Chinese Economics Thread


now I read
China will increase support, subsidies for tech firms, official says
  • Sector needs a breakthrough and Washington’s protectionist moves can provide the catalyst for it, industry vice-minister Wang Zhijun says
  • Comments come after Chinese President Xi Jinping issued rallying call on trip to Jiangxi province
Updated: 11:26pm, 24 May, 2019
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China will increase its support and subsidies for technology firms amid rising protectionism from the United States, a senior official said on Friday.

Vice-minister for industry and information technology Wang Zhijun said Washington’s recent moves to stymie Chinese firms would help those companies to cut their reliance on foreign technologies.

“Recently, the US has taken a series of measures to crack down on Chinese companies for political purposes,” he said.

“[But] it is in fact a good thing for Chinese firms. China’s manufacturing upgrade requires a breakthrough in key and core technologies, [and] we need to speed up the process.”

To encourage that transition, Wang said the government would play a greater role in formulating strategy, increase research and development subsidies for technology companies, and offer those firms better for their intellectual property.

“We will strengthen the strategic guidance at the national level, devote more resources to achieving a breakthrough in core technologies, and create a market environment for fair competition,” he said. “At the same time, the government will increase its financial support for basic research … and encourage companies to devote more resources to it.”

A greater emphasis on “basic research” – the focus of which is on improving scientific theory – is seen as key to China reducing its dependence on foreign technology and achieving its ambition of becoming a global technology superpower.

Wang’s comments came after the US last week put Chinese firm Huawei Technologies on a trade blacklist, and more recent reports that it is considering banning Chinese video-surveillance giants Hangzhou Hikvision Digital Technology and Zhejiang Dahua Technology from buying its technology.

Beijing hit back on Wednesday, with the finance ministry describing the potential ban as an effort to smear Chinese tech companies and urging Washington to provide a fair trading environment for its firms.

To offset the possible implications of the ban, the ministry said it would this year introduce a two-year waiver on corporate tax payments for software developers and integrated circuit manufacturers, and reduce the rate on subsequent payments to 12.5 per cent over the next three years.

On a visit to Jiangxi province this week,
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issued a rallying call to the public and industry leaders to strive for self-reliance and innovation, while warning that they should also prepare for a long struggle in the face of “unfavourable factors from home and abroad”.
Beijing’s role within Chinese industry, in particular its financial support for the state sector, has been a major sticking point in the trade negotiations between the world’s two largest economies. Washington complains it puts US companies at a disadvantage, but Beijing says the matter is one of principle and it has no plans to change.
 

Hendrik_2000

Brigadier
Vote of confidence from Denso a Japanese air condition and auto part manufacturer So much for the narrative that Factory are fleeing China

Japanese automotive supplier Denso to build new plant in China
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CGTN - 27-May-2019



Japanese automotive supplier Denso Corp. will invest no less than 2 billion yuan (290.3 million U.S. dollars) to build a plant in Nansha District of Guangzhou, capital of south China's Guangdong Province, sources with the district said Monday.

Covering about 100,000 square meters, the plant will consist of auto parts manufacturing workshops, a quality monitoring center, and warehousing and distribution center to produce auto electronic components upon completion, according to an agreement signed between the management committee of the Guangzhou Nansha economic and technological development zone and Denso (Guang Zhou Nansha) Co. Ltd.

The construction on the project, located in Huangge Township, will start on June 28. It is expected to become operational in 2021 and achieve mass production in 2022.

Yoshitaka Kajita, president of Denso(China) Investment Co. Ltd., said that despite the recent decline in China's vehicle market, China was still a very large and important market in the medium and long term. Therefore, the company had decided to invest more in Nansha District to meet the needs of the market and customers.

The new plant will expand its capacity and focus on designing new products for the development of new energy vehicles and intelligent network vehicles.

Cai Chaolin, Party chief of the Nansha District, said that in recent years the automobile industry has developed to be one of the pillar industries of Nansha District, with total output value of automobile manufacturing and related industries exceeding 100 billion yuan.

The district government will fully support the new plant project, Cai said.

