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USCBC in the News
22. SCMP: Debate in US over trade deficit with China heats up
Chinese News Sources
Notables
26. FT: Official China union raises stakes in Walmart closure programme
27. WSJ: Top J.P. Morgan executive in China expected to resign
28. Reuters: GM's global recall includes imported Buick Enclaves in China
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1. WP: Companies say they’re optimistic about China, but expansion is slowing
Is China still a gold mine for global investors? It’s a question many have asked of late with the continued slowdown in economic growth here. For those who see dark clouds and fear a hard landing, a new report issued Wednesday by the American Chamber of Commerce in China added a small silver lining. The China Business Climate Survey showed 75 percent of the chamber’s members remain optimistic or slightly optimistic about the two-year business outlook in China, from 2012 to 2014, despite concerns of slowing growth, rising costs, market access and intellectual property rights infringements. What’s odd and perhaps telling is that in the face of that professed optimism, more companies are scaling back expansion plans for China, according to the report. For the first time, the majority planned to increase China investments by 10 percent or less, with the proportion of companies planning no increase rising sharply. It’s a seeming contradiction between confidence and investment.
WP
2. CNNMoney: Are U.S. companies falling out of love with China?
American companies operating in China expect slower revenue growth, investment and expansion this year, according to a survey conducted by the American Chamber of Commerce in China. The tempered expectations underscore just how challenging U.S.
firms can find conditions in the world's second biggest economy. The survey found heightened concerns over intellectual property, the safety of proprietary data and government-sponsored campaigns against foreign firms operating in the country. Forty-one percent of respondents said they felt less welcome in China than before, and only 11% said they felt more at home. The remaining 41% said they detected no change. Foreign firms, including pharmaceutical companies, food suppliers and even Apple, have been targeted over the past year by state media and regulators. The annual survey was conducted in November and December last year and drew responses from 365 of the chamber's members.
CNNMoney
3. Reuters: China opens door further to foreign stock investors
China has relaxed rules to allow more foreign participation in its main stock market, in the latest step towards liberalizing the financial system in the world's second-largest economy. From Thursday, foreign investors on the Shanghai stock exchange will be allowed to invest in more products and can invest up to 30 percent in a single company, up from 20 percent previously. The move comes just days after the People's Bank of China, the central bank, doubled the daily trading band of its currency, and after it earlier this month provided an explicit timeframe for the liberalization of the country's deposit rates. The country's stock markets showed muted reaction to the latest change on
Thursday but analysts said it highlighted the overall direction of the reforms. "We're at the point where developments of this kind represent important forward steps," said Tom Gatley, a senior analyst at GaveKal Dragonomics in Beijing.
Reuters photo
Reuters
4. Reuters: China's yuan slides to near one-year low as economic risks mount
China's yuan fell beyond 6.20 to the dollar on Wednesday for the first time since April last year amid market speculation the central bank will keep the currency weak as economic growth slows. The yuan has tumbled 0.8 percent so far this week after the People's Bank of China (PBOC) on
Saturday doubled the daily trading band allowed for the currency to 2 percent from the
mid-point that it sets each day. Spot yuan briefly fell as low as 6.2040 in early afternoon trade before ending at 6.1965. That marked a 0.07 percent loss on the day from Tuesday's close, and a fall of 1 percent from the
mid-point. "We see
risks of further near-term yuan weakness, but do not expect this to extend beyond the second quarter. It is not in the PBOC's interests to have a sustained depreciation
in the currency, as this will increase financial stability risks," economists at ANZ said in a research note. Other analysts agreed that allowing the yuan to weaken too far, too fast would only increase the stresses on Chinese companies and the broader economy.
Reuters
5. WSJ: Yuan falls farther, but ride may be nearly over
With signs hot-money inflows have slowed, analysts say
central bank may ease up.
