Category Archives: China

(BBG) Hong Kong Expects First Annual Recession Since Global Financial Crisis

(BBG)

  •  City sees economy contracting 1.3% amid local social incidents
  •  Consumer price inflation estimated higher on China pork supply
People gather during a protest in the Central district of Hong Kong on Nov. 12.
People gather during a protest in the Central district of Hong Kong on Nov. 12. Photographer: Justin Chin/Bloomberg

Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Apple PodcastSpotify or Pocket Cast.

Hong Kong revised down its estimate for economic growth this year as political unrest grips the city, with the government now forecasting the first annual contraction since the global financial crisis a decade ago.You’re browsing incognito.Subscribe to conti

P.O. (BBG) Unprecedented Hong Kong Chaos Raises Fears About What’s Next

P.O.

People around the World have finally came to the conclusion that HK’s hand over to mainland China was flawed one and a terrible mistake made by all parties involved.

Hong Kong, as we knew it,is no more.

It’s gone forever.

Whether we like it, or not.

And regardless if Beijing likes it, or not.

Any possible solution would be a face loosing one for Beijing, which is not acceptable at all in the Far East.

I don’t know what the eventual outcome might be.

But one thing i think i know, is that the situation in HK will became much much worse before it quiets down.

And i am afraid that a terrible tragedy might occur.

I am sorry not to have better news.

Francisco (Abouaf) de Curiel Marques Pereira



(BBG)

  • Public schools suspended, events canceled as violence worsens
  •  Chinese state media steps up rhetoric, warns of intervention

Hong Kong has seen many violent days since the unrest began in June, but the disruption this week has taken things to a new level — and fears are growing as to what may come next.

Protesters paralyzed the city on Wednesday for a third straight day, disrupting subway lines and blocking roads. Tear gas emanated through the Central financial district, while police also battled university students far from the city center. The government ordered schools from kindergarten to college to shut on Thursday, the first time it’s done so during the unrest.You’re browsing incognito.Subscribe to c



P.O. Hong Kong as we knew it is no more

P.O.
Hong Kong as we knew it is no more.
Whether Beijing likes it or not.
A gigantic capital flght has been going on and the creativity and free spirit is no longer there.
The PRC will own the land, but not much else.
As a major international hub HK is finished.
The atrocities of the last two days only confirm my view.
What a disgusting sight and what a tragedy.
I call your attention to these two videos, which are not suited for minors.

FCMP



(ZH) Profits, Trading Plunge At World’s 3rd Largest Exchange As Hong Kong Chaos Spreads

(ZH) The social-economic turmoil in Hong Kong is certainly unprecedented. 

Retail sales have crashed, housing prices are rolling over, monetary policy via the Hong Kong Monetary Authority is failing to stabilize the economy, and now, new evidence suggests the financial industry is starting to crack.

Hong Kong Exchanges & Clearing Ltd., the world’s third-largest stock exchange (in terms of average daily trading volume), recorded its worst profit in three years as investors fled regional stocks.

Net income of the exchange plunged 10% to $282 million in Q3 YoY, Bloomberg reported Wednesday. This was one of the most significant drops since the global slowdown in 2016.

Last week, Hong Kong crashed into a technical recession, the first time since the 2008/09 financial crisis. Hong Kong’s economy plunged 3.2% in Q3, government data showed last week, exceeding economists’ lowest estimates and confirming a technical recession has begun.

Hong Kong Financial Secretary Paul Chan warned after more than half a year of violent anti-government demonstrations, the end of October marked the start of the recession. 

“After seeing negative growth in the second quarter, the situation continued in the third quarter, meaning our economy has entered technical recession,” Chan wrote in a blog post.

“It seems it will be extremely difficult for us to reach full-year economic growth of 0 to 1%. I would not rule out the possibility that the full-year economic growth will be negative.”

With two consecutive quarters of negative growth and no end to the protests in sight, Bloomberg has noted in a series of graphs that a full-year economic contraction is likely for 2020.

Since the protests became violent in early summer, Hong Kong Exchanges & Clearing shares have slipped 12%.

As the crisis deepens in Hong Kong, it’s likely the Hang Seng is setting up for another leg lower. 

(Independent) Trade war: China and US agree to roll back tariffs in phases, giving boost to prospects for world economy

(Independent) Stock markets soar as world’s two economic superpowers agree deal

Reuters

China and the US have agreed to cancel tariffs on billions of dollars of goods in the first sign that a damaging trade war between the world’s two largest economies could be winding down.

European stock markets surged  to their highest level since 2015 on Thursday morning as hopes rise that trade hostilities will thaw, giving a boost to the global economy.

