Belgian-Chinese Chamber of Commerce (BCECC)

China Press Review – October 20, 2021

China’s Canton Fair wraps up, but exporters lament the lack of foreign buyers
The biggest concern among Chinese exhibitors at October’s Canton Fair has been the rising cost of production amid global inflation.    Other were disappointed with the lack of foreign buyers as coronavirus-related travel restrictions continue to hamper attendance

U.S. takes aim at China’s ‘unfair trade practices’ at WTO review
The United States said on Wednesday that China’s industrial policies “skew the playing field” against imported goods and services, as well as their foreign providers, and that Washington would pursue all means to secure reforms.

pdf : Trade Policy Review: China
The eighth review of the trade policies and practices of China takes place on 20 and 22 October 2021. The basis for the review is a report by the WTO Secretariat and a report by the Government of China.

The stumbling dragon: a look into China’s economic slowdown
China’s economy grew at the slowest pace in a year in the third quarter, hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks and raising heat on policymakers amid rising jitters over the property sector.

Xi calls for smarter regulation of digital economy and highlights its key role in future national development
According to Xi, the digital economy is vital for China to form a new ‘development pattern’ and ‘modern economic system’     Xi said that China has unique advantages, including its socialism system, a ‘whole country approach’ and vast market size

China’s tech crackdown will see ‘more substantial progress’ by year’s end, Beijing vows
Economic uncertainties and diminishing GDP growth also prompt warning on financial risks, while a raft of measures are being reviewed to help struggling businesses    President Xi Jinping again stresses the importance of curbing monopolies and preventing the disorderly expansion of capital  Beijing has been cracking down on Big Tech for several months, in line with the country’s efforts to prevent monopolies and the disorderly expansion of capital – a mission thatwas again stressed by President Xi Jinping at a Tuesday meeting of the Politburo. The fresh comments by Guo, who is also chairman of the China Banking and Insurance Regulatory Commission, came as market worries have resurfaced over the financial stability and future of the private economy, which employs 80 per cent of the urban workforce and accounts for 60 per cent of the national gross domestic product (GDP). Meanwhile, China’s financial regulators have promised more financing support for the private economy. This comes as third-quarter GDP growth dropped to 4.9 per cent from 7.9 per cent in the second quarter, and as September’s producer price index rose to a record high of 10.7 per cent from a year earlier  Additionally, Guo encouraged the sharing of business information such as utility bill payments, registration information and taxes so banks can more easily evaluate private firms’ creditworthiness. He also defended the tech clampdown by saying many of the firms violated laws or regulations. And he warned against winner-take-all scenarios while emphasising the importance of both standardising and developing business. “We don’t mean that we prefer standardisation to development, or vice versa,” he said. “Financial innovation must be based on the precondition of people-first [principles].”
Beijing shut down thousands of peer-to-peer lending platforms last year and has cracked down on cryptocurrency activities in recent months. Guo also warned of the intrusion of industrial capital in the state-controlled financial system. A variety of industrial capital entered the financial industry in the past. Their illegal affiliate transactions, particularly when they control certain financial institutions, could turn commercial risks into financial risks,” he said, without naming any company.    Beijing has already dismantled Tomorrow Group, a financial empire controlled by Xiao Jianhua that includes now-bankrupt Baoshang Bank, several securities, insurance and futures businesses.   Last month, the default of Evergrande Wealth Management, the financial unit of the embattled property developer, led to a rare protest by investors in Shenzhen.    According to data from the All-China Federation of Industry and Commerce released in late September, 281 of China’s top 500 private enterprises had entered the financial sector. Among them, 111 were involved in lending businesses, 107 in banks, 53 in asset management, and 18 in securities.

China’s Self-Destructive Tech Takedown
China’s leaders think that they can crack down on the country’s private technology sector and still deliver material progress as state-owned companies take over. But by reversing the policies that enabled decades of rapid growth, they risk imperiling the unique economic model they seek to sustain.

China’s power crisis: Beijing draws up plans to increase coal output, lower energy prices as temperatures plunge
China’s power crunch has already had an impact on the economy and raised concerns ahead of the winter heating season, which has started early in some provinces    Thermal coal futures hit an all-time high on Tuesday, but senior officials have promised to increase coal production and lower energy prices

Can Russia and Mongolia Replace Australia’s Coal Supply to China?
As China grapples with an energy shortage, it is increasingly looking to source coal from its northern neighbors.