WSJ
6. CNBC: Goldman Sachs slashes China growth outlook
Goldman Sachs has become the latest bank to downgrade its gross domestic product (GDP) growth forecast for China, noting the world's second largest economy faces a "bumpy road ahead." The bank lowered its 2014 forecast to 7.3 percent from 7.6 percent late Wednesday. It also cut its 2015 outlook to 7.6 percent from 7.8 percent. "Both trade and consumption - factors that we had expected to provide positive support to growth this year - disappointed in the first two months of 2014, relating to the anti-corruption efforts, which affected consumption, and the soft DM (developed market) recovery," economists led by Li Cui, managing director, China Macro Research at the bank wrote in a note. "The exit of
overcapacity sectors, along with the emerging default cases in the related sectors, are negatively impacting growth in the near
term but are necessary from a longer-term perspective by allowing proper signals to dampen wasteful investment," they added.
CNBC
7. FT: Smog insurance added to efforts in China’s war on pollution
Travellers to China worried that their view of the Great Wall will be obscured by Beijing’s pollution can rest easy with a “smog insurance” product being introduced this week. “Smog insurance” is the latest response to choking air pollution in China and follows efforts that include closing industrial plants and do-it-yourself air filter specialists dispensing advice online. Panasonic, the Japanese electronics group, said last week it would offer a pollution bonus to expatriate employees working in China. Li Keqiang,
Chinese premier, declared a “war on pollution” in his annual speech to the legislature in March. Only three Chinese cities meet national air quality standards, two of which are on islands.
CTrip, an online travel agent, and Ping
An, the state-owned insurance company, have teamed up to offer “smog insurance” to
travellers and residents in seven cities plagued by smog. The scheme pays out when the air quality index, or AQI, exceeds set levels for two days in a row. A week of the index being over 300, a level deemed hazardous at prolonged exposure, yields the policy holder a free lung check while those who need
hospitalisation because of it would receive Rmb1
,500 ($240).
FT
8. Bloomberg Businessweek: China wants its people in the cities
Thirty-five years ago, when paramount leader Deng Xiaoping launched
gaige kaifang, or “reform and opening,” China was a much more agricultural country, with less than a fifth of its people living in cities. Since then hundreds of millions of rural residents have left the countryside, many seeking jobs in the export-oriented factories and construction sites that Deng’s policy promoted. In 1978 there were no Chinese cities with more than 10 million people and only two with 5 million to 10 million; by 2010, six cities had more than 10 million and 10 had
from 5 million to 10 million. By the following year, a majority of Chinese
were living in urban areas for the first time in the country’s history. Now urbanization has been designated a national priority and is expected to occur even more rapidly. On March 16, Premier Li Keqiang’s State Council and the central committee of the Communist Party released the “National New-type Urbanization Plan (2014-2020),” which sets clear targets: By 2020 the country will have 60 percent of its people living in cities, up from 53.7 percent now.
Bloomberg photo
Bloomberg
9. Reuters: Michelle Obama arrives in China on hotly anticipated trip
U.S.
first lady Michelle Obama arrived in Beijing on Thursday evening, the official Xinhua news agency said, beginning a hotly anticipated
week-long trip during which she will promote education and cultural ties. Obama, a Harvard-educated lawyer, is expected to spend Friday with China's charismatic first lady, Peng Liyuan, who is admired at home as both a glamorous songstress and fashion icon. Besides Beijing, Obama will visit the western historic city of Xi'an and the southern city of Chengdu, where she will visit a panda preserve. Obama's two daughters are accompanying her, as well as her mother. She also plans to visit American and Chinese students to promote education and cultural exchanges, and visit historical landmarks like the Great Wall of China. A Xinhua commentary said the trip was "especially meaningful" given tensions in the U
.S
.-China relationship, including President Barack Obama's recent meeting with the Dalai Lama, whom China sees as a violent separatist.
Reuters
10. NYT - Sinosphere: Michelle Obama stays connected on her visit to China
As Michelle Obama kicks off her weeklong trip to China, her first ever, her team is harnessing the power of technology to ensure that every step, every impression is documented. Accompanied by her daughters, Malia and Sasha, as well as her mother, Marian Robinson, the first lady will be blogging, tweeting and Instagramming her way through the country. After touching down in Beijing on Thursday, she planned to tour
on Friday a Chinese high school and the Forbidden City with Peng Liyuan, the wife of President Xi Jinping. After other events in the capital that will focus mostly on youth and education, she will head to the historic city of Xi’an on Monday to see the Terra Cotta Warriors Museum and wrap up her trip with a stop in the southwestern city of Chengdu, where she will visit a panda research and breeding base before her departure on Wednesday. “A visit like this is an important opportunity not just to share China’s rich history and culture with young people like you, but to connect you with the stories of young people in China,” Mrs. Obama said in a video message posted on PBS.