China’s Commerce Ministry said that Washington and Beijing had agreed to roll back tariff hikes that have already been imposed, depending on further progress in trade talks.  TOP ARTICLES1/5READ MORERed Star Belgrade vs Tottenham LIVE: Resultand latest reaction from Champions League match

“In the past two weeks, top negotiators had serious, constructive discussions and agreed to remove the additional tariffs in phases as progress is made on the agreement,” spokesperson Gao Feng said Thursday.

“If China and the US reach a phase-one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously,” Mr Gao said.

6 November 2019

“The trade war started with tariffs, and should end with the cancellation of tariffs,” Gao told reporters.

Neither side has yet laid out a timetable for the roll back.

The announcement comes amid increasing signs that the trade war is hurting US businesses, including some in key swing states for the 2020 US presidential election.

Donald Trump has made attacking China’s trade practices a hallmark of his presidency, imposing import tariffs on hundreds of billions of dollars of Chinese goods and placing Chinese companies such as Huawei on a blacklist.

Tit-for-tat tariff hikes between the two sides have dragged down confidence in global trade, hurting economic growth which had already showed signs of slowing.

China’s imports of American soybeans and other goods tumbled 26.4 per cent in the first nine months of this year following tariff hikes and orders to importers to find other suppliers.

Independent news email

Only the best news in your inboxContinue

Register with your social account or click here to log inwould like to receive morning headlinesMonday – Friday plus breaking news alerts by email

Trump and Chinese premier Xi Jinping were due to meet at this month’s gathering of Asia-Pacific leaders in Chile but that event was cancelled due to protests there.

That dampened hopes a face-to-face meeting might produce progress. But US officials say the two governments are looking for a different location.

US Commerce Secretary Wilbur Ross said this week any “Phase 1” agreement would be general and cover trade in specific areas such as soybeans and liquefied natural gas.

More complicated issues would be tackled in later negotiations, Ross said. He gave no indication whether rolling back tariffs was a possibility at this stage.

(Reuters) China’s digital currency will kick off ‘horse race’: central bank official

(Reuters)

HONG KONG (Reuters) – China’s digital currency will create a “horse race” when it is launched as commercial banks and other institutions compete to provide the best services using the new form of money, a central bank official said on Wednesday.A China yuan banknote featuring late Chinese chairman Mao Zedong and a computer keyboard are seen reflected on an image of Chinese flag in this illustration picture taken November 1, 2019. REUTERS/Florence Lo/Illustration

China is preparing to be the first country to roll out a digitized domestic currency, a development that is being closely watched by the world’s financial services industries, though few details are currently available.

Akin to Facebook’s proposed Libra digital currency and other cryptocurrencies such as bitcoin, the Digital Currency Electronic Payment (DCEP) project will be powered partially by blockchain technology.

The People’s Bank of China will adopt a two-tier approach with its project, Mu Changchun, the head of the central bank’s digital currency research institute, told a forum in Hong Kong. It will first issue the currency to commercial banks and other institutions, who will then resend it to the general public.

“During the research period, and also the issuance period there will be a horse race approach,” Mu said.

“The front runner will take the whole market – who is more efficient, who can provide a better service to the public – they can survive in the future.”

Mu added that the central bank was “technology neutral”, but he anticipated that if a front runner takes the lead, “the technology they use will be adopted by other parties”.

As the DCEP is designed to substitute existing coins and paper money, holders of the currency would not receive interest payments, which would mean there would be no implications for inflation or monetary policy, Mu said.

While the project has some similarities to Facebook’s Libra, it seems likely to allow Chinese regulators even closer oversight over money flows than they currently have.

The main motivation behind the project, market observers say, is China’s desire to protect its capital borders in the face of fears that newer global payment systems and advanced technology could facilitate illegal cash flows.

Mu reiterated Chinese regulators’ concerns about Libra on Wednesday, saying that if a country had capital management policies, the crytocurrency “was definitely a threat to the country’s currency sovereignty.

He also said that any other “stable coins”, digital currencies whose value is pegged to that of other assets or currencies, would have to abide by all of China’s foreign exchange rules if they were to be accepted in China.

(GUA) ‘Alarming’ Chinese meddling at UK universities exposed in report

(GUA) Chinese embassy appears to be coordinating efforts to curb academic freedom, say MPs

University.
 ‘There is clear evidence that autocracies are seeking to shape the research agenda or curricula of UK universities,’ says parliamentary report. Photograph: Alamy Stock Photo

Universities are not adequately responding to the growing risk of China and other “autocracies” influencing academic freedom in the UK, the foreign affairs select committee has said.

The report, rushed out before parliament is suspended pending the election, finds “alarming evidence” of Chinese interference on UK campuses, adding some of the activity seeking to restrict academic freedom appears to be coordinated by the Chinese embassy in London.

The report says: “There is clear evidence that autocracies are seeking to shape the research agenda or curricula of UK universities, as well as limit the activities of researchers on university campuses. Not enough is being done to protect academic freedom from financial, political and diplomatic pressure.”

