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Chinese Manufacturing PMI Numbers Confirmed a Decline

The Chinese National Bureau of Statistics official website recently published its December PMI numbers for China’s manufacturing industry. The overall PMI index landed at 49.4 percent. The PMI New Orders sub-index was 49.7 percent. The Raw Material Inventory sub-index was 47.1 percent; and Employment sub-index was 48 percent. The data indicates the first decline in the manufacturing business in 29 months.

Well-known Chinese financial company Caixin, which conducts its own independent and globally recognized Chinese PMI data collection, also published its December numbers. The overall Chinese manufacturing PMI index reached 49.7, which was the first time it had fallen below 50 since Caixin’s June 2017 report. The trending is in line with the National Bureau of Statistics. Caixin’s New Orders sub-index showed the first decline since July 2016 and New Export Orders showed a nine-month-in-a-row decline. The Employment sub-index has been showing a decline for 62 months.

In the meantime, in December, the Guangdong Provincial Department of Industry and Information Technology suddenly stopped publishing its manufacturing PMI numbers for the province. The event sent a shockwave across the media, since Guangdong is one of China’s largest manufacturing provinces. The government later explained that the move was per the requirements of the National Bureau of Statistics.

PMI (Purchasing Managers Index) is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.

Sources:
1. Chinese National Bureau of Statistics official website, December 31, 2018
http://www.stats.gov.cn/tjsj/zxfb/201812/t20181231_1642475.html
2. Caixin, January 2, 2019
http://pmi.caixin.com/2019-01-02/101365402.html
3. Phoenix New Media, December 17, 2018
https://finance.ifeng.com/c/7iiBpVpQFWM

Sing Tao: Samsung Closed Its Tianjin Factory

Primary Hong Kong news media Sing Tao News Group recently reported that global mobile phone leader Samsung closed its Tianjin factory on the last day of 2018 and sent all of its 2000 employees home. This factory used to manufacture cellphones, camcorders, video recorders and DVD equipment, exporting to over 20 countries in Asia, Europe, and Africa. This is another major Samsung closure after the company shut down its Shenzhen factory last April. Now Samsung has only one handset manufacturing factory left in Huizhou, Guangdong Province, China. Local taxi drivers told the reporter that the close-down will definitely have a negative impact on the local economy and their business. In recent years Samsung has been moving from China to Southeast Asia and India. The Huizhou factory can still produce 72 million handsets. However, the two Samsung factories in Vietnam now make 240 million handsets. Last November, Samsung opened the world’s largest smartphone factory in New Delhi, which is expected to be Samsung’s biggest export center.

Source: Sing Tao News, December 31, 2018
http://www.stheadline.com/inews-content.php?cat=e&nid=288520

Hong Kong’s Toy Industry Plans to Move Factories out of Mainland

Major Taiwanese news group Eastern Media International recently reported that, so far, Hong Kong’s toy industry has not been impacted by the US-China trade war, although many other sectors in the manufacturing business have been leaving China. However, with more and more negative expectations on the 90-day US-China negotiation, the Hong Kong toy factory owners are seriously considering relocating their facilities mainly to Vietnam and India. According to Lawrence Chan Wing-luen, Chairman of the Toy Industry Advisory Committee of the Hong Kong Trade Development Council (HKTDC), nowadays nine out of ten toys sold in the U.S. are made in China. More and more associated Hong Kong toy vendors are concerned about the trade war risks, which have mounted on top of the continuous cost increases that the Mainland manufacturing industry has seen in the recent years. For example, one of the largest Hong Kong toy makers, Wah Shing Toys, employs around 20,000 Mainland workers. Its board member Francis Wong Wai-cheuk said that the company is planning to move out.

Source: Eastern Media International, January 3, 2019
https://www.ettoday.net/news/20190103/1347198.htm

The Paper: Xiamen City Carried Out Ideology Campaign among Party Members to Create “Clean and Healthy Political Ecology”

The Paper reported that, in order to create a “clean and healthy political ecology,” Xiamen City of Fujian Province recently carried out a campaign among 70,000 of its party members to rectify the behavior of some of the party members. Some members choose to “believe in ghosts and in god but do not believe in Marxism-Leninism (不信马列信鬼神).” The members were asked to conduct a self-check and take corrective action if they found any violations. All violations are subject to serious investigation and an accountability check. The article stated that this is part of Xiamen City implementing the party’s political tasks which include “promoting party organizations, party members and cadres at all levels of the city to safeguard (Xi Jinping)’s core leadership in a conscious manner, firmly implement the party’s political line, and strictly enforce political discipline and political rules in order to ensure the implementation of major decisions.” So far, the city has conducted questionnaires on 20 violations of political discipline and political rules, including 3 municipal cadres. Meanwhile in 2018, Xiamen City and the local districts organized 31 training programs with 2,630 participants to study the “key messages from the 19th congress and Xi Jinping’s socialist thoughts with Chinese Characteristics in the new era.” This was done so that the members could “grasp the discipline inspection and supervision work in the new era more accurately.”

