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Chinese Ambassador told Companies to Take the Opportunity to Seize the Russian Market

After Russia’s invasion of Ukraine, a number of global multinational companies have pulled out of Russia. The Chinese Ambassador to Russia, Zhang Hanhui, recently told local Chinese companies that they should “lose no time” in seizing the “great opportunities in the crisis” and they should adjust their business operations to fill the gap in the Russian market.

Addressing a dozen executives from Chinese companies in Moscow on March 20, Zhang told them “not to wait,” but to integrate their resources and adapt to the “new situation” as soon as possible.

Amid the complicated international situation, the methods of settlement and supply chains of Chinese companies in Russia are encountering great difficulties and interruptions. This is the time when private small and medium-sized enterprises come into play, added Zhang. He said that the Chinese government is making adjustmenst and is building new platforms to solve the outstanding problems of settlement and logistics.

Source: Central News Agency (Taiwan), March 20, 2022
https://www.cna.com.tw/news/acn/202203220310.aspx

Briefings | | |   Geo-Strategic Trend

China Trains Personnel to Censor Online Religious Information

China’s Zhejiang Provincial government recently issued a notice that it will train auditors of Internet religious information starting on March 31. The content of the training includes “basic knowledge of religion” and “religious policies and regulations.” Several provinces and cities have made announcements for such training and examinations.

Pastor Liu Yi, who now lives in California and once worked for many years in churches in Zhejiang, said that religious auditors have existed in China since a long time ago. Liu said, “At the beginning of the Chinese Communist Party’s takeover of China, there were such personnel in Christian and Catholic churches, monitoring the sermons and Bible studies. If any so-called anti-socialist content was found, it would be reported to the authorities.”

The Measures for the Administration of Religious Information Services on the Internet, published by China’s State Administration of Religious Affairs (SARA), came into effect on March 1 this year. The document prohibits any organization or individual from establishing any religious organizations, religious colleges, religious activity sites, or developing congregations online, and it also prohibits overseas organizations or individuals from “engaging in Internet religious information services” inside China.

According to the announcement of the Tianjin Municipal government on March 7, the scope of training also includes “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” “Xi Jinping Thought on the Rule of Law,” “Socialist Core Values ,” and “General Secretary Xi Jinping’s Important Discourse on Religious Work.”

Source: Radio Free Asia, March 22, 2022
https://www.rfa.org/mandarin/yataibaodao/renquanfazhi/sc-03222022150905.html

Briefings | | |   Social Stability

Chinese Scholar: Total Population May Peak in 2022

With China’s natural population growth approaching zero last year, Cai Fang, the former vice president of the Chinese Academy of Social Sciences (CAAS) and a member of the Central Bank’s Monetary Policy Committee, believes it is entirely possible that China’s population will reach its peak in 2022.

According to the 2021 population data released by China’s National Bureau of Statistics, the country’s total population was 1.41 billion at the end of last year, with a natural growth rate of 0.34 per 1,000.

Cai said in a speech at a conference on March 18th that the most prominent factor affecting China’s long-term economic growth is population.

The demographic factors are now creating constraints on the demand side. Cai noted, “In the past we had negative growth in the working-age population, which was a supply-side constraint. Now we may be experiencing negative growth in the total population, which will create a new constraint on the demand side.”

Cai added that with the weakening of the comparative advantage of manufacturing and the slowdown of the growth in GDP, the export-and-investment-driven growth model is unsustainable. There is an urgent need to shift to a model that relies more on domestic consumption. As the population growth rate has declined, the growth rate of total consumption has also declined, and it is declining rapidly. He pointed out that the trend of population change is irreversible and cannot be reversed in the short term or in the foreseeable future. He said that the only thing that can change is the income distribution.

Source: Lianhe Zaobao (Singapore), March 21, 2022
https://www.zaobao.com.sg/realtime/china/story20220321-1254491

Briefings | | |   Economy/Resources

Russian Newspaper Listed 10 Ways in which China Benefits from the Russia-Ukraine War

On March 12, the Russian newspaper The View (Взгляд) listed 10 areas in which Chinese companies have benefited from the ongoing Russia-Ukraine War and the sanctions from the U.S. and European countries.

First, the Union Pay system will be a winner. After Mastercard and Visa rejected overseas payment transactions, seven major Russian banks have indicated they plan to connect to China’s Union Pay system.

Second, the Chinese banking system will benefit. The West’s refusal to issue loans to Russian banks and invest in Russian assets creates opportunities for Chinese banks.

Third, it is good for the Chinese Yuan. Cutting off the access to the Dollar and the Euro will create a shortage of Western currency for Russian banks. Russian banks, companies, portfolio investors and ordinary people will turn their attention to the Chinese yuan.

Fourth, the Russian-Chinese trade will continue to climb to historic records.

Fifth, more Chinese consumer goods will enter the Russian market. Chinese clothing and daily products will become realistic substitutes for imported goods due to the shortage of dollars and euros.

Sixth, Chinese automakers will be in a favorable position.

Seventh, China will have access to all Russian energy and other raw materials that Europe rejected.

Eighth, Chinese investors will actively invest in Russian companies under favorable conditions, as competitors are exiting the Russian market.

Ninth, China’s role as a bypass route for Russia will increase. China could become a ‘middleman’ through which Russia could ship needed Western parts while paying to third parties.

Tenth, Chinese airlines will be in an advantageous position. After Russia bans European airlines from flying over its airspace, passengers will fly with Asian airlines, including Chinese airlines.