The committee highlighted the role of China-funded Confucius Institutes officials in confiscating papers that mentioned Taiwan at an academic conference, the use of the Chinese Students and Scholars Association as an instrument of political interference and evidence that dissidents active while studying in the UK, such as Ayeshagul Nur Ibrahim, an Uighur Muslim, were being monitoring and her family in China being harassed.Advertisement

The committee accuses some academic organisations, such as Million Plus, which represents 20 modern universities, of complacency.

Bill Rammell, the chair of Million Plus, told the committee he had “not heard one piece of evidence” that substantiated claims of foreign influence in universities.

The committee said the government’s focus was on protecting universities from intellectual property theft and risks arising from joint research projects. “This is not enough to protect academic freedom from other types of interference such as financial, political or diplomatic pressure,” the MPs said.

The Foreign Office’s evidence to the committee highlighted the lack of government advice to universities, the report says, adding ministers have not coordinated approaches to the issue, either within Whitehall or with foreign governments such as Australia and the US.

The report points out that a 2019 international education strategy white paper mentions China more than 20 times in the context of boosting education expertise to the Chinese market, but with no mention of security or interference.

The committee concluded: “The battle for university students or trade deals should not outweigh the international standards which have brought freedom and prosperity to the UK and the wider world. The government should provide any strategic advice to universities and not used its key sanction tools such as ‘Magnitsky powers’ to curb interference on human rights grounds.”

Ministers can curb interference through the Sanctions and Anti-Money Laundering Act passed 17 months ago, the report said.

However, ministers previously told the committee they could not use the so-called Magnitsky amendment, contained in the act, until the UK had left the EU. In June the FCO finally admitted this interpretation was legally incorrect, and the powers could be used independently of the EU while still an EU member.

Tom Tugendhat, the chair of the foreign affairs select committee.
 Tom Tugendhat, the chair of the foreign affairs select committee, says academic freedoms are under threat in the UK. Photograph: Niall Carson/PA

The FCO has still to lay the necessary statutory instrument to introduce the power, 17 months after the act became law. The foreign affairs select committee pointed out that the power, touted by the foreign secretary, Dominic Raab, in pre-Conservative party conference interviews, will be delayed still further by the general election.

The committee, chaired by the Conservative MP Tom Tugendhat, also asked the FCO to explain its failure to use sanctions in response to repression by state authorities in Hong Kong and Xinjiang.

On the question of Hong Kong, where violent protests continue and local elections are due to be held later this month, the committee has urged the government to assess the reputational damage to the UK of British judges continuing to sit on the Hong Kong court of final appeal. The committee warns there is a danger of the UK appearing to be complicit in supporting and participating in a system that is undermining the rule of law.

In a bid to support the protesters, the UK should grant residency to Hong Kong citizens who are British national (overseas) passport holders, the report said.

Tugendhat said hard-won freedoms were under threat in the UK. The FCO had been “found wanting in three policy areas: autocracies’ influence on academic freedom; the use of sanctions against autocratic states and their supporters, and the UK’s cooperation with other democracies in responding to autocracies”.

An FCO spokesperson said: “The UK is a passionate defender of democracy and the rules-based international system, showing leadership on issues from climate change to media freedom. When we leave the EU, we will set our own sanctions regime and hold to account those who commit serious abuses of human rights.

“We will look at this report closely as we continue to bolster our efforts to promote and uphold our democratic values.”

(SCMP) China’s yuan soars above key level against US dollar on hopes that Trump considering ditching some tariffs

(SCMP)

  • Yuan surged back above key psychological level of 7 to the US dollar on reports that Donald Trump could agree to removing tariffs on China in phase one trade deal
  • Market expectations for further yuan decline have completely evaporated, analysts say, amid surprise suggestion of more significant trade deal than expected
Chinese 100 yuan banknotes are seen in a counting machine while a clerk counts them at a branch of a commercial bank in Beijing, China. Photo: Reuters

Chinese 100 yuan banknotes are seen in a counting machine while a clerk counts them at a branch of a commercial bank in Beijing, China. Photo: Reuters

China’s yuan surged on Tuesday to its highest level against the US dollar since August amid rising optimism that US President Donald Trump would agree to roll back tariffs on Chinese imports.The phase one deal, which may be signed later this month by Trump and Chinese President Xi Jinping at a yet-to-be determined location, is widely expected to include a US pledge to scrap tariffs that are scheduled for December 15 on about US$156 billion worth of Chinese imports, including mobile phones, laptops and toys.Officials in Beijing demanded that Washington take a further step and retract some existing levies on Chinese goods for the first time since the start of the trade war in July 2018, a step that has been resisted by Trump to date. However, White House officials are now debating whether to remove or scale back levies on US$112 billion of Chinese goods, including clothing, appliances and flat-screen monitors, which were introduced at a 15 per cent rate on September 1, the Financial Times reported citing five unnamed sources.