Source: The Paper, January 5, 2019
https://www.thepaper.cn/newsDetail_forward_2816898

CNA: Mainland Scholar Calls on the Chinese Communist Party to Fade Out of the Historical Stage

The Central News Agency reported that Zheng Yefu, a famous Chinese social scholar, recently wrote that, since its establishment, the Chinese Communist Party has brought too many disasters. In the past 70 years it has completely lost its ability to correct itself. Only by peacefully fading out from the historical stage can it meet the fundamental interests of the people. However if the public keeps quiet, the people don’t deserve to see the end of this totalitarian regime.

Zheng took the history of Taiwan’s end of the one-party dictatorship as an example. He emphasized that, if there had been no democratic party to fight against the ruling party for many years, the then President Chiang Ching-kuo would not have been able to make decisions toward a democratic transformation. Compared with today’s China, if intellectuals were faithful to their own consciences, they should have been brave enough to express their views and “China would not have become what it is today.”

Zheng Yefu is a retired professor at the Department of Sociology at Peking University. He has long observed Chinese intellectuals and social development issues and has criticized official policies. Among the public he is very highly respected. He made the above appeal in his article called, “The Causes and Difficulties of Political Reform,” which was published last month.

Although this article was not published in mainland China, overseas Chinese media reprinted it and triggered extensive discussions. Chinese netizens have also reprinted on the microblog some of the content that does not contain sensitive vocabulary. They expressed their gratitude to Zheng Yefu for this article. Some people said that Zheng is “the true spirit and patriotism of Peking University.”

According to a report from Radio Free Asia and Radio France International, Zheng Yefu said in the article that most of the party’s policies do not represent the interests of the Chinese people. Instead, the party took the opportunity to turn the private land of the people into state-owned land, and the local governments then sold the land to real estate developers at a much higher price and made countless citizens become house slaves.

He pointed out that since the party came to power, for 70 years, it has brought too many disasters to the Chinese people, and it has almost completely lost the mechanism of self-correction. “Joining the party is to earn an official title and defending the party is to safeguard its vested interests; the party is increasingly hateful towards different political views, and the fear of crisis has made the party dysfunctional.”

Zheng Yefu believes that, currently, the common interest of the Chinese people and the ruling party is for “the Party to peacefully, that is, in order to avoid violence and cause the minimum social unrest, to fade out of the historical arena.” “The only big contribution for the existing party leadership to do that can go down in history is to lead the party to decently fade out of the historical arena.”

He also mentioned, “If we (the public) do not say something and do not exert pressure, we should not, and we do not deserve to see the end of this totalitarian regime.”

Zheng Yefu pointed out that “The rise and fall of a nation rests with every one of its citizens,” which was one of the purposes of his writing the article. “There is also a humble motivation. I have written millions of words over the years. If I don’t say a word on the subject that matters to the fate of the nation, I will look down on myself.”

He mentioned at the end of the article that China has not yet reached the point where all responsibility can be pushed on the politicians. “It is because today’s scholars have not fulfilled their responsibilities. If they were faithful to their own consciences, if they were brave enough to speak their own opinions, China would not be what it is today.”

Source: Central News Agency, January 5, 2019
https://www.cna.com.tw/news/acn/201901050094.aspx

Xi Jinping: As Risks and Challenges Increase, Be Prepared for Combat Readiness

The military work conference of the Central Military Commission was held in Beijing on Jan 4. At the conference, Xi Jinping emphasized that China is still in an important period of strategic opportunities. As the number of risks and challenges are increasing, the entire army must do a solid job in preparing for combat readiness. In his speech, Xi said that the entire army must properly understand and grasp the general trend of China’s security and development, strengthen the sense of urgency and crisis, do a good job in preparing for a military fight, and resolutely fulfill the missions and tasks that the party and the people have entrusted to it. Xi also pointed out that it is necessary to establish the military strategy in the new era and to improve the capabilities of the combat forces.

Prior to the meeting, Xi signed the first military mobilization order of 2019. During the meeting he presented awards to 10 armed warfare units and 20 armed soldiers.