NYT
11. NYT: Bloomberg should have rethought articles on China, chairman says
The chairman of Bloomberg L.P.
said in a speech here on Thursday that the company should have reconsidered articles that deviated from the core of its coverage, business news, in light of the huge potential for its products in the Chinese market. Bloomberg, the financial data and news company,
relies on sales of its terminals, which are ubiquitous on bankers’ desks around the world, for around 82 percent of its $8.5 billion in revenue. But sales of those terminals in China declined sharply after the company published an article in June 2012 on the family wealth of Xi Jinping, at that time the incoming Communist Party chief. Following its publication, officials ordered state enterprises not to subscribe to the service. Acknowledging the vast size of the Chinese economy, the world’s second biggest after that of the United States, the chairman, Peter T.
Grauer, said, “We have to be there.” “We have about 50 journalists in the market, primarily writing stories about the local business and economic environment,” Mr.
Grauer said in response to questions after a speech at the Asia Society. “You’re all aware that every once in a while we wander a little bit away from that and write stories that we probably may have kind of rethought — should have rethought.”
NYT
12. Reuters: Japan firms want Abe to cool it on China; see demand ebbing: Reuters poll
Japanese companies are concerned about Prime Minister Shinzo Abe's forceful diplomacy with neighbors like China, at a time when demand from Asia's giant appears to be ebbing, a Reuters survey showed. More than half the executives in the Reuters Corporate Survey said demand from China is peaking or declining
.The survey showed a quarter are concerned about the impact of Abe's approach to foreign policy, which has inflamed tensions with China and South Korea. Forty-six percent said it has not affected them, and 29 percent said they were unsure
.Japan's ties with China and Korea have worsened over bilateral territorial disputes and a feeling in Seoul and Beijing that Tokyo has not atoned for its wartime aggression, especially with Abe's December visit to the Yasukuni shrine, which Japan's neighbors consider a symbol of its wartime and colonial brutality.
Reuters
13. Reuters: China top leader reaffirms economic reforms
Chinese Vice Premier Zhang Gaoli reaffirmed to a group of visiting senior foreign executives and officials on Sunday that the country will introduce market-based interest rates and a market-based exchange rate for the yuan currency. Zhang, speaking at the annual China Development Forum, said China will "introduce a modern and competitive market system with fair and open market rules". He provided no details. China's central bank will focus on liberalizing bank deposit rates over the next two years, while loosening its grip on the yuan currency to give greater influence to market forces, a vice governor of the People's Bank of China said on Saturday. Central bank chief Zhou Xiaochuan said earlier this month deposit rates were likely to be liberalized in one to two years, but government economists and policy advisers told Reuters they believed the central bank was treading cautiously as economic growth slows.
Reuters
14. WSJ: China HSBC Manufacturing PMI falls to eight-month low
The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to an eight-month low of 48.1 in March, compared with a final reading of 48.5 in February, HSBC Holdings PLC said Monday. A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction. Output, employment and new orders were all down in March, though new export orders increased after falling in February. "China's growth momentum continued to slow down," HSBC economist Qu Hongbin said in a statement. "Weakness is
broadly-based with domestic demand softening further. We expect Beijing to launch a series of policy measures to stabilize growth."
WSJ
15. Reuters: Central banker says defaults may be good for China markets-paper
Some debt defaults could be positive for market discipline in China and help the wealth management products market develop in a more healthy way, an influential state-run newspaper on Monday quoted deputy central bank governor Pan Gongsheng as saying. To help prevent systemic risk, "naturally occurring" defaults may be "conducive to strengthening market discipline constraints, correcting the
behaviour of product issuers and investors, and also conducive to the healthy development of the wealth management market," the Shanghai Securities News quoted Pan as saying.
Reuters
16. WSJ: Yuan's decline raises concerns over currency war
U.S.
officials, others believe China is intentionally keeping currency below market value.
