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Central News Agency: Over One Hundred P2P Platforms Shut Down in Less Than Two Weeks

The Central News Agency reported that, at the end of last year, China announced that it would carry out a “Peer to Peer Lending” platform regulation starting in June of 2018 (P2P occurs when online services match lenders with borrowers). From July 2 to 16, 131 of the P2P platforms were shut down leaving investors unable to withdraw cash while the owners went missing. The South China Morning Post reported that, in Shenzhen City alone, 22 P2P platforms were closed. One example is Heshidai (合時代), which has been running for 5 years since 2013 with accumulated financing activity of over 18 billion yuan (US$2.68 billion) and over 100,000 investors.

According to Sina, in China, P2P grew 200 percent from 2013 to 2017 because proper channels are lacking for Chinese citizens and small businesses to get loans from the bank. In 2014, only 9.6 percent of Chinese residents were able to get personal loans. At the same time, although small businesses contribute toward 60 percent of GDP and supply 80 percent of job opportunities, only 25 percent of them were able to get business loans. However, regulations for P2P lending are lacking. One of the scandals that turned into a Ponzi scheme was Ezubao lending. It was set up in 2014 and involved a $7.3 billion fund and 900,000 victims. It was shut down in February 2016 and 21 people were arrested.

It is expected that the regulatory activity will continue for a period of time and more P2P platforms will be impacted.

Sources:

1. Central News Agency, July 22, 2018
http://www.cna.com.tw/news/acn/201807220026-1.aspx
2. Sina.com, May 17, 2018
http://finance.sina.com.cn/stock/usstock/c/2018-05-17/doc-iharvfhu3237018.shtml

Ruo Yuan: What Is the United States Doing?

Ruo Yuan, the Executive Vice President and Secretary General of the China Strategic Culture Promotion Association, published an article on China’s state media, “Global Times (Huanqiu)” discussing the Trump administration’s strategy on China. The article was based on the “2017 U.S. Military Assessment Report” that the China Strategic Culture Promotion Association released. Below is an excerpt from the article:

Why has the United States taken the world by storm and provoked a trade war against China? It is as if the world is taking a quiz and few people understand what’s going on. Combined with Washington’s two previously published strategic papers on security, we will be able to see this more clearly.

On December 18, 2017, the Trump administration announced its first “National Security Strategy.” On January 19, 2018, U.S. Secretary of Defense James Mattis announced a non-confidential version of the “2018 U.S. Defense Strategy Summary.” These two strategic reports are the programmatic documents of the four years of Trump’s presidency. They show many new ideas in judgment about threats, strategic thinking, and strategic priorities. They show a clear imprint of the Trump brand. The main points are as follows:

(1) The “U.S. priority” has become a national security strategy; it marks the end of multilateralism and the rise of unilateralism.

(2) Taking China as the primary security threat marks a fundamental shift in the U.S.’s judgment about threats; it increases the possibility of Sino-US confrontation and conflict.

(3) Replacing the “contact strategy” with the “competition strategy” indicates that the U.S. foreign policy will be more confrontational.

(4) Replacing the “Asia-Pacific Rebalancing Strategy” with the “Indo-Pacific Strategy” and “South Asia-Central Asia Strategy,” indicates that the scope of China-U.S. competition will be broader. Trump expects Japan, South Korea, Australia, and other allies and partners such as India, Singapore, and Vietnam to play more and greater roles in its “Indo-Pacific strategy” and “South Asia-Central Asia strategy.” This means that the competition between China and the United States will expand from the Western Pacific to the entire Pacific, Indian Ocean, South Asia, and Central Asia. The friction and confrontation between China and the United States, China and Japan, and China and Australia may increase. China’s international security environment will be more challenging.

(5) Replacing the “automatic reduction plan” with “rebuilding military capabilities” involves increasing the defense budget and expanding the army.

(6) Replacing the “Nuclear-Free World” with “National Nuclear Forces and Nuclear Infrastructure Modernization” shows that the importance of nuclear weapons in the U.S. national security strategy is increasing.