China attracts global demand in US$4.9 billion bond offerings as investors prepare for wider access, index inclusion
China completed a US$4 billion global bond offering on Tuesday with overwhelming demand     The government also auctioned 6 billion yuan of bonds in Hong Kong as sovereign debt enters FTSE WGBI index family from next month

China’s property, construction sectors contract as Evergrande crisis, tougher regulation hit home
Output in the real estate and construction industries shrank 1.6 per cent and 1.8 per cent respectively in the third quarter of 2021     Effects of Beijing’s crackdown on overheated property market and a debt crisis at country’s biggest developer have started to ripple through the economy

Bull run in China’s coal stumbles after economic planner’s pledge to cool fuel prices, sending futures and mining stocks tumbling
Twelve-month thermal coal futures for January 2022 delivery fell by their 8 per cent daily limit on the Zhengzhou exchange to 1,755.4 yuan each    The shares of at least seven coal miners, including the state-owned China Coal Energy and Yanzhou Coal Mining, plunged by their 10 per cent daily limits on the Shanghai and Shenzhen stock exchanges

Hong Kong’s success as a financial hub brings new opportunities for fintech firms to up their game
Hong Kong FinTech Week brings fintech founders and investors together, as well as established financial institutions and regulators    Event provides networking opportunities for local and global fintech firms seeking funds to scale up, as well as decision makers at financial institutions   For Zhang, the attraction of the event is all about AAX’s position as a global-facing company with an office in Hong Kong. “Hong Kong FinTech Week is not just a Hong Kong event,” she says. “It is a global event, which we can leverage to impact a global audience. This year, they have both physical and virtual platforms, which means we can further maximise our reach to these global audiences.”  Join some of the biggest names in global finance and technology at Hong Kong FinTech Week 2021. This year’s event combines a conference in Hong Kong with online access from anywhere in the world, and features a stellar line-up of speakers including People’s Bank of China governor Yi Gang, Alibaba Group co-founder and executive vice-chairman Joe Tsai, BlackRock chairman and CEO Larry Fink, and Citi CEO Jane Fraser. The conference will be held from November 3-4 at the Hong Kong Convention & Exhibition Centre and is open to both in-person and virtual attendees. There will also be an additional online-only conference on November 5, where many sessions from global iconic leaders will be broadcast for the first time during Hong Kong FinTech Week.

Beijing’s Services Sector Opens More Areas to Foreign Investment
China’s capital received the green light from the State Council to further open parts of the Beijing service sector to foreign investment. The affected industries include areas that were previously off-limits, such as education, telecommunications, construction, performing arts, and more. We discuss what impact this could have on foreign investors.On Monday, October 18, 2021, China’s State Council announced that it had permitted Beijing to temporarily adjust certain regulations to enable more access to areas of the services sector for foreign investors, effective immediately. A document released by the State Council detailed the adjustments to specific articles in several pieces of legislation that restrict foreign participation in the service industries, covering areas like education, telecommunications, entertainment, tourism, and construction, among others. The adjusted regulations also include temporary exemptions to items on the Special Administrative Measures for Foreign Investment Access (Negative List) (2020 Edition)an extensive list of industries and fields that are off-limits to foreign investors. The new adjustments follow several policy reforms aimed at developing and expanding market access to Beijing’s thriving services sector. In this article, we provide a complete translation of the adjusted regulations and discuss the potential impact this change will have upon foreign investors in Beijing.

Cyberport’s future is in the north as industry pivots towards Greater Bay Area, says CEO of Hong Kong tech hub
With government funding support, Cyberport provides start-up capital, office space and access to technology to help local start-ups get off the ground      Cyberport CEO says Hong Kong’s tech firms will rely more on the Greater Bay Area as a market in future, and tech hub is at a special moment in its history

Chinese EV maker Xpeng’s flying car company raises over $500 million as it aims to roll out in 2024
HT Aero, the flying car company backed by Chinese electric carmaker Xpeng Inc. and its founder, raised more than $500 million from outside investors.  The money will be put toward research and development and rolling out a new model that has the ability to operate in the air as well as on roads.   The company is planning for an official roll-out of that flying and driving vehicle in 2024.

