Common prosperity in China: rich or poor, people have questions about Beijing’s attempt to spread the wealth
From rural farmers to the corporate elite, China’s new economic plan aims to touch the lives of 1.4 billion people. Albeit at opposite ends of the economic spectrum, with vastly different hopes for how the strategy will pan out, the haves and have-nots are asking surprisingly similar questions.
Explainer | China’s economic buzzwords explained, from ‘common prosperity’ to ‘dual circulation’
China’s top leaders have introduced a number of new economic terms like ‘cross-cyclical adjustment’ and ‘chief of industrial chains’ in recent years. The buzzwords describe strategies to tackle everything from inequality to industrial chain inefficiency, and point to a new phase in China’s development.
China’s ‘common prosperity’ can start by addressing discrimination against migrant workers
China’s economic boom in the last several years owes a huge debt to the nation’s migrant workforce, and it’s time for that backbone to receive greater support Migrant workers earned an average monthly income of nearly half what urban residents in non-private-sector jobs earned last year President Xi Jinping visits a rural village in Jiangxi province. His new common-prosperity drive aims to more evenly distribute the nation’s wealth. Photo: XinhuaPresident Xi Jinping visits a rural village in Jiangxi province. His new common-prosperity drive aims to more evenly distribute the nation’s wealth.
The country’s state-funded school system, which is run by local governments, can sometimes make it difficult to enrol children of migrant workers, creating a huge social problem in China known as the “left-behind children” who grow up away from their parents. Many migrant workers in China also face serious challenges as they get older – more than a quarter of them are older than 50 – and traditional low-skill manufacturing jobs disappear. And migrant workers bear the brunt of production disruptions, including those caused by the coronavirus pandemic. Beijing’s recent push on internet platforms to be nicer to deliverymen and ride-hailing drivers is a positive development in the direction. It’s fair to say China owes a debt to its migrant workers, and it’s time to begin that repayment.
China will reportedly break up Ant Group’s Alipay and force creation of new loans app
Beijing plans to break up Ant Group’s Alipay and create a separate app for the fintech giant’s loans business, the Financial Times reported Monday. The plan will also result in Ant turning over the user data that underpins lending decisions to a new credit scoring joint-venture that will be partly state-owned, the Times reported, citing people familiar with the process. The latest development marked yet another sign of trouble for Ant’s business after its failed attempt to go public late last year sparked a months-long regulatory crackdown on China’s tech giants.
Alipay operator Ant Group to create separate app for lending business
The Hangzhou-based company, an affiliate of Alibaba Group, may create the separate app, according to a report by the Financial Times Company was ordered by the People’s Bank of China in April to cut consumer lending ties
China antitrust: Anti-corruption watchdog says negative impact on Big Tech will be short-lived
Beijing’s fight against monopolistic practices is ‘the best choice in the long run’, said the Central Commission for Discipline Inspection China’s tech regulator reportedly asked Alibaba, Tencent, ByteDance, Baidu and other tech giants this week to fix monopolistic issue
US mulls probe into Chinese subsidies in bid to pressure Beijing on trade
Top Biden economic advisers, including USTR Katherine Tai and Commerce Secretary Gina Raimondo, are meeting to discuss the potential probe The move comes less than a day after the US president and his Chinese counterpart Xi Jinping held a phone call
Angela Merkel and Xi Jinping discuss ‘close economic ties’ in likely last official call together
Merkel called the EU-China investment deal ‘mutually beneficial and win-win’, according to a Chinese readout of Friday’s call German readout did not mention the controversial Comprehensive Agreement on Investment; Merkel’s office says they talked about Afghanistan, economic issues
Biden Calls Xi as China-US Relationship Grows More Fraught
Biden initiated the call with Xi, the second between the two leaders since Biden took office, after lower-level exchanges proved unproductive. Biden from the start of his presidency has sought to put greater focus on China, rallying allies to speak in a more unified voice about Beijing’s human rights record, its trade practices, and its military’s increasingly assertive behavior, which has unnerved U.S. allies in the Pacific. He sees Beijing as the most significant economic competitor to the United States and a growing national security concern. But the president has also expressed hope that his long-running working relationship with Xi, one that dates back to when he served as Barack Obama’s vice president, could pay dividends in the two nations’ cooperation on certain critical issues. The two spent time on the call reminiscing about their time traveling together when they were both vice presidents, the administration official said. The White House said the leaders during the call agreed to engage “openly and straightforwardly” on issues where the nations are at odds and where there is agreement.
