Chinese Economics Thread

[AssassinsMace]

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Don't do business in China then...

Oh yes, complain about something the West has been doing to China and the world for decades. If anyone in China is deemed a bad actor and doesn't conform to their wishes in the world, they sanction them. But when China does it to them somehow that's unfair... 1984...? Just don't call it 1984 because they've been doing already and it's not 1984. That's the only difference.

 

[Jura The idiot]

a longer one, but interesting
A reprieve in name only: Trump’s Huawei moves leave US tech companies confused

• Delaying a ban while adding more Huawei entities to the blacklist ‘reflects a schizophrenic approach to China trade relations’
• The episode reminds US tech companies of a much broader problem: in this environment, how to do business with China

Updated: 9:46pm, 28 Aug, 2019

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On August 19, the US extended a deadline allowing American tech suppliers to sell components to Chinese telecommunications giant Huawei for another 90 days. Since then, though, the much-anticipated reprieve has provided more confusion than clarity.

As part of the extension, the Commerce Department added 46 more Huawei subsidiaries to its blacklist, affecting more US businesses once the new deadline arrives in November.

“The decision to extend the time period, while at the same time adding a large number of new Huawei entities to the export ban, reflects a schizophrenic approach to China trade relations,” said Judith Lee, co-chair of the law firm Gibson Dunn’s international trade practice.

“This brings more uncertainty and is very bad for US companies,” added Lee.

The announcement was only the latest example of the Trump administration’s unpredictable approach in its policymaking towards China. In the days that have followed, the policy served as a reminder of a much broader problem facing US tech companies: how to do business with Chinese tech companies overall.

The administration’s inconsistencies have prohibited businesses from making crucial decisions and, to some, could threaten their very existence. And contrary to a traditionally open communication between the business community and Washington, US companies are finding their voices falling on deaf ears.

Huawei has been in the crosshairs of the escalating US-China trade war for months. The US blacklisted the world’s largest telecoms equipment maker in May, putting it on a so-called Entity List. In making the ban, US officials said they feared that Huawei devices might give “back door” monitoring access to Beijing or that the company could otherwise be compelled to share critical American information that would threaten national security.

The blacklist barred Huawei from doing business in the US market, even though the company reportedly spent US$11 billion last year buying US components from Qualcomm and Intel. The reprieve by the US Commerce Department permitted Huawei to do business in areas deemed not critical for three months – to minimise disruption of network operators in rural America that rely on Huawei equipment, the department said.

Earlier this month, the US followed through on legislation approved by Congress last year to prohibit government agencies from purchasing equipment from five Chinese companies including Huawei; its rival ZTE; radio systems provider Hytera; camera maker Hangzhou Hikvision Digital Technology; and video surveillance products maker Dahua Technology.

The legislation was approved last summer as part of a defence spending bill. Coincidentally, the rule went into effect on August 19.

Many US firms have found “phase two” of the defence bill’s provisions even more troublesome. By August 2020, much broader restrictions will keep government agencies from procuring services and products from any company that uses equipment from Huawei.

For months, numerous US firms have sought to work with the government, seeking more clarity and to narrow the restrictions. But a concerted effort is unlikely, people at various companies and advisory firms said.

“There is some sensitivity in doing that. You don’t want to be outright supporting companies like Huawei because there are justifiable concerns,” said Lee.

Talks between US companies and government officials were going on earlier this year, according to a person involved in the process. Government officials at the working level admitted that the ban was far broader than initially intended, the person said, who asked not to be named because the conversations were private.

But since the end of May, such discussions have stopped, this person said. And the agencies have since not responded as the trade war intensified after China established its own list of “unreliable entities”.

Additionally, many businesses and advisers have found the language in the defence bill’s broader restrictions opaque.

“There is some ambiguity that looks like it only applies to critical infrastructure, which will exclude my business. But it’s unclear. So the question is ‘do I take a risk putting something in and then find out my clients cannot get funding?’” said Mark Zuckerman, chief executive officer of Clear Connection.

The company, a video surveillance system provider based in Beltsville, Maryland, services Baltimore and Washington. The company does little federal government work, but several of Zuckerman’s non-profit clients receive grants from the US Department of Homeland Security.

Of those non-profit clients, 25 per cent to 30 per cent use Hikvision products, Zuckerman said.

