Why China is unlikely to rescue the world economy again; Exclusive Insight: Zhejiang's Unique Blend: The Resilient Integrity of Officials and Entrepreneurs
In China, the police came for the consultants, and now the CEOs are alarmed; China charm offensive in Europe depends on Ukraine stance: analysts; Chinese cash keeps Japan’s struggling hot spring resor
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Exclusive Insight: Zhejiang's Unique Blend: The Resilient Integrity of Officials and Entrepreneurs
In the late 1990s, Shen Zuren, the Governor of Zhejiang Province, was a distinctive figure who passed away a few days ago. As a provincial leader, he retired and dismissed the secretary provided by the state, choosing to reside in a nursing home like an ordinary person.
During his tenure, he visited an impoverished mountain village in the province over ten times. The village, initially lacking even basic road access, was among the poorest in Zhejiang. As governor, he implemented a unique provincial system, directly linking county finances to the province, which was only found in Zhejiang throughout the country. Additionally, during Zhu Rongji's tenure, the taxation system was divided into national and local taxes, and every province had two separate bureaus. Zhejiang, however, resisted this change, remaining as one of the only two provinces with two plaques and one team. Although eventually, they had to conform, Zhejiang's resistance was rare.
Zhejiang's officials may appear humble and low-profile, but they possess innovative ideas and maintain determination in practice. The relationship between officials and entrepreneurs in Zhejiang can be characterized as respectful yet distant, connected yet unentangled, and corrupt yet not rotten. Although bribery may be common elsewhere, it is relatively rare in Zhejiang. Zhejiang officials accept meals and drinks but not gifts, making corruption difficult.
This phenomenon might be related to the province's thriving private economy. In the families of officials, there are always relatives and friends engaged in business. The officials may believe that their role is to accomplish something or bring honor to their family. If their goal were merely to amass wealth, they would opt for business instead of public service. At least in their own minds, they could earn more money through legitimate means rather than accepting bribes with trepidation.
Zhejiang's people value integrity, human relationships, and loyalty, which are reflected in their officials' adherence to bottom lines, principles, and maintaining distance. The balance in these aspects has been well maintained, providing a solid foundation for basic human interactions.
(Excerpt from "Zhejiang, Zhejiang People, Zhejiang Economy" Series, No. 23. The author, Ye Feng, is a Zhejiang Research Scholar.)
In China, the police came for the consultants. Now the CEOs are alarmed.
Japan Times
Increasing concerns about doing business in China have arisen following targeted raids on foreign-oriented advisory and consulting firms. Reports from the past few weeks have alleged that the Mintz Group, Bain & Co, and Capvision Partners were all targeted, leading to increased worry from executives about how to best protect staff and business operations. Recent revisions to China’s counterespionage law have heightened concern about the ability of authorities to target foreign companies’ employees in China, suggesting that national security is a priority over foreign investment. It has also become increasingly difficult to get reliable information about competitors and markets while operating in China. Some companies, such as the U.S. education company mentioned in the article, are looking to shield themselves from potential governmental interference in their market operations involving foreign employees. While some businesses are starting to reconsider investments in China, for those with products to sell the market remains a crucial one given the sheer size of the potential consumer base.
China charm offensive in Europe depends on Ukraine stance: analysts
South China Morning Post
China's potential peacemaking role in Europe and Ukraine has drawn scrutiny, with European analysts saying it would need to do much more to repair its image in Europe after a series of setbacks in recent years. While China has wooed European leaders to embrace "strategic autonomy" - its shorthand for less dependence on the US - by talking up its 12-point peace plan for Ukraine, some analysts believe that substantive policy changes would be needed if China wants to win over European capitals, especially Berlin. Chinese engagement or "divide and conquer"? sat at the heart of Foreign Minister Qin Gang's EU trip. Prof. Ulrich Brückner, a Stanford professor of European studies, suggested that the most significant action Beijing could take to change negative sentiment towards China would be to play an active role “to end the Ukraine war”. The poll by the German public broadcaster ARD from March showed that trust among the public in Germany about China has fallen to an all-time low with 83% surveyed calling Beijing an untrustworthy partner.
Chinese cash keeps Japan’s struggling hot spring resorts bubbling
South China Morning Post
More Chinese investors are acquiring historic Japanese ryokan hotels with thermal springs as inbound tourism to Japan remains slow and traditional inns struggle to compete with modern hotels. Chinese buyers often pay twice what the Japanese would pay to acquire ryokan assets and many are motivated to hold their wealth outside China, particularly in Japan, which is close by. The Japanese Administration of Immigration reports numbers of Chinese seeking business management and highly skilled professional visas is rising as wealthy citizens explore investment opportunities to gain residency. China's previous crackdown on the tech sector has seen some of its elite citizens, including Alibaba founder Jack Ma, spending months in Japan waiting out the storm, increasing their interest in Japan, said Professor Tom Sawayanagi of Rikkyo University. However, traditional ryokan are finding it difficult to diversify to compete with modern hotels that offer multilingual services and online bookings.