HNA Group finds strategic investors for airline, airport businesses as conglomerate takes steps to emerge from bankruptcy
Liaoning Fangda will be the strategic investor for the group’s flagship HNA Airlines Hainan Development Holdings will invest in HNA Infrastructure
Evergrande’s collapse would have ‘profound consequences’ for China’s economy
Investors are bracing for the increasing risk that Chinese real estate colossus Evergrande will collapse under the weight of more than $300 billion of debt. But experts say the Chinese Communist Party will have no choice but to save a company that is so emblematic of its economic growth model – and whose collapse would send shockwaves across the global economy.
China Evergrande’s restructuring ‘quasi unavoidable’ amid distress as ‘free pass’ on debt binge ends
SC Lowy has actively traded Evergrande bonds including with new investors as prices dropped to distressed levels, co-founder says Evergrande’s free pass appears to have ended as regulators slapped ‘three red lines’ on borrowing limits to contain risk: Seafarer Capital
Chinese tech giants are squeezing retailers with group buying platforms and analyst predicts tighter regulations to level playing field
Community group buying platforms, backed by Big Tech cash power, are hurting neighbourhood supermarkets and retailers, analysts say Not all are joining the bandwagon as some manufacturers seek to protect brand image and avoid price-discounting war The group purchasing platforms are not only squeezing traditional manufacturers and retailers. The cutthroat competition for consumer dollars is also forcing the players to consolidate as their model of burning cash drew criticisms. Chengxin Youxuan, the community group buying business of ride-hailing giant Didi Chuxing, has shut down some of its operations in several mainland cities, resulting in lay-offs amid fierce competition and tighter regulations. Chinese online media outlet LatePost said the headcount at Chengxin has dwindled to 10,000 now from 16,000 at the end of 2020, with daily orders dropping to six million from a peak of over 10 million, compared with about 20 million daily orders on platforms operated by Meituan and Pinduoduo. Zhang at iiMedia Research foresees Chinese authorities looking into the situation to prevent a wider fallout in the economy as growth loses momentum. Tighter regulations may be the answer to level the playing field, he said.
“Regulators need to resolve the problems by improving market rules, enhancing protections for [smaller] merchants, and working on antitrust and market entry,” he added.
Chinese regulators step up pressure on workers’ rights in internet sector
Chinese regulators summoned several of the country’s largest internet platform operators – including Alibaba, Tencent, Meituan and Didi – to a meeting to discuss their work on protecting the basic rights of “gig economy” workers, following on from government issued guidelines released in July, reports the South China Morning Post. The ten internet companies called to the meeting were directed to “play a leading role” in caring for these workers and shouldering the social responsibilities for employing them, according to a statement on Friday released by the Ministry of Human Resources and Social Security (MOHRSS). The ministry also told the companies to each draw up a timetable and road map to comply with the guidelines, including signing up “gig” (temporary) workers to contracts. The new guidelines, which were jointly issued by the State Administration for Market Regulation (SAMR) and six other government agencies, are meant to protect the basic rights of “gig” workers such as delivery and ride-hailing drivers. Their rights include being provided a basic income, work safety, food safety, a decent working environment and access to insurance coverage.
Big Tech’s ‘walled gardens’ start to crack as Tencent vows to follow Beijing’s order to unblock links to rivals
The crackdown on link-blocking is part of a six-month internet clean-up campaign by MIIT which began in July China’s internet industry has historically been characterised by ‘walled gardens’, where major companies built barriers around their ecosystems Tencent has previously been cautious about platform opening. Martin Lau, president of Tencent, said last month that opening up would give rise to questions about spamming, content piracy and commercial policy issues. “We feel very complicated questions need to be discussed and resolved over time. It’s really not the most important priority for our vision,” said Lau. “We want to handle these questions in a very cautious way.”
