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Briefings - 257. page

Exporting Excess Capacity through “One Belt One Road”

An internal Chinese Communist Party (CCP) document that Jilin Province issued reveals that the purpose of China’s “One Belt One Road” strategy is to enable China to export excess capacity.

The document disclosed that one of the main tasks of China’s industrial transformation and upgrading is to “solve the excess capacity” problem through the “One Belt One Road” strategy.

According to the Jilin Provincial Government, “with the ‘One Belt One Road’ strategy leading us, our province should take the initiative to find the consumer market, digest excess capacity, adjust economic structure, promote industrial transformation, and promote product upgrading.” The document mentioned China’s first automobile manufacturing plant “FAW” located in Jilin Province, saying that “Changchun FAW and its supporting enterprises will usher in a rare opportunity.”

FAW has had a serious overcapacity problem. Its brands, Pentium, Red Flag, FAW Jilin, and FAW Tianjin have a combined total production capacity of 780,000 vehicles. In 2017, the sales volume was only 210,000 vehicles, and the capacity utilization rate was less than 30 percent.

According to statistics that the China Association of Automobile Manufacturers released, due to the continued decrease in sales and the continued increase in production capacity, the capacity utilization rate of passenger vehicles in China has dropped from 66.55 percent in 2017 to 53.74 percent in 2019.

Internal documents from Anhui Province also show that local governments are actively transferring excess production capacity through “One Belt One Road.”

In the documents, the CCP Chuzhou municipal government in Anhui Province encourages companies with excess capacity to invest in countries along the “One Belt One Road” and focus on supporting companies involving cement, glass and construction materials to establish production facilities along the route.

Source: Epoch Times, October 7, 2020
https://www.epochtimes.com/gb/20/10/6/n12458129.html

Briefings | | |   Geo-Strategic Trend Government/Politics

China Views U.S. Diplomatic Missions in China as Hostile Forces

An internal document that Epoch Times recently obtained shows that the Chinese Communist Party (CCP) regards the U.S. and other Western embassies and consulates in China as “hostile forces” “to contain and to block.”

The document that the Foreign Affairs Bureau of Leizhou City, Guangdong Province, issued on April 5, 2018, was titled, The “Working Plan for Guarding against and Combating Hostile Forces’ Infiltration and Destructive Activities in order to Maintain Political Security.”

The plan identifies the focus of “preventing and combating hostile forces” from the U.S. and other Western embassies and consulates in China and lists the details of the methods.

According to the internal documents, the priority is to “prevent the penetration of and destruction by the U.S. and other Western embassies and consulates in China.”

The “objective is to counteract the internalization, personalization, and agency of the U.S. and Western embassies and consulates in China in their infiltration activities and to block them effectively from communicating with key political persons, lawyers, ‘public intellectuals,’ ’rights defenders and specific interest groups,’ and to sever their ties and break their network, in order to compress their penetration space, reduce their penetration energy, and defeat their penetration scheme.”

The Leizhou Foreign Affairs Bureau listed several implementation measures. “Cut off any connections between the U.S. and other Western embassies and consulates in China and with key [Chinese] figures in the country. Strengthen intelligence and early warnings, find out about the infiltration activities of the U.S. and other Western consulates in Guangzhou in a timely manner and use various methods such as reminders, warnings, striking, and other methods to discourage relevant [Chinese] figures from participating in the activities to such an extent that the U.S. and other Western consulates in Guangzhou ‘cannot connect, cannot enter and cannot make things happen.’”

In addition to these measures, the Foreign Affairs Bureau also directed “to establish a database of key personnel of the U.S. and other Western embassies and consulates in China. Use big data to collect background information about activities and the whereabouts of relevant personnel [diplomats].”

Source: Epoch Times, October 16, 2020
https://www.epochtimes.com/gb/20/10/12/n12471193.htm

Briefings | | |   US-China Relations

Huawei Lost another Major EU Customer

Well-known Chinese news site Sohu (NASDAQ: SOHU) recently reported that French-owned telecommunications giant Orange Belgium officially announced it selected Nokia’s 5G technology to deploy its 5G network throughout Belgium. Orange decided to build its future 5G infrastructure on top of its current Ericsson network. Orange Belgium also operates in Luxembourg, where Nokia 5G technology will also be used. In the meantime, Orange Belgium’s competitor Proximus also announced the decision to use Nokia in its Belgium and Luxembourg networks. Belgium is the focal point of the United States on pushing out Huawei since the EU Executive Branch and the EU Parliament are located in Belgium’s capital, the City of Brussels. The U.S. sanction on Huawei brought the deep worry that Huawei may not be capable of keeping up with supply. Huawei commented on Orange’s decision, saying this is a loss in a fair bidding process, and Huawei respects fair play. Huawei has been serving the Belgium market for over ten years.

Source: Sohu, October 12, 2020
https://m.k.sohu.com/d/488169663?channelId=1&page=1

Briefings | | |   Geo-Strategic Trend

Chinese Student Visas to the U.S. Fell Dramatically

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that the previous U.S. strategy of peacefully transforming China has apparently failed, so now the United States has started to worry that the Chinese scholars and students can be used as weapons against the U.S. As part of the Trump administration’s overall Chinese strategy, the U.S. government has been speeding up its radical process of delinking with China. Due to the pandemic and the change of Chinese students’ choice of destination, as well as the changes in U.S. policies, this June’s number of U.S. student visas granted to Chinese students was eight, and another eight Chinese applicants were granted visiting scholar visas. The same numbers in June of 2019 were 34,001 and 5,736, respectively. With the new restrictions imposed on the academic exchanges between China and the U.S., the opportunities for the United States to better understand the complex Chinese society will significantly decline. If Washington continues its policies, it will lose the capabilities to influence China in many areas like the economy, the financial system, public health, environmental protection, education and cultural exchanges.