These new ideas of Trump’s National Security Strategy are full of cold war and zero-sum competition thinking. If fully implemented, they will not only profoundly affect U.S. domestic and foreign policies, but will also affect the world’s strategic structure to a certain extent. They should garner close attention. In particular, the new U.S. national security and defense strategy named China and Russia as “revisionist countries” and long-term strategic competitors. It co-listed China, Russia, North Korea, Iran, and transnational criminal groups as threats and challenges to U.S. security interests. This may trigger a new type of cold war and deserves high vigilance. From this, we can also see a glimpse of the original intention of the United States to launch the U.S.-China trade war. This is only part of the overall U.S. strategy toward China.

Source: Huanqiu (Global Times), July 22, 2018
http://opinion.huanqiu.com/hqpl/2018-07/12549188.html

Sputnik News: China to Find a Solution in Vietnam to Win the Trade War

The ongoing U.S. – China trade war could have dealt a heavy blow to China’s export-oriented enterprises. According to the Russian government-owned news agency Sputnik News, Xu Ningning, the executive director of the government backed China-ASEAN Business Council, advised that China and ASEAN should cooperate in manufacturing.

In fact, the joint production plan was implemented a long time ago. Against the current backdrop, the cooperation between China and Southeast Asian countries will gain new momentum. China’s Guangxi Zhuang Autonomous Region has a Science and Technology Park under construction in its neighboring country of Vietnam. The goods produced there, which can be labeled “Made in Vietnam” according to the Rules of Origin, are not subject to the U.S. tariffs. The question is then whether the U.S. will exert its influence against such cooperation.

Chen Fengying, a researcher at the China Institute of Contemporary International Relations, told Sputnik News that, “Every country focuses on its own national interests. Because of the pressure from the U.S., they are also looking for a new development model, such as the cooperation between Vietnam and China. As to whether the U.S. will obstruct the deal, I think that even if the U.S. has such an idea, it may not be realized. Not every country completely obeys the U.S.”

Chen added, “The changes in the external environment will prompt Asia to strengthen cooperation. On the one hand, we must unite the Asian countries; on the other hand, we cannot ignore cooperation with the outside world. Asia has a good regional cooperation mechanism. Examples are the Regional Comprehensive Economic Partnership (RCEP) and ‘One Belt, One Road.’”

Trade statistics show that the mutual interests between China and ASEAN are growing. In the first five months of this year, the trade volume between China and ASEAN increased by 20 percent, while the overall growth rate of China’s foreign trade during the same period was 16.8 percent. Trade between China and the EU increased by 15.1 percent. At the same time, the trade between China and the U.S. was slightly behind with a growth of 13.1 percent.

Source: Sputnik News, July 13, 2018
http://sputniknews.cn/opinion/201807131025879187/

People’s Daily Commentary: The Claim that China Steals U.S. Technology Is a Total Lie

The Deputy Director of the Expert Committee of the China Association of International Trade wrote an opinion article that People’s Daily then published. The article asserted that the statement that “China steals U.S. technology” is a total lie that the U.S. made up. It stated that the lie has risen to the level of “economic aggression,” which is alarmist. “By distorting the facts, the U.S. has tried to portray the development of China’s science and technology as a ‘threat to the world.’” It further pointed out that the purpose for this U.S. allegation is obvious. It is to “demonize China and fool the world.” The article then listed a number of China’s achievements. They include the following: 1) China has the second largest number of international patent applicants in the world and is expected to surpass the U.S. in three years. 2) China has increased its research funding, which accounted for 2.12 percent of GDP in 2017, up by 11.6 percent compared to 2016. 3) The annual amount of intellectual property fees that China paid has increased year by year. It is ranked the fourth in the world. 4) China has become a technology transfer country whose technology transfer fees were 311.5 percent higher in 2017 compared to 2016. 5) Chinese companies are the advocates and leaders in the advancement of China’s technological development.

The article concluded that China’s technological progress and development momentum comes from its own innovative development system. The scientific and technological interaction between China and the rest of the world is benign and mutually reinforcing. It is pure nonsense to accuse China of stealing American technology.

