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China Economy: Volvo’s Safety Reputation is Challenged Due to Massive Recalls
China Economy recently reported that China-owned Swedish automobile manufacturer Volvo issued multiple recalls for a total of 380,000 cars in the Chinese domestic market in the last month alone. Volvo ranked number one on the recall list in August in China. Volvo made its name in the Chinese market for its quality and safety. However, numerous design mistakes and manufacturing issues caused multiple large-scale recalls and have been eating into the brand’s reputation. Volvo has recalled over half a million cars this year in China. The latest batch of recalls in September impacted 135,316 cars, which is greater than all the recalls issued in the past four years (2016-2019) combined. As the inventor of the safety belt, Volvo’s recent global safety belt recall of 2.2 million cars added to the crisis, as it was the largest recall in the company’s history since its founding in 1927. Chinese multinational automotive company Geely Holding Group acquired Volvo from Ford in 2010.
Source: China Economy, September 8, 2020
http://www.ce.cn/cysc/zljd/gd/202009/08/t20200908_35695591.shtml
India Is Coming up with New Trade Barriers for China
Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, according to two anonymous Indian government officials and one industrial official, India will soon ask domestic importers to register. The purpose is to protect domestic manufacturers. The next step will be to impose import restrictions on copper and aluminum so that the government must approve all import contracts. India buys a large amount of copper and aluminum from China. The up-coming plan also includes the implementation of Prime Minister Modi’s strategy to reduce imports and to increase India’s exports of high value-added products. The registration requirement is also designed to track more accurately and to understand the level of metal dumping into the Indian market. The Indian Ministry of Mines and the Ministry of Commerce refused to comment on this matter. India has been creating new anti-China trade policies recently, such as the ban on hundreds of Chinese mobile apps. The Chinese Ministry of Commerce expressed the opinion that India has been violating the legal rights of both Chinese investors and the Indian consumers.
Source: Sina, September 10, 2020
https://dailynews.sina.com/gb/international/phoenixtv/2020-09-10/doc-ifzzxynp3771513.shtml
SMIC’s Claim of Having No Military Tie Is Questionable
Taiwanese news site NewTalk recently reported that U.S. Pentagon officials advised that the Trump administration is considering blacklisting Chinese domestic chip maker SMIC due to its ties to the Chinese military. This could cause major damage to the Chinese chip-making industry, since SMIC is China’s largest and the most advanced chip manufacturer. It is also Huawei’s only hope for low-end chip supply. SMIC has issued announcements claiming it has no relationship with the Chinese military. However, according to Mainland media reports, SMIC was the sole manufacturer for the KD5660 Level-A network exchange chip designed by a company named ArmyFly, which is headquartered in Beijing and is dedicated to serving the Chinese military with focuses on army information network and equipment innovation. The KD560 chip even won the highest award issued by the Equipment Development Department of the Central Military Commission. ArmyFly’s customers are all military branches and SMIC, as its award-winning chip supplier, now declares it has nothing to do with ArmyFly.
Source: NewTalk, September 10, 2020
https://newtalk.tw/news/view/2020-09-10/463575
China Moves to Discipline Local Financing Platforms
China’s financial regulatory authority recently issued a document imposing strict restrictions on the products and services that can be provided by the locally established financing platform – the financial asset exchanges (FAE). The move may deal a blow to real estate companies and urban investment companies that have resorted to these exchanges as a financing channel in recent years.
The financial asset exchange is a financial asset trading service platform set up with the approval from local governments (provincial and municipal governments).
According to a Reuters report, this document forbids local FAE’s from cooperating with e-financing and real estate companies that are subject to state regulatory restrictions. It also obliges FAE’s to stop providing passages for financial or non-financial institutions to circumvent regulatory requirements such as the scope of investment and leverage constraints.
The document also pointed out that the local FAE’s are not allowed to sell products, in any fashion, to individuals, and that they are not allowed to issue, sell or trade financial products and private equity products under the supervision of the central financial authorities.
Since 2010, China’s local governments have been setting up FAE’s, originally to solve the financing problems of local small and medium sized enterprise. However, many FAE’s were involved in a number of illegal fund-raising activities and were subsequently subject to strict regulation. In recent years, FAE’s are becoming an important financing channel for real estate companies and local government owned infrastructure investment entities. The new document is believed to put a brake on the new waves of housing and infrastructure development.
Source: Central News Agency, September 13, 2020
https://www.cna.com.tw/news/acn/202009130049.aspx
CCP Secret Trial of Real Estate Tycoon Who Openly Criticized Xi Jinping and the Official Media
On September 11, Ren Zhiqiang, the former chairman of China Huayuan Group, a real estate tycoon, was put on trial in Beijing. Ren was charged with corruption and bribery, embezzlement of public funds, and abuse of power. There were many policemen in and around the courthouse, and no one except those “specially invited” could enter the courtroom. In 2016, Ren Zhiqiang publicly criticized “the official media which has the party as its last name” and was suspended from the party for one year. In February 2020, Ren Zhiqiang wrote on social media that the CCP lost control of the epidemic due to the lack of freedom of the press and speech and should take responsibility. He also implied that Xi Jinping is “the clown who even if stripped naked, would still insist on being an emperor himself.” Ren disappeared from the public in March. On April 7, the Beijing Municipal Discipline Inspection Department announced that it was conducting a disciplinary review on Ren Zhiqiang. On July 23, Ren Zhiqiang was “expelled from the party for serious violations of discipline and law” was accused of “not complying with the Party Central Committee on major issues” and of “smearing the image of the party and the country.” Ren holds a Law degree from Renmin University and served as a member of the Beijing Political Consultative Conference. His father was the formal Deputy Minister of Commerce.
