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Lianhe Zaobao: British Companies in China Expect A Tougher Year Ahead

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported on the latest survey results from the British Chamber of Commerce in China. The business confidence survey of around 300 British companies in China indicated that 60 percent of surveyed companies believe that doing business in China is more difficult this year than last year. The top three reasons that made it more difficult for them are economic factors, geopolitical factors and regulatory factors.

The report pointed out that due to the slow recovery of China’s economy after Covid-19 and the influence of geopolitical issues, British companies in China are in a state of hesitation, and many companies have postponed their investment decisions. About 55 percent of the surveyed companies said they will reduce or maintain investment levels in China operations next year. Around 42 percent of the respondents believe that the uncertainty of other countries’ trade policies towards China in the past year had a negative impact on their business operations.

The report pointed out that 2024 will be a critical year for the development of relations between China and the West, and that China’s relationship with the West is likely to become an important factor driving changes and decisions for companies that are “stagnant.”

Source: Lianhe Zaobao, December 12, 2023
https://www.zaobao.com.sg/news/china/story20231212-1455731

Briefings | | |   Economy/Resources Geo-Strategic Trend

UDN: South Korean President Visits the Netherlands to Form A Chip Alliance

Taiwanese news group United Daily News (UDN) recently reported that South Korean President Yoon Seok-yue is in the Netherlands for a state visit. Yoon’s trip is focused on increasing cooperation between the two countries related to the semiconductor industry — he said that this trip marked a key turning point for the “South Korea-Netherlands Semiconductor Alliance” and that discussing chip cooperation was the “top priority” of his visit.

Yoon stated in an interview that high-tech chips are the lifeblood of the modern global economy, and that South Korea accounts for about 60 percent of the world’s supply of memory chips. He said that the Netherlands is home to semiconductor production equipment manufacturer ASML, and the two countries have been cooperating “in an exemplary manner” for many years, contributing to the stability of the global semiconductor supply chain.

The semiconductor industry is being buffeted by geopolitical turmoil. ASML supplies South Korea’s major chip manufacturers Samsung and SK Hynix. During President Yoon’s visit, he will visit the ASML headquarters. The “South Korea-Netherlands Semiconductor Alliance” is expected to include the countries’ respective governments, enterprises and universities. This is the first time a South Korean head of state has paid a state visit to the Netherlands since 1961, when South Korea and the Netherlands first established diplomatic relations.

Source: UDN, December 11, 2023
https://udn.com/news/story/6811/7631837?from=udn_ch2_menu_v2_main_cate

Briefings | | |   Geo-Strategic Trend Information/Technology

CNA: China Issues Official Policy on Wearing Masks as Respiratory Illnesses Surge

According to primary Taiwanese news agency Central News Agency (CNA), the current surge of respiratory disease in China now is severe. Multiple diseases are prevalent at the same time in the current epidemic. According to China’s National Administration of Disease Control and Prevention, common respiratory infectious diseases circulating in China now include COVID-19, the influenza virus, Mycoplasma pneumoniae, respiratory syncytial virus, etc. These are mainly spread through respiratory droplets, inhalation of aerosols containing pathogens, or close contact [with contagious persons].

A new policy and guidelines issued by the National Administration of Disease Control and Prevention recommends wearing a mask when taking public transportation or entering a crowded place. Furthermore, the policy requires people to wear masks when going to medical institutions or places where vulnerable groups gather. The policy also requires public service personnel such as medical, catering, cleaning, and security personnel to wear masks during work. People should also wear a mask when entering supermarkets, theaters, passenger terminals, elevators, and other closed and crowded places.

According to the guidelines, patients with respiratory infectious diseases or those with symptoms of respiratory infectious diseases should wear particle protective masks such as N95 or KN95 (without a breathing valve) or medical protective masks; other personnel should wear disposable medical masks or medical surgical masks.

Source: CNA, December 9, 2023
https://www.cna.com.tw/news/acn/202312090218.aspx

Briefings | | |   Social Stability

RFI: Moody’s Under Fire after Negative Rating of China

Radio France Internationale (RFI) recently reported that ratings firm Moody’s faced a barrage of criticism from China after it changed the country’s credit rating outlook to negative. This rating outlook change resulted in a series of similar changes in Moody’s outlook for China’s state-owned banks, insurance companies, and enterprises, including 22 Chinese local government financing vehicles that have issued international bonds. Moody’s also changed the outlook on the credit ratings of China’s two special administrative regions, Hong Kong and Macau, to negative. In the meantime it downgraded its outlook on a number of other companies as well, including the operator of Hong Kong’s subway system.

Chinese government ministries and officials criticized Moody’s move in various public statements and official media articles, saying that China was “disappointed” and believed that Moody’s rating methodology was “flawed” and that its concerns were “unwarranted.” China’s Ministry of Finance issued a long article rebutting Moody’s rating decision, saying that China’s economy is continuing to recover and that the country’s fiscal revenue has maintained a restorative, positive growth rate.

Eric Chan, the Hong Kong government’s second-ranking figure and Chief Secretary for Administration, said that Moody’s decision to downgrade Hong Kong’s credit rating outlook is being used by Western countries, led by the United States, to discredit Hong Kong and the Mainland. He said in a radio interview that Moody’s “only purpose” in its rating decision on Hong Kong was to suppress the development of the Mainland through Hong Kong.

