Chinascope – Page 616

Caixin: Fitch Published Special Report on China’s Rating

Well-known Chinese financial news site Caixin recently reported that Fitch Ratings just released its special report on China’s sovereign rating. After both S&P and Moody’s downgraded China’s outlook, Fitch kept its China rating unchanged. However, Fitch’s report pointed out that the Chinese economy does have structural risks. China will suffer the burden of high debts. The Chinese economy currently has had a high leverage ratio, which the indicator of “Aggregate Financing to the Real Economy” demonstrated. According to China’s official numbers, it reached 198 percent of the total GDP. Fitch expressed the belief that the number in reality might be closer to 250 percent. Fitch leaves the current China rating unchanged based on the fact that China still maintains a high level of foreign exchange reserve, but the key factor that impacts the rating is how China plans to conduct its structural reform, which should lead to sustainability. The Fitch report cautioned that the Chinese government’s strategic roadmap for its structural reform remains unclear.

Source: Caixin, April 6, 2016

http://finance.caixin.com/2016-04-06/100928909.html

Briefings | | April 12, 2016 | Economy/Resources

BBC Chinese: USTR Identified the Great Firewall as a Trade Barrier

BBC Chinese recently reported on the annual report that the Office of the United States Trade Representative (USTR) just released. The report identified China’s policy of using the so-called Great Firewall to block international websites as a trade barrier. This is first time the USTR annual report included mention of the Great Firewall. The USTR official pointed out that blocking hundreds of millions of Internet users from the daily tools that are used globally, such as Google, Facebook, and Twitter disrupts international corporations from being able to conduct business in China. At the same time, China also blocks the majority of the large-scale international news sites. The USTR report mentioned a normal U.S. furniture company that China has blocked as an example of censorship against sites unrelated to politics. That clearly proves the Internet blocking mechanism is being used as a trade barrier. China responded to the USTR report by asking the United States to respect the rights every country has to regulate the use of their own Internet.

Source: BBC Chinese, April 8, 2016

http://www.bbc.com/zhongwen/simp/business/2016/04/160408_us_china_internet_censor_trade

Briefings | | April 12, 2016 | US-China Relations

Salaries of 48 CEOs of Publicly Traded SOEs Released

Xinhua recently published an article about the salaries that the CEOs of 48 publicly traded State Owned Enterprises (SOEs) received. The analysis pointed out that of the 48 CEOs of publicly traded SOEs, 18 of them saw their salaries drop while four companies saw salaries increase over the rate of 100 percent. The gap between the highest and lowest paid CEOs is six million yuan (US$930,000). The report indicated that the pay rate was directly tied to the financial performance of the company. It further stated that the change in the rate of pay started at the beginning of 2015 following the launch of a salary reform plan. The result appears to be a healthy trend. The next phase is expected to be among the second and third tier of the SOE companies and local SOEs.

Source: Xinhua, April 11, 2016
http://news.xinhuanet.com/fortune/2016-04/11/c_128881758.htm

Briefings | | April 11, 2016 | Economy/Resources

CCDI: Do Not Relax Our Strength in Building Clean Government and Combating Corruption

Xinhua published an article that was originally posted on the website of the Central Commission for Discipline Inspection (CCDI). The article stated that “the current situation for building a clean and honest government and for combating corruption is still serious. … The mission of CCDI remains unchanged and we must stay clear headed. At the same time, we cannot lose our strength.” The article reported that over the last three years, cadres in 31 provinces and regions were subject to disciplinary action. The article claimed that there is no pure land anywhere to be found and that matter shows the degree and the seriousness of the corruption. The article reminded everyone that all levels of the Party organization should have a clear position and strictly follow the directives of the central administration.

Source: Xinhua, April 11, 2016
http://news.xinhuanet.com/politics/2016-04/11/c_128881274.htm

Briefings | | April 11, 2016 | Government/Politics

Super Media: Five Traps for Xi Jinping and China

Super Media International Group in Hong Kong published a commentary in its April issue of its Super Media publication, elaborating on several issues related to Xi Jinping. The commentary stated that Xi faces five traps and that his governance path is first to establish his authority, then the rules, and finally the legislation.