‘Ignore China at your peril’: Ad mogul Martin Sorrell on Beijing’s tech crackdown
Beijing has cracked down on multiple companies this year, prompting a sharp sell-off in Chinese stocks. Regulators are specifically clamping down on areas like gaming and data-sharing. China’s latest actions have raised “significant issues” for Sorrell’s S4 Capital, a digital advertising and marketing company that he founded in 2018, and other companies that are looking to expand in China.Last week, billionaire George Soros criticized Blackrock, the world’s largest asset manager, for its investments in China.
China’s former central banker blasts venture capital for fanning ‘winner takes all’ in digital economy
Cash-burning strategies funded by venture capital firms have led to anticompetitive behaviours, says China’s former central bank governor Zhou Xiaochuan The comments echo Beijing’s call to prevent “the disorderly expansion of capital” One of the main ways that businesses try to achieve that is by “burning money” to offer users discounts on services, Zhou said, citing bike sharing as an example. The industry saw explosive growth in China about five years ago, with tech giants and VCs making huge investments into start-ups that aggressively crammed cities with colourful rental bikes and wooed users with deep discounts. Their cash-burning tactics proved unsustainable , however, leaving behind mountains of abandoned bikes that became scrap metal. Zhou said the use of massive price subsidies and “distorted capital” by these start-ups led to “huge social waste”. he comments came as Chinese regulators have ramped up scrutiny of Big Tech since last winter, when the country’s top leadership called for measures to “prevent the disorderly expansion of capital”. Authorities have issued new laws and regulations that can be used to target anticompetitive behaviours, as well as questionable data privacy and security practices, commonly carried out by Chinese internet giants over the years.
Zhou suggested that the excess money supply created by quantitative easing has boosted the flow of funding and contributed to the problems that Chinese regulators are now trying to address, including anticompetitive and monopolistic practices. Once companies have to “compete at real cost”, he said, the industry landscape could take three to four years or longer to settle, compared with one to two years when companies operated under distorted capital. Zhou called for companies to uphold “a moral bottom line”. “Investment banks and capital should not blindly expand or encourage improper mergers, but should do their best to do the right thing,” he said.
Chinese tech, EV stocks fall on regulatory fears; property developer Soho China drops 35% on failed deal
Hong Kong-listed shares of Alibaba dropped 4.23% following a Financial Times report that Beijing wants to break up Ant Group’s Alipay and force the creation of a separate loans app. Chinese electric vehicle stocks also fell after the country’s industry minister said consolidation in the sector is needed as there are “too many” EV makers in China. Chinese property developer Soho China plunged 34.57% after a takeover deal by Blackstone Group fell through.
China has ‘too many’ electric vehicle companies, minister says
China has “too many” electric vehicle (EV) makers and the government will encourage consolidation, Industry and Information Technology Minister Xiao Yaqing said on Monday. The minister also said China would improve its charging network and develop EV sales in rural markets. The government’s promotion of greener vehicles to cut pollution has prompted electric car makers such as Nio, XPeng and BYD to expand manufacturing capacity in China.
Xiaomi talks electric vehicles with state-owned carmaker FAW Group as it pursues smart car ambitions
Xiaomi held an ‘in-depth’ talk with FAW Group last week in Jilin, where the electronics brand wants to bulk up electric car cooperation The world’s second-largest smartphone maker jumped into the EV market this year, investing in multiple autonomous driving companies
China’s carbon neutral goal: Beijing sets ambitious hydropower storage goal to bolster wind, solar energy growth
Beijing aims to double pumped storage hydropower generating capacity in five years and double it again by 2030 Rapid expansion will help China meet its carbon peaking and carbon-neutrality goals, NEA says
China prepares to test thorium-fuelled nuclear reactor
If China’s experimental reactor is a success it could lead to commercialization and help the nation meet its climate goals.
