Tag: Chinas

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Politics

Cracking down on China’s shady shell corporations

Cracking down on China's shady shell companies

A Chinese policeman guards a giant portrait of the late Chairman Mao Zedong at Tiananmen Gate in Tiananmen Square in Beijing, China.

Getty Images

When you think of anonymous shell companies, you might think of illegal activities by shady criminal groups, or tax evaders trying to hide their money, or crooked foreign officials trying to defraud the population.

But there is one other thing to keep in mind: the Chinese Communist Party (CCP).

While it hasn’t received nearly as much attention as some other topics related to the Chinese government, anonymous shell companies have proven to be a key component in the country’s recent rise.

More importantly, these shell companies preventing investigators from successfully tracking financial flows have proven to be key tools for both the CCP’s corrupt and heightened influence in the country and its expansive overseas efforts, all of which are aimed at this increasing the influence of the People’s Republic of China and eroding American power and American interests.

Take a look at Beijing’s Belt and Road Initiative (BRI), for example. While the CCP spins the initiative as mere economic expansion and global integration, further investigation reveals far more suspicious and far more corrupt deals – often with anonymous Shell companies at their core.

From Southeast Asia to Africa to Europe, the BRI has relied on anonymous Shell companies to hide payments to corrupt officials overseas and smear their palms to sign love agreements with representatives of the PRC and state-affiliated companies.

These shell companies, which prevent investigators from successfully tracking financial flows, have proven to be key tools both in the corrupt and heightened influence of the Chinese Communist Party in the country and in its expansive efforts abroad.

According to a report by the Hudson Institute’s Kleptocracy Initiative, the Belt and Road Initiative has “loaded the kleptocracy in developing countries with bribes and unprecedented embezzlement opportunities” – much of it relied on anonymous Shell companies, which are both journalists and anti-corruption activists blocked from exposing the details of crooked deals.

Not only has the BRI further undercut American efforts elsewhere, but the CCP has relied on anonymous Shell companies to prop up the rogue regime in North Korea. As recently as this year, the Justice Department charged dozens of people with laundering billions of dollars through anonymous corporations to help develop North Korea’s nuclear program.

Or look at the role anonymous Shell companies are playing in the CCP’s domestic stranglehold. Like other corrupt authoritarian powers in countries like Russia and Iran, the CCP often seems more interested in looting its people than in providing things like basic freedoms.

Most of the time, anonymous shell companies are at the center of these corrupt, oligarchic schemes. To take just one example, the Panama Papers revealed global transplant operations that were hidden behind anonymous Shell companies. Around 40,000 anonymous shells were directly linked to politically influential Chinese nationals, including Chinese President’s brother-in-law Xi Jinping.

The revelations also pulled the curtain back on a number of other CCP majors, all of whom are hiding their looted millions behind anonymous Shell companies.

Even the CCP’s biggest human rights violations rely on anonymous Shell companies. In Xinjiang, where the CCP set up the largest concentration camp system in the world since World War II and where the CCP forcibly detained millions of Uyghurs and Kazakhs for their ethnicity, Beijing has relied on anonymous shell companies to hide their funding.

A paramilitary organization set up by the CCP in Xinjiang relied on hundreds of thousands of anonymous Shell companies to cover up how Beijing is funding its massive crimes.

Easier than getting a library card

Shell anonymous companies are clearly key to the CCP’s designs. But in all of these details and the way China uses and abuses anonymous shell companies, there is an unfortunate reality.

The largest provider of anonymous shell companies is not in Beijing or other traditional offshore ports. Right here in the US, getting an anonymous shell company is often easier than getting a library card – and the Chinese government has turned over and over again for many of their anonymous needs.

Fortunately, the US is finally on the verge of eliminating this scourge. The National Defense Authorization Act of 2021, which went into effect January 1, 2021, contained our legislation – the ILLICIT CASH Act – effectively banning anonymous shell companies once and for all. The move will not only be the largest anti-corruption reform in the US in decades, it will also eliminate one of the world’s most popular tools for the criminals and corrupt.

Needless to say, there are many reasons to celebrate the passing of our laws. It will finally end one of the favorite tools used by cartels trying to hide their profits and oligarchs hiding their plundered wealth from battered populations. And it will include critical reforms of the anti-money laundering tools in our country that will bring our anti-money laundering laws into the 21st century.

It will also exemplify American unity and strength, thanks to its strong support from both parties. And perhaps most importantly, the Chinese Communist Party leaders who bribe officials overseas are building concentration camps at home and undermining American interests wherever they get a chance.

Sens. Mark R. Warner, D-VA and Mike Rounds, R-SD.

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Business

How Beijing Turned China’s Covid-19 Tragedy to Its Benefit

How Beijing Turned China’s Covid-19 Tragedy to Its Advantage

A year ago this week, the Chinese Communist Party was on the verge of its biggest crisis in decades. The corona virus brought the city of Wuhan to a standstill. In the days that followed, the government’s efforts to hide the pandemic would go public, sparking an online backlash unlike anything the Chinese internet had seen in years.

Then, when the blows landed faster than the Chinese propaganda machine apparently could handle, some liberal-minded Chinese began to think the unthinkable. Perhaps this tragedy would force the Chinese people to push back. After decades of mind control and the deterioration of censorship, perhaps this was the moment when the world’s largest and most powerful propaganda machine would crack.

It was not.