China Authorities Summon Banks to Clarify Probe Details
Bloomberg
China's central bank has launched an investigation into alleged bond market manipulation by several of the country's publicly owned banks, including the Export-Import Bank of China, China Minsheng Bank, and China Construction Bank. The National Association of Financial Market Institutional Investors (NAFMII), which oversees interbank bond sales, has been asking the banks about their low underwriting fees on a monthly basis. Regulators have been working to improve the transparency of the debt market and prevent price-skewing practices in a bid to safeguard investors for years.
China’s nuclear ambitions boosted by Russia, but is energy the only goal?
South China Morning Post
China is to receive shipments of highly enriched uranium-235 fuel from Russia over the next three years as part of a deal to supply a demonstration fast-neutron power plant. As well as helping improve China’s output of nuclear fuel, the resulting plutonium-239 created by the project could aid Beijing’s aim to increase its nuclear warhead stockpile, which the US Department of Defence estimates could reach 1,500 by 2035. China has struggled to expand its nuclear ambitions due to a shortage of domestic uranium reserves, and a percentage of the country’s raw uranium still needs to be imported.
‘China is Europe’s partner’: Foreign Minister Qin Gang calls to oppose decoupling
South China Morning Post
The Chinese Foreign Minister has urged China and Europe to oppose a “new Cold War” and deepen their collaborations. Both Europe and China have a responsibility to uphold economic globalization and strengthen macroeconomic policy coordination. The two civilizations should work together to maintain the smoothness of global industrial and supply chains. European officials have spoken about “de-risking” relations with China amid rising tensions between the US and China.
Why China is unlikely to rescue the world economy again
Deutsche Welle
China's economic recovery appears somewhat uneven with imports contracting sharply in April by 7.9%, and both consumer prices and factory gate deflation deepening that month. Despite being one of the biggest drivers of international economic growth for the past decade, China's stimulus response to the 2008 meltdown left it mired in debt, which, combined with growing tensions with the West, makes it unlikely that it will provide a countervailing force to the expected global economic slowdown that is being exacerbated by tightening monetary policy in place since the end of the Covid-induced recession.
Shareholders of Evergrande's EV unit agree on restructuring deal
Reuters
Shareholders of China Evergrande New Energy Vehicle Group have approved plans to divest two subsidiaries as part of a restructuring, according to a filing with the Hong Kong stock exchange. Over 50% of EV company votes were cast in favor of the proposal, which was raised at the end of April. The EV unit announced last month that it was selling the two debt-laden businesses to another unit, with a $3.6bn gain expected as a result. China Evergrande said it had received an enforcement notice from a court in Guangzhou regarding the fulfillment of repurchase obligations.
Former ByteDance executive says he was dismissed for flagging illegal activity
Reuters
ByteDance, the Chinese tech company that owns the popular app TikTok, is facing accusations of stealing user content from other platforms without permission. Yintao "Roger" Yu, a former head of engineering at Bytedance who was fired after he voiced his concerns about this alleged scheme, has filed a lawsuit against the company in a San Francisco court. He also claims in the filing that ByteDance fabricated user metrics and served as a propaganda tool for the Chinese Communist Party. The allegations come as TikTok faces calls for a nationwide ban from some US lawmakers amid concerns about Chinese government influence.
G7 leaders’ summit statement to target China’s ‘economic coercion’
Japan Times
The Group of Seven (G7) leaders are expected to discuss China's "economic coercion" in a joint statement after the leaders' summit on 19-21 May in Hiroshima, according to US officials. It will likely be paired with a broader proposal on how the seven leading countries will work together to counter any country’s economic coercion. The main statement is expected to have a section addressing China, listing concerns including "economic coercion and other behaviours". Under the Biden administration, the US is pushing for more direct statements about China than was seen under Donald Trump.
China's Oppo to shut down chip design unit as smartphone sales slump
Reuters
Oppo has announced that it will close its chip design unit, Zeku. The unit was established in 2019 and designed a neural processing unit for image and video processing on smartphones. Oppo has cited uncertainties in the global economy and the smartphone industry as the reason for the closure. The Chinese smartphone market, the biggest in the world, is struggling to recover from its worst slump in a decade, and total unit shipments fell below 300 million in 2022. Oppo is owned by BBK Electronics, which also owns Vivo, another top-selling Chinese smartphone brand.
A tipping point looms on the Australia-China reset
The Sydney Morning Herald
Australia has requested that China starts removing trade sanctions which are estimated to be worth over $20bn on Australian exports. Beijing responded by saying that it had begun to review its tariffs on Australian barley. However, this review must be completed within two months, or Australia will resume its dispute through the World Trade Organisation.
Europe needs stronger line on China ties, ministers urge
Japan Times
Foreign ministers from several European Union (EU) member states have called for increased collaboration and unity on how to handle China’s rising power as part of a common approach. The bloc is aiming to balance stronger political and economic tensions with China with efforts to preserve the EU’s supply chains that remain interlinked with China. An EU foreign affairs paper highlights the importance of dealing with China with a view to the country being a partner, competitor and systemic rival simultaneously whilst avoiding being drawn into zero-sum competition with the US.
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