Global shipping lines have their best year since 2008 as economic reopening after Covid-19 spurs demand for goods
The shipping sector has seen bumper earnings because of two main reasons – rising demand for goods and disruption to global supply chains, as the pandemic has limited the industry’s ability to move goods quickly Container shipping costs have risen more than 500 per cent year on year; it now costs US$14,287 to haul a 40-foot steel box from China to Europe
China worse than India on regulatory woes, state-owned enterprise skew
Domestic markets up 22% this year, MSCI China down 12%
Qianhai, with its promise of integration, is an opportunity Hong Kong would be wise to grasp
Qianhai’s expansion, the result of a sustained push to develop Shenzhen and the Greater Bay Area, underlines Beijing’s preference for slow and steady, baby-step reforms With its potential role in the development and adoption of regulations and institutions that can integrate the region as a whole, the Qianhai plan is a step in the right direction
War With China? The Economic Factor That Could Trigger It
The Pentagon undoubtedly draws up various scenarios for how conflict between China and the U.S. might develop. Most of them would involve a Chinese move against Taiwan. But Taiwan and China have co-existed in intense but bloodless antagonism for seven decades without tipping into real war. The crucial question is: What would trigger an actual Chinese military adventure? Are we complacent? Media descriptions of the political and economic tension between the U.S. and China often favor military metaphors – “trade wars,”“wolf warriors” – attacks, assaults, attrition, technological “arms races” etc. – all of which bring a certain energy and flair to stories covering what are often rather dry bureaucratic disagreements (over tariff policies, currency exchange rates, audit standards). The press coverage can sound over-excited, the “threats” are often exaggerated – but eventually the news is consumed with the morning coffee, digested, and discounted back to normalcy. We are used to it. Scare headlines sell newspapers. Is there a risk that Metaphor could morph into Reality? Is open military conflict unthinkable? It is easy to assume that we are all too grown-up to let mere trade disputes get out of hand. Or we may assume that “globalization” and economic interconnectedness – “interlocking interests” – will defuse any real possibility of war. Maybe so. I myself make these assumptions. It helps me to sleep more easily. However, there is History to consider, in the form of the Angell thesis. Norman Angell (1872-1967) was “an English Nobel Peace Prize winner, a lecturer, journalist, author and Member of Parliament.” He led a fascinating life, but is remembered today for his book, published in 1909 and titled with unintended irony, The Great Illusion. Angell’s premise was that because of what we would now call globalization, War in Europe had become economically impossible – “Angell’s primary thesis was that ‘the economic cost of war was so great that no one could possibly hope to gain by starting a war the consequences of which would be so disastrous.’ War was economically and socially irrational…the economic interdependence between industrial countries would be ‘the real guarantor of the good behavior of one state to another.’” – Wikipedia Of course, the sequel didn’t play out that way in 1914, or in 1941, and it should be a caution to our complacency in 2021.
U.S.-China Business Relations: Black And White Or Many Shades Of Gray?
First: Continue to build the positive elements. Take current U.S. exports. I have just published a book, “The Smart Business Guide to China E-Commerce,” which shows how businesses around the world can win in China e-commerce Second: Don’t mimic China’s economic nationalism. China has held an internal debate between economic rationalism and economic nationalism for over 40 years, with nationalism gaining under President Xi Jinping. But this might be as much good news for the U.S. as a competitor. Economic nationalism means China might lurch into unfair trading practices and subsidize certain industries. But it also means China can misallocate resources, take on debt, reward rent-seekers and foster economic inefficiency Third Let’s do away with the rancor. Friction is a clumsy management tool and has the habit of feeding on itself. Push back when we must, build areas of collaboration where we can, and do it with as many friends and allies as possible. The utility of diplomacy is not to get along with friends, the utility is that it gives us architecture to deal with nations that are not intrinsically friendly. Denigrating China can play to a domestic audience at times, but it can also be corrosive and makes it less likely to attain the desired outcome. I don’t think a country has ever been insulted into agreement. Let’s communicate displeasure when it might lead to a better outcome, but let’s not adopt it as an obligatory operating premise. The ultimate working relationship between China and the U.S. will be defined over the coming years of give and take. By building out the positive aspects of the relationship, by playing to our strengths, and by avoiding gratuitous hostility, the U.S. will be positioned to manage for the best outcome.
The Perennial Standoff | Book Review — The Long Game: How the Chinese Negotiate with India by Vijay Gokhale
The ‘long game’ between the Asian giants is still in progress and the contours of Delhi’s comprehensive strategy towards China remain blurred.
