Transcription of a Portion of the “We the People” Talk Radio Program, March 1, 2020 with Dr. Shizhong Chen and Eureka Young on the CCP Virus
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China Agreed to Restructure Low Income Countries’ Debts
China has recently reached agreements with a number of low-income countries that applied for debt restructuring to assist these countries in fighting the epidemic. Analyses show that China holds the large debts of many low-income countries. Therefore, this agreement is significant.
The Financial Times reported that China’s Ministry of Foreign Affairs stated that China has reached an agreement with half of the 20 low-income countries that have requested debt restructuring. The Debt Service Suspension Initiative (DSSI) of G20 countries leads the negotiation framework for this agreement.
The DSSI was launched in April this year to help some low-income countries to focus on responding to the health and economic crisis that the COVID-19 epidemic caused. Eligible countries can freeze the repayment of bilateral loans until the end of this year. This is the first time that China has participated in a multilateral debt relief initiative. The agreement between China and Angola is critical.
In the past 20 years, among the African countries, Angola has been the largest recipient of loans from China, receiving about one third of China’s total loans to the continent. According to data from the World Bank, Angola’s loan payable of approximately US$2.6 billion may be suspended in 2020, accounting for 3.1 percent of the country’s gross domestic product (GDP). The Central Bank of Angola said that the country’s total outstanding external government debt approximates US$49 billion, of which China is owed 45 percent.
As the COVID-19 disease has caused severe damage to developing countries, more countries may request debt restructuring in the future. Redd Intelligence’s senior analyst Mark Bohlund said that, under the DSSI framework, “much of the burden falls primarily on China.”
Analysts pointed out that tracking the progress of DSSI negotiations in the past has not been easy. In particular, it is because China provides a large proportion of the loans and often does not fully disclose information. At present, China’s state-owned export credit agency, the Export-Import Bank of China, has issued most of China’s loans, but some also come from the state-owned China Development Bank.
Source: Central News Agency, September 2, 2020
https://www.cna.com.tw/news/acn/202009020167.aspx
Scholars’ View on China’s “Domestic Circulation” Strategy
Recently, at the semi-annual meeting of the Chinese Communist Party’s (CCP) Politburo, General Secretary Xi Jinping proposed a new economic strategy in response to the deteriorating relationship with the U.S. and the slowdown of the global economy. The “dual circulation” strategy aims to replace the prevailing one driven by exports and infrastructure investment with one led by domestic consumption, or “domestic circulation.” He Jiangbing, a Chinese financial expert told the Taiwan based Central News Agency that the truth is, “People don’t have money.” This is the basis for China to implement “domestic circulation.” It is because they cannot afford the expensive imports.
According to the calculations of the Income Distribution Research Institute of Beijing Normal University, 964 million Chinese people earn a monthly income below 2,000 yuan (US$ 292.50); 364 million earn a monthly income between 2,000 (US$ 292.50) and 5,000 yuan (US$ 731.10); and only 72 million people, or 5.13 percent of the total population, have a monthly income of more than 5,000 yuan (US$ 731.10). Data from China’s National Bureau of Statistics (NBS) also shows that 40 percent of the households, a population of 610 million, make about 1,000 yuan (US$ 146.20) a month on average.
He pointed to three issues related to “domestic circulation.” The first is the widening food shortage; the second is advanced technology that depends on advanced economies such as the United States, especially the annual import of over US$ 300 billion worth of chips; the third is the energy sources such as oil and natural gas that rely on imports.
Liu Kaiming, director of the Shenzhen based nongovernmental organization, the Institute of Contemporary Observation organization, believes that it is difficult for export oriented companies to switch to domestic sales. Generally speaking, “China’s total production capacity exceeds the domestic demand by about one-third.” Without external demand, “one third of those companies will go bankrupt.” China’s total exports last year were about 17 trillion yuan (US$2.5 trillion). Even a drop of 1 percent, or 170 billion yuan (US$25 billion), is enormous. The gap must be filled by the corresponding domestic market.