Debt-ridden Tsinghua Unigroup meets creditors to update them on latest restructuring moves
The once high-flying conglomerate associated with China’s top university entered a bankruptcy restructuring process following a Beijing court order     Tsinghua Unigroup and its subsidiaries met creditors in a virtual meeting to update them on latest moves in restructuring process

China’s real estate crisis could threaten growth into 2022. Beijing’s undeterred
China’s growth is seriously slowing down as the country lurches from one economic threat to another. And while some of the biggest pain points appear to be easing, an unfolding crisis in real estate is emerging as one of Beijing’s toughest challenges in the coming year. The country’s GDP grew at its slowest pace in a year last quarter, expanding just 4.9% from a year earlier. Compared to the prior quarter, the economy grew a mere 0.2% in the July-to-September period — one of the weakest quarters since China started releasing such records in 2011. Disruptions due to the global shipping crisis and a massive energy crunch contributed to the slowdown.Shipping delays and mounting inventories in China have hit smaller manufacturers that are now hurting for cash, resulting in lost orders and production cuts. And factory output has been dented in large part because of power shortages, a result of high demand for fossil fuel that has clashed with a national push to reduce carbon emissions.  But some of the most significant concerns for growth are now rippling through the real estate sector, which is suffering from the energy woes along with a government drive to curb excessive borrowing

Investors see Southeast Asia’s young population driving property market recovery after pandemic
Property markets in Southeast Asia, one of the worst-hit by the Covid-19 pandemic, are poised to recover as the global economy gradually opens up    Mitbana, a joint venture between Mitsubishi and Temasek-owned Surbana Jurong, is investing US$500 million in the region in the next five years

Democracy not ‘pretext for imposing hegemony’: Chinese spokesperson
Chinese Foreign Ministry Spokesperson Wang Wenbin said Tuesday that democracy is not a slogan or a dogma, and should not be used as a pretext for imposing hegemony.

Tencent to set up privacy oversight committee, a requirement of China’s personal information law starting next month
Tencent is China’s first Big Tech company to announce plans for an independent privacy committee, a requirement of the Personal Information Protection Law     The law’s requirements are vague, but legal experts question whether a company’s own committee is sufficiently independent

In the absence of the United States, consideration should be given to the European Union as a central player in an expanded Indo-Pacific trade accord.

Will China end its deep freeze of Australia to join the CPTPP?
China’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership free-trade agreement is dead in the water unless its commerce minister, Wang Wentao, agrees to meet his Australian counterpart, Dan Tehan. Tehan has been careful not to present this as an ultimatum. When Chinese officials indicated to Department of Foreign Affairs and Trade officials that they were planning to apply, they were told it was ‘just the practical reality—that as part of the accession process, we need to be able to sit down at the ministerial level to work through it

Borrell: China’s threats to Taiwan pose risk to EU
Borrell says microchips like those produced on Taiwan are indispensable to the EU’s digital development.  The EU’s foreign policy chief has sharply ramped up the bloc’s rhetoric on Taiwan by saying China’s threats to the self-ruling island “may have a direct impact on European security” — partly because Taipei’s microchips are “indispensable” to Europe’s digital development.  In his most comprehensive policy speech yet on Taiwan — which China considers its own territory — Josep Borrell late on Tuesday raised concern over Beijing’s escalating military activities in the Taiwan Strait. Some 150 Chinese military aircraft entered Taiwan’s airspace between the national days in Beijing and Taipei, both in early October.  The speech — which marks an end of the EU’s usual diplomatic reserve over the sensitive issue of Taiwan — came just days after Chinese President Xi Jinping told European Council President Charles Michel China will “resolutely safeguard its own sovereignty,” a veiled reference to the EU’s expression of concern over Taiwan during the conversation.

Learning to manage the China threat
When US President Bill Clinton backed China’s accession to the World Trade Organization, he suggested that the move would spark profound changes ‘from the inside out’. By joining the WTO, China would not simply be agreeing to import more American products; it would be ‘agreeing to import one of democracy’s most cherished values, economic freedom’. And ‘the more China liberalizes its economy,’ Clinton predicted, ‘the more fully it will liberate the potential of its people.’