The Sino-US power struggle is not China’s to win, but the West’s to lose
US military adventurism and predatory capitalism are allowing Beijing to entice nations away, as China’s rise intersects with America’s decline To turn things around, the US and its allies need a radical shift in their foreign policy thinking
Opinion | What The U.S. Withdrawal From Afghanistan Means For Taiwan
There are many reasons to fear an impending Chinese attack on Taiwan: Intensified Chinese aerial activity. High-profile Pentagon warnings. Rapid Chinese military modernization. President Xi Jinping’s escalating rhetoric. But despite what recent feverish discussion in foreign policy and military circles is suggesting, the U.S. withdrawal from Afghanistan isn’t one of them
Fitch upgrade of ‘Taiwan, China’ draws fire from Taipei
In an announcement upgrading Taiwan’s economic outlook, Fitch Ratings referred to the self-ruled island as a part of China for the first time Taipei expressed ‘deep regret’ at the name change and asked the ratings agency to revert to its previous practice of just saying ‘Taiwan’
China and Australia urged to hold fire after Nazi Germany comparison makes Beijing slam ‘toxic rhetoric’
Australian defence minister slams ‘increasingly bellicose’ Chinese officials, prompting fierce criticism from Beijing of US-led hyping of ‘China threat theory’ Analysts urge China to understand regional nervousness, while cautioning Australia on the pitfalls of making an outright adversary of Beijing
Why China’s attack on Nato ‘double standards’ suggests it will continue to build up nuclear arsenal
The alliance’s head Jens Stoltenberg accused Beijing of increasing its firepower ‘without constraint’ and urged it to sign up to international arms controls But Beijing hit back by criticising Nato’s nuclear sharing arrangements and said the US and Russia should lead the way by disarming
webinaire How should the United States deter China?Thursday, Sep 23, 202110:00 AM EDT – 11:00 AM EDT
The 2018 National Defense Strategy was the first time the Pentagon identified China as the organizing focus of U.S. defense policy. Elbridge Colby, former deputy assistant secretary of defense for strategy and force development, was a key architect of that document. In a new book, he now lays out a vision for how the United States should approach China in the coming years, with special consideration for how the U.S. military might win a war with China in order to deter such a war from ever taking place.
On September 23, Brookings will host Colby for a virtual event to discuss his approach to the long-term challenge of deterring China.
Chinese researchers aim to make a small splash for robots sent to mine the bottom of the ocean
Robots are perfecting their diving skills in preparation for the serious business of tapping into mineral resources in the seabed One environmental protocol China proposes requires underwater drones to monitor mining robots and ensure no undersea environmental damage
Controlling hearts and minds: China cracks down on content algorithms to make sure the Communist Party is still boss
Jinri Toutiao relied on computer algorithms to recommend interesting and important articles to readers, not reporters or editors Less than a decade on, Zhang’s news aggregator would grow into ByteDance, the world’s first hectocorn, a private company valued at US$100 billion
Xi’s cult of personality is a danger to China
This should be an alarm for modern China. Xi’s state-led veneration has echoes of the personality cult around Mao Zedong and, with it, the famines and terror unleashed by Mao during the Great Leap Forward and the Cultural Revolution. From Stalin’s Russia to Romania by Ceausescu For Kim’s North Korea and Castro’s Cuba, the combination of a cult of personality and Communist Party rule is often a recipe for poverty and brutality. These comparisons may seem implausible, given the wealth and sophistication of modern China. The country’s economic transformation in recent decades has been remarkable, prompting Beijing to promote a “China model” from which the world can learn. But it is important to make a distinction between the “China model” and the “Xi model.” China’s reform and opening-up model, established by Deng Xiaoping, was based on the rejection of the cult of personality. Deng urged officials to “seek the truth from the facts.” Policy should be guided by a pragmatic observation of what works, rather than the grandiose statements of Chairman Mao. But in the Xi era, the Chinese Communist Party has once again embraced a cult of personality. He incorporated Xi Jinping’s thinking into his constitution at a congress in 2017. This was an honor previously only bestowed on one other leader, while he was still in power: Mao. Xi’s creation of a cult of personality and his moves to become, in effect, “ruler for life” are part of a disturbing global pattern. In Russia, Vladimir Putin is also pushing for constitutional changes that will allow him to remain president until well into the 1980s. Donald Trump used to enviously “joke” that the United States should emulate China’s abolition of presidential term limits. But the United States has checks and balances, which have so far succeeded in thwarting Trump’s worst instincts. In a country like China, without independent courts, elections, or free media, there are no real limitations to a cult of leadership. That is why Xi is now a danger to his own country.
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