WSJ
17. NYT - Editorial: Urbanizing China
The plan announced by China’s leaders last week to move more people from the countryside to cities could help raise the standard of living for millions of people. But it does not go far enough to protect migrants and farmers. The experience of numerous countries shows that urbanization increases as economies become more industrialized. China is no exception. In the last several decades, hundreds of millions of Chinese have moved to cities in search of better jobs. Nearly 54 percent of the country’s 1.35 billion people now live in cities, up from less than 18 percent in 1978. China’s government has put forward an intriguing
urbanization plan. But it has a lot more work to do to make sure its ideas are designed and carried out in ways that benefit its people.
NYT
18. NYT: N.S.A. breached Chinese servers seen as security threat
American officials have long considered Huawei, the Chinese telecommunications giant, a security threat, blocking it from business deals in the United States for fear that the company would create “back doors” in its equipment that could allow the Chinese military or Beijing-backed hackers to steal corporate and government secrets. But even as the United States made a public case about the dangers of buying from Huawei, classified documents show that the National Security Agency was creating its own back doors — directly into Huawei’s networks. The agency pried its way into the servers in Huawei’s sealed headquarters in Shenzhen, China’s industrial heart, according to N.S.A.
documents provided by the former contractor Edward J. Snowden. It obtained information about the workings of the giant routers and complex digital switches that Huawei boasts connect a third of the world’s population, and monitored communications of the company’s top executives.
NYT
19. FT: NSA accused of breaching networks run by China’s Huawei
Chinese telecoms equipment maker Huawei has condemned reports that the US National Security Agency breached the company’s internal servers and called on global technology companies to join forces to fight government spying. The NSA tried to use
Huawei to access networks sold to countries including Iran, Pakistan and Cuba, according to revelations first reported by the New York Times and based on documents from former NSA contractor Edward Snowden.
FT
20. WP: Michelle Obama visits Great Wall of China, meets with students about education
As her daughters strolled ahead, peering down to a great ravine, Michelle Obama walked a stretch of this towering stone wall along walkways that date to the Ming Dynasty. They walked from Towers 14 to 15, strolling along while their staff and security detail hung a little ways back. The Great Wall, which has steep walkways undulating through a chain of mountains, is a draw for both tourists and dignitaries. Obama’s mother, Marian Robinson, skipped the hike and stood on a platform just below the wall that offered a sweeping view of the scenic spot. Other than two large black birds, it was quiet out. There were no crowds, and even vendors at the foot of the wall had put away their T-shirts depicting President Obama in the uniform of Mao Zedong, the founder of the Chinese Communist Party. Trees are beginning to blossom, but a haze of pollution hung in the air, making the sky gray on Sunday afternoon. The first lady seemed not to notice. She, Sasha and Malia descended the mountain on toboggans, which zip down like a bobsled.
WP
21. WSJ - China Realtime: First Lady surprises in China speech
Speaking to students from the U.S.
and China at the Stanford Center at Peking University Saturday, Mrs. Obama said that “when it comes to expressing yourself freely, and worshiping as you choose, and having open access to information-we believe those are universal rights that are the birthright of every person on this planet.” Those words surprised. Mrs. Obama’s weeklong China trip was billed as part family break—she’s traveling with her two daughters and her mother—and part cultural outreach. U.S.
government officials have for many years been expected to promote American values while visiting China, if not directly criticize Beijing for its rights abuses. But the authoritarian Chinese government is in the midst of a renewed effort to tighten control over the Internet, media and schooling. One theme White House officials said Mrs. Obama would promote on the trip is education. Prior to the visit some encouraged her to address academic freedom and access to information. Chinese economist Xia Yeliang, a politically outspoken professor who lost his teaching position at Peking University last year for expressing liberal views, said he hoped the first lady would confront China on educational controls. “Schools in China and elsewhere must ask, ‘What’s the purpose of education?’,” said Mr. Xia. He said in China students lack freedom to pursue their curiosity.
