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Pou Chen Corporation Exited Mainland China

Taiwanese news site Mirror Media recently reported that leading footwear manufacturer Pou Chen has completed its exit from Mainland China. Pou Chen is the largest branded athletic and casual footwear manufacturer in the world. It does OEM manufacturing for major global labels such as Nike, Adidas, Asics, Clarks, Reebok, Puma, New Balance, Crocs, Merrell, Timberland, Converse, and Salomon. Pou Chen makes one out of every five athletic and casual shoes. It started changing its Mainland China operating strategy a few years ago, switching from running production lines to primarily providing distribution channels. By now all footwear production lines have stopped and all Pou Chen owned hotel businesses in the Mainland have been sold as well. Pou Chen Corporation has completely exited the Mainland market. Some industrial land ownership still remain in the hands of Pou Chen; it plans to sell to or jointly develop them with real estate construction companies. Pou Chen currently has a large amount of cash in hand. The next investment plan is to build museums in Taiwan.

Source: Mirror Media, May 29, 2018

Green Peace: Increase in China’s 2018 Carbon Emissions Expected to Be the Fastest in Six Years

China Carbon Trading Online recently published a report by Green Peace, which showed that China’s 2018 carbon emission volume will increase at a pace never seen in the past six years. Green Peace reached this conclusion based on China’s official data. This brings back the doubt as to whether the Paris Agreement can truly result in curbing carbon emissions. Green Peace’s calculation showed China’s carbon emissions increased four percent in the first quarter of this year. China is currently the largest carbon emissions country in the world; it creates a quarter of the world’s total emissions. Global emissions stabilized between 2014 and 2016. However, in 2017, the total emissions started growing again as a result of the increase in the volume that China produces, as well as the European Union and the rest of the Asian countries. Scientists expressed their belief that, according to the Chinese government’s economic development plan, China’s increase in emissions will continue. China estimated that its emissions level will top out “before 2030.”

Source: China Carbon Trading Online, May 30, 2018

Apple Daily: China’s Vice Premier Liu He and His Negotiation Position

Major Hong Kong newspaper Apple Daily recently published an analysis which senior Chinese journalist Lu Yue authored on China’s Vice Premier Liu He and his position on trade. Liu is currently the Special Envoy of President Xi Jinping and China’s Chief Negotiator for trade negotiations with the United States. Liu was a two-time student (1994 and 2002) at the Harvard Kennedy School, where he obtained his Master’s degree in Public Administration. Liu was also Xi’s economic adviser for ten years when Xi was the government official in Fujian Province. This background gives Liu the unquestionable justification to take the lead position in the on-going US-China trade negotiation. In the Chinese leadership domain, he is regarded as “half a Standing Committee Member” of the Communist Party’s Politburo.

In the current “trade war” with the United States, China’s top leadership did not step out and make any direct comment on any tactics. The ones making noise are the Ministry of Foreign Affairs, the Ministry of Commerce, Customs, and the Chinese media. A careful examination reveals that not all of these entities are in the domain that reports to Liu. Liu is essentially against taking on a full-blown trade war with the U.S. because it might result in a loss that could trigger a total collapse of the Chinese economy. Liu built his judgment on three factors: First is the fact that China did not fulfill the promises it made to the World Trade Organization (WTO). Second, China can sustain the trade war only to US$150 billion, which is the total amount that China imports from the U.S. The third factor is that the United States can find a substitute elsewhere for all goods that the U.S. imports from China, while most of the goods that China imports from the U.S. are critical at the life-line level. This is especially so in the high-tech product category. China, as an information society, may cease to function if the U.S. expands its export ban on ZTE to all Chinese buyers. It would be a better situation for China to accept Trump’s conditions and then use those as a driver to push much needed internal reforms.

Liu’s current negotiation strategy is “overall compromise coupled with partial discussions.” He is extremely good at working out convincing details in the numbers, which was the reason his 15-minute meeting with Trump got extended to 45 minutes. As an example, Liu offered US$60 billion worth of agricultural purchases when the U.S “ask price” was US$30 billion. China’s refusal to commit to $200 billion in trade deficit reduction was largely a PR show.

Source: Apple Daily, May 31, 2018

Deutsche Welle: South German Newspaper Stopped Publishing China Watch Supplement

Deutsche Welle Chinese recently reported that a German newspaper, the South German Newspaper (Süddeutsche Zeitung) decided to stop publishing the supplement called China Watch, which China Daily provided. The South German Newspaper, published in Munich, Bavaria, is one of the largest daily newspapers in Germany. China Daily is the Chinese government’s official newspaper designed for readers outside of China. In recent years, many Western newspapers have periodically published China Watch as a supplement, including such famous newspapers as the Washington Post, New York Times, British Daily Telegraph, French Le Figaro and Business Daily in Germany. Although the South German Newspaper refused to comment on the reason for discontinuing publication of the supplement, its choice did receive a lot of praise from political observers and human rights organizations. As part of China’s strategy of broadening China’s influence on public opinion in the West, China Watch took the approach of utilizing the channels available through traditional Western media.

Source: DW Chinese, May 19, 2018

China Ranked Number One on Wealthy Population Leaving the Country

Well-known Chinese news site Sohu recently published a report based on multiple studies done on wealthy Chinese leaving the country. According to research that Shanghai Hurun conducted in 2017, 46 percent of wealthy Chinese with income between RMB 10 million (around US$1.57 million) and 200 million (around US$31.3 million) have considered leaving the country. Another research report that New World Wealth published also showed, in 2017, that around 10,000 wealthy Chinese (net worth above US$1 million) moved overseas, making China the country that had the largest number of wealthy people leaving. The most popular destinations for these Chinese are the United States, Australia, and Canada. In the past three years, Australia has been the most popular destination. Among the key drivers for people to leave, a better education for their children and China’s high real estate cost sat at the top.

Source: Sohu, May 19, 2018

China’s Resident Deposit Balance Saw a Sharp Decline in April

Well-known Chinese news site Tencent recently reported, based on data that the Chinese central bank recently released, that as of the end of April, the balance of the total deposits of China’s residents fell to RMB 67.4 trillion, which was 1.32 trillion less than the same number at the end of March. This is the largest single-month decline in history. It also represents a 2.1 trillion year-over-year decline. For many years, China has been considered a country with a high rate of savings. However, in 2017, the balance of resident’s deposits started to see a net reduction. In 2008, China’s household savings rate was 53.2 percent. In 2017, that rate dropped to 7.7 percent. In the first quarter of this year, all major domestic national banks saw negative growth for the balance of individual savings. In the same period of time, consumer spending did not show any significant growth. Statistics showed that people have been putting more and more money into investment funds and the real estate market. The savings decline can have a major impact on the economy. It may result in slower bank investments into the economy, an increased cost of borrowing, and more resources sucked into the real estate bubble.

Source: Tencent Financial News, May 18, 2018

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