China Press Review – October 9, 2019

Press review

China’s economic miracle has a secret ingredient hiding in plain sight: unbalanced growth
Like the US, China’s economic dynamism rests on the imbalance between the runaway successes of its coastal provinces and the laggards along its northern rust belt. The crucial difference? Beijing redistributes the fruits of economic success

China open to partial trade deal despite tech blacklist
Negotiators heading to Washington for talks starting Thursday aren’t optimistic about securing a broad agreement.

China open to partial US trade deal as long as Donald Trump does not impose new tariffs, official says
Official signals that Beijing is hoping to limit the damage to its economy but does not expect final deal to be reached in latest round of talks

China-US trade war may cost US$700 billion by 2020 in synchronised global slowdown, new IMF chief says
Global growth rate this year is expected to slow to lowest rate in a decade, new IMF head Kristalina Georgieva says    Global corporate debt at risk of default in event of global downturn would be higher than during global financial crisis, the economist warns

US-China trade war may have ‘milder than feared’ effect on global growth, Fidelity says
No ‘imminent risk’ of a global recession next year, according to Fidelity’s Wen-Wen Lindroth   Trade war drag on business, consumer confidence key indicator to watch, Fidelity says

The market is losing hope for a US-China trade deal — 2 experts weigh in
It is highly unlikely that a comprehensive U.S.-China trade deal emerges from this week’s negotiations, experts tell CNBC.    New developments this week, including the NBA controversy and the blacklisting of some Chinese companies, are adding complexity to the discussions, they say.  “For the first time, politics, rather than just economics, are front and center in the trade discussion,” says Jeff Moon, former assistant U.S. trade representative for China.

Trade talks: US and China still too far apart
Among all the negative reports about the forthcoming US-China trade talks, some positive signs have emerged as well. But there’s scant evidence that the two sides are willing to change their positions enough to break out of the current deadlock

China offering extra U.S. agriculture purchases: FT
Chinese officials are offering to increase annual purchases of U.S. agricultural products as the two countries seek to resolve their trade dispute, the Financial Times newspaper reported on Wednesday, citing unnamed sources.

Can Your Business Afford/Stomach the China Risks?
Two months ago, Steve Dickinson wrote a post listing his top 14 “PRC/U.S. trade war wild cards,….at least for today.” It is interesting to look again at those risks to see which have already come true, in just this short time. Overall, the risk of doing business with China has gone up substantially in just the last two months — heck, it’s gone up substantially in just the last two days. Many are no longer asking whether China is too risky; they’ve already decided that it is.

The pains of a prolonged US–China trade war
Reality once again demonstrates that in a trade war surplus countries like China hold a disadvantage against those with deficits such as the United States. But with little to show for its efforts, it is not in the best interests of the United States to fight with China. The best option for both sides is to reach an agreement. US President Donald Trump’s trade war has not achieved its original objectives. First, the US total current account deficits will remain massive this year. The politically sensitive goods trade deficit with China in the first half of 2019 registered US$167 billion. Second, the trade war has failed to impede China’s technological enhancement. Despite the Chinese government and media renouncing the slogan ‘Made in China 2025’, China continued boosting investment and innovation in the strategic industries listed under the initiative. Geo-economic factors are also intensifying downside risks to the US macroeconomic outlook, as shown by the recent economic indicators.  But China still has more palpable losses. US tariffs have slowed China’s GDP by an estimated 0.6 per cent. The trade war also affects GDP through indirect channels. It has driven dozens of firms to shift their supply chains from China to ASEAN countries and deterred Chinese investment in the United States. Chinese global investment is decreasing, but investment in the United States has shrunk more significantly from US$24 billion in 2017 to US$9 billion in 2018 and US$3.2 billion in 2019.