Source: Central News Agency, January 4, 2019
http://https://www.cna.com.tw/news/acn/201901040341.aspx

China’s Aid for Pakistan’s Foreign Exchange Reserves

China has pledged to provide Pakistan with a total of $2 billion in financial aid to increase its foreign exchange reserves. Russian experts pointed out that there is a high possibility that China will respond to Pakistan’s request to provide financial support for its all-weather strategic partners.

In the year 2018, the value of the rupee shrank by more than 20 percent with respect to the dollar. Repayment of foreign debts, including $8 billion paid in December 2018, almost emptied Pakistan’s foreign exchange reserves.

The ongoing three-month negotiation with the International Monetary Fund (IMF) has not generated any tangible results. The two sides will resume negotiations on January 15 for a loan of $7 to 8 billion. It is very likely that Pakistan will satisfy the conditions that the IMF has set and will make transparent all terms to international lenders of Chinese loans and infrastructure projects under the framework of the China-Pakistan Economic Corridor. However, due to the budget gap, the Pakistani side has been in arrears in paying for the amount of work and services that the Chinese companies have completed. Therefore, it is very likely that the future loans received from the IMF will be used to pay to Chinese companies. The United States, which plays a major role within the IMF, has warned the IMF that the U.S. membership fee at the IMF is taxpayer’s money and should not be used to pay the Chinese lenders or Pakistani bond holders.

Pakistan’s foreign exchange reserves fell to a critically low amount of only $7.3 billion, which cannot even cover imports in recent months. The international rating agency Fitch has listed Islamabad’s debt rating as junk. Against this backdrop, China’s commitment of $2 billion will strengthen the Pakistani economy, improve the overall foreign exchange reserves, and, more importantly, will help increase the confidence of foreign investors.

The current promised $2 billion is the second allocation within six months. In July 2018, Beijing already pledged $2 billion to Pakistan to deal with the economic crisis. Earlier, according to Pakistan’s newspaper The Express Tribune, quoting from a Chinese Ministry of Finance’s anonymous source, China will give additional financial support. However, this information has not been corroborated; nor has any other source denied it.

In view of this, Russian experts pointed out in an interview with the Russian Sputnik News that China and Pakistan have reached a consensus and will not disclose information on the specific amount and conditions of the financial assistance. Pakistan’s Minister of Finance, Asad Umar, did not answer inquiries from foreign media about China’s new financial assistance. Zhao Lijian, representative of the Chinese Embassy in Islamabad, insisted that he did not have the information regarding the amount of loans and investments under the framework of the China-Pakistan Economic Corridor. However, he pointed out that China will continue to provide assistance for Pakistan’s economic development.

Source: Sputnik News, January 4, 2019
http://sputniknews.cn/opinion/201901041027279641/

Luo Yuan on the “Military Attitude in the South China Sea”

At the 2019 Annual Meeting of Global Times on December 8, Luo Yuan, Executive Vice President and Secretary General of the China Strategic Culture Promotion Association, dismissed the opinion that (China’s) “military stance in the South China Sea is too weak.” He stated that China must have the strategic calmness to safeguard the sovereignty of the country. Luo implied that one shouldn’t look at what’s going on right now; the key is what will happen in the future.

Luo Yuan said that the situation in the South China Sea has changed a lot. China has built airports on the reefs and deployed defensive weapons and equipment. This was unimaginable 20 years ago.

Luo Yuan also analyzed the case of the Southern Combat Region’s spokesperson’s statement on November 30 regarding the U.S. ship’s intruding into of the Xisha territorial waters. Luo Yuan said that the Ministry of National Defense previously voiced “the South China Sea issue.” Now it is the local combat region that issues a statement. What is the function of the combat region? The combat region is established mainly to fight, that is, in the state of preparation for war. Our warships and planes have conducted evidence-collecting, warning, and expelling activities. This was absolutely impossible 20 years ago. Don’t talk about ‘avoiding the Sino-U.S. crisis.’ The best way to ‘avoid a crisis’ is if the U.S. warships don’t go into China’s territorial waters. To the United States, also, don’t talk about ‘freedom of navigation’ all day long. It is also time for China to say to the United States that China also needs to maintain ‘freedom of navigation.’”

Luo Yuan concluded, “So many people have questioned why the U.S. warships went to the Taiwan Strait and went to the South China Sea. Why hasn’t the army taken any measures? We advise everyone that we must have confidence in national defense; we must have strategic calmness; and we are gradually gaining strategic controlling power, accumulating the capability of a ‘must-win in fight.’”

Source: Global Times, December 8, 2018
http://world.huanqiu.com/exclusive/2018-12/13752537.html