the United States at an all-time high, US hostility has supercharged Xi’s popularity for standing up to US pressure.   Washington has never faced a rival like Beijing. The two powers, incapable of dominating each other, have dictated the durability of the bipolarity. China cannot expect the United States to accept its authoritarian system, and Washington cannot alter Beijing’s intrinsic values or stop its rise.
Although no single power is likely to create a war on its own, there is a real possibility that missteps could lead to escalation and violent conflict. The leaders in both countries must find ways to compete constructively

Taiwan tensions raise fears of U.S.-China conflict in Asia
China seeks to bring the strategically and symbolically important island back under its control, and the U.S. sees Taiwan in the context of broader challenges from China.

By standing up to China, Australia may end up standing alone
Earlier this month, with great fanfare, Washington, London, and Canberra announced the AUKUS pact: a security arrangement meant to confront China. The deal was hailed as a “historic opportunity” by Australian Prime Minister Scott Morrison “to protect shared values and promote security and prosperity in the Indo-Pacific region.”   As the U.S.-China strategic rivalry intensifies, no other capital in the Asia-Pacific region has exceeded Canberra’s gumption in backing Washington, as well as trying to rally others to the cause. Security arrangements like the AUKUS deal might imply that these efforts are paying off, as America strongly supports Canberra’s efforts as relations with China worsen. To be clear: None of this excuses or deflects attention away from Beijing’s bad behavior toward Australia. And, for its part, Washington’s support for American producers and households is exactly what one should expect.    As Michèle Flournoy, a former senior Clinton and Obama administration official, stated last month: “I’m not sure that the White House can control Napa Valley exports of wines to China.”    This complicated balance is well understood in Australia’s region. The one exception, perhaps, is Canberra.

Explaining the PLA’s Record-Setting Air Incursions Into Taiwan’s ADIZ
Multiple reasons likely contributed to the spike in incursions and sorties in early October.   Beijing could very well have used the Wall Street Journal’s report that the United States has been secretly maintaining a small contingent of military trainers in Taiwan for at least a year as a pretext to renew large-scale incursions. The Global Times called the U.S. deployment an “invasion” and said that China “has the right to carry out military strikes against them at any time.” However, on the eve of Taiwan’s National Day, Chinese President Xi Jinping vowed “peaceful” reunification, saying it best meets the interests of the Taiwanese people. Xi’s remarks came after President Joe Biden acknowledged on October 5 that he and Xi had spoken about Taiwan and agreed to abide by the “Taiwan agreement.”     The lull in incursions also followed the Zurich meeting on October 6 between U.S. National Security Advisor Jake Sullivan and China’s top diplomat Yang Jiechi, where there were “tough and direct exchanges” over the Taiwan Strait. This goes on to demonstrate the difficulty in making any hard and fast conclusions about the PLA incursions into Taiwan’s ADIZ. What we can say is that there are many motivations and reasons for the intrusions, many of which may have little to do directly with Taiwan itself.

What Is Kishidanomics?
Can Japan achieve the new prime minister’s plan for income doubling and economic security?   With close connections to the United States and a strong defense background, Kobayashi is likely to take a tough stance on Beijing. This will be highly welcome in Washington, which has long pushed for Tokyo to be more active and critical of China. While stepping up on China will also cater to the more conservative factions within the LDP and possibly bolster Kishida’s popularity, it will also be a highly welcome move in Taiwan, whose relations with Japan have seen an uplift in recent months.  On the other hand, allowing a heavy-handed ministerial outlet to tackle Japan’s economic downturn will likely be met with suspicion, given its unclear political agenda. In a phone call with Chinese leader Xi Jinping, Kishida already slightly backpedaled away from taking a clear stance on Beijing’s assertiveness. Kishida reaffirmed that he aims for “constructive and stable” relations with Japan’s East Asian neighbor, a stance that Xi underscored with a call for “dialogue and cooperation.” The hawkish state-run tabloid, the Global Times, in a fiery article, already called out Tokyo’s alleged “muddled rhetoric” and accused the new Japanese administration of hypocrisy.If Kishidanomics is to bear fruit in such a climate guided by a strong anti-China rhetoric, the new administration will need be mindful of not accidentally shutting too many doors. It is therefore plausible that the lack of detail about how the new administration plans to fund its wealth distribution may be indicative of an underlying desire not to anger Beijing from the get-go. On the other hand, not being able to communicate clearly what its aims and ambitions are could upset Kishidanomics before it has a chance to be officially implemented.

China’s New Regulation on Market Entity Registration: What Do You Need to Know
In this article, we discuss the new regulation regarding the administration of registration of market entities in China and the provision of suspending business operations without losing license for a period up to three years, a policy initially piloted in Shenzhen SEZ.

Does China’s Remaining Non-State Media Have a Future?
New draft regulations could cripple outlets like Caixin, considered a bastion of investigative journalism scrutinizing corporate and government dealings.

Xi Jinping says China’s ‘democratic’ political system is a ‘great creation’ the holds key to international success
Chinese President tells party meeting that systems can be judged on whether they allow an orderly transfer of power and people can express their interests      Speech is seen as latest attempt to defend the Communist Party’s system amid growing pressure from the US over rights and value   But Xi went further on Thursday, saying: “If there are only high-flying promises before elections and no say for the people after them, then such a democracy is not a real democracy.”  He continued: “In judging whether the political system of a country is democratic or effective, [we should] examine if there is an orderly and legal succession of its leadership, if its people can manage state affairs, social, economic and cultural matters in accordance with the law, and if its people can effectively express their interests and demands.   “[It depends on] whether different sectors of the society can effectively participate in the political life in the country … and whether there are effective checks and balances on power,” he added.

Chinese President Xi Jinping says country will continue to build links to outside world
Chinese leader also highlighted the country’s role in keeping the global supply chain running during the Covid-19 pandemic    Xi was speaking at the start of a UN conference on sustainable transport
The China-Europe rail link saw record freight levels in the first half of the year, but it was largely one-way traffic.  “Transport has been the key to China’s modernisation. We have become a country that is the best connected to the global shipping network, and recorded the world’s highest volume of trade in goods,” “Throughout the coronavirus pandemic, the China-Europe railway express kept running day and night to ensure full stability in the global supply chain. This showcases China’s sense of responsibility in the global community.” “China’s door will only open wider and will never be closed. China will continue to push for high quality development in the Belt and Road Initiative, and to strengthen connectivity with other countries’ basic infrastructure.” In February, Beijing also announced plans to expand its high speed rail network to cover 70,000km (43,500 miles) by 2035 – a sharp rise from the estimated 38,000km operating at the end of last year. It also plans to build a 460,000km network of expressways and highways, a 25,000km inland waterway system and 162 additional civilian airports, bringing the total number to 400, over the period. Earlier this year, US President Joe Biden warned that China was threatening to outcompete the US on infrastructure and public transport through these massive investments, and said the United States had to invest heavily in major projects to upgrade the country’s infrastructure.

Alain Gillard
Information Officer
Service Asie Pacifique
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