Chinascope – Page 184

Local Governments in China Sold Land to Themselves to Maintain the Price

Selling land usage rights is the main source of income for local governments in China. As Chinese private real estate developers are stressed for cash these days, state-owned-enterprises, especially the city investment enterprises, have become the main buyers when governments auction land.

However, the city investment enterprises are the financing platforms that local governments set up to raise money for government spending. They are owned and managed by the government. Government’s selling land to them is in essence to move land from the left hand and give it to the right hand. This shows money on the books. However, in reality, it does not bring money to the government. So this practice just serves to maintain real estate prices. These city investment enterprises still need to find true real estate companies to develop the land. It is at that time that they hope they will make money.

Source: Epoch Times, February 19, 2022
https://www.epochtimes.com/gb/22/2/19/n13590084.htm

Briefings | | February 23, 2022 | Economy/Resources Government/Politics

Study Shows Political Connections Give Chinese Companies Preferential Access to Money

Bloomberg reported that researchers at the University of Navarra in Spain and the University of Manchester in the U.K. conducted a study of the Chinese companies that have connections to top-level Chinese Communist Party (CCP) officials. The researchers found that those with connections received more government subsidies that those without such connections.

Between 2012 and 2017, private firms that were listed on Chinese stock exchanges and that had board members who attended college alongside a member of the CCP Politburo, which has the 25 highest-ranking Chinese officials, received an average of 16 percent more in subsidies relative to their sales when compared with similar companies without those ties. However, these “connected” companies did not have faster sales growth than the others, indicating that the special favors given to them were not the best use of China’s resources.

Source: Bloomberg, February 18, 2022
https://www.bloomberg.com/news/articles/2022-02-18/chinese-businesses-benefit-from-ties-to-elites-study-shows

Briefings | | February 23, 2022 | Economy/Resources

Chinese Cities Lowered the Down Payment for Housing

Securities Times, a Shenzhen based financial and economic daily newspaper under People’s Daily reported that China has started to relax its policy on housing this year. For example, in Heze city, Shandong province, the down payment ratio for first-time home buyers has been reduced to 20 percent. Banks in Chongqing city and Jiangxi province have also reduced the down payment ratio to 20 percent for first-time buyers.

The report said that lowering the down payment is a strong policy incentive that stimulates market transactions.

After last year’s stringent housing market control, many places in China have adjusted their mortgage policies. More than 40 cities have announced measures to boost the sector, including lowering the down payment ratio, reducing the mortgage interest rate, and subsidizing home purchases.

Source: Central News Agency (Taiwan), February 21, 2022
https://www.cna.com.tw/news/acn/202202210057.aspx

Briefings | | February 23, 2022 | Economy/Resources

CCP’s No. 1 Document: Food Security and Avoiding a Massive Return to Poverty

The Chinese Communist Party (CCP) issued a No. 1 document on February 22, a policy paper that traditionally focuses on the agriculture sector in rural China. This year’s document aims to “to ensure national food security” and “not to return to poverty on a large scale.”

The document “insists that the rice bowls of Chinese people are ‘filled with Chinese food,’ and ensures that the grain output is maintained at over 650 billion kilograms.”

The document also vows to implement hard measures to protect arable land, strictly adhering to the red line of 1.8 billion mu (1.2 million sq kilometers) of arable land.

The CCP announced that it got rid of poverty at the end of 2020. The new document tells the officials to “resolutely hold the bottom line of not returning to poverty on a large scale,” and put the rural households that are at risk of returning to poverty into the scope of monitoring.

Source: Central News Agency (Taiwan), February 22, 2022
https://www.cna.com.tw/news/acn/202202220389.aspx

Briefings | | February 22, 2022 | Economy/Resources

China’s Banking Sector Comes to the Rescue of Real Estate Developers

The People’s Bank of China (PBOC), the country’s central bank, and the China Banking and Insurance Regulatory Commission (CBIRC), the chief regulator of the banking and insurance sector, jointly issued a circular at the end last year. It encouraged large state and private enterprises to merge and purchase (M&A) “high-quality projects” from real estate developers who are plagued by operational difficulties. It also urged financial institutions to provide these enterprises with the services that were needed for the acquisition.