European Commission’s next leaders take tough tone on China
Incoming senior members of the EU’s executive branch show willingness to confront Beijing during hearings to confirm their appointments   Chinese investments in Europe among the matters set to come under greater scrutiny when new executive takes over in November

Chinese AI project under review at MIT after US blacklists tech unicorn SenseTime
Hong Kong-based SenseTime, the world’s most valuable AI start-up, is among eight hi-tech companies blacklisted over alleged human rights violations

The US unemployment rate is enviable. It’s consumer confidence America needs to worry about
The latest figures suggest tensions over the trade war with China are starting to hit home. With more tariff trouble brewing on the European front, amid an already slowing economy, Fed officials may be forced to consider more forceful monetary easing

China’s September new loans seen rising, more policy easing expected: Reuters poll
China’s new bank loans likely rose in September but other key gauges of credit growth remained lackluster, a Reuters poll showed, reinforcing expectations Beijing needs to deliver more support to stabilize the economy as trade pressures build.

China’s De-Dollarization amid Trade War: Gold’s Upside?
As trade tensions rage on, China continued buying gold for the tenth consecutive month in September. The country also continued its de-dollarization bid.

Why Washington Shouldn’t see Vietnam as the Next China
In a recent Senate Finance Committee report, U.S. Trade Czar Robert Lighthizer opined that Vietnam must take action to curb its growing trade surplus with the U.S., including removing barriers to market access for U.S. companies.

China leads emerging economies in latest global competitiveness ranking: WEF report
China is by far the best performer among the five BRICS economies in terms of competitiveness, said the World Economic Forum (WEF) Wednesday in the latest annual report assessing the productivity and long-term growth of 141 economies.

Singapore replaces US at top of World Economic Forum competitiveness rankings
Hong Kong, the Netherlands and Switzerland made up the rest of the top five, according to the WEF survey published on Wednesday   The WEF also said central banks must take some blame for weak productivity, as their trillions of stimulus keep zombie firms alive

Why luxury goods are so expensive in China
The luxury market in China is still thriving despite high prices and issues with counterfeiting. By 2025, Chinese consumers will account for 40% of global spending on luxury brands, according to McKinsey & Company’s China Luxury report. But as younger consumers begin to make up more of luxury purchases, luxury fashion houses will have to keep evolving to maintain success in this market.  “It’s really important to be able to cater to the younger generations,” Flora said. “Luxury shoppers skew much younger in China. They’re following their own sets of fashion trends and celebrities so brands need to incorporate those into their digital marketing strategies.”

“Important Tips” for Protecting Your IP from China
All of these tips, all of these recommendations that I provided, by and large apply to all these destinations. Registering your IP is something you need to do no matter where you are and no matter where you are it makes sense to work with local law enforcement. Something that is also true across the board is the need to protect your own facilities. It may be the case that you’re manufacturing in a country that doesn’t have much of a counterfeiting problem

Nio’s aggressive promotions drive surge in Q3 sales
After a number of setbacks in the first half of the year, Nio may be poised for a rebound. The beleaguered electric vehicle (EV) maker said on Tuesday that car deliveries in the third quarter exceeded the top end of its guided range

6 Beauty Industry Trends in China Brands Must Know
The modern Chinese beauty consumer is no stranger to switching brands, as they’re less loyal than older generations. This analysis is supported by the China Insight Report: The New Face of Beauty in China, which was produced by Reuter: Intelligence. The luxury intelligence platform “performed qualitative focus group discussions, smartphone-enabled ethnographies, big data analytics, and a quantitative online survey of over 300 consumers across first-tier cities Shanghai, Beijing, and Guangzhou.” The results concluded that over 60 percent of the respondents were very curious about niche brands, so despite their established record of credibility, big international retailers should be wary of this characteristic. But there are other difficulties that international brands need to overcome in China today, so they must understand the following trends:

How China is fueling the growth of beauty brands and boosting luxury players
China has quickly gained on the United States in beauty sales, and is set to overtake it by 2023.   L’Oreal, Estee Lauder and Shiseido are three prestige companies benefiting from growth in China.   E-commerce helps the companies reach customers outside of China’s most developed cities.

‘Golden Week’ spending surged on mobile payment platforms amid cooling economy
Despite the cooling economy, Chinese consumers aren’t holding back when it comes to holiday shopping. Domestic third-party payment platforms reported robust growth in transaction number and value during China’s week-long National Day holiday.

Relocating China’s pig industry could have unintended consequences
Writing in Nature Sustainability, an international group of agriculture and environmental scientists warn that the Chinese Government’s desire to relocate its pig industry from the South, in order to protect water quality could have unintended detrimental consequences.