Denso is a world-renowned automotive parts and systems supplier. Its subsidiary Denso (Guang Zhou Nansha) Co. Ltd., was established in 2004 in Nansha District of Guangzhou, mainly engaged in the production and management of engine control systems, filters, horns, chassis control systems and equipment, and molds.


Trade war. Indeed.
 

Hendrik_2000

Brigadier
China need to close rank with OC who contribute so much to China's economic development in the past. I guess Xi know the importance of OC. After all he spent 17 years as vice governor of Fujian province the ancestral home of Million SEA Chinese
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Xi meets representatives of overseas Chinese
Source:Xinhua Published: 2019/5/29 7:54:17

Chinese President Xi Jinping, also general secretary of the Communist Party of China (CPC) Central Committee, meets with overseas Chinese representatives who are in Beijing to attend the ninth Conference for Friendship of Overseas Chinese Associations and a plenary session of the board of directors of the China Overseas Friendship Association at the Great Hall of the People in Beijing, capital of China, May 28, 2019. Other Chinese leaders including Wang Yang, a member of the Standing Committee of the Political Bureau of the CPC Central Committee and chairman of the Chinese People's Political Consultative Conference National Committee, were also present at the meeting. (Xinhua/Li Xueren)


Chinese President Xi Jinping, also general secretary of the Communist Party of China (CPC) Central Committee, meets with overseas Chinese representatives who are in Beijing to attend the ninth Conference for Friendship of Overseas Chinese Associations and a plenary session of the board of directors of the China Overseas Friendship Association at the Great Hall of the People in Beijing, capital of China, May 28, 2019. Other Chinese leaders including Wang Yang, a member of the Standing Committee of the Political Bureau of the CPC Central Committee and chairman of the Chinese People's Political Consultative Conference National Committee, were also present at the meeting. (Xinhua/Li Xueren)


Chinese President Xi Jinping, also general secretary of the Communist Party of China (CPC) Central Committee, meets with overseas Chinese representatives who are in Beijing to attend the ninth Conference for Friendship of Overseas Chinese Associations and a plenary session of the board of directors of the China Overseas Friendship Association at the Great Hall of the People in Beijing, capital of China, May 28, 2019. Other Chinese leaders including Wang Yang, a member of the Standing Committee of the Political Bureau of the CPC Central Committee and chairman of the Chinese People's Political Consultative Conference National Committee, were also present at the meeting. (Xinhua/Li Xueren)


Chinese President Xi Jinping, also general secretary of the Communist Party of China (CPC) Central Committee, meets with overseas Chinese representatives who are in Beijing to attend the ninth Conference for Friendship of Overseas Chinese Associations and a plenary session of the board of directors of the China Overseas Friendship Association at the Great Hall of the People in Beijing, capital of China, May 28, 2019. Other Chinese leaders including Wang Yang, a member of the Standing Committee of the Political Bureau of the CPC Central Committee and chairman of the Chinese People's Political Consultative Conference National Committee, were also present at the meeting. (Xinhua/Li Xueren)



Chinese President Xi Jinping, also general secretary of the Communist Party of China (CPC) Central Committee, meets with overseas Chinese representatives who are in Beijing to attend the ninth Conference for Friendship of Overseas Chinese Associations and a plenary session of the board of directors of the China Overseas Friendship Association at the Great Hall of the People in Beijing, capital of China, May 28, 2019. Other Chinese leaders including Wang Yang, a member of the Standing Committee of the Political Bureau of the CPC Central Committee and chairman of the Chinese People's Political Consultative Conference National Committee, were also present at the meeting. (Xinhua/Li Xueren)

President Xi Jinping on Tuesday met with overseas Chinese representatives who are in Beijing to attend the ninth Conference for Friendship of Overseas Chinese Associations and a plenary session of the board of directors of the China Overseas Friendship Association.

On behalf of the Communist Party of China (CPC) Central Committee and the State Council, Xi, also general secretary of the CPC Central Committee, expressed a warm welcome and sincere congratulations to the representatives and extended greetings to overseas Chinese around the world.