Source: The Epoch Times, September 11, 2020
https://www.epochtimes.com/gb/20/9/11/n12395667.htm
CCP Provincial Party Committee Issues Directive to Prevent Japanese and Korean Companies from Leaving
In October 2019, Samsung closed its mobile phones plant in Huizhou city of Guangdong province. In June this year, Samsung announced that it will move its display production line from China to Vietnam. An internal document that the Huizhou government issued on August 10 showed that the Huizhou Import and Export business was hit hard when Samsung left and the CCP Guangdong provincial party committee asked that Huizhou take measures to stop Japanese and Korean companies from moving out.
In a confidential document that the Huizhou Municipal Bureau of Commerce issued on August 10, 2020, it stated that, in 2020, due to China US trade war, the pandemic, and the exit of Samsung, Huizhou’s import and export trade with Korea fell by 77.4 percent, of which exports plummeted by 89.5 percent. Out of 280 Korean companies, including Samsung and LG, which have invested in Huizhou over the years, as of July 2020 there were only 96 left, an indication that two-thirds of South Korean companies have left.
In the document, the Guangdong provincial party committee directed that Huizhou “take advantage of the relatively stable epidemic condition in Southeast Asia and use ‘fighting the epidemic together’ as the opportunity to prevent companies from Japan, South Korea and other neighboring countries from leaving. The document suggests that Huizhou use the upcoming economic conferences with Korea and Japan and focus on the promotion of the China-South Korea Industrial Park in Huizhou and organize Japanese and Korean companies with an investment interest to visit Huizhou. The document also summarized the recent cooperation projects Huizhou has with neighboring countries. It includes the opening of the Huizhou Economic and Trade Representative Office in South Korea at the end of August. These projects also include: hosting visits of Japanese, South Korean and Singaporean companies and institutions to visit Huizhou; returning visits to key enterprises in those countries; and engaging third party agencies to attract investment opportunities in Huizhou.
Source: Epoch Times, September 8, 2020
https://www.epochtimes.com/gb/20/9/8/n12389899.htm
People’s Daily Refused to Publish U.S. Ambassador’s Op-Ed, Accusing U.S. of Being Overbearing
Terry Branstad, the U.S. Ambassador to China, recently approached the People’s Daily, hoping to publish his op-ed on improving U.S.-China relations. People’s Daily, however, rejected the U.S. Ambassador’s request. China’s Ministry of Foreign Affairs and People’s Daily responded on Thursday September 10, calling the U.S. Ambassador’s article “full of loopholes” and accused the U.S. of being ” illogical, overbearing and unreasonable” in this matter.
In the Op-Ed titled, “Resetting the Relationship Based on Reciprocity,” Branstad stated that the relationship between the U.S. and China has become increasingly imbalanced. U.S. companies, journalists, diplomats, and even civil society have been given unequal access. While U.S. journalists face restrictions on reporting and even entering China, Chinese state media workers have long enjoyed open access in the United States.
At a regular press conference on Thursday, Zhao Lijian, spokesperson for the Ministry of Foreign Affairs, said that Branstad’s article “attacks” and “smears” China, saying that the U.S. request of “publishing the op-ed with its full content with no alteration” clearly has nothing to do with freedom of the press. Zhao Lijian said that the US is “deliberately touching porcelain to find fault” [Editor’s note: deliberately manufacturing the outrage to find fault with China.]
U.S. Secretary of State Pompeo issued a statement late on Wednesday night to the People’s Daily for refusing to publish Branstad’s op-ed criticizing China’s propaganda agencies of hypocrisy and lack of reciprocal treatment and that China’s Ambassador to the U.S. Cui Tiankai alone has published five Op-eds this year in prominent U.S. news outlets.
Since the beginning of this year, the U.S. has begun to put pressure on the Chinese authorities to achieve reciprocity in terms of the number of media, the working environment of journalists, and the free flow of information. Related measures have caused a strong backlash from China. The People’s Daily, Xinhua News Agency and other Chinese propaganda agencies have recently published long articles in succession criticizing U.S. practices.
On August 25, the People’s Daily published a 30,000-word article in three pages criticizing the China policy speech delivered by US Secretary of State Pompeo at the Nixon Presidential Library.
Source: Voice of America, September 10, 2020
https://www.voachinese.com/a/china-u-s-trade-attacks-after-paper-refuses-to-carry-envoy-s-op-ed-20200910/5578345.html