A spokesman for Hikvision, which is based in Hangzhou, said in a statement that the company “is gravely disappointed that the provision will take effect without a review or investigation to warrant the video surveillance technology restrictions.”

Zuckerman said that he “can understand why the government wants to do this to the products that are open to the critical infrastructure. 5G is complicated.

“But if the system runs on a private network, and you don’t propagate the routing to outside, there is no reason to make that ban,” Zuckerman said.

Instead of blacklisting the company outright, he said the government could require it and the other blacklisted firms to go through tests to ensure that their networks were not vulnerable.

Regarding national security concerns, Zuckerman said, “I do support the president on the issue. But in my opinion, the US is trying to tighten the screw on China.

“This is more about the trade war than anything else.” he said.

David Adelman, a former US ambassador to Singapore and now a partner at the Reed Smith law firm, noted that “the US export-control regime gives great deference to the Pentagon. For American decision-makers, Huawei presents slightly different issues from the typical dual-use analysis because of the complexity of software within the telecommunications infrastructure.

“The views of the intelligence agencies are highly classified, which makes it very challenging for American officials to speak about their concerns with Huawei.”

In a statement following the announced reprieve, a Huawei spokesman said that “it's clear that this decision, made at this particular time, is politically motivated and has nothing to do with national security.

“The extension of the Temporary General Licence does not change the fact that Huawei has been treated unjustly.”

Many Huawei suppliers have requested the special licences to continue to sell to the telecoms giant. Commerce Secretary Wilbur Ross told reporters in late July that the department had received more than 50 applications, and that he expected to receive more.

And this is just the tip of an uncertain iceberg. With President Donald Trump’s executive order signed in May that created the blacklist. “there will be more targeted designations against Chinese companies,” said Lee of Gibson Dunn.

The scary part, she added, is that “nobody knows whether this administration is doing this to protect against the threats or to gain leverage against China on trade negotiations”.

 

[manqiangrexue]

Good article on China's trade war strategy. Pictures are from Costco's grand opening in China; so many shoppers the store had to close in 5 hours due to dangerous crowding. Chinese domestic consumption is just too strong.

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China’s playing the long game, and is making key moves to hedge against Trump’s tariffs
PUBLISHED 3 HOURS AGOUPDATED MOMENTS AGO

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• “We think China is neither aiming to quickly reach a trade deal, nor trying to hit back at the U.S. as hard as it can,” says Yi Xiong, China economist at Deutsche Bank.
• China is accelerating its efforts in other countries to reduce its reliance on the U.S.
• The country is also strengthening its domestic market.
• “China will still respond to US tariffs, but with smaller and targeted measures,” Xiong said.

“We think China is neither aiming to quickly reach a trade deal, nor trying to hit back at the U.S. as hard as it can,” Xiong said in a note Wednesday. “China’s current strategy likely has a long time horizon embedded in it. The time horizon may also go beyond the life cycle of the current U.S. administration.”

While China will remain open to further negotiations, it’s less likely to make concessions given its effort to diversify its supply chain, the economist said.

China is accelerating efforts in other countries to reduce its reliance on the U.S. The official newspaper of the Chinese Communist Party, the People’s Daily, on Sunday published several articles about China’s improving cooperation with other countries including Thailand, Japan, South Korea and Latin America.

The country is also strengthening its domestic market. The State Council on Tuesday outlined 20 measures to support consumption, including applying new technologies to promote the circulation of products, improving infrastructure of commercial streets and accelerating the development of chain convenience stores, according to state-run media Xinhua.

Hu Xijin, editor of a tabloid under the People’s Daily, highlighted the move in a Tuesday tweet, saying it’s “more and more difficult for the U.S. to press China to make concessions.”

“China will still respond to US tariffs, but with smaller and targeted measures,” he said. “For the same reason, China is likely reluctant to take non-trade actions against the U.S., such as punishing U.S. business interests in China.”

In fact, China has been welcoming U.S. businesses.

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just had

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of its Shanghai location on Tuesday.

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’s “gigafactory” in Shanghai is also being built in “top speed,” a Xinhua article said Wednesday.

 

[manqiangrexue]

Bloomberg's 700K point analysis. Thank me cus this is supposedly for Bloomberg professional subscribers only

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700K Data Points Reveal China’s Edge in the Trade War
By

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and

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August 28, 2019, 5:52 AM EDT

There’s no winner in a trade war -- what matters for the U.S. and China is who loses least.