A year later, party’s control over the narrative has become absolute. In Beijing’s narrative, Wuhan does not stand as evidence of China’s weaknesses, but of its strengths. The memories of the horrors of last year seem to be fading, at least judging by the online content. Even moderate dissent is shouted down.

The people of China should bow their heads this week in memory of those who have suffered and died. Instead, the Chinese internet is on fire over the scandal of a Chinese actress and her surrogate babies, a tabloid controversy sparked by Chinese propaganda.

Anyone looking for lessons about China in the years to come must understand the consequences of what is happening in 2020. The tragedy has shown that Beijing is able to control what people in China see, hear and think to an extent that exceeds even what pessimists believed. During the next crisis – be it a disaster, a war or a financial crisis – the party has shown that it has the means to get people together, no matter how tenacious Beijing is about it.

This week I went through my Chinese social media schedules and screenshots from a year ago. I was shocked at how many posts, articles, photos, and videos were removed. I was also surprised to remember the sense of hope in that moment, despite intense anger and sadness.

The shift was particularly evident on the night that Dr. Li Wenliang, who was silenced after warning of the outbreak in late 2019, died of the virus.

That night, numerous Chinese people led an online riot. They posted videos of the song “Les Misérables” “Can you hear people singing?” They repeatedly shared one of Dr. Li’s quotes: “A healthy society shouldn’t have just one voice.”

Even one of China’s propaganda guidelines warned that Dr. Li’s death was an “unprecedented challenge”. Young people told me that the official news media had lost credibility.

One of my followers on Weibo, the Chinese social media platform, apologized for attacking me earlier. I used to think people like you were bad, he wrote. Now, he added, I know we have been betrayed.

A middle-aged intellectual told me he expected the population of liberal-minded Chinese – those who want more freedom from Beijing’s controls – to grow from its estimate of 5 percent to 10 percent of the total population to 30 to 40 percent.

As those hopes rose, others tried to stifle the excitement. A political scientist suggested that the proportion of liberal-minded Chinese internet users would shrink, not grow. In three months, she predicted, the Chinese public, led by the great communist government, would celebrate the glorious victory over the outbreak.

Updated

Jan. 23, 2021, 9:48 p.m. ET

Unfortunately she was right.

In order to get the narrative back in the early days of the pandemic, as my colleagues have reported, the Chinese government began a tremendous effort behind the scenes to ensure that the censors took control at the local level as well. They listened and read almost everything people had written. Then the censors either addressed the problems or silenced those who thought differently. Chinese officials say police examined or otherwise treated more than 17,000 people who they said they had invented or distributed fake information about pandemics.

The lockdown in Wuhan ended after 11 weeks. By the summer, a photo of a crowded Wuhan swimming pool appeared on the home pages of many websites around the world. China became a success story as infection cases and the death toll skyrocketed in the US and many other Western countries. The contrast made the effectiveness of the party’s strong hand an easy sale.

The Chinese Communist Party has a long history in controlling history. In the United States, historical narratives shift and compete, causing argument and sometimes even violence, but constantly shedding light on new perspectives and providing a better understanding of what underlies national identity. In China, on the other hand, the government has successfully taught its citizens that the country is virtually ungovernable unless a strong hand controls the narrative.

The Communist Party reports severely on its most serious mistakes, including the Great Leap Forward, the Cultural Revolution and crackdown on Tiananmen Square. Immediately after the Cultural Revolution, so-called scar literature – memoirs of those who suffered during this difficult time – became a popular genre. The party quickly recognized the danger of the public sharing their individual trauma and banned the books.

Under Xi Jinping, the party has become even less tolerant of unorthodox historical ideas. In 2016, Yanhuang Chunqiu, a monthly history magazine in which moderate retired officials published articles, was forced to cede its editorial powers to the authorities.

The narrative of the current pandemic is no exception. Journalists, writers and bloggers whose account of the outbreak differs from the official version have been arrested, disappeared or silenced.

Fang Fang, a Wuhan-based writer, became the most vilified figure on the Chinese internet in 2020. Your crime? Documentation of their lockdown experiences in an apolitical account in an online diary.

People on the internet call her a liar, a traitor, a villain and an imperialist dog. They accuse her of slandering the government and causing the Chinese people to lose face to the world by publishing an English translation of their diary in the United States. A man asked the government to investigate her for the crime of undermining state power. A high-ranking medical doctor punished her for lack of patriotic feelings.

No publisher is willing or able to publish their works in China. The social media posts and articles they endorse are often censored. Some people who spoke out in favor of them in public were punished, including a literary professor in Wuhan who lost their membership in the Communist Party and their right to teach.

“I think Fang Fang wrote about what happened,” said Amy Ye, the organizer of a volunteer group for disabled people in Wuhan. “In fact, I don’t think she included the most dire situations. Your diary is very moderate. I don’t understand why such a thing could not be tolerated. “

This requirement for a single narrative carries risks. It silences those who might warn the government before it does something stupid like stumbling into conflict or disrupting China’s economic growth machine.

It also hides the real feelings of the Chinese people. On the street, most Chinese people like to tell you what they think, perhaps in great detail. But China became more opaque in 2020. Online censorship got tougher. Few Chinese people are willing to take the risk of speaking to Western news media. Beijing has expelled many American journalists.

This single narrative also means that people who don’t fit in run the risk of being left behind.

Ms. Ye, the volunteer organizer of the Wuhan Group, doesn’t think Wuhan could win a victory over the pandemic. “My whole world has changed and it will probably never go back to what it used to be,” she said.