WSJ
USCBC in the News
22. SCMP: Debate in US over trade deficit with China heats up
Trade gap with China brings demands for action, though some warn measures could be counterproductive as jobs are being created. China is the second-biggest trading partner of the US, behind Canada, and the US was the largest trading partner of China last year, according to official data. Recent academic research shows the growth of Chinese exports to the US had resulted in job losses in the US, Larry Qiu Dongxiao, an economics professor at the University of Hong Kong, told the South China Morning Post. "However, China is not the only country to be blamed," Qiu said. "The international production structure is responsible for this." Many countries, including Japan, export intermediate goods to China for assembly, and the final goods are shipped from China to the US, Qiu said. "Without those countries' participation, China would not be able to export that much," he said. "So all these countries together should be blamed, not just China." Last month, the US-China Business Council urged the US and China to complete negotiations over the Sino-US Bilateral Investment Treaty this year. Under this treaty, Chinese investments in the US would receive protection and vice versa, while both countries would adopt more market-oriented policies towards investment.
SCMP
Chinese News Sources
23. SCMP: Market reforms to reduce role for Beijing, says Vice-Premier Zhang Gaoli
Government will need to use its powers more effectively as it frees up market forces.
SCMP
24. Xinhua: Chinese vice premier highlights commitment to deepening comprehensive reform
China reiterated its commitment to deepening reforms and implementation, says vice premier Zhang Gaoli during the China Development Forum. In his welcome speech, Zhang also says China will improve the country's legal system, cut government red tapes, and build a fairer market for both domestic and international companies. Taxation of consumption, environmental protection and real estate are on the legislative agenda this year. Financial and fiscal reforms are also on the list. Zhang also vows to enhance modern governance and improve social welfare. China unveiled its roadmap for comprehensive reforms during the Third Plenum last year, which analysts say, pave the ground for the country's development path of the next decade. The two day forum kicks off Sunday in Beijing, hosting a number of dignitaries, including Christine Lagarde, managing director of
International Monetary Fund and Douglas Oberhelman, the Chairman of Caterpillar, and also the Co-chair of this year's conference.
Xinhua
25. Xinhua: China should manage reform tradeoff, implementation
China needs to manage tradeoffs arising from reform, and effective implementation is the key to success, World Bank Managing Director Sri Mulyani Indrawati said here on Sunday. This will be the first year in over five that both developed and developing countries register positive growth and
developed economies are not a source of instability, she told Xinhua. "The world economy is entering a new phase. The effects of the global financial crisis are starting to wane, and extraordinary monetary policies are being normalized," she said on Sunday when addressing the China Development Forum. "That is the positive news, but there is also the downside risk of the adjustment of policies," she said during an interview on the sidelines of the forum, adding that normalization of extraordinary monetary policies in some advanced countries will lead to capital flow disruptions and an increased interest
rates. Emerging economies need to adjust their growth models, and stress reforms focused more on attracting foreign direct investment rather than short-term capital flows, she stressed.
Xinhua
Notables
26. FT: Official China union raises stakes in Walmart closure programme
A restructuring of Walmart’s China business is being challenged by the country’s normally reticent official union, which is involved in at least one of three protests that have erupted at stores slated for closure this month. A unit of the government-sanctioned All China Federation of Trade Unions has been leading the protests outside a Walmart store in Changde, Hunan province that closed last week. The ACFTU’s involvement in an industrial action, which is extremely rare, could increase official scrutiny of the closures.
FT
27. WSJ: Top J.P. Morgan executive in China expected to resign
Fang Fang
departing as
bank faces probe of Asian hiring practices.
WSJ
28. Reuters: GM's global recall includes imported Buick Enclaves in China
General Motors Co will recall 24,021 imported Buick Enclave vehicles due to airbag defects, China's quality watchdog said on Monday, as part of the U.S.
automaker's global recall over the same issue involving over nearly 1.2 million vehicles. Starting Monday, Shanghai General Motors, GM's joint venture with SAIC Motors Corp Ltd, will recall some of Buick Enclave vehicles produced between 2008 and 2013 to fix an issue that could lead to the
nondeployment of side airbags, China's General Administration of Quality Supervision, Inspection and Quarantine said in a statement on its website. A GM spokeswoman said the move was part of the global recall announced earlier by GM. She said the company had no further comments to make.
Reuters