China flys in 900 Danish breeding pigs to replenish herd
One of China’s top pig farming companies imported 906 breeding pigs from Denmark this week, said China’s customs on Wednesday, in the first import of live pigs in a year.    The animals bought by C.P. Pokphand Co, China’s fifth largest pig producer, arrived on a charter flight in August and spent over a month in quarantine in Xiangyang city in central Hubei province, according to a report on the website of China’s General Administration of Customs.

China’s Power Plant Emissions See ‘Significant’ Drop, Study Suggests
Researchers attribute the reduction to a national policy introduced in 2014 to curb polluting industries.

China to help ease fiscal strains on local governments amid tax cuts
China’s cabinet unveiled steps on Tuesday to ease growing fiscal strains on local governments, amid a push to cut taxes to support the slowing economy.   China will shift some central government tax revenue to local governments’ coffers when conditions are appropriate, the State Council said in a statement

China relaxes grip on mortgage rates and Shanghai jumps to cut, showing challenges in curbing speculation
China’s central bank has introduced a new mortgage rate interest system, granting banks greater autonomy in setting the prices they can charge clients   Policy shift is part of an effort to implement a more market-oriented lending system

Hang Seng Bank sees biggest fall in 2 months as economic weakness, virtual banks weigh on banking outlook
Hang Seng ends down 0.56 while China stocks eke out small gains   Budweiser APAC closes up 2.8 per cent, meaning it is up nearly 19 per cent in just over a week since its debut

China’s stocks regulator bares its teeth, ejecting drugmaker Changsheng from Shenzhen bourse for faking vaccine data
Company found to have falsified production and inspection data, and to have made ineffective vaccines in July last year     Shares will trade for a final 30 trading days before stock is officially expelled on November 26

Why Informal Workers Are Opting Out of China’s Welfare System
As China’s population continues to age, the country must increase the number of people paying into the system. But many workers in the informal sector aren’t interested.

Why Hong Kong’s status as a global financial centre is perfectly safe and secure
Hong Kong is irreplaceable in the Asia-Pacific and hosts a complex and pivotal network of firms and financiers that has survived wars, revolutions and economic depressions    Importantly, Beijing firmly supports Hong Kong as China’s global financial centre and will never let order in the city break down completely

Hong Kong companies ‘resilient’, but protests present new risks, challenges, S&P Global Ratings warns
The effects on infrastructure companies, such as MTR Corporation and the Airport Authority Hong Kong, are ‘more direct and bigger’ says report   Companies in ‘unfamiliar territories’ of increasingly ‘complex sensitivities that could lead to unforeseen risk, rating agency says

Hong Kong’s protest-weary emigrants are ditching America as top escape route as the welcome mat looks less appealing
US is already home to more Hongkongers than any country outside mainland China    But anti-immigrant rhetoric, gun violence and impending changes to ‘investor visa’ programme have encouraged Hongkongers to consider Australia, Canada, Singapore and Taiwan

China has pulled ahead of India on far more than the economy
In economic terms, it’s around a dozen years ahead of us, but the gap is much larger when social indicators are considered

View: Why Delhi should be wary of China’s renewed position on Kashmir
Is China trying to use Kashmir as a bargaining chip and ask something in return for softening its stance on it?

China plans to restrict visas for U.S. visitors with ‘anti-China’ links
China is planning tighter visa restrictions for U.S. nationals with ties to anti-China groups, people with knowledge of the proposed curbs said, following similar U.S. restrictions on Chinese nationals, as relations between the countries sour.

US’ visa sanction on Chinese officials over Xinjiang is ‘made-up pretext’, Beijing says
Xinjiang ‘does not have the so-called human rights issue’, Chinese embassy in the US tweets after visa restrictions are announced    Measures in Xinjiang ‘supported by all 25 million people of various ethnic groups’ in the region, embassy claims

Why the 13th round of US-China trade war talks may well be unlucky for some
Far from making America great, Trump’s tariffs have brought US manufacturing to its knees and failed to address the challenges of doing business in China. Going down that road will only produce a deal of little substance

China is reportedly reluctant to agree to a broad US trade deal with talks set to restart
Chinese officials are growing hesitant to pursue a broad trade deal with the U.S. in negotiations set to begin this Thursday, people familiar with the matter told Bloomberg News.