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now noticed the tweet
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·
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China's new
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cut policies saved 524.5 billion yuan (around 76 billion U.S. dollars) for businesses and individuals in the first 4 months of this year, official data showed Thursday.
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now I read
Huawei reassesses goal to be world’s bestselling smartphone vendor after US blacklist
  • Huawei is now closely observing and evaluating the situation, Honor president Zhao Ming said at Shanghai event
  • ‘Too early to say whether we are able to achieve the goal’ of becoming No 1 by 2020, Zhao said
Updated: 2:40pm, 1 Jun, 2019
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Huawei Technologies is reassessing its target to become the world’s top-selling smartphone vendor by 2020, after a US trade ban raised serious questions about its access to services that are crucial for international sales, according to a senior executive.

Huawei is now closely observing and evaluating the situation after the US government barred American companies from supplying the Shenzhen-based telecommunications equipment giant, according to Zhao Ming, president of Honor, one of Huawei’s smartphone brands, at a media briefing in Shanghai on Friday night.

“As the new situation has emerged, it is too early to say whether we are able to achieve the goal,” Zhao said, responding to questions about Huawei’s plan to overtake Samsung Electronics and become the world’s largest smartphone vendor before the end of 2020.

The US government in mid-May placed Huawei and its affiliates on a trade blacklist that restricted the company from buying services and parts from US companies without approval.

After the move, US corporations including chip makers Intel, Qualcomm, Xilinx and Broadcom have reportedly told their employees not to supply Huawei until further notice. Google also suspended Huawei’s access to future Android operating system updates, affecting its ability to offer popular Google apps on its phones in the future.

Foxconn, the Taiwanese electronics manufacturer that assembles handsets products for many phone brands including Apple and Xiaomi, has stopped several production lines for Huawei phones in recent days as the Shenzhen company reduced orders for new phones, according to people familiar with the matter, who asked not to be named as the information is private.

Smartphone manufacturers have flexibility built in their production schedules and can increase, or reduce, orders to meet changing conditions, and it is not clear whether the decreased production is temporary or part of a longer-term cut, the people said.

Foxconn had initiated a massive recruitment drive earlier this year due to Huawei’s surging sales, according to one person. Foxconn declined to comment, while Huawei did not immediately comment.

Huawei’s share of global smartphone shipments climbed to 15.7 per cent in the first quarter of 2019, up from 10.5 per cent in the same period last year, according to data from Gartner, an industry research firm. Samsung and Apple, currently the largest and the third largest vendor globally, saw their market share decline to 19.2 per cent and 11.9 per cent, respectively, in the first three months, the data showed.

Huawei, which calculates its global mobile shipments by combining both Huawei and Honor-branded phones, is aiming to win 50 per cent of the Chinese smartphone market by the end of this year and wrest the global sales crown from South Korea’s Samsung no later than 2020, Huawei’s mobile chief Richard Yu Chengdong said in March.

At Friday’s event in Shanghai, Honor president Zhao did not answer the question from reporters whether Honor’s business has encountered difficulties in overseas markets after the US ban. When asked about the cut in production, Zhao said he was not aware of the situation.

“All the difficulties make us stronger, no matter in mentality or in action,” Zhao said during the media briefing, held to unveil its flagship Honor 20 series for the China market following its global launch in London 10 days earlier.
 
The village testing China’s social credit system: driven by big data, its citizens earn a star rating
Set to be rolled out by next year, the scheme is the nation’s most ambitious project in social engineering since the Cultural Revolution. Whether it eventually creates an Orwellian dystopia, or an honest, harmonious society, as intended, remains to be seen
Published: 2:00pm, 2 Jun, 2019
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is related to what I began to follow
Oct 25, 2016
I noticed in a major server here (
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) and it's scary, so you may tell me if it's hyped or something:
China’s plan to organize its society relies on ‘big data’ to rate everyone

goes on in the subsequent post due to size-limit; source:
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(actually I now got to it by clicking from
May 15, 2019
now noticed the tweet
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·
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Eating or drinking on
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in
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will affect personal credit score starting Wednesday, according to Municipal Commission of Transport
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and like going backwards)
 
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Economic Watch: China boosts targeted financing support for private sector
Xinhua| 2019-06-01 22:18:45
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Qu Ronghua, general manager of Taizhou Infinite New Energy Technology Co. Ltd (Zhejiang), never expected that he could use patents as collateral for a bank loan.

