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Global Times: Three Signals from the China-U.S. Presidential Agreement

Global Times published a commentary immediately after the historic dinner that Chinese President Xi Jinping and U.S. President Donald Trump had in Argentina at the G20 Summit. The presidential agreement can be summarized as follows: one, no more escalation of the trade war; two, no increase of the U.S. tariff to 25 percent on January 1; and three, the two countries should speed up the negotiations on removing the current tariff. This outcome sends three concrete signals. The first is that China’s determination to defend its interests didn’t change; the second is that head of state diplomacy plays a critical role in the China-U.S. relationship; and third, China should remain calm when facing new challenges and should focus on solving internal problems. The commentary concluded that China is no longer the old China of 40 years ago. It is now the second largest economy in the world and no one wants to lose the Chinese market. However, there will still be tough days in the near future and China cannot take the upcoming challenges for granted.

Source: Global Times, December 2, 2018

Xinhua: Overseas Scholar Recruitment Summit Held in Guangzhou

Xinhua reported that, from November 28 to 30, the 7th annual meeting for European and American Alumni Association (China Association of Overseas Students) and Guangzhou Haigui (Returned Scholars from Overseas) Innovation and Entrepreneurship Summit was held in Guangzhou. Three hundred forty candidates participated in the talent matching session held on November 30 and 79 letter of intent agreements were signed. Most of them were in the field of the next generation of information technology, bio-medicine, and artificial intelligence. A representative from the Guangzhou United Front office said solid achievements were made during the summit. The participants had the opportunity to learn about Guangzhou and its talent requirements, which will help promote high quality development in Guangzhou.

The article also listed the qualifications to join the European and American Alumni Association. They are:
1. Graduated from overseas higher education institutions with a bachelor’s degree or above;
2. Graduated from a domestic university with bachelor’s degree; received a master’s degree overseas or worked as a visiting scholar and conducted research projects at an overseas university or research institution for no less than two years;
3. Graduated from a domestic university with a master’s degree or above or worked as a lecturer, engineer, or in other corresponding positions, studied and conducted research at overseas universities, research institutes, or at companies for at least one year. Special consideration will be given to those who have overseas experience of less than one year.
4. Those with outstanding academic achievements or contributions may not be subject to requirements listed above but are subject to the approval of the Alumni Association.

Source: Xinhua, December 2, 2018

Xinhua: China’s New Energy Vehicle Market Faces Risk of Excess Capacity and Lack of Core Technology

Xinhua published an article on the new energy vehicle industry in China. It reported that, in recent years, the industry has experienced rapid growth. However, the industry is facing some challenges that are also emerging. These include dependence on subsidies, overcapacity, and a lack of ownership of core technologies. According to the article, over the last five years, China has had an annual compound growth rate for new energy vehicle sales of 130 percent, mostly due to financial assistance from the government, which has provided rebates to consumers and subsidies to the manufacturers. Meanwhile, an increased number of public charging stations in residential complexes, work units, and along the highways has boosted the support for electric vehicles. In 2017, the investment in the new energy vehicles industry exceeded 700 billion yuan (US$100 billion), accounting for more than 50 percent of the total investment in the entire automotive industry. However, the new energy vehicle industry also faces challenges. First, the industry is flooded with companies that want to take advantage of the government subsidy program, especially engine battery manufacturers, which has resulted in excess capacity. Also, over a dozen companies have been charged with filing false claims to cheat the subsidy system. Second, the companies lack the drive to develop new technology and to market the vehicles as many of them tend simply to rely on the government subsidies just to break even. According to the 2018 Global Electric Vehicle Development Index, China ranks first overall, but this is mainly reflected in the market scale. On the technical level, China’s vehicle manufacturing is still positioned in the low-tech field. It still relies on imports of basic components such as electric drive high-speed bearings and control chips. Third there is an increased risk in environmental hazard control. The potential environmental waste from used batteries could be a big risk. It is estimated that by 2020, China will have 120,000 to 170,000 tons of electric batteries to be scrapped. Lastly, domestic manufacturers are facing competition as foreign auto manufacturers such as Volkswagen, Honda, Tesla, BMW, Audi, and Jaguar have increased their investment and presence in the new energy vehicle market in China.

Source: Xinhua, November 29, 2018

Xinhua: Real Estate Developers Financed over 100 Billion Yuan in November

As real estate sales have gradually slowed down, China’s real estate developers have been faced with an increased demand for financing due to people’s heavy upfront investments, interest payments, and the slow return of cash flow. Since the government loosened up the financing policy, there has been an increase in real estate financing activities. According to statistics from the Central Plains Real Estate Research Center, in November (as of November 28), a number of real estate companies across the country were approved for large-scale financing with the total financing amount exceeding 100 billion yuan (US$14 billion). Meanwhile the defaults on debt payments this year has hit a record high. In November, 150 billion yuan in debt was due, which was the second largest amount in 2018. It is expected that the debt repayment will be even larger in December.

Source: Xinhua, November 30, 2018

China Is Latin America’s Second Largest Trading Partner

According to a People’s Daily report, at the time of Xi Jinping’s trip to Argentina, China’s economic, trade, and investment cooperation with Latin American and the Caribbean countries was developing rapidly. At present, China has become the second largest trading partner for Latin America, and, after Asia, Latin America has become the second largest destination for Chinese overseas investment.

In 2017, the bilateral trade volume between China and Latin American and the Caribbean countries reached US$257.8 billion, an 18.8 percent year-over-year growth over 2016. From January to September this year, the bilateral trade volume increased by 20 percent, reaching US$228.6 billion. In 2017, Chinese companies’ stock for direct investments in Latin America reached US$387 billion, with a total contractual value of Chinese engineering projects in Latin America of US$164.2 billion.

Source: People’s Daily Online, November 30, 2018