At the beginning of this year, with support from the central government, the banking industry started to ease financing restrictions and release funds to support mergers and acquisitions. The number of real estate related M&A cases is on the rise.

The banking industry has injected at least 58 billion yuan ($US 9.15 billion) into the economy by issuing bonds, loans and other securitized assets.

A researcher at PBOC said, “Because of the lack of capital in the real estate industry, it is difficult to see large-scale M&A activities by the industry leaders. For some time in the future, banks will be an important source of funds.”

Source: Central News Agency (Taiwan), February 21, 2022
https://www.cna.com.tw/news/acn/202202210070.aspx

Briefings | | February 22, 2022 | Economy/Resources

Global Times: India Banned 54 More Chinese Apps

Global Times recently reported, based on Indian media coverage, that the Indian government banned 54 more Chinese mobile apps for “threat to Indians’ privacy and security.” Many of these apps are products of large Chinese technology companies like Tencent, Alibaba and NetEase. Since June 2020, India has carried out four rounds of operations against Chinese apps, with a total of more than 270 apps banned. The current one is the fifth round of the Indian government’s crackdown on Chinese apps, and overall, more than 300 apps have been banned. This is the latest step taken by India against the backdrop of tensions between China and India due to border disputes. The latest 54 banned apps are mostly those banned by the Indian government two years ago but have since been repackaged. Many apps owned by Tencent and Alibaba have changed hands to hide ownership and are hosted in regions like Hong Kong or Singapore, but the data ends up being sent to servers in China. A senior Indian official said on condition of anonymity that, the government has taken notice of this. The Ministry of Electronics and Information Technology of India issued a statement saying that it had received a request from the Ministry of the Interior of India to implement an emergency blocking of 54 applications in accordance with relevant laws. The statement said the 54 apps gained a number of key permissions and collected sensitive data from users. The Chinese government has stated on many occasions that it firmly opposes India’s repeated use of “national security” as an excuse to ban apps with Chinese backgrounds. Such practices violate the WTO principle of non-discrimination and the principle of fair competition in the market economy.

Source: Global Times, February 15, 2022
https://world.huanqiu.com/article/46osKXPY6dp

Briefings | | February 21, 2022 | Geo-Strategic Trend Information/Technology

U.S. Notorious Market List Targeted Chinese Companies Again

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that the United States Trade Representative (USTR) just released the so-called “2021 Counterfeit and Piracy Notorious Market Report.” AliExpress and Tencent’s WeChat and Ecosystem were newly included in this year’s list. Chinese companies such as Pinduoduo (NASDAQ: PDD), Taobao and Baidu (NASDAQ: BIDU) Netdisk, which had made it to the list before, remain listed. In total, the USTR Report identified 42 online and 35 brick-and-mortar markets around the world, which the report states, “are reported to have engaged in or facilitated substantial trademark counterfeiting or copyright piracy.” The USTR Report reflected what the Biden-Harris administration called “worker-centric trade policies.” U.S. Trade Representative Katherine Tai claimed that “global trade of counterfeit and pirated goods undermines critical U.S. innovation and creativity, harming American workers.” In recent years, the United States has used export control as a tool of political suppression and economic bullying and has continuously taken unilateral measures to suppress and contain other countries’ enterprises, institutions and individuals, creating difficulties and obstacles, jeopardizing the international economic and trade order, as well as free trade rules. As early as January 12, 2018, the Office of the United States Trade Representative issued a so-called report on intellectual property protection in 2017, in which 9 Chinese markets were included in the list of “notorious markets.”

Source: Sina, February 18, 2022
https://cj.sina.com.cn/articles/view/1887344341/707e96d5020017pw9

Briefings | | February 21, 2022 | US-China Relations

China’s Reaction to Trump’s Election Win

Xinhua Commentary Series: Spotlight on the U.S. Presidential Election

Wu Guoguang: Xi Jinping’s Reversal of the Course, Will China’s Transition be Peaceful or Marked with Bloodshed?

Cheng Xiaonong: U.S.-China Strategic Relations Have Crystallized