She is still struggling with depression and the fear of getting out of her apartment. As a pre-pandemic outgoing person, she has only attended one social gathering since lockdown ended in April.

“We were suddenly locked up at home for many days. So many people died. But nobody was held accountable, ”she said. “I would probably feel better if someone could apologize for not doing their job.”

“I can’t forget the pain,” she said. “It’s engraved on my bones and my heart.”

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Health

New map reveals the place China’s newest virus circumstances are clustered

New map shows where China's latest virus cases are clustered

More than half a year since Covid-19 halted its spread in mainland China, new clusters of cases have appeared in and around the capital Beijing in recent weeks.

The number of newly reported cases is nowhere near as high as in many countries outside of China, including the US. Hebei, the worst-hit province, has reported more than 800 new confirmed cases since January 1. Here’s a look at the provinces that have reported confirmed coronavirus cases since December 1, with darker shades representing areas with higher numbers of cases:

The ongoing spread of the virus, particularly in Hebei province surrounding Beijing, has led authorities to lockdown several regions and urge people across the country not to travel during the upcoming New Year celebrations. The holiday officially falls in mid-February this year.

“Given the rapid response from local governments, efficient testing and tracking systems, and the ongoing adoption of vaccines, we believe the situation will eventually be brought under control,” said Ting Lu, Nomura’s chief economist, China, in a January 18 note . “However, the unusually cold weather and the upcoming Lunar New Year (LNY) rush could make the task of containing the virus more difficult.”

“The hospitality sector is expected to slow while the industrial sector may remain solid,” said Lu, adding, “Markets may need to lower expectations of strong pent-up consumer demand during the upcoming LNY vacation in mid-February.”

Hebei Province started an increase in coronavirus cases earlier this year, with daily numbers topping 90 last week. The numbers don’t include the many asymptomatic cases found by mass testing.

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Politics

U.S. Says China’s Repression of Uighurs Is ‘Genocide’

U.S. Says China’s Repression of Uighurs Is ‘Genocide’

Tensions have worsened significantly since 2009, when Uyghurs participating in ethnic unrest killed around 200 Han after previous tensions and violence in Urumqi, the regional capital. The Chinese security forces began a comprehensive crackdown. In the years that followed, there were attacks and further raids in Uighur cities and some cities outside of Xinjiang.

Since 2017, Xinjiang’s leaders, squeezed by Mr. Xi, have taken or stepped up measures aimed at transforming the Uyghurs, Kazakhs and other ethnic minorities into loyal, largely secular supporters of the Communist Party. The Foreign Ministry’s determination stated that the Chinese government had committed “crimes against humanity” since “at least March 2017”.

Security forces have sent hundreds of thousands of Uyghurs and Kazakhs – possibly a million or more, according to estimates – to indoctrination camps in order to instill loyalty to the party and break adherence to Islam. The Chinese government has defended the camps as benign vocational schools and has denied inmate estimates without ever issuing its own. Former inmates and their families who have left China have described harsh living conditions, gross indoctrination, and abusive guards.

The swell camps were increasingly condemned internationally, including by human rights experts advising the United Nations, as well as the United States and other nations. Journalists and scholars began writing articles about the camps and a sophisticated high-tech surveillance system in Xinjiang in 2017, long before foreign governments began discussing the subject.

However, the indoctrination camps were only part of the Chinese Communist Party’s broader campaign to drastically transform Uyghurs, Kazakhs and other ethnic minorities. Other measures include labor transfers, school and cultural policy and population controls.

Under Mr. Xi, Xinjiang has expanded and intensified long-term programs to relocate Uyghurs and Kazakhs from rural areas to jobs in factories, cities, and in commercial agriculture. The Chinese government has stated that these labor transfers are entirely voluntary and bring prosperity to the impoverished peoples. However, some programs have set targets for the number of people being displaced to work and have prevented recruits from choosing or leaving their jobs – hallmarks of forced labor.

The schools in Uighurs have largely discarded the lessons and pushed students to learn Chinese. Uyghur academics who tried to preserve and promote their culture have been arrested and publication in Uyghur languages ​​has been severely restricted. Officials have forced children into boarding schools, separated from their parents.

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Business

Most Main Economies Are Shrinking. Not China’s.

Most Major Economies Are Shrinking. Not China’s.

SHANGHAI – With most nations around the world grappling with new lockdowns and layoffs in the face of the growing pandemic, only one major economy has recovered after getting most of the coronavirus under control: China.

The Chinese economy grew 2.3 percent last year, the country’s National Bureau of Statistics said in Beijing on Monday. In contrast, the United States, Japan, and many nations in Europe are expected to have suffered a sharp decline in economic output.

China’s strength seemed unlikely a year ago when the virus hit the central Chinese city of Wuhan. When the travel and business situation almost came to a standstill, the economy contracted 6.8 percent from January to March compared to 2019, the first decline in half a century.

Since then, the economy has improved steadily and closed the year with a growth of 6.5 percent in the last three months compared to the same period last year. While the recovery remains uneven, factories across China are in full swing to fulfill overseas orders and cranes are constantly busy on construction sites – a boom in exports and infrastructure that should fuel the economy for the coming year.