With the party over, Beijing needs to see progress on Hong Kong, US trade talks
The contrast between Beijing’s lavish National Day celebrations and the chaos on Hong Kong’s streets is a fitting metaphor of the challenges China’s leaders face On both the trade war and Hong Kong, it might be time for Beijing to take a more flexible approach

Why Trump’s threat to cut China from US capital markets makes no sense
The administration is reportedly considering delisting Chinese stocks from US markets, but this would only push more belt and road business onto the Hong Kong and London exchanges, leaving New York out in the cold. Who exactly is Trump trying to punish?

Trump impeachment may rescue economy by forcing China trade deal, Wall Street
“As this [impeachment] inquiry proceeds, President Trump will be eager, if not desperate, to redirect the news flow,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “He will probably be more willing to agree to a “mini-deal” or de-escalation with China, so there’s a potential economic upside to the impeachment process – at least in probability terms,”

Kudlow says there could be some ‘positive surprises’ out of next week’s China trade talks
“There could be positive surprises coming out of these talks,” Kudlow said. “I’m not predicting. I’m just saying don’t rule that out. There could be some positive surprises.” Trade negotiators from the U.S. and China are set to resume trade negotiations on Oct.10 in Washington. However, Kudlow said the U.S. strong support of Hong Kong’s protests for democracy could have a negative impact on the talks.

China’s currency pain is Germany’s gain
A devaluation of China’s currency during the ongoing trade war with the US may lead to more prosperity for Germany and the rest of the world, except the United States. But not much, an ifo report suggests.

Europe has to choose a side in the U.S.-China rivalry
Europe has been at the center of nearly every great-power competition of the last 500 years, either as home to one or both of the protagonists or as the decisive theater of struggle. No longer: The world wars of the last century saw to that. Yet Europe’s nations are still capable of playing a critical role in the defining contest of this century: that between China and America. Or, they can allow the continent to be reduced to a weak, divided region that struggles to make its influence felt. China desires the latter, and has a strategy for achieving it. The U.S. should prefer an active and capable set of European allies, but its policies have too often played into Beijing’s hands.

EU-Japan take on China’s BRI with own Silk Road
The EU and Japan have signed an infrastructure deal to boost connectivity between Europe and Asia. The pact is being described as the EU and Japan’s riposte to China’s Belt and Road Initiative (BRI).

How the EU can tidy up Eurasia’s tangled web of infrastructure projects
From China’s belt and road to India’s Asia-Africa growth corridor, there is wasteful duplication and rising geopolitical tension The EU should aim to unite nations under a connectivity code of conduct, expand a common umbrella of finance and set up a forum for the private sector and civil society to talk about connectivity

Can Kazakhstan’s China-backed financial hub boost belt and road funding?
New stock exchange in Kazakh capital backed by Shanghai and Nasdaq exchanges and Goldman Sachs, among others But analysts unconvinced new financial hub can tap international investor money without greater transparency of project details

China’s September forex reserves fall to $3.092 trillion
China’s foreign exchange reserves fell more than expected in September despite the yuan rebounding from its biggest monthly drop in 25 years in August amid a cooling domestic economy and rising Sino-U.S. trade tensions.

Budweiser wants to take on China, the world’s largest beer market where local brews rule
After listing its Budweiser APAC in Hong Kong last week, AB InBev said it will be looking to expand in Asia — especially in China, South Korea, India and Vietnam. However, local beers are still dominant in Asia. China is the world’s largest beer market by sales but firms have found it challenging amid fierce competition between local brewers and global beer giants.

China’s consumption upgrade props up shrinking car market with locally made premium models flying off the assembly line
Sales of 10 premium brands, which includes BMW, Mercedes-Benz, Audi, Volvo and Lexus, have risen in a steeply declining market Overall car sales in China have fallen 11 per cent in the year’s first eight months to 16.1 million units

Analysis: How China is fuelling Volkswagen’s electric dream
Volkswagen’s ambitious EV plans rely heavily on China, which poses major challenges The rapid expansion of Volkswagen’s new electric ID range will ramp up in 2020 with the launch of two SUV-based models – both of which will be offered exclusively in China.