Liu added that China’s manufacturing industry consists of two parts: the domestic market and the foreign market including Hong Kong, the U.S. and Europe. The products made for the former domestic market are of lower quality, while those made for the latter have a higher quality and technology, and employees are paid better. If the government promotes “domestic circulation” as the main driver of the economy, because the income of Chinese people is generally low, firms will have to lower the quality and resort to price competition. “The domestic circulation cannot drive and improve the quality of products made in China.”
Liu believes the major problem for the Chinese people is “no money.” To reduce its dependence on exports, China has to increase domestic consumption.
Source: Central News Agency, September 1, 2020
https://www.cna.com.tw/news/acn/202009010223.aspx
China’s Banking Industry: Non-performing Debt to Surge as Preferential Policies Expire
The profitability of China’s banking industry has severely deteriorated as a result of the ongoing epidemic. Each and every of the five state banks has recorded double-digit negative first-half net profit growth. According to Reuters, increasing the provisions for bad debts and more speedily disposing of them are the banks’ main measures for dealing with the slowing economy and the impact of the virus.
Liao Lin, vice president and chief risk officer of the Industrial and Commercial Bank of China (ICBC), talked about the mounting pressure of controlling the quality of the collateral for deferred loan repayments in the second half. Jin Yanmin, the chief risk officer of China Construction Bank (CCB), expressed that the expiration of relevant preferential policies that help companies to recover may affect the appraised value of the customers’ assets. In the first half of next year, more non-performing debts may surface. Zhang Qingsong, President of the Agricultural Bank of China (ABC), mentioned two sectors with greater uncertainty in the mortgage assets: one is the businesses that the epidemic directly impacts, such as catering, accommodation, tourism, and entertainment; the other is those with a high degree of external dependence and high risks due to external uncertainty, such as export-oriented low-end manufacturing.
The interim results of the five major banks showed that their non-performing loan ratios are slightly on the rise, ending a three-year downward trend. Among them, the Bank of Communications (BC) shows the largest climb at 21BP (basis point), followed by ICBC and CCB, both at 7BP. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC), the state regulator of the banking industry, recently stated that the banking industry is expected to dispose of 3.4 trillion yuan (US$ 500 billion) of overdue loans this year, compared to 2.3 trillion yuan (US$ 340 billion) last year.
Source: Central News Agency, September 1, 2020
https://www.cna.com.tw/news/acn/202009010113.aspx
Lianhe Zaobao: China Warned Norway: Don’t Award Nobel Prize to Hong Kong Residents
Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that Chinese Foreign Minister Wang Yi commented in a joint press conference with Norwegian Minister of Foreign Affairs Ine Eriksen Søreide that China made it clear that it would not like to see the politicization of the Nobel Prize. There have been Norwegian lawmakers as well as U.S. congressmen who nominated Hong Kong Residents as the Nobel Peace Prize candidate. Although the Nobel Prize Committee is independent from the Norwegian government, yet its decisions may still impact the government’s relationship with China. Wang Yi’s recent visit was the first time a Chinese Foreign Minister visited in 15 years. Wang urged the Norwegian government to “cherish” the opportunity to have a “healthy” relationship and promised more “openness” from China.
Source: Lianhe Zaobao, August 29, 2020
http://www.uzaobao.com/cngov/2020-08/2977148.html
SETN: Indian Government Is Silently Removing Huawei
Sanlih, one of the primary Taiwanese TV stations, recently reported that, with the worsening of the China-India relationship, the movement inside the Indian government to eliminate Huawei’s presence in India has been expanding quietly. Although India has not officially announced a ban on Huawei and ZTE, yet multiple central government ministers have been telling the Indian domestic telecommunications companies to avoid deploying equipment made in China, including 5G network equipment. A high-ranking executive from India’s top communications service provider said the government has already blocked all Chinese bidders from having access to India’s 5G network tests. “It’s now very clear – it’s game over,” said this anonymous source. India is the world’s second largest mobile telecommunications market, with 850 million users. Huawei was established as a major supplier for all three of India’s top telecommunications providers. If the government were to ban Huawei, it would be a massive setback for Huawei. Another government source suggested that India may not issue an official ban to avoid angering China; however, the Modi administration has been “on high alert.”