At booths in Wuhan Taiyuan Textile Market in Hubei Province, apparel factory managers have ordered large samples of fabric to meet domestic and international apparel orders. At Xuzhou Construction Machinery Group in Jiangsu Province, facilities are in operation day and night to keep up with the demand for new earthmoving and pile driving equipment. Huahong Holding Group, a large exporter of framed prints and oil paintings in Zhejiang Province, has doubled profits.

“This is the only major economy that has quickly recovered from the pandemic and is able to operate normally,” said Zhou Linlin, a Shanghai financier on Huahong’s board of directors. “So all of these orders are coming to China from all over the world.”

However, the general resilience of the Chinese economy hides weaknesses.

There are many jobs for blue-collar workers, but they were rare for young college graduates with little experience. Service companies such as hotels and restaurants did well in large coastal cities such as Beijing and Shanghai late last year, but never fully recovered in inland provinces. Consumer electronics and personal protective equipment manufacturers have benefited from the pandemic, but exporters to poor disease-ravaged countries have not.

Zhang Shaobo, the owner of a Halloween mask factory in Yiwu, received news in March last year that one of his most consistent export customers in India had contracted the coronavirus. In May the man was dead. New customers from Mr. Zhang’s main markets in India and South America also stopped coming to China to view his latest products.

He fired all but four of his 20 factory workers and began making preparations to close his business in Yiwu’s wholesale market. Since the business is so weak, he said, “I’m not going to keep renting it.”

China’s top leader Xi Jinping paid tribute to the economic challenges in a speech published by Communist Party magazine Qiushi on Friday.

“There are profound adjustments in the international economy, technology, culture, security and politics, and the world is in a period of turbulent change,” Xi said in the speech delivered in August. “In the coming period, we will face an external environment with increasing headwinds and countercurrents and we must prepare to respond to a range of new risks and challenges.”

These challenges could get worse in the coming weeks. After notable success in taming the coronavirus, China has suffered a number of minor outbreaks recently. The government was quick to mobilize by building hospitals, running mass tests and banning at least 28 million people.

Updated

Jan. 17, 2021, 10:48 p.m. ET

Authorities are starting to reintroduce a variety of health checks that are deterring consumers from spending. Not everyone was doing well before the recent outbreaks. Consumer confidence never fully recovered in the past year. Chinese families have shown themselves to be particularly cautious when it comes to large expenses such as renovation projects or new furniture.

Lin Jinting, a worker in Wuhan, can typically earn nearly $ 100 a day bringing heavy loads home for buyers. Now many people are postponing major purchases and work is scarce.

“I came here this morning at 8:00 am and I didn’t get any orders today,” he said one afternoon.

Keeping the virus at bay has been critical to China’s economic success over the past year. As the pandemic devastates other nations, Beijing’s aggressive top-down approach prevented the virus from spreading rapidly across the country.

In China, nearly 100,000 cases and fewer than 5,000 deaths have been reported, mostly in Wuhan. Around 150 cases have been reported daily in the current outbreaks. In the United States, there were over 220,000 cases and 3,300 deaths a day.

Mary Wu, a 26-year-old saleswoman in Jiande, southeast China, was only allowed to leave her home once every three days during a lockdown last spring. The local schools closed for their children between the ages of 4 and 9. But life quickly returned to normal, schools reopened, and Ms. Wu and her family started eating out again.

Ms. Wu even sent her older child to additional classes to make sure they caught up any ground they lost. She no longer worries about the virus.

“We all wear masks,” she said.

With the virus largely under control, Beijing has relied on its old game book to help boost the economy.

When Wuhan was still under lockdown, the authorities moved to restart production in other areas. They provided long-distance buses to take the workers back to the factories from their home villages after the Chinese New Year. State banks provided special loans to factories, while many government agencies partially reimbursed corporate taxes paid before the pandemic.

China, already the world’s largest manufacturer, expanded its lead this year. Despite the trade war and tariffs, American and European companies turned to parts and goods of China when factories elsewhere struggled to meet demand. Factories in China turned to nearby suppliers to replace imports as transoceanic utilities became less reliable.

The “Made in China” label was particularly popular as people stuck in their homes were being renovated and refurbished. At the Xingxing refrigerated factory in Taizhou, managers cannot hire staff fast enough to keep up with the strong demand for freezers for people looking to store more food during a pandemic.

The consumer electronics sector in China is particularly strong right now, for both white-collar and blue-collar workers. When American managers could no longer travel to China last spring to oversee technology projects, the demand for electronics project managers who were already in China soared.

“Companies found everyone they could find,” said Anna-Katrina Shedletsky, general manager of Instrumental, a remote quality monitoring system used by global brands to track and manage electronics manufacturing.

Beijing also increased its infrastructure spending. Every major city in China was already connected by high-speed rail lines enough to span the continental United States seven times. However, smaller cities were quickly expanded to include new routes in the past year. New highways crossed remote western provinces. Construction companies switched on floodlights at many locations so that work could continue around the clock.

Exports and infrastructure were key drivers of last year’s growth. China’s exports rose 18.1 percent in December and 21.1 percent in November compared with the same month last year. Investments in property, plant and equipment, from high-speed lines to new residential buildings, rose 2.9 percent last year.

Both are expected to power the economy in 2021.

The Chinese Academy of Social Sciences predicted last week that the country’s economy will grow by 7.8 percent this year. If it did, it would be China’s strongest achievement in nine years.

Liu Yi and Coral Yang contributed to the research.