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’ analysis of 700,000 trade data points shows that, in one important respect, the U.S. is the biggest loser. China was the dominant supplier of many tariffed products, meaning U.S. importers are scrambling -- and failing -- to find replacements. With China sourcing from a wider variety of countries, its firms face smaller supply disruptions.

 

[Jura The idiot]

now I read
China's corporate social credit system creates level playing field for businesses
Source:Global Times Published: 2019/8/28 19:58:40

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Corporate social credit system creates level playing field for firms

A national corporate social credit system (SCS), which aims to be fully implemented as early as late 2020, can create a more transparent and level playing field for multinational and domestic companies as long as there is constructive dialogue, the European Union Chamber of Commerce in China (EUCCC) said on Wednesday.

Since the system assesses the behavior of all companies in China through big data and produces algorithm-based ratings, it can lead to a future where all companies are treated more equally, regardless of ownership structures, said Jacob Gunter, policy and communications manager of the EUCCC, citing a report released by the chamber.

"What the SCS can do is actually remove local officials' effects in many ways," Gunter said.

"By having a lot of the data going directly to the central databases, and these cold, dispassionate algorithms rating it, you remove local officials' ability to either accidentally or intentionally misuse these regulations. In that aspect the system is providing a more level playing field."

The SCS has been described by Joerg Wuttke, president of the chamber, as the most comprehensive system created by any government to impose on a self-regulating market place. It will be built based on existing credit data infrastructures, including the National Credit Information Sharing Platform, CreditChina, National Enterprise Credit information Publicity System and other private platforms, the report said.

The level of data integrity embedded in the system means that the system will solve the problem of stranded information for both local and international companies. The sharing of information will improve equal treatment for all companies in China and drastically improve the efficiency of doing business, Feng Liguo, a research fellow at China Minsheng Bank's research center, told the Global Times.

"It is never in the interest of China to put off foreign business by unfair treatment," Feng said. "The system can provide a better business environment rather than scaring foreign investment away."

For the system to work to its full potential, conversations will need to remain open and transparent, and related laws and regulations concerning the access and handling of sensitive data will need to be enforced, Mirjam Meissner, director of Sinolytics, a partner with the chamber in the report, told the Global Times on Wednesday.

"The Chinese government is very interested in getting into dialogue and has already done so. It shows an ambition to not only engage but also to explore parts of the ideas of the social credit system," Meissner said. "This is of course something that can only be built through close exchange."

Bjoern Conrad, CEO of Sinolytics, agreed that there is an openness on the government side, and he said he is optimistic over the system's general outlook, as long as international companies improve their internal understanding of its workings and the exchange of information is open.

Companies "need to know what exactly to ask," Conrad told the Global Times.

"Making the conversations more active and proactive from both sides, and having more information flow from both directions, that is a very immediate goal."

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[Jura The idiot]

now I read in Facebook:

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·

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:

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risks losing big for fighting

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with

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On Tuesday, Costco opened its first physical store in China, attracting so many shoppers that the outlet shut down early. It is apparent from the large crowds that there still is strong Chinese demand for US goods, but this should also serve as a reminder of just how much America has to lose if it continues to escalate the trade war with China.

Instead of leaving the Chinese market, the world-famous US retail giant opened a flagship store with a shopping area of 14,000 square meters in

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, and the scene that unfolded on its first day shows that the Chinese consumer market is just too big to ignore.

Cui Tiankai, Chinese Ambassador to the US, responded to the news, calling it a mutual benefit for both countries. On his Twitter account, Cui wrote that the opening of the store in Shanghai shows the huge interest of American companies in the robust Chinese consumer market and that of Chinese consumers in American products.

US President Donald Trump likes to say that his tariffs are hurting China and that China is desperate for a trade deal. Trump also likes to say that trade wars are good and easy to win. He recently said that “we don’t need China” and that American companies would be better off without them. These are not persuasive arguments.

Certain people in the United States are seeking to decouple the US and Chinese economies, hoping that this will revive the US economy, but this is like sailing upstream without a paddle. Decoupling would not only be counterproductive but destructive for both sides.