Source: Sina, October 16, 2020
https://finance.sina.com.cn/wm/2020-10-16/doc-iiznctkc5875586.shtml

Briefings | | |   US-China Relations

HKET: UK Introduces National Security and Investment Bill

Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported that the British government has been drafting a National Security and Investment Bill to govern sensitive technology related to foreign investments, especially in the areas of defense and infrastructure. The draft was planned to be discussed in the Cabinet after its completion by the end of this month. The Parliament is scheduled to review and approve the Bill next month, at the earliest. The biggest debate about the new bill was regarding the authorization of cabinet members to overturn past or current investment projects. British laws rarely have retroactive power. The British government has been considering legislation to regulate national security related foreign investments since the last quarter of 2019. It is widely recognized as a move against Chinese investments. Prime Minister Johnson already ordered the phase-out of Huawei equipment. The most sensitive project with Chinese involvement is the Hinkley Point C nuclear project.

Source: HKET, October 14, 2020
https://bit.ly/2IGXEGo

Briefings | | |   Geo-Strategic Trend

Package Delivery Companies in China on Strike

Recently, people in many parts of China have complained about the delay in package delivery. The media reported that a number of package delivery companies are on strike due to wage cuts. The strike highlights the unhealthy price competition among the booming package delivery companies in China.

Metropolitan newspapers reported that due to rising logistics costs, some delivery companies chose to cut the delivery fee paid to couriers to save money. One company cut the delivery fee from the original 1.2 yuan (18 cents) per item to 0.5 yuan (7.5 cents).

The couriers who went on strike came from companies including ZTO Express, Yunda Express, Best Express, and the YTO Express Group. The affected areas included Changsha in Hunan province, Sanming in Fujian province, Hebei province, Suzhou in Jiangsu province, and Changchun in Jilin province.

The booming e-commerce in China has sent the package delivery industry on a high growth path. Although companies such as SF Express, Yunda Express, and STO Express have gone public, the industry has been stuck in a price war for a long time.

For example, in 2015, in Yiwu city of Zhejiang province, the delivery fee was 7.44 yuan (US$ 1.11) per item, and in the first half of 2019, it dropped to only 3.45 yuan (52 cents). Parcels under one kilogram had a fee as low as 1 yuan (15 cents).

In addition, most couriers, except SF Express employees, are paid using a piece rate only and have no minimal pay.

Source: Central News Agency, October 18, 2020
https://www.cna.com.tw/news/acn/202010180200.aspx

Briefings | | |   Economy/Resources

Open Slots for TOEFL Test Taken within 5 Minutes

TOEFL, the Test of English as Foreign Language, is an important test for foreign students to take in order to study in the universities in the U.S. China’s official TOEFL test site recently opened the first wave of registration for the 2021 TOEFL test. People were shocked to find out that the slots from January to August for test centers in Beijing and Shanghai were gone in the first 5 minutes. However, later on, the China TOEFL site assured the test takers that more seats would be released later on every Wednesday and Friday.

Chinese netizens commented that the media inside of China constantly attack the U.S. but the TOEFL test slots were still taken in the first 5 minutes. Many Chinese high ranking officials, diplomats or spokesperson send their daughters and sons to study in the U.S. People joked that it is because “Slandering America is their job but living in America is their life.”

Source: Liberty Times Net, October 17, 2020
https://news.ltn.com.tw/news/world/breakingnews/3324266

Briefings | | |   US-China Relations

European Union Chamber of Commerce Concerned about United Front Work in Private Companies

Back in September, the CCP General Office issued the “Opinions on Strengthening United Front Work in the Private Economy in the New Era.” Recently the European Union Chamber of Commerce in China issued a position paper which expressed concerns that the Opinions will further influence a company’s policy and that the CCP will directly intervene in the business decision-making process.

In the Opinions, all private economic enterprises operating in China were required “to strengthen and expand political consensus.” It stated further that the party should “further strengthen its leadership over the united front work in the private companies, let them unwaveringly listen to the party and follow the party, let the entrepreneurs in the private sectors maintain a high degree of consistency with the Party Central Committee and always be politically sensible persons in their political stance, political direction, political principles, and political path.”

The European Chamber of Commerce stated that this may cause private companies to react to the political elements in the decision-making process, which could pose great harm and hinder the company’s productivity and profitability. This will also impact their business confidence and will make them reconsider their current and future investment strategies in China. These companies worry that, in the long run, such united front policies will appear regularly.

As early as the end of 2017, China passed Article 19 of the “Business Law” which required that a company can have a party sub-branch (in a company) as long as there are three Chinese Communist Party members in any state-owned enterprise, foreign investment company, or joint venture.

In June of this year, the European Union Chamber of Commerce in China conducted a survey. Many European companies believed that the major obstacles to operating in China were from imposed scrutiny and from unfair privileges that the state-owned enterprises have. Among the 626 European companies surveyed, 44 percent expect that China will further impose more regulations in the next five years and nearly half expect that the state-owned enterprises will gain growth opportunities this year, while private enterprises will be sacrificed.

The European Chamber of Commerce also mentioned that the Chinese companies operating overseas will also be impacted because foreign companies will face stricter scrutiny from the CCP if they decide to work with any Chinese companies.

Source:
1. Epoch Times, October 18, 2020
https://www.epochtimes.com/gb/20/10/18/n12484864.htm
2. Deutsche Welle, October 16, 2020
https://p.dw.com/p/3k14r

Briefings | | |   Government/Politics