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Health

China’s Covid outbreak nonetheless not at a turning level: Hospital director

China's Covid outbreak still not at a turning point: Hospital director

Medical workers collect swab samples from residents of a Covid-19 testing site in Qiaoxi Township in Shijiazhuang, capital of north China’s Hebei Province, on Jan. 7, 2021.

Yang Shiyao | Xinhua News Agency | Getty Images

BEIJING – Beijing remains on the lookout for a recurrence of Covid-19 infection as neighboring Hebei Province continues to report new cases every day.

Hebei reported an increase in cases earlier in the year. In the last week or so, the province closed its own capital and at least two other areas to contain the spread of the coronavirus.

“The turning point has not yet come (for Hebei),” Gao Yan, director of the Infectious Diseases Department at Peking University People’s Hospital, told reporters on Friday. That comes from a CNBC translation of her Mandarin-language remarks.

Due to previous outbreaks in China, it usually takes about a month to reach a tipping point.

Hebei Province reported 90 new confirmed cases on Thursday, bringing the total number of current cases to more than 550. The majority are in the capital, Shijiazhuang, about three and a half hours by car southwest of Beijing.

Targeted measures in Beijing, such as tracking down people in contact with Hebei cases, are sufficient for the time being, Gao said. She said the likelihood of the Chinese outbreak recurring last year was “very, very small”.

Covid-19 first appeared in the Chinese city of Wuhan in late 2019. The authorities did not lock the city until more than a month later. More than 4,000 people have died from the virus in China, according to Johns Hopkins University. The disease has killed more than 1.9 million people worldwide.

Beijing launched a city-wide vaccination campaign with more than 200 vaccination centers on January 1, 2021 to ensure critical staff are vaccinated before the New Year celebrations. Hundreds of millions of people usually travel the month around the public holiday, which officially falls in mid-February of this year.

According to official figures, in about two weeks from 5 p.m. local time on Thursday, the capital administered 1.5 million vaccine doses. At least for a large vaccination center in the Chaoyang district – where large foreign companies and embassies are located – the vaccines came from the state-owned Sinopharm company.

Categories
Business

Nio and Tesla vie for dominance in China’s electrical automobiles market

Nio and Tesla vie for dominance in China's electric vehicles market

SINGAPORE – As domestic automakers in China attempt to position themselves against Tesla in the growing Chinese electric vehicle space, Nio is well positioned to capture a sizable slice of the market, an analyst told CNBC.

The Chinese electric car start-up released its first sedan, the et7, on Saturday with self-driving technology features that are said to outperform those of Tesla. An et7 with a 70-kilowatt-per-hour battery starts at 448,000 yuan ($ 69,000) before the subsidy.

“This is the symbol for Nio in the sedan category,” said Bill Russo, founder and CEO of Automobility Limited, on CNBC’s Street Signs Asia on Monday. He said the company has already established itself as a premium brand in the SUV category, where it sells faster than its peer group in China.

“Now they are moving into the sedan segment or the premium car segment,” Russo said, adding that the et7 will compete with Tesla’s imported Model S.

“Obviously the pricing that was announced on Nio Day is actually pretty competitive with the Model S,” he said, adding, “It’s a statement of claim, it’s a statement of where they hope their brand is and under position the Chinese company. ” They realize they are the premium (electric vehicle) company. “

Last year, Reuters reported that Tesla cut its Model S price in China by 3%.

Catch up with Tesla

China is already the world’s largest car market. In its quest to become a leader in electric vehicle technology, Beijing has supported the industry with subsidies, relaxed restrictions and the expansion of charging infrastructure.

Domestic electric vehicle manufacturers including Nio, Li Auto and Xpeng said deliveries rose sharply over the past year. Government data showed that January-November sales of all-electric vehicles rose 4.4% year over year, while total passenger car sales fell 7.6% over the same period. Even so, their delivery numbers lagged behind those of Tesla.

“Obviously everyone is trying to position themselves against Tesla. Tesla is certainly the market leader. It has a market capitalization that is so far ahead of everyone else,” said Russo. Tesla’s market value as of Monday is around $ 768.93 billion, while Nio has a market capitalization of around $ 98.63 billion.

Employees conduct checks on an inspection line during a media tour of Nio Inc.’s manufacturing facility in Hefei, Anhui Province, China on Friday, December 4, 2020.

Qilai Shen | Bloomberg | Getty Images

Nio “is trying to establish itself as the Chinese Tesla, which means that as a premium EV brand in China you have to compare yourself to access to the Chinese market, which will grow significantly over the next five years,” said Russo.

“These companies will grow with the market and I think Nio is well positioned to capture a lot of it,” he said, adding that the company still does not control the entire supply chain, relying on third party components like autonomous driving chipsets .

For its part, Tesla has stepped up its efforts in China, including further promotions on New Years Day. The company has a factory in the country that can produce 250,000 vehicles and has announced a new China-made vehicle, Model Y, priced at 339,900 yuan.

– CNBC’s Evelyn Cheng contributed to this report.

Categories
World News

With Concessions and Offers, China’s Chief Tries to Field Out Biden

With Concessions and Deals, China’s Leader Tries to Box Out Biden

A trade pact with 14 other Asian nations. A promise to work with other countries to reduce CO2 emissions in order to combat global warming. Now an investment agreement with the European Union.

China’s leader, Xi Jinping, has been doing business for the past few weeks, pledging to position his country as an indispensable global leader, even after dealing with the coronavirus and increasing readiness to fight at home and abroad damaged his international standing.

