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Ministry of Commerce: Closing Down North Korean Companies Per UN Resolution

China’s Ministry of Commerce recently released its official announcement asking all government branches to close down North Korean owned businesses in China. The regulation was issued under the State Administration for Industry and Commerce (SAIC), which is part of the Ministry. The new government regulation explained that the cause of the policy change was based on the United Nations Security Council Resolution 2375. The scope of the regulation applies to all companies in China that involve North Korea, including joint ventures. SAIC gave the companies 120 days to close down their businesses. The provincial governments are held accountable for enforcing the implementation of the new regulation. However, the new announcement did mention some exceptions for purposes that are not-for-profit and which the UN resolution allows.

Source: Official Website of the Ministry of Commerce, September 26, 2017
http://www.mofcom.gov.cn/article/b/f/201709/20170902652390.shtml

Briefings | | |   Economy/Resources Geo-Strategic Trend

Is Jian Yang a Chinese Spy?

A number of English media and Chinese media reported that Jian Yang (杨健), an MP in the New Zealand government and a member of its ruling National Party, might be a Chinese spy.

Jian Yang was born in Jiangxi Province in China. He earned his Master and Ph. D. degree in International Relations from the Australian National University. Then in 1999, the University of Auckland in New Zealand hired him as a Senior Lecturer in Political Studies. In 2011, he was elected as an MP from the National Party.

The issue was that Yang didn’t disclose his experiences as both a student and instructor at two military schools in China whose main duty is to produce spies. The two schools are the Air Force Engineering College and the Luoyang PLA University of Foreign Languages.

Some of the English media focused on how much Yang had disclosed to the New Zealand government and whether he vowed to be loyal to New Zealand. However, that discussion may not be that relevant since what Yang disclosed (or did not disclose) does not prove (or disprove) he is a spy. In all probability, a spy would not disclose anything that would even hint that he is a spy. A person who is not a spy might not choose to disclose anything either.

So whether Yang is a spy may be left to the intelligence office to decide.

Lianhe Zaobao, the largest Singapore-based Chinese-language newspaper stated, “The two universities belong to the PLA and are the key places where China trains its spies.” It also quoted an expert who said, “Yang almost certainly works for the PLA.”

Source: Lianhe Zaobao, September 13, 2017
http://www.zaobao.com.sg/realtime/china/story20170913-794975

 

Briefings | | |   Economy/Resources Geo-Strategic Trend

Chinese’ Total Bank Savings Amount Is Less Than Total Mortgage Amount

China’s National Bureau of Statistics recently reported that, by the end of 2016, the total amount of resident’s bank savings had reached 60 trillion yuan (US$9 trillion). However an article in the China Business Journal argued that the number is alarmingly small compared to housing prices and mortgage amounts.

Since China has 1.3 billion people, the average bank savings is 46,000 yuan per person. In Beijing’s the average bank savings is 130,000 yuan, the highest in the nation. However, the average housing price in Beijing is 5 million yuan. How can people afford a house?

The article further compared the total mortgage vs. total bank savings in the major cities. The traditional Chinese thinking is not to get in debt, so the author viewed it as a bad thing for the total of mortgages to be higher than the total of bank savings (it would mean that people collectively cannot afford their houses). Several cities fall into this group. For example, take Shenzhen. The total of all mortgages amounts to 1.4 trillion yuan in Shenzhen, but the total bank savings is only 1 trillion yuan.

Source: China Business Journal, September 18, 2017
http://www.cb.com.cn/qijunjie/2017_0918/1199834.html

Briefings | | |   Economy/Resources

Caixin: S&P Lowered China’s Sovereign Credit Rating

Well-known Chinese financial news media group Caixin recently reported that Standard and Poor’s (S&P) just announced the decision to downgrade China’s sovereign credit rating from AA- to A+. This is the first time in 18 years that S&P has downgraded China. In May, another world-class ratings organization, Moody’s, also downgraded the rating of China’s currency. S&P explained that concern over China’s debt level was the primary cause of the downgrade. S&P expects sustained growth of loans made outside the standard banking system over the next two to three years, while China’s total debt growth rate will remain higher than its GDP growth. The financial risks in the Chinese economy are still increasing. S&P did acknowledge the success of the recent efforts the Chinese government put in place to control the growth of debt. However, it will take time for the new policies to have a tangible impact. S&P also mentioned that it may increase China’s ratings if the rate of debt growth slows down significantly. All of the international ratings organizations have been monitoring China’s debt level and its financing platforms carefully. They have repeatedly asked the Chinese government to improve the information transparency of local government debts.