Source: HK01.com, March 14, 2022
https://www.hk01.com/即时国际/746656

Briefings | | |   Geo-Strategic Trend

Exit of Visa and MasterCard Prompts Russians Banks to Adopt Chinese UnionPay

According to the Russian newspaper Kommersant, the demand for China’s UnionPay cards has increased significantly as Visa and MasterCard exited from the Russian market, which has made it impossible to use cards issued by Russian banks for overseas and cross border payments.

Founded on 26 March 2002, UnionPay, also known as China UnionPay (CUP), is an association for the China’s banking card industry, operating under the approval of the People’s Bank of China (PBOC, the central bank of China). It is an electronic funds transfer at point of sale network, and the only interbank network in China that links all the automatic teller machines (ATMs) of all banks throughout the country. UnionPay cards can be used in 180 countries and regions around the world. In 2015 UnionPay overtook Visa and Mastercard in the total value of payments made by customers and became China’s largest card payment processing organization. However, only 0.5 percent of this payment volume was outside of China.

Gazprombank issued 1,000 physical and 3,700 virtual CUP cards on March 9 alone, despite an average issuance of 400 bank cards per month. Bank ZENIT claims to have received 1,000 daily applications, although there was little demand for CUP cards before March 6. The Russian Agricultural Bank has issued hundreds of thousands of CUP cards since 2017. The Post Bank (Russia) has started processing virtual CUP cards since March 9, the daily applications once exceeding 12,000.

A total of 10 Russian banks have launched UnionPay cards. In addition, five banks are studying the introduction of Mir-CUP dual cards. Mir is a Russian payment system for electronic fund transfers established by the Central Bank of Russia.

The CUP card can be used by Russian citizens abroad for ATM transactions. In recent years, Chinese tourists have frequently travelled and spent money abroad. Many countries around the world have started adopting CUP cards.

Source: Sputnik News, March 11, 2022
https://sputniknews.cn/20220311/1039902015.html

Briefings | | |   Geo-Strategic Trend

China’s Cyber Regulator Sends Team to Social Media Firm Douban

On March 15, the Cyberspace Administration of China (CAC), China’s top cyber regulator, directed its office overseeing the city of Beijing to send a team to Douban to “supervise its rectification and reform.”

Douban is an interest-based networking site in China that lets users form online communities and review films, books and music. At the end of last year, the head of the CAC had already met with the person in charge and chief editor of Douban.com, as there were “repeated appearances of information prohibited by laws and regulations being published or transmitted on Douban.com and its accounts.”The  CAC ordered Douban “immediately to rectify and seriously deal with the persons responsible” in accordance to the Cybersecurity Law. The CAC’s office in Beijing imposed administrative penalties totaling 1.5 million yuan (US$ 0.24 million) in fines on Beijing Douwang Technology Co., the main operator of Douban.com.

In fact, this is not the first time that the CAC punished Douban. From January to November 2021, the CAC directed its office in Beijing to impose 20 penalties on Douban, for a total cumulative fine of 9 million yuan (US$ 1.4 million).

Source: China.com.cn, March 15, 2022
http://tech.china.com.cn/app/20220315/385795.shtml

Briefings | | |   Information/Technology

China’s Defense Budget Increased to a 3-year High

At China’s 13th National People’s Congress (NPC) meeting on March 5, the central and local government budgets were publicized. According to the report, the official budget for national defense for 2022 is 1.45 trillion yuan (US$229.5 billion), an annual increase of 7.1 percent. The official national defense spending for 2021 is $1.36 trillion (US$215.2 billion).

This year’s 7.1 percent growth is the highest since 2019, when the country’s spending grew at 7.5 percent. The increase in 2021 and 2020 were 6.8 percent and 6.6 percent respectively.

The increase in China’s military spending this year is higher than the official target of 5.5 percent in economic growth. In recent years, the targeted economic growth rates have been reduced year by year while the military spending has been rising at an increasing rate.

Source: Central News Agency (Taiwan), March 5, 2022
https://www.cna.com.tw/news/acn/202203050227.aspx

Briefings | | |   Defense/Military

Optimism of U.S. Companies in China is Declining

The American Chamber of Commerce in China (AmCham China) recently published its 24th annual edition of the China Business Climate Survey (BCS) Report.

According to the 2022 BCS Report, In 2021, US companies in China reported a declining level of optimism due to multiple challenges. These included sustained air travel disruptions, an increasingly uncertain regulatory environment, difficulty attracting and retaining talent, and the strained US-China relationship.

US companies operating in China faced mounting pressure and risks  on politically sensitive issues as well. One example is navigating US-China bilateral tensions, which remains a top challenge and concern for companies. 42 percent of companies have been facing mounting pressure to speak out and make (or not make) statements on politically sensitive issues. This has often caused them problems in both the U.S. and Chinese markets.

More than twice as many companies feel “much less welcome” in China compared to last year. One-third of respondents report that foreign companies are treated unfairly versus domestic competitors.

Most believe labor costs will increase in 2022, in line with fears that labor costs and wages are a growing HR challenge.

47 percent of the over 300 respondents report they are confident or very confident that the Chinese market will open up more to foreign investment over the next three years. This figure is down 14 percentage points from last year.

Optimism is down across almost all aspects of business operations in China and pessimism up more than 10 percentage points with regard to the regulatory environment and economic growth. 37 percent of members see China’s investment environment improving, a 13 percentage point decrease from last year and the lowest in four years. Concerns about an uncertain Chinese policy environment is the most-cited reason for declining investment.

Source: AmCham China, March 2022.
https://www.amchamchina.org/2022-china-business-climate-survey-report/

Briefings | | |   US-China Relations