In doing so, he underscored how difficult it will be for President-elect Joseph R. Biden Jr. to forge a united front with allies against China’s authoritarian policies and trade practices, a key focus of the new administration’s plan to compete with Beijing and Beijing Review The increasing performance. The picture of Mr Xi, who joined in a conference call with Chancellor Angela Merkel from Germany, President Emmanuel Macron from France and other European heads of state and government on Wednesday to seal the agreement with the European Union, was also a stinging accusation against the efforts of the Trump administration to isolate China’s Communist Party state.

The deals show the leverage that Mr. Xi has due to the strength of the Chinese economy, which is now growing the fastest among major nations as the world continues to grapple with the pandemic.

Noah Barkin, a China expert in Berlin at the Rhodium Group, described the investment agreement as a “geopolitical coup for China”. Chinese companies already had better access to European markets – a core complaint in Europe – and thus gained only modest openings in manufacturing and the growing renewable energy market. The real achievement for China is diplomatic.

China only had to make modest concessions to overcome increasingly vocal concerns about China’s toughest policies, including crackdown on Hong Kong and the mass imprisonment and forced labor of Uyghurs in Xinjiang, western China.

China agreed, at least on paper, to relax many of the restrictions on European companies operating in China, open China to European banks, and comply with international standards on forced labor. The question is whether the commitments can be enforced.

For China’s critics, Mr. Xi’s steps were tactical – even cynical. However, they have also proven successful to an extent that seemed impossible just a few months ago, when several European countries became more open against China.

“It would be wrong to see these Chinese concessions as a major change in policy,” said Barkin. “In the past year we have seen how the party got the economy more firmly under control, doubled itself compared to state-owned companies and started a new boost for independence. That is the direction of the policy that Xi has set and it would be naive to believe that this deal will change that. “

Instead, China has shown again that it pays little or no diplomatic costs for abuses that violate European values. For example, Europeans signed the investment deal the day after the European Union publicly criticized a Chinese lawyer who reported on the first coronavirus outbreak in Wuhan city.

Australia faced a similar compromise in November when it signed the Asian Trade Pact, the regional comprehensive economic partnership, despite China waging a campaign of economic coercion against the country.

China’s tremendous economic and diplomatic influence, especially at this time of global crisis, means that countries feel they have no choice but to embark on it, regardless of their uneasiness about the nature of Mr. Xi’s harsh rule. The Asian trade pact, for example, although limited in scope, involves more people – 2.2 billion people – than any other.

“The values ​​that we all hold in our Sunday speeches must be adhered to if we do not want to fall victim to a new systemic rival,” said Reinhard Bütikofer, a German member of the European Parliament who has spoken out against the European investment agreement with China .

“I think understanding is increasing,” he added, “but how to respond is not yet clear.”

China’s overtures will not end anger over its repressive policies, including the documented use of forced labor. However, they could appease China’s critics by seizing the lure of commercial profit in a country whose economy has recovered more from the pandemic than any other.

It would also undermine Mr Biden, who has already had four years of frustration in Europe to overcome President Trump’s standalone approach in facing China’s actions at home and abroad.

“I think now is a very good window for us,” said Wang Huiyao, president of the Center for China and Globalization, a think tank in Beijing. He said China could serve as a role model and partner in the cooperation, and suggested that Europe could play a moderating role between China and the United States.

“Everyone has seen China’s resilience, vitality, tenacity and stability, especially through its fight against the epidemic,” he said.

Of course, Mr. Xi did not acknowledge that any policy by China has undermined global confidence. The officials have also not signaled a renewed review of their core policy.

The country’s “Wolf Warrior” diplomacy, named after two jingoistic action films, shows no signs of indulgence. Australia is still exposed to China’s wrath, as is Canada over the US imprisonment of the chief financial officer of Chinese tech giant Huawei.

“I think they are taking a selective approach to improving their image,” said Minxin Pei, a professor at Claremont McKenna College in California.

In the long term, it remains to be seen how much China’s pacts and pledges will improve its international image, which collapsed this year due to its disguise due to the coronavirus outbreak in Wuhan.

A poll by the Pew Research Center in October found that in 14 economically advanced countries, unfavorable attitudes toward China had reached their highest levels in more than a decade. A median of 78 percent of respondents said they had little or no confidence that Mr. Xi would do the right thing in world affairs. (An advantage for Mr. Xi: 89 percent felt the same way about Mr. Trump.)

China’s economic recovery has nevertheless given Mr. Xi a diplomatic opening, and he has seized it. Mr. Xi’s pledges to accelerate China’s carbon emissions reduction, which he began in September, have received international praise, even if the government is still unsure of how to wean itself off coal and other highly polluting industries.

At around the same time, Mr. Xi showed renewed interest in finalizing discussions on the seven-year European investment agreement. Just months earlier, a deal seemed as good as dead in the face of mounting hostility towards China in Europe. “There are real differences and we are not going to document them,” said Charles Michel, President of the European Council, in September.

A breakthrough came after the American presidential election. Mr Trump showed contempt for America’s traditional allies in Europe and Asia, but Mr Biden has pledged to form a coalition to meet China’s economic, diplomatic and military challenges.

China clearly foresaw the potential threat.

Just two weeks after the election, China signed the regional comprehensive economic partnership with the 14 other Asian nations. In early December, after phone calls with Ms. Merkel and Mr. Macron, Mr. Xi urged that the investment agreement be concluded with the Europeans.