Source: Caixin, September 21, 2017
http://finance.caixin.com/2017-09-21/101148569.html

Briefings | | |   Economy/Resources

CBN: China Closing Down All Bitcoin Exchange Platforms

China Business Network (CBN) recently reported that the Chinese Internet regulatory authorities have decided to close down all bitcoin exchange platforms operating in China and put them out of the market. According to a government-issued risk advisory, all these Internet-based virtual currencies (“coins”) and their exchange platforms were established without having a Chinese legal basis. They are rapidly growing into channels for money laundering, drug-dealing and smuggling. China has been investigating the virtual currencies since the beginning of the year, starting in Beijing and Shanghai. The government also met with the owners of all the Chinese virtual currency platforms. The investigation showed all these platforms failed to meet financial regulatory requirements and caused major market fluctuations. According to recent statistics, the vast majority of the global Bitcoin trading transactions occurred in China. As of the beginning of this year, the three major Chinese Bitcoin trading platforms carried 98 percent of the global volume. The trading volume saw a sharp decline after the Chinese authorities intervened. On September 4, the Chinese central bank announced that Initial Coin Offering (ICO) activities are illegal. Very recently, the Chinese government decided to ban all virtual currencies in China.

Source: China Business Network, September 14, 2017
http://www.yicai.com/news/5345241.html

Briefings | | |   Economy/Resources

The Economic Observer: Moody’s Downgraded China’s Bank of Communications

Well-known Chinese national weekly newspaper The Economic Observer recently reported that Moody’s has just downgraded the baseline credit assessments of China’s Bank of Communications (BOCOM) from Baa3 to Ba1, which is often known as the “garbage level.” BOCOM was founded in 1908 (Qing Dynasty) and is currently the fifth largest bank in China, with 3,285 domestic outlets and 20 international branches. BOCOM’s total asset value (2016) was around US$1,296.5 billion. Moody’s cited BOCOM’s poor financing capabilities and higher-than-average financing costs, as well as a declining number of savings accounts, as the reason for the downgrade. A few other performance indicators also showed that the bank is facing much higher market risks. BOCOM responded immediately by suggesting that Moody’s focused too much on very few indicators and the downgraded rating was biased. It is worth noting that BOCOM’s rating for its long-term outlook remains at A3.

Source: The Economic Observer, September 8, 2017
http://www.eeo.com.cn/2017/0908/312397.shtmli

Briefings | | |   Economy/Resources US-China Relations

Three Percent of College Graduates Had to Start Their Own Business Due to Poor Job Market

According to a report that Radio Free Asia (RFA) published, new statistics from the Ministry of Education showed that, after graduation, three percent of college graduates in China start their own businesses. The rate is twice what it is in developed countries. The most likely conclusion is that these college graduates were forced to start their own businesses because of the lack of job opportunities. One economics professor in Beijing told RFA that the struggles that private companies have directly impact the job market for college graduates. Most of these college graduates have been forced to start their own businesses because they can’t find jobs. The Chinese economy has slowed down in recent years. Many private businesses face the challenge of high tax rates and the difficulty of getting a loan from state owned banks. Some of them have chosen to borrow money at a high interest rate and have ended up in a capital chain rupture.  The Ministry of Human Resources and Social Security found that over half of the businesses that college graduates started failed within three years.

Source: Radio Free Asia, September 8, 2017
http://www.rfa.org/mandarin/yataibaodao/kejiaowen/hc-09082017111255.html

Briefings | | |   Economy/Resources

CCP Wants Final Say in Foreign Company’s Operations in China

According to a dispatch from Beijing that the Taipei-based Central News Agency (CNA) published on August 24, executives from over a dozen major European companies in China met in Beijing last month to discuss the growing role the Chinese Communist Party (CCP) plays in foreign companies.

CNA cited reports from Reuters, among other news agencies, that people familiar with the discussion were concerned about President Xi Jinping’s emphasis on the CCP’s role in Chinese society, which has impacted the China operations of foreign companies.

China Daily, China’s official English-language newspaper, reported last month that it is a fact that CCP organizations have been established within companies in China. According to China Daily, out of 1.86 million privately owned companies, over 70 percent have a CCP branch unit in them.

Until recently, many foreign executives have regarded such an arrangement as symbolic. However, one executive who participated in last month’s discussion revealed that (the party) has exerted political pressure on some companies to give CCP representatives in the joint ventures the final say over business operations.

The executive said the company’s Chinese partner was pushing to change the terms of the joint venture to bring CCP personnel into management, to include the CCP organization’s overhead expenses in the company budget, and for the CCP secretary be named chairman of the board.

Source:
Central News Agency, August 24, 2017
http://www.cna.com.tw/news/afe/201708240405-1.aspx

Briefings | | |   Economy/Resources Government/Politics