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China Researcher: How Did China Beat the Western Countries in African Investment?

Guancha (The Observer) website is a media in China with a focus on international affairs. It published an interview with Ms. He Wenping, a researcher at the Institute of West Asia and Africa, Chinese Academy of Social Sciences (CASS), on the differences between China and the Western countries in their investments in Africa.

Ms. He said Africa has three shortcomings: poor infrastructure, lack of skilled people, and lack of money. China’s investments are focusing on these things, such as infrastructure projects and training local people. This includes the Luban Workshop – a number of vocational education classes – and industrial parks at local sites.

Regarding the Western countries’ saying that China is creating a “debt trap” in Africa, Ms. He said it was because they control the discourse power. China is making improvements with CGTN (a state-run English-language news channel based in Beijing) to have its own voice heard. CGTN’s programs are on YouTube and Tweeter and follow the international reporting standard. CGTN’s London station, U.S. station, and Africa station have local people as hosts and reporters. For example, the Africa station at Nairobi, Kenya’s capital city, has an “Africa Live” program with an African anchor and African reporters who go to hot spots to interview people every day. Thus some African scholars are following it every day.

Regarding differences between the West’s and China’s investment in Africa , Ms. He said that the West is telling the African countries what to do while China just treats them as partners. The West’s investments have strings attached but China’s do not. Biden held his U.S.-Africa summit in Washington, DC, while China always has its summit in Africa.

Source: Guancha, January 16, 2023
https://www.guancha.cn/HeWenPing/2023_01_16_676060.shtml

Briefings | | |   Geo-Strategic Trend

Following the U.S., the Netherlands and Japan to Take Action on Chinese Chip Industry

Popular Chinese online news site Redian recently republished a Bloomberg report indicating that the Netherlands and Japan, home to major suppliers of semiconductor manufacturing equipment, are about to join a Biden administration-led effort to limit exports of the technology to China. Export controls in the Netherlands and Japan could be finalized as soon as late January, according to people familiar with the matter. Japanese Prime Minister Fumio Kishida and Dutch Prime Minister Mark Rutte discussed their plans with U.S. President Joe Biden at the White House earlier this month. “I am very confident that we will get there,” Rutte told Bloomberg in an interview on the sidelines of the World Economic Forum in Davos, Switzerland. However, the Netherlands and Japan’s restrictions may not go as far as the U.S. restrictions do, which not only limit the export of U.S.-made machines but also prevent U.S. citizens from working with Chinese chipmakers. Even so, once all three countries take action, China may find itself even less able to acquire the technology or expertise needed to manufacture the most advanced semiconductors. A spokesperson for the White House National Security Council declined to comment. The U.S. Commerce Department rules are opposed by some U.S. semiconductor companies but supported by bipartisan lawmakers. China said Biden’s new chip tech curbs will hurt its economic recovery.

Source: Redian, January 19, 2023
https://redian.news/wxnews/231251

Briefings | | |   Geo-Strategic Trend Information/Technology

Global Times: Biden Administration Extends China Chip Export Restrictions to Macau

Global Times recently reported that the United States has further tightened export controls on Chinese chips and chip manufacturing equipment, and has further extended the restrictive policies imposed on Mainland China to Macau. The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce published an “interim final rule” in the Federal Register, saying that the control measures announced in October last year also apply to the Macau Special Administrative Region. The announcement claimed that the restricted exports of chips and chip manufacturing equipment may be transshipped from Macau to other places in Mainland China, so the new measures include Macau in the scope of export restrictions. After the implementation of the measure, U.S. companies will need to obtain a license to export to Macau. Last October, without any prior warning, the U.S. Department of Commerce imposed the most extensive restrictions on chip-related exports to China in history. In addition to prohibiting the export of advanced chips, technology and equipment, it also prohibits “Americans” from supporting the “development or production’ of advanced chips in Chinese companies without permission.”

Source: Global Times, January 18, 2023
https://world.huanqiu.com/article/4BLNDLEqFe3

Briefings | | |   Information/Technology US-China Relations

China’s New Energy Vehicle Growth Slowed after Subsidy Cancellation

Well-known Chinese news site Sina (NASDQ: SINA) recently reported that, according to the data just released by the China Passenger Car Association (CPCA), from January 1 to 15, the national new energy passenger car manufacturers wholesaled 187,000 units, a month-over-month decrease of 38 percent. The market retail sales reached 184,000 units, a month-over-month decrease of 33 percent. According to a report released by CPCA, on January 18, the growth of new energy vehicle sales has entered a bottleneck stage. After the discontinuation of the government’s new energy policy in 2023, sales growth will be a serious problem. At the same time, the prices of new energy models have increased too much in the early stage. Orders are decreasing and the price cuts of leading manufacturers such as Tesla have been aggressive, which has caused consumers to take a wait-and-see attitude. China’s new energy vehicle subsidies started in 2010. In that year, a total of 25 cities in three batches were selected to carry out demonstration and promotions of energy-saving and new energy vehicles. Since then, the industrialization process has started. In 2016, the subsidy policy entered the full application stage. Under the government subsidy policy dividends, the new energy vehicle market has achieved rapid development. Recently, Tesla China began to cut prices, which disrupted the market rhythm to a certain extent. After Tesla announced the price cuts, the number of new orders increased significantly, and the traffic at Tesla stores in many regions of the country increased significantly too. Some customers who originally planned to order other brands even cancelled their orders and turned to Tesla.