The prospect raised alarms in both Europe and the United States. Mr Biden’s new National Security Advisor, Jake Sullivan, went on Twitter to insist that Europe should wait for consultations with the new government first – to no avail.

Critics said the deal would tie Europe’s economy even closer to China’s, helping Beijing build economic power and divert external pressure to open up its party-state economy.

They said the agreement did not do enough to address China’s human rights abuses, including labor rights. The promise that China’s negotiators have drawn on this issue to “make continued and sustained efforts” to ratify two international conventions on forced labor requires that China act in good faith. Critics have been quick to point out that China has not kept all of the promises it made when it joined the World Trade Organization in 2001.

The investment agreement has to be ratified by the European Parliament before it can enter into force and there is considerable opposition that it could derail. At the moment, Chinese officials are celebrating a deal that Mr. Xi described as “balanced, of high standard and mutually beneficial.”

“The Chinese leadership is concerned about a transatlantic front, a multinational front, and I think they are ready to make tactical concessions to get the Europeans on board,” said Barkin of the Rhodium Group. “You were very smart.”

Claire Fu contributed to the research.

Categories
Business

Jobs, Homes and Cows: China’s Expensive Drive to Erase Excessive Poverty

Jobs, Houses and Cows: China’s Costly Drive to Erase Extreme Poverty

JIEYUAN VILLAGE, China – When the Chinese government offered free cows to farmers in Jieyuan, villagers in the remote mountain community were skeptical. They feared the officers would ask them to return the cattle later with the calves they could raise.

But the farmers kept the cows and the money they brought. Others received small flocks of sheep. Government workers also paved a road into town, built new houses for the poorest residents of the village, and used an old school as a community center.

Jia Huanwen, a 58-year-old farmer in the village in Gansu Province, received a large cow three years ago that produced two healthy calves. He sold the cow in April for $ 2,900, as much as he makes in two years growing potatoes, wheat, and corn on the terraced, yellow clay slopes nearby. Now he regularly buys vegetables for his family’s table and medication for an arthritic knee.

“It was the best cow I have ever had,” said Mr. Jia.

Jieyuan Village is one of the many achievements of President Xi Jinping’s ambitious pledge to eradicate dire rural poverty by the end of 2020. In just five years, China claims to have lifted more than 50 million farmers out of extreme poverty left behind by China’s breakneck economic growth.

The village, one of six in Gansu visited by the New York Times without government supervision, is also evidence of the significant cost of the ruling Communist Party’s approach to poverty alleviation. This approach relied on massive, potentially unsustainable, subsidies to create jobs and build better homes.

Local cadres fanned out to identify impoverished households – defined as living on less than $ 1.70 a day. They distributed loans, grants and even farm animals to poor villagers. Officials visited residents weekly to check their progress.

“We are fairly certain that China’s eradication of absolute poverty in rural areas has been successful. Given the resources mobilized, we are less certain that it will be sustainable or inexpensive,” said Martin Raiser, World Bank country director for China.

Beijing has poured nearly $ 700 billion in loans and grants into poverty reduction over the past five years – about 1 percent of annual economic output. This excludes large donations from state-owned companies like State Grid, an electricity transmission giant that has invested $ 120 billion in upgrading rural electricity and deployed more than 7,000 people on poverty reduction projects.

The campaign received a new urgency this year as the country was devastated by the coronavirus pandemic and severe flooding. One by one, the provinces announced that they had achieved their goals. In early December, Mr. Xi stated that China had “won a major victory that has impressed the world”.

However, Mr. Xi acknowledged that more efforts are needed to further share the wealth. A migrant worker in a coastal factory town can make as much in a month as a Gansu farmer in a year.

Mr. Xi also urged officials to ensure that newly created jobs and aid to the poor do not fade in the years to come.

Gansu, China’s poorest province, said in late November that it had lifted its last counties out of poverty. A decade ago, poverty was widespread in the province.

Hu Jintao, China’s leader before Mr. Xi, visited people who lived in simple houses with little furniture. Villagers ate so many potatoes that local officials were embarrassed when a young girl initially refused to have another meal with Mr. Hu in front of television cameras because she was fed up with it, according to a cable published by WikiLeaks.

Although many villages are only accessible by single lane roads, they are lined with street lights powered by solar panels. New pig farms, nurseries and small industrial-scale factories have sprung up and have created jobs. Workers build new houses for farmers.

Three years ago, Zhang Jinlu woke up in horror when the rain-weakened mud-brick walls of his house gave way. Half of the roof timbers collapsed with dirt slabs and barely missed him and his mother.

Officials in Youfang Village built a spacious new concrete house with new furniture for her. Mr. Zhang, 69, is now receiving a monthly grant of $ 82 through the Poverty Program. His original house was converted into a storage shed for him.

Updated

Apr. 30, 2020 at 9:23 am ET

“This house used to be dilapidated and it leaked when it rained,” said Mr. Zhang.

The government helps private factories buy equipment and pay salaries when they hire workers who are believed to be impoverished.

At Tanyue Tongwei Clothing & Accessories Company in southeast Gansu, around 170 workers, mostly women, sewed school uniforms, T-shirts, down jackets and face masks. Workers said several dozen employees were receiving additional payments from the poverty reduction program in addition to their salaries.

According to Lu Yaming, the company’s legal representative, Tanyue receives at least $ 26,000 per year in subsidies from poverty reduction programs, of which $ 500 per year was paid to each of the 17 villagers believed to be impoverished.