The first trap is the middle income trap where, when a country attains a certain income (due to given advantages) it will get stuck at that level. On November 10, 2016, Xi spoke about efforts to overcome the middle income trap.

The second is the Tacitus Trap. On March 18, 2014, Xi explained that Tacitus, a historian of the Roman Empire said that when a government loses credibility, no matter what it says or does, it will be considered a lie or a bad deed.

The third trap is the Thucydides trap. Xi said in an interview on January 22, 2014, that China should avoid the Thucydides trap. However, Thucydides’ theory that a rising power will inevitably seek hegemony does not apply to China, and, further, that China does not have the genes to implement such action.

The fourth trap is Westernization and separation. On February 17, 2014, Xi spoke about this trap at a forum for provincial leaders. “The so-called ‘Westernization’ means to give up the leadership of the Communist Party and the socialist system and to implement the multi-party system and private ownership just as in the West, which is controlled by monopoly capital. The so-called ‘separation’ is to split China in an attempt to divide and rule. They intended to win a ‘war of no smoke,’ in order to achieve their purpose of disintegrating China’s socialist system.”

Lastly, the fifth trap is the personality cult trap. On some occasions, the lyrics of “The Sun Rises from the East” that praises Mao Zedong were changed to praise Xi. State media have also promoted such a personality cult. Many are digging a huge trap for Xi. They praise Xi only to set him up for his downfall later. Observers recognize that, to get around these traps, Xi’s approach to governance has been first to establish authority, then rules and finally legislation.

Source: Super Media, April 5, 2016

http://www.supermedia.hk/?p=870

Briefings | | April 11, 2016 | Government/Politics

Expert: China Needs to Prepare for Military Struggle in the South China Sea

From April 4 to 15, the United States and the Philippines will be holding "shoulder to shoulder" joint military exercises in Philippine territory. Australian troops are also participating in the exercises. Japan is participating as an observer. Military expert Yin Zhuo, in an interview with People’s Daily, thought that the United States is attempting to transform the mechanism of joint exercises into a "quasi-military alliance" to contain China.

Yin Zhuo said the "shoulder to shoulder" military exercise is a stepping stone for U.S. intervention in the South China Sea issue. The U.S. is attempting to hype up the South China Sea issue, thereby curbing the rise of China and undermining the economic ties between China and ASEAN countries. In recent years, America’s economic strength has declined. It hopes that its allies in the Asia-Pacific region will shoulder part of the responsibility to contain China. It also hopes to form a multilateral military alliance against China through the use of the South China Sea issue.

Yin Zhuo said that the United States’ strategic intentions to contain China’s through the South China Sea issue will not change because this is an important component of its "Asia-Pacific rebalancing" strategy. Therefore, China should stick to the principle of being prepared for the unexpected. That is, we will never give in on the issue of sovereignty where the South China Sea islands and reefs are concerned. We should let the United States know this bottom line. This does not mean we have to use military means to solve the problem. China will not strike the first shot, but we must be prepared for a military struggle.

Source: People’s Daily, April 5, 2016

http://military.people.com.cn/n1/2016/0405/c1011-28251022.html

Briefings | | April 8, 2016 | US-China Relations

China Imposes Restrictions on Trade with North Korea

On April 5, 2016, the Ministry of Commerce of China announced that, in order to implement relevant Security Council resolutions [prohibiting nuclear weapons development and ballistic missile activity], it was imposing an immediate ban on imports of North Korean coal, iron ore, gold, titanium, vanadium and rare earths. Some imports for civilian use would be allowed so long as they were not connected to nuclear or missile programs or U.N. Security Council Resolutions 1718 (2006), 1874 (2009), 2087 (2013) and 2094 (2013) and 2270 (2016).

The Ministry of Commerce of China also announced that sales of jet fuel to North Korea were prohibited, but commercial aircraft outside of North Korea would be allowed to refuel for flights to North Korea.

Source: Ministry of Commerce of China, April 5, 2016 http://www.mofcom.gov.cn/article/b/e/201604/20160401289770.shtml

Briefings | | April 6, 2016 | Geo-Strategic Trend

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

Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”