French carmakers fight to find their footing in China
When French automakers jumped into China, they thought Chinese consumers’ appetite for French design and luxury goods would translate into booming car sales. That hasn’t been the case. After several years of growth in China, sales at PSA Group and Renault have dropped sharply. True, the slumping Chinese economy has affected sales at almost every automaker, but Renault and PSA were down 62 percent overall in the first half compared with the same period last year and hold just a 0.7 percent market share.

How Chinese money is driving Southeast Asia’s tech start-up scene
Chinese investment in the region’s start-ups ballooned to US$1.78 billion in the first seven months of this year, an eightfold increase A saturated tech scene in China and Southeast Asia’s maturing mobile economy are driving the influx of cash

New soybean could make China more self-reliant during trade war
Scientists create Henong-71, whose seeds produce nearly four times the average yield for the plant in China A drop in imports from the US left a shortfall for the world’s biggest soybean consumer

Are Chinese consumers spending less? Rising instant noodle sales revive debate
Sharp recovery in sales renews talk of whether people are tightening their belts because of economic worries Government argues that strong sales are a sign of upgraded consumption

New projects offered to China as part of CPEC: Pak Minister
Pakistan would engage China at the highest level for talks on several big projects in the fields of hydropower, oil refinery and steel mills as part of the China-Pakistan Economic Corridor (CPEC), a Minister said here.

China is too big to be isolated
A TPP for digital trade is the answer to the Huawei dilemma

How China is aiming for a state of technological independence
Rather than hampering semiconductor innovation in China, is America’s technology policy actually boosting it?

Why factories leaving China aren’t going to India
Vietnam seems to be the consensus pick for winner of the U.S.-China trade war, as Chinese and other manufacturers shift production to the cheaper Southeast Asian nation. If there’s a loser, at least in terms of missed opportunities, it may be the countries of South Asia.

The Secret Behind the Most Profitable Fashion Media in China — GQ Lab
According to Newrank, the WeChat ranking agency, GQ Lab now has over 800,000 fans with an equal balance of male and female readers in their early 20s and 30s, who are, perhaps, struggling to find their place in the world and seek content that reflects their version of reality

The Secret Behind the Most Profitable Fashion Media in China — GQ Lab

China breeds giant pigs the size of polar bears as African swine fever causes pork shortage
Breeders adopt ‘bigger is better’ philosophy in response to a shortage expected to continue into 2020 The country’s hog herd has been decimated by the epidemic

University emails reveal breadth of FBI campaign against researchers’ ‘wholesale theft’ of trade secrets for China
Agents have lectured at seminars, briefed administrators in campus meetings and distributed pamphlets with cautionary tales of trade secret theft Senior FBI officials said they were not encouraging schools to monitor researchers by nationality but instead to take steps to protect research

Generation Z in China the new focus of luxury fashion brands, which woo them with sneakers, streetwear and celebrities such as Fan Chengcheng
Shoppers in China born since the mid-1990s spend more than counterparts in other markets, are nationalistic and prefer to buy products made in China Getting their custom is a challenge for Western luxury brands, which are turning to athleisure and collaborations with Chinese celebrities to reach them

Tycoon Zhang Zhenxin, owner of troubled Chinese financial conglomerate UCF Group, dies aged 48 as company struggles with mountain of debt
Zhang, 48, died in London last month due to multiple organ failure, alcohol dependence, his company said in WeChat post

More than half of world’s wealthiest families expect a recession next year, survey by UBS and Camden Wealth shows
Asia-Pacific family offices enjoyed portfolio returns of 6.2 per cent until end of second quarter this year, highest of any region ‘Business as usual’ for UBS’s Hong Kong family office despite protests

China’s Coal Power Giants Seen Charging Ahead Into Climate Risks
China’s top six listed coal-power generators are failing to respond to climate change, lagging international peers and leaving them misaligned with Beijing’s broader environmental policies, according to a sustainability and governance risk consultant.