However, the viability of these factories without ongoing assistance is far from clear. Until the subsidies came in, the factory often had problems paying wages on time, Mr. Lu said.

Inevitable questions arise about whether some families have used personal relationships with local officials to qualify for scholarships. According to official statistics, corruption investigators linked to poverty reduction measures fined 99,000 people across the country last year. Local eateries in communities like Mayingzhen, where a spicy platter of roast donkey meat costs $ 7, the key is who got what and whether they should really have qualified.

While the poverty reduction program has helped millions of poor people, critics point to the campaign’s strict definitions. The program supports people classified as extremely poor from 2014 to 2016, without adding others who may have had tough times since then. It also helps very little poor people in big cities where wages are higher, but workers have to pay much more for food and rent.

The government’s complicated criteria for determining eligibility were excluded from anyone who owned a car, had assets over $ 4,600, or had a new or recently remodeled home. People living just above the government’s poverty line continue to struggle to make ends meet, but are often denied assistance with housing or other services.

Zhang Sumei, a 53-year-old farmer, makes $ 1,500 a year growing and selling potatoes and had to use her savings to build her house out of concrete. She says she should have qualified to help the extremely poor. Farming Gansu’s notoriously barren soil is tough and difficult.

“In this society, poor families are ruled by cadres and we have nothing.” she said bitterly.

The party’s campaign-like approach also fails to address deep-seated issues that disproportionately hurt the poor, including health care costs and other gaps in China’s burgeoning social safety net. Villages offer limited health insurance – for example, only 17 percent of the cost of the arthritis drug is paid for by Mr. Jia. High medical bills can ruin families.

Yang Xiaoling, a 48-year-old worker who works at another government-subsidized factory in Gansu, cried uncontrollably as she described the crippling debt she faced after paying medical fees for her husband, who suffered from kidney failure would have.

Three years ago she borrowed interest-free US $ 7,700 from a Poverty Reduction Bank to invest the money in buying cattle. Instead, she borrowed more money from relatives and then spent all of the money on a kidney transplant and medication for her husband.

Now all of the loan is due and she has no money to pay it back. Medical follow-up treatments for her husband use up all of her salary. The couple and their three children, as well as their husband’s invalid parents, live on monthly state poverty relief payments of less than $ 50 per person.

“I can’t pay it back. I can’t help it, ”Ms. Yang sobbed. “I’ve already borrowed a lot of money and now nobody lends me any more money.”

Despite the challenges, the poverty reduction program may have long-term policy benefits that will help some of it survive. The gratitude for the program seems to strengthen the party’s political power in rural areas.

In Youfang, Mr. Zhang was quick to praise not only the poverty program, but also Mr. Xi, comparing him to Mao.

“It is good for the country to have Xi Jinping,” he said, “and the national politics are good.”

Chris Buckley contributed to the coverage from Sydney. Liu Yi, Amber Wang, and Coral Yang contributed to the research.

Categories
World News

Basis of China’s financial restoration ‘not but strong,’ leaders say

Foundation of China's economic recovery 'not yet solid,' leaders say

Workers make protective masks at a factory in Handan, Hebei Province, China on Jan. 22, 2020.

China Daily about REUTERS

BEIJING – Chinese leaders warned at a key economic planning meeting last week that growth was still facing many challenges.

While the rest of the world is still grappling with the shock of the coronavirus pandemic, China will be the only major economy expanding this year.

President Xi Jinping, Prime Minister Li Keqiang, and other heads of state and government who attended the Central Economic Work Conference from December 16-18, commented positively on China’s relative achievements and remained cautious of major changes in economic policy, according to state media. The annual meeting sets development priorities for the coming year.

The meeting indicated that while the country recognizes achievements, it needs to be clearly aware of the changes caused by the pandemic and uncertainties abroad, state media said.

“The foundation of our economic recovery is not yet solid,” the report said in a CNBC translation of the Chinese text.

Covid-19 first appeared in the Chinese city of Wuhan late last year. To control the outbreak, Chinese authorities temporarily closed more than half of the country earlier this year. GDP declined 6.8% in the first quarter before returning to growth at 3.2% in the second quarter.

“Not having a solid (foundation) yet indicates a slightly slower than expected start to domestic demand and consumption,” Bruce Pang, director of macro and strategy research at China Renaissance, said in a Chinese statement, according to a CNBC translation.

Investment in manufacturing and the non-government stake have not rebounded much, Pang said. He added there were doubts about the sustainability of exports, uncertainties about employment and many other concerns.

Economists have suggested that much of China’s recovery can be attributed to traditional growth drivers such as exports, fueled by overseas demand for pandemic-related products.

However, many Chinese have yet to increase their spending as they have concerns about future income. This lack of consumption affects an economy that Beijing seeks to support with domestic demand rather than foreign demand.

While China expects growth of around 2% this year, retail sales were down 4.8% year over year by the end of November.

“Next year the pace of economic growth could slow down from an initial rapid pace,” the state media said, according to a CNBC translation of the Chinese text. “Keeping the economy within reasonable limits remains an important test.”

GDP expansion in the first few months of next year would look high compared to the decline in the first quarter of 2020. Overall, many economists predict that China’s GDP will grow by around 8% next year.

Pang pointed out that the rate would represent a 5% growth in 2020 and a further 5% increase in 2021.

That’s slower than the 6.1% pace in 2019.