Source: SETN, August 25, 2020
https://www.setn.com/News.aspx?NewsID=802871
TechNews: Huawei Urges Suppliers to Ship before the U.S. Ban
Taiwanese technology news site TechNews recently reported that Huawei has lately switched to “survival mode” and is trying to establish a large enough chip stock before the U.S. ban takes effect on September 14. According to sources familiar with the matter from among Huawei’s key Taiwanese suppliers, namely MediaTek, Realtek, Novatek and RichWave, Huawei has been calling suppliers at 4 AM in the morning or setting up midnight teleconferences urging them to sending shipments. Samsung, SK Hynix, and even optical lens manufacturers are also rushing their shipments due to the fact that all these vendors use U.S. technology. In some cases, Huawei obtained agreements from suppliers to ship half-made products or products that have not yet passed the quality assurance (QA) processes. However, one of the largest Huawei suppliers, MediaTek, issued a statement clarifying that they will not ship any products without QA. Some companies declined to comment on the inquiry.
Source: TechNews, August 26, 2020
https:// technews.tw/2020/08/26/huawei-in-survival-mode-as-suppliers-race-to-beat-us-deadline/
The CCP Inspects the Entire Internet for Xinjiang Information More than 1 Million Times Per Day
Recently, Epoch Times obtained a document that the Chinese Communist Party’s local branch at the Public Opinion Center of Xinjiang Cyberspace Affairs Office (the Public Opinion Center) issued on June 20, 2019.
According to the document, the Public Opinion Center currently monitors and inspects Xinjiang-related information on the entire Internet at all times, by all means, and through all platforms, with an average of more than 1 million inspections per day.
From its establishment in 2014 to June 2019, the Public Opinion Center “reported and investigated” (i.e., referred for investigations and penalties) a total of more than 1.07 million pieces of information related to the “CCP, government, military, violence, terrorism, and religious extremism.” It shut down over 4,800 websites, canceled over 4,440 new media accounts, and suspended over 760 websites. It interrogated over 690 persons in charge of the websites and investigated over 63,000 netizens.
The document stated that the Public Opinion Center focuses on the Internet postings about the “China threat theory,” the “China penetration theory,” the “Chinese hegemony theory,” and “strictly investigates officials who violate discipline and the law and engage in internal fighting.” The Public Opinion Center monitored and censored over 150,000 pieces of political information, including 145,000 pieces of information outside Xinjiang and over 5,000 pieces of information inside Xinjiang. The CCP Central Government’s Cyberspace Affairs Office repeatedly commended the Public Opinion Center of the Xinjiang Cyberspace Affairs Office.
The Xinjiang Cyberspace Affairs Office keeps an eye on more than 2,300 Xinjiang-related key people and key accounts.
To control the dissemination of videos, over 500,000 videos have been censored, information transmission has been blocked more than 6.3 million times, and 40,281 information samples have been blocked and filtered.
For example, the document stated that in May 2017, the CCP Central Committee and the Xinjiang autonomous region worked together to “purify the public opinion environment.” The Public Opinion Center directed the cyber information offices of all prefectures and cities across Xinjiang to dispose of more than 200,000 pieces of negative information.
To join the Public Opinion Center, one must pass a strict “political” background check, and must also be in good health to be able to monitor online 24 hours a day, seven days a week, and 365 days a year. As for language skills, people working at the Public Opinion Center are proficient in Uighur, Kazakh, English, Russian, Uzbek, Arabic, and other languages.
Source: Epoch Times, August 30, 2020
https://www.epochtimes.com/gb/20/8/26/n12358317.htm