China is more focused on trade talks than Donald Trump’s attack on Joe Biden, observers say
Despite US president’s call for Beijing to investigate a political rival, China is more concerned about making progress in the next round of negotiations, analysts say China also keen to maintain its position of not interfering in other nations’ domestic affairs, academic says

China Loves News About Trump’s Controversies. Not This Time.
Since President Trump called for China to investigate the Bidens, Chinese media and officials have been notably muted. They have reason for caution, said experts.

HSBC to axe jobs in Europe, high-paying roles amid more cost cutting
Bank to still hire for ‘revenue-generating’ roles as it grows in Asia Cuts on top of plan to eliminate less than 2 per cent of workforce, reduce wage costs by 4 per cent over the course of 2019

Club Med, Fosun betting on Xi’s ambition of 300 million skiers before 2022 Winter Olympics to catapult resorts
Club Med to open equal number of ski and beach resorts over next few years Skiing holidays are more profitable for company than beach resorts, executive says

Houston Rockets’ Daryl Morey backtracks after ‘stand with Hong Kong’ backlash, saying he did not intend to offend China
Daryl Morey says he has now had the opportunity to ‘hear and consider other perspectives’ since his first tweet results in an exodus of Rockets’ sponsors Morey tweets an image depicting ‘fight for freedom, stand with Hong Kong’ before the Chinese Basketball Association ceases cooperation with the Rockets

Huaren or huaqiao? Beijing respects the difference and is not coercing foreigners to toe its line
Beijing has taken great care to tailor distinct policies for both its citizens overseas and Chinese descendants of foreign nationality The former are subject to China’s domestic policies while the latter come under foreign affairs, and Beijing is careful not to blur the distinction

Beijing confident Carrie Lam can restore order to Hong Kong, Chinese ambassador to Britain says
Unrest in city has ‘escalated to a dangerous level’, but leader has central government’s ‘full trust’, envoy Liu Xiaoming says Chief executive’s decision to introduce ban on wearing masks shows she is still ‘in control’, he says

Hong Kong and Beijing: A Tale of Two Cities
However, both the Hong Kong government and Beijing are wary of foreign response. This is due to the need to maintain Hong Kong’s separate economic status as well as its role as a link to overseas Chinese. In addition, the PRC leadership is greatly concerned that, for all of its charm offensives in the region, the views on China on the part of its Asian neighbors have been becoming steadily more negative. Whatever happens next, as a result of the current wave of protests, two illusions are gone: First, the foreign one that Hong Kong people are only interested in money. Second, the mainland one that Hong Kong would remain a separate territory where they could safely store their money. It is perhaps the even more intriguing one.

Hong Kong and Beijing: A Tale of Two Cities

How the flames of Hong Kong’s out-of-control protests are being fanned by a rigid mindset, leaving no place for those with an open mind
Like a political rally, the Red Guards or a heated football match, the protests have been taken over by a frenzied mindset. It’s no longer clear what the protesters’ goal is, but it is obvious that they are doing lasting damage to Hong Kong

Is China’s DF-17 hypersonic missile a serious threat to the United States?
An American general warned last year that the US does not have an effective defence against such weapons But with the PLA Rocket Force set to deploy the missile for the first time next year, Ankit Panda looks to dispel the hype

‘South Park’ Scrubbed From Chinese Internet After Critical Episode
After the “Band in China” episode mocked Hollywood for shaping its content to please the Chinese government, Beijing has responded by deleting all clips, episodes and discussions of the Comedy Central show.

China will use economic pain to hinder US’s Pacific missile deployment
Beijing’s leverage looms over American allies like Philippines and South Korea “The military balance in the Pacific is going in the wrong direction,” said former U.S. defense department strategist Elbridge Colby recently. Following the dissolution of a landmark arms control treaty in early August, the U.S. is now eyeing where it might field missiles as a counterweight to China’s sizable arsenal.

China and Taiwan clash over Wikipedia edits
Ask Google or Siri: “What is Taiwan?” “A state”, they will answer, “in East Asia”. But earlier in September, it would have been a “province in the People’s Republic of China”.

Alain Gillard
Information Officer
Service Asie Pacifique
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1080 Bruxelles
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