Source: Sina, January 20, 2023
https://finance.sina.com.cn/chanjing/cyxw/2023-01-20/doc-imyauhaw5442320.shtml

Briefings | | |   Economy/Resources Information/Technology

China Signed a 25-Year Deal with Afghanistan in Oil Exploration

With the departure of the U.S. invaders, the Afghan people did not live the life they expected, and were still struggling under the poverty line. The Taliban government in Afghanistan has been in power for more than a year. The results have proved that it is basically impossible to rely solely on the power of Taliban to save the Afghan economy. Looking at the whole world, it can be said that there are very few countries that are able and willing to provide assistance to Afghanistan in terms of economic construction. Atta can only focus on the big eastern countries.

China Central Asia Petroleum and Natural Gas Co., Ltd. signed a 25-year oil exploration contract with the Afghan Taliban government. According to the contract, the Chinese company and the Afghan government will jointly explore oil in the Amu Darya Basin in northern Afghanistan, where the oil reserves are estimated to exceed 80 million barrels. Chinese companies have been approved to carry out mining operations in an area of 4,500 square kilometers across the three provinces of Sar Pul, Jowzjan, and Faryab. The daily oil production will be 1,000 tons in the initial stage, and will gradually increase to 20,000 tons later. It is reported that the Chinese company in charge of the cooperation project will invest a maximum of US$150 million per year in the first three years, and will increase to US$540 million per year after three years. If the 25-year contract period is successfully fulfilled, the cumulative investment of the Chinese side will exceed US$12 billion.

Source: qq.com, January 6, 2023

https://view.inews.qq.com/a/20230106A0633500?tbkt=G&uid=&refer=wx_hot

Briefings | | |   Geo-Strategic Trend

“He Who Created the Debt Owes the Debt” – China’s Finance Minister Told Local Governments

China’s local government debts have grown to an alarming high level. Liu Kun, China’s Minister of Finance expressed that local governments are responsible for resolving the issue and the central government will not help. During an interview with the China Central Television (CCTV), Liu said that “(we will) adhere to the principle of no bailout by the central government, and it should be ‘whose child it is who holds (the debt).” (In other words, he who created the debt owes the debt.)

Liu stressed the importance of regulating the local government’s financing platform companies. It has been a common practice for local governments to establish these companies to raise money to finance their spending. These companies usually use land (taken from the government) as collateral to get loans from banks, and later pay back the loans after the local governments sell the land. Now with the collapse of the real estate industry, local governments have a hard time selling land, and thus these companies are unable to pay back the bank loans.

Cheng Xiaonong, a Chinese economist living in the U.S. pointed out that all 31 provinces and municipalities in China had fiscal deficits in 2022. Now the central government is not willing to fill the hole. The result will be that banks will lose the money their customers deposited. In addition local governments must cut spending including salary reductions and layoffs.

According to Bloomberg, in the next five years, nearly 15 trillion yuan (US$2.2 trillion) of China’s local governments’ bonds will mature.

Last December, China’s Ministry of Finance issued 750 billion yuan (US$110 billion) in special national bonds for “economic reform, responding to major emergency events, and other expense items.”

Source: Radio Free Asia, January 9, 2023
https://www.rfa.org/mandarin/yataibaodao/jingmao/hcm1-01092023025727.html

Briefings | | |   @CS Economy/Resources

China’s Housing Prices Have Been Going South for 16 Months

On January 16, China’s National Statistics Bureau released information on the housing prices in 70 major and medium-sized cities during the month of December, 2022. New house sales prices in 55 cities were lower than the previous month, an increase of four more cities from November’s statistics. Existing house sales prices went down in 63 cities, with the addition of one more city from November.

According to the National Statistics Bureau’s data, starting in September 2021, prices of both new house sales and existing house sales in 70 major and medium-sized cities have dropped down and the downward trend has lasted for 16 months, through the present.

Source: China News Agency, January 16, 2023
https://www.cna.com.tw/news/acn/202301160299.aspx

Briefings | | |   Economy/Resources

Central Economic Work Conference Stressed Expanding Domestic Demand

China Daily published an article that an author wrote commenting on China’s economic focus for the year 2023. The article said that a Central Economic Work Conference was held on December 15 and 16, 2022. The conference provided a comprehensive plan for China’s economic work in 2023. In the plan, the recovery and expansion of consumer spending has a high priority and thus the expansion of domestic demand is the focal task for China’s economic work.

The article acknowledged that, for the past three years, China’s economy has been impacted negatively by international relations and by COVID. Consumer spending has also gone down significantly. In the first three quarters of 2022, China’s GDP growth rates were 4.8 percent, 0.4 percent, and 3.9 percent, respectively. The growth rate in those three quarters for total retail sales of consumer goods was 3.3 percent, -4.6 percent, and 3.5 percent, respectively. This shows that residents’ consumption dragged down the GDP.

The world economy is very likely to slow down in 2023. Western countries may be trapped in inflation and enter recession. Thus the external demand for China is likely to drop significantly. In fact, this has already happened. The growth rate for China’s exports  in January 2022 was 24.1 percent over the same period a year ago, but only 5.7 percent in September 2022. It could keep sliding in 2023.

Therefore, China’s economic growth will have to rely on domestic consumption.

Source: China Today, January 10, 2023
http://www.chinatoday.com.cn/zw2018/bktg/202301/t20230110_800318097.html

Briefings | | |   Economy/Resources Government/Politics