Source: People’s Daily, July 18, 2018
http://world.people.com.cn/n1/2018/0718/c1002-30153589.html

Military Expert: Upcoming Military Exercises in East China Sea “Tailored to Taiwan Independence Forces”

Huanqiu reported that the PLA will conduct large scale military exercises in the East China Sea from 8:00 a.m. on July 18 to 6:00 p.m. on July 23 lasting about six days. Eighteen days ago, the Ministry of Defense made an advance announcement about the exercises. One military expert told Huanqiu that “the military exercises are live exercises that are tailored to the ‘Taiwan independence’ forces.” The article claimed that these are routine military exercises that have been conducted in the same region every year. An expert who asked for anonymity told Huanqiu on the 17th that, based on an analysis of the published information, the exercises are expected to be high level military exercises because they will last for six days, cover a large region, and involve different types of military forces and weapons. Since the Navy is leading them, generally speaking, all three major fleets will have their troops participate. This will include the navy, marines, air force, rocket army, and the support forces.

Source: Huanqiu, July 17, 2018
https://3w.huanqiu.com/a/5e93e2/7EC4fbUp5As?agt=8

Xinhua Article Claims China’s Economy Is Stable and its Economic Confidence Level Is Increasing

Xinhua reported that, on July 16, the spokesperson for the National Development and Reform Commission spoke at a press conference. He stated that the latest economic index for the first six months of 2018 suggests that China’s economy has been generally stable and the economic structure continues to be optimized and is improving. China’s fiscal deficit rate and government debt ratio are low, commercial banks’ capital adequacy ratios and provision coverage ratios are relatively high, and the corporate debt ratio is tending to decline. There is plenty of room for macroeconomic regulations and policies to be applied. He claimed that China will continue to adhere to the general tone of steady progress, maintain strategic strength, enhance the flexibility of macroeconomic policies, and strengthen coordination between policies to ensure the stability of macroeconomic fundamentals. As to the economic outlook for the second half of the year, the spokesperson stated that China needs to shift its development, structure, and economic transformation from over relying on foreign investments and exports to increasing its domestic spending and services. According to the spokesperson, “With the great resilience of the Chinese economy and the certainty of sustained and healthy development, we have the confidence, conditions, and sufficient ability to be effective in responding to the uncertainties of the world economy and to ensure the achievement of the goals and tasks that were set forth at the beginning of the year.”

Source: Xinhua, July 17, 2018
http://www.xinhuanet.com/fortune/2018-07/17/c_1123140349.htm

Ministry of Commerce: China’s Trade Surplus with the U.S. Reached Record High in June

The Chinese Ministry of Commerce recently posted a notice on its official site regarding the news that, according to data from the General Administration of Customs, China’s June trade surplus with the U.S. reached US$28.97 billion, which is the highest level since the year 1999. The total exports to the U.S. in June amounted to US$42.62 billion, which is a new record. Overall Chinese June exports saw an 11.3 percent increase, while imports increased by 14.1 percent – both were lower than the same numbers in May. China’s overall June trade surplus was at US$41.61 billion. Experts expressed their belief that the record-setting numbers with the U.S. showed a healthy U.S. economy with strong growth as well as a slightly weakening Chinese economy. Some also thought China’s domestic spending was weak due to its lack of investments. Also, in June, China had a trade surplus of US$16.25 billion with the European Union, a trade deficit of US$2.89 billion with Japan, and a trade surplus of US$4.22 billion with Russia. In the first half of 2018, China had an overall global trade surplus of US$135.4 billion.

Source: The Chinese Ministry of Commerce Official Site, July 13, 2018
http://www.mofcom.gov.cn/article/i/jyjl/e/201807/20180702766046.shtml

LTN: China’s Soybean “Punishment” against the U.S. Brought Uncle Sam More Business

Major Taiwanese news network Liberty Times Network (LTN) recently reported that the primary “weapon” China deployed in the trade war with the U.S. was China’s soybean tariff. China is the largest U.S. soybean buyer and the “punishment” was designed to have a negative effect on U.S. farmers, who mostly supported Trump in the last election. However, the significantly lowered price of U.S. soybean futures triggered a wave of non-Chinese buyers who even hoarded in volume. According to the U.S. Department of Agriculture, major U.S. soybean importers generated a year-over-year purchase increase of 27 percent for July-to-September U.S. soybean futures. These buyers include Mexico, Pakistan, and Thailand. Even Brazil, the  world’s largest exporter of soybeans, is planning to buy more U.S. soybeans for domestic use and export Brazilian soybeans to China at a much higher price. Argentina, as the third largest soybean exporter, increased its purchase of U.S. soybeans due to domestic weather conditions.

Source: LTN, July 12, 2018
http://ec.ltn.com.tw/article/breakingnews/2486656