Within eight days, his company secured 1 million yuan (about 145,000 U.S. dollars) of loan from a local commercial bank, saving his factory which partially laid idle due to insufficient cash flow.

"Now we can focus our attention on product research and development," Qu said.

Qu's unexpected "fortune" is now becoming increasingly common among cash-strained private businesses as the government steps up efforts to channel more money to the sector.

Since China's reforms and opening up, private businesses have assumed a bigger role in driving growth. The sector now contributes more than 60 percent of China's GDP and provides over 80 percent of jobs.

But in recent years the sector is facing increasing pressures from economic headwinds, higher labor and material costs, as well as financing difficulties as banks and financial institutions have a habit of leaning toward state-backed borrowers due to risk concerns.

Alarmed by the trend, Chinese policymakers have made multi-pronged policy moves.

In a guideline released in April, China's central authorities pledged more measures on SMEs financing difficulties, including the creation of more financing channels and encouraging small firms to seek funding on the "new third board."

China adopted a targeted cut in reserve requirement ratio (RRR) for some small and medium-sized banks starting from May 15.

Responding to the policy call, financial institutions at lower levels across the country have introduced innovative financial services to help small and micro businesses.

China Construction Bank's branch in Ningxia Hui Autonomous Region rolled out a new inclusive finance service to lend to small enterprises that have existed for two years or more if they pay their electricity bills on time.

As Chinese private businesses are seeking opportunities in technology innovation and services, financial institutions should abandon their over-reliance on land and property as collateral for loans and opt for more intelligent risk control solutions, noted Dong Ximiao, deputy dean of the Chongyang Institute for Financial Studies at Renmin University.

The slew of policies are producing the desired results. Data from the central bank showed outstanding loans to small and micro firms grew the fastest among all sectors of inclusive financial credit, going up 19.1 percent to 10.05 trillion yuan by the end of the first quarter.

To enable the private sector to better play a role in spurring growth, more efforts are needed to foster a financial service system that can cover different development stages with diverse funding tools, analysts have said.

The Chinese economy expanded by a better-than-expected 6.4 percent year-on-year in the first quarter.
 

Tam

Major
Registered Member
When Russia sold over $100 million in US Treasury bonds it certainly had an impact on yield rates.

Also, China does not have much of a choice. It will need money to boost its own economy and that means moving money overseas back to China. That means it will stop buying US bonds and sell them gradually, which they have already been doing. Mind you this is different from using Treasuries as a weapon, this is almost stealthily selling the bonds over time so not to disrupt the market. If you want to weaponize Treasuries, you would aim for disruption, which is not in this case. The intention is not to weaponize bonds but you want to eventually get out of the market altogether since it serves no benefit. The whole purpose of putting money into US Treasury bonds is to keep the dollar high and Chinese export prices low. Selling the bonds has a risk of devaluing the US dollar and making Chinese exports to the US even less competitive but China doesn't care much about the latter at this point, all it needs is as much cash as it can get for its own domestic stimulus.

All these articles about China not going to weaponize Treasuries miss an important fact. These Treasuries are bought with surplus, and if try to hurt this economy, the surplus would be reduced and so will its buying power and appetite to buy Treasuries.

Unless you give China a good reason to hold on to Treasuries, US Treasuries will become redundant in China's future economic planning, and like all things redundant, you cut them out.

What did Russia do to the money they sold the US Treasuries for? They bought gold and silver. These help stabilize the currency and gives it more value. China is on the rise in buying gold and silver as well and might be compelled to sell Treasuries in exchange for buying more gold and silver.
 

Anlsvrthng

Senior Member
Registered Member
Selling the bonds has a risk of devaluing the US dollar and making Chinese exports to the US even less competitive but China doesn't care much about the latter at this point, all it needs is as much cash as it can get for its own domestic stimulus.
Domestic consumers using yuan, not dollar for purchases.

I think there is quite lean stock of yuan in foreign hands, several magnitude smaller than the treasury.

So, how can the treasury sale stimulate the domestic demand ?
 

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