Pdf Global investment flows rebound in first half of 2021, recovery highly uneven
The outlook for infrastructure investment is strong due to COVID-19 stimulus packages, but investment in industry remains weak. And while high-income countries more than doubled quarterly FDI inflows, low-income economies suffered a further 9% decline.   Global foreign direct investment (FDI) flows in the first half of 2021 reached an estimated $852 billion, showing stronger than expected rebound momentum, according to UNCTAD’s Investment Trends Monitor released on 18 October. The increase in the first two quarters recovered more than 70% of the loss induced by the COVID-19 pandemic in 2020.  “The rapid FDI recovery and the optimistic outlook mask the growing divergence in FDI flows between developed and developing economies, as well as the lag in a broad-based recovery of the greenfield investment in productive capacity. Furthermore, uncertainties remain abundant,” said James Zhan, UNCTAD’s director of investment and enterprise. FDI flows in developing economies also increased significantly, totaling $427 billion in the first half of 2021, with a growth acceleration in East and South-East Asia (+25%), a recovery to near pre-pandemic levels in Central and South America, and upticks in several other economies across Africa and West and Central Asia. Of the total “recovery increase” in global FDI flows in the first half of 2021 of $373 billion, 75% was recorded in developed economies.  International project finance deals were up 32% in number (74% in value terms), with sizeable increases in most high-income regions and in Asia and South America. In contrast, investor confidence in industry and global value chains remains shaky. Greenfield investment project announcements continued their downward path (-13% in number, -11% in value during the first three quarters). The global FDI outlook for the full year has improved from earlier projections. The underlying trend – net of conduit flows, one-off transactions and intra-firm financial flows – will be more muted than the rebound growth rates of the first half of 2021.   However, the current momentum and the growth of international project finance are likely to bring FDI flows back beyond pre-pandemic levels.  The duration of the health crisis and the pace of vaccinations, especially in developing countries, as well as the speed of implementation of infrastructure investment stimulus, remain important factors of uncertainty.  Other important risk factors, including labour and supply chain bottlenecks, energy prices and inflationary pressures, will also affect final year results.

SEP litigation in China – implications and developments
Standard setting organisations (SSOs) are independent, not-for-profit organisations that oversee telecoms and other technical standards (eg, 3G, 5G and long-term evolution (LTE)). To develop and promote the adoption of technical standards, the SSO ‘ecosystem’ is designed to provide incentives to both the innovators and implementers of SEPs. On one hand, after the innovators disclose patents that are or may be essential to the standards, they are expected to receive a fair return of investment through licensing the SEPs. Also, because the innovators are required to declare that they are prepared to license the SEPs on FRAND terms (Annex 6, Section 6.1 of the European Telecommunications Standards Institute IP Rights Policy, 19 November 2014), standard implementers are assured that the SEPs will be available and licensed on a FRAND basis. Due to the voluntary collaborative nature of the SSO system, along with increasingly competitive telecoms markets, FRAND commitments have become the subject of numerous litigations in the past decade.     China is emerging as one of the fastest growing markets. As Chinese manufacturers have developed significantly over time, SEP litigations have also boomed in China over the past few years. In this chapter, we discuss the general trend of SEP litigations in China and dive into some implications of the latest developments with respect to economic approaches and legal procedures.

How COVID Affected the World Economy and What that Means for Business Owners

The COVID virus was one of the most recent viruses to sweep through the world. It has had a significant impact on both individuals and businesses, but not in ways that are all negative. In this blog post, we will discuss how the COVID virus affected the global economy and what it means for business owners

podcast  Rethinking fiscal policy
A look at the past, present and future of fiscal policy in the European Union with Chief economist of the European Stability Mechanism, Rolf Strauch.The pandemic and subsequent downturn have seen EU countries deploy unprecedented fiscal support, while the EU as a whole complemented this with an architectural innovation in the form of the Next Generation EU fund. As European economies begin to recover, is it time to return to pre-pandemic fiscal rules or is it time to reform them? If yes, then what should be changed and how?

China drafts new law dedicated to fighting phone and online scams that cost victims US$42 billion last year
Proposed law is being reviewed by top legislature in latest attempt to root out the menace     Scams cost victims US$42.5 billion in 2020, according to China’s public security ministry    Technology is being increasingly used in fighting cybercrime. An app developed by China’s public security ministry was once the most downloaded in China app stores.    The application, known as the “National Anti-fraud Centre,” is able to filter spam calls and warn users of incoming phone calls from abroad. It ranked as the second most popular free iOS app in China on Wednesday, according to App Annie.

China’s Shenzhou 13 Mission and Its Long-Term Impact
With three astronauts set to spend six months on China’s space station, this is China’s most ambitious human space mission to date.  As per Xi’s guidelines, China aspires to be a leader in space collaboration, space power projection, space technology demonstration, and deep space exploration and utilization, guided by strict adherence to his guiding thoughts for a new era. Under his leadership, China has embarked on an assertive foreign policy, established a separate military space service, and called for the critical importance of viewing space as part of China’s overall national security and economic power. The steady meeting of deadlines is gradually building China into a spacepower to be reckoned with in the 21st century

Alain Gillard
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