The trade war has already affected both sides. However, all you need to do is look at the videos of Chinese shoppers crowding the aisles of the Costco store in Shanghai to know that the United States has a lot to gain from greater cooperation with China and a lot to lose if it erects a wall between the world’s two largest economies.

 

[styx]

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Trump is acting like being in the 2000's china. But china has changed

 

[Equation]

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Trump is acting like being in the 2000's china. But china has changed

That's what he gets for listening to the likes of those neocons like John Bolton and Mike Pompeo.

 

[styx]

they think always to be in the 80's and china is ussr

 

[Hendrik_2000]

Subjected to the most egregious and unfair treatment Huawei increase their market share of Network business Via Emperor. They are twice bigger than their next competitor Nokia

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Huawei, ZTE expand share in global telecoms gear, but all eyes are on the second half amid trade tensions

Chinese telecoms giants grow global share in first half on back of rising 5G network equipment orders

Li Tao
Published: 9:27pm, 30 Aug, 2019

Shenzhen-based Huawei, the world’s largest telecoms gear supplier, saw its global share reach 28.1 per cent at the end of June, up from about 27 per cent at the end of December, according to a report on Thursday by California-based Dell’Oro Group. Founded in 1995, Dell’Oro is a leading independent market research firm for the telecoms industry.

ZTE, the crosstown rival of Huawei, seized a 9.6 per cent share in the same period, compared with 8 per cent at the end of last year.

The market share growth reinforced the rising demand for the two companies’ 5G carrier equipment orders in the world’s second largest economy and various overseas markets.

With peak data rates up to 100 times faster than what current 4G networks provide, 5G has been held out as “the connective tissue” for the Internet of Things, autonomous cars, smart cities and other new mobile applications, establishing the backbone for the industrial internet.

More telecoms network operators have started tests and deployment of the next-generation mobile technology, according to separate financial results recently posted by privately held Huawei and Hong Kong-listed ZTE.

“Although Huawei was placed on the US Entity List in May, restricting its purchase of US components without a licence, the company seems to have avoided any negative impact on sales of telecoms equipment,” said Dell’Oro analysts Jimmy Yu and Stefan Pongratz in a statement.

Huawei reported in July that its first-half revenue rose 23.2 per cent to 401.3 billion yuan (US$56.1 billion), up from 325.7 billion yuan in the same period last year, driven by higher smartphone shipments and robust demand for its 5G equipment.

The company, which has struggled from being on the US trade blacklist, was recently granted a further reprieve by Washington buy major components from US hi-tech suppliers.

On ZTE, Dell’Oro’s Yu and Pongratz said the company’s achievement of a 10 per cent market share in the first half of this year was “a great demonstration of the company’s customer loyalty”.

The company hogged global headlines a year ago, when the US government dropped the hammer on it for breaching the terms of an earlier deal on trade sanctions violations. It ceased major operating activities for nearly four months from April last year because it was barred from buying hardware, software and services from American hi-tech companies.

“Following the end of the US ban, ZTE’s revenue almost immediately returned to previous levels,” the analysts said.

ZTE posted a 607 million yuan net profit in the quarter ended June 30, rebounding from a 2.4 billion yuan loss a year ago. Revenue in the second quarter jumped 188 per cent to 22.4 billion yuan, up from 11.9 billion yuan in the same period last year.

The latest tally of 5G network equipment supply contracts by ZTE puts it ahead of Sweden’s Ericsson, which has reported 22 5G contracts. Huawei remains ahead in the market with 50 announced 5G network deals, while Finland’s Nokia had 43 contracts.

Nokia and Ericsson’s global telecoms equipment market share in the first half stood at 15.7 per cent and 13.1 per cent, respectively, according to Dell’Oro. Those were down from 16.8 per cent for Nokia and 13.6 per cent for Ericsson at the end of December.

To be sure, Dell’Oro’s Yu and Pongratz said the first-half estimates may not reflect the full situation in the industry because some vendors, like Nokia, tend to ramp up their orders through the year.

Huawei and ZTE are also not expected to make any breakthroughs in the US. The Trump administration earlier this month announced a ban on US federal agencies buying equipment and services from Chinese companies, such as Huawei and ZTE, citing national security concerns.

The global 5G infrastructure market is forecast to reach US$22.5 billion by 2025, up from US$1.3 billion last year, according to a report from US-based Zion Market Research in July.