Source: RFI, December 8, 2023
https://tinyurl.com/5wse2bh8

Briefings | | |   Economy/Resources US-China Relations

RFA: Beijing Removing English from Road Signs

According to Radio Free Asia (RFA), dual-language road signs in Beijing are being replaced with Chinese-only road signs. Previously, many road signs had both Chinese and English. Authorities in Beijing said the updating will enhance the “overall city image,” give citizens a sense of belonging, and improve road safety and traffic efficiency. The change comes not long after directional signs on highways across China were changed from Chinese-language-only to dual Chinese-and-English signs.

The move  triggered a nationwide online discussion. Some speculated that Beijing may feel that its relationship with the West is completely hopeless, citing the recent meeting between Biden and Xi Jinping at the APEC summit in the US. Some netizens expressed worry that the all-Chinese road signs may cause inconvenience to foreign tourists. Others stated that many government officials send their kids to foreign countries [in the West] even as Western languages are at home in China. Meanwhile, some supporters of the new policy expressed the view that the transportation department’s signage update is a manifestation of cultural confidence and of China’s international status.

Both the Traffic Management Bureau of the Beijing Municipal Public Security Bureau and Beijing’s Municipal Traffic Service Hotline were unavailable for comment.

Source: RFA, December 1, 2023
https://www.rfa.org/mandarin/yataibaodao/meiti/gt-12012023070307.html

Briefings | | |   Government/Politics Social Stability

Lianhe Zaobao: China’s Manufacturing PMI Fell in November

China’s November Manufacturing Purchasing Managers Index (PMI) was 49.4 percent, down 0.1 percentage points from the previous month, indicating that the market demand has declined. Among the five sub-indexes that make up the manufacturing PMI, the new orders index, the raw materials inventory index and the employment index are all lower than the critical level of 50 percent.

The raw materials inventory index for November stood at 48.0 percent, down 0.2 percentage points from the previous month, indicating a decrease in stock levels for major raw materials. The employment index was 48.1 percent, an increase of 0.1 percentage points from the previous month, indicating that the employment situation of the manufacturing companies has recovered slightly. Lianhe Zaobao, Singapore’s primary Chinese language newspaper, reported on the new PMI numbers, saying that the prosperity level in Chinese manufacturing is declining.

PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline. China’s PMI numbers are jointly published by the China Federation of Logistics & Purchasing and the China Bureau of Statistics.

Source: Lianhe Zaobao, November 30, 2023
https://www.zaobao.com.sg/realtime/china/story20231130-1453217

Briefings | | |   Economy/Resources

Walmart to Move Procurement Center to Vietnam

Well-known Chinese news site Tencent News recently reported that Walmart has announced it is moving procurement center from China to Vietnam.

As a global manufacturing center, China’s labor costs are rising, which undoubtedly brings additional burdens to large-scale retailers. Meanwhile, Vietnam is an emerging manufacturing country with relatively low labor costs and a loose regulatory environment. Thus, Vietnam has become Walmart’s first choice as an alternative to Chinese labor.

China’s status in the global manufacturing supply chain is gradually declining. At the same time, other countries are becoming more important links in a transformed global supply chain. These other countries include Mexico, India, Thailand, Vietnam, etc.

According to the Tencent article, these countries are likely to succeed China and become the next world factory. The impact of Walmart’s departure from China is not only the loss of an important foreign-owned retail system, but more importantly, there is a series of chain reactions that may result from Walmart’s departure. As one of the world’s largest retailers, Walmart has a huge procurement operation. Once Walmart leaves, it will no longer have demand for Chinese suppliers, which may lead to increased pressure on the survival of some small and medium-sized Chinese manufacturers. Also, Walmart has a large number of employees in China, and the departure may result in significant job losses. This will bring pressure to China’s job market and social stability. However, Walmart’s departure will provide more opportunities for Walmart’s rivals to compete for the Chinese consumer market share.

Walmart began to close its stores in China in 2016. Over 130 Walmart locations in China have closed since then.

Source: Tencent News, November 23, 2023
https://new.qq.com/rain/a/20231123A00DCU00

Briefings | | |   Economy/Resources Geo-Strategic Trend

NHK Chinese: Less Than 30 Percent of Japanese Companies Plan to Expand Operations in China

NHK Chinese recently reported on a routine survey by the Japan External Trade Organization (JETRO). The survey showed that the number of Japanese companies that believe their business in China will expand in the future has further decreased, falling below 30 percent for the first time since the survey’s inception.

The JETRO annual survey is conducted on Japanese companies investing overseas. The latest result showed that only 27.7 percent of the surveyed companies plan to expand in China within the next one to two years. This figure has fallen rapidly during the past several years — two years ago, 40.9 percent of companies reported plans for expansion in China, and last year the figure was 33.4 percent.

Analysis suggests the following reasons for the decline: China’s economic outlook has become increasingly uncertain; due to the popularity of electric vehicles in China, the market share of Japanese companies that operate in the field of petroleum-fueled vehicles has shrunk.

In this survey, there were a significant increase in the number of Japanese companies that plan to grow their businesses in the Global South, including in India and Brazil. JETRO’s Chairman said that China’s macro economy has slowed down significantly, and that the Chinese market is critical for Japanese companies. Thus, Japanese companies will still need to ensure their presence in the Chinese markets even if they are not optimistic about prospects for business expansion in China.

Source: NHK Chinese, November 21, 2023
https://www3.nhk.or.jp/nhkworld/zh/news/k10014264701000/

Briefings | | |   Geo-Strategic Trend