In response, the yuan jumped by 0.59 per cent to 6.9890, breaking a key resistance level of 7.00 to the dollar, as traders and fund managers closed position betting against a rise in the currency that triggered a wave of automatic trades set up to avoid losses. The yuan’s rise also pulled up other regional currencies, including the South Korean won, the Taiwanese dollar and Singapore’s dollar.

“This [would be] totally unexpected by the US side,” said Ken Cheung Kin-tai, chief Asian currency strategist at Mizuho Bank, on the prospect of tariff removal. “If tariffs are being removed, that could really mark a major turning point in the trade war. It may not even be a mini-deal or just a ceasefire, but a much more significant trade deal to be signed.”

The yuan jumped by 0.59 per cent to 6.9890 on Tuesday, breaking a key resistance level of 7.00 to the dollar. Photo: AFP

The yuan jumped by 0.59 per cent to 6.9890 on Tuesday, breaking a key resistance level of 7.00 to the dollar. Photo: AFPShare:

Trump may be using the phase one deal to ensure large Chinese purchases of US agricultural products as a means of securing support from his electoral base in farm states as he seeks re-election next November, analysts said.“A tariff detente, or even removal of some tariffs, is not a bridge too far to cross, especially as President Trump moves to bolster his political ambitions and guarantee that US voters do not end up with a lump of coal in their holiday stockings this year,” said Stephen Innes, Asia-Pacific Market Strategist at AXITrader. “The doom and gloom fear of a rapid yuan depreciation is quickly evaporating.”

Given that the previous two tranches of tariff increases saw the yuan drop to 7.10 to the dollar from 6.90, there is downside potential for the yuan to rise to 6.90 again if both the October and December tariffs are entirely removed, Innes said.

Optimism around a US-China trade deal, the driver of the currency appreciation, is based on the fact that an ailing Chinese economy could do with a shot in the arm.

Adding to this optimism, Xi reiterated on Tuesday the government’s extensive pledges to continue to open China’s economy and markets and strengthen protection of intellectual property rights to attract foreign capital flows.

“China’s door will only open wider and wider,” Xi said at the China International Import Expo in Shanghai, suggesting additional government efforts to facilitate foreign trade and investment.

M.P.O. Japan sounds warning on China military might

M.P..O.

Unfortunately this has been in the cards forever.

The Third and probably last Wordl War is going to happen  with the West’s confrontation with China.

China is a dominant culture, run as an imperialjstic dictatorship of Mandarin families
Already in the 70’s Alain Peyrefitte a french scholar and politician, member of the Academie Française, and a confident of General Charles de Gaulle wrote:
“Quand la Chine s’eveillera le Monde tremblera”
Among many books he wrote The immobile Empire” and “The Trouble with France” are the best  known.
He survived an asassination attempt in which his driver was killed and was buried with the highest State Honors at Les Invalides.
He was a visionary much ahead of his time.
I read most of his books when they were published, so this situation with China does not came as a surprise.
What came as a surprise was the time it took Western learders to figure the obvious.
That a confrontation with China will happen. I have no doubt.
Also because, as I wrote years ago, of the exhaustion of the chinese model.
It seems now it is going to be rather sooner than later.

Francisco (Abouaf) de Curiel Marques Pereira.

(ZH) Hong Kong Crashed Into First Recession Since 2009

(ZH) The first domino in the next global economic crisis has fallen this morning, when Hong Kong crashed into a technical recession, the first time since the 2008/09 financial crisis. Hong Kong’s economy plunged 3.2% in 3Q19, government data showed on Thursday, exceeding economists’ lowest estimates and confirming a technical recession has begun.

Earlier this week, we reported that Hong Kong Financial Secretary Paul Chan warned after more than half a year of violent anti-government demonstrations, the end of October will likely mark the start of a recession. 

“After seeing negative growth in the second quarter, the situation continued in the third quarter, meaning our economy has entered technical recession,” Chan wrote in a blog post.

“It seems it will be extremely difficult for us to reach full-year economic growth of 0 to 1%. I would not rule out the possibility that the full-year economic growth will be negative.”

Mark Mobius Says Beijing Has Handled Hong Kong Situation Very Well

With two consecutive quarters of negative growth and no end to the protests in sight, Bloomberg has noted in a series of graphs that a full-year economic contraction is likely for 2020.

Raymond Yeung, the chief Greater China economist with Australia & New Zealand Banking Group Ltd., told Bloomberg that social chaos in the city is driving the economy into the ground. Protesters have frequently shut down popular shopping districts, something that we outlined several weeks ago, warning that the retail industry in Hong Kong is on the brink of collapse.

Yeung warned: “It’s obviously comparable to the global financial crisis. We have a very similar situation that we don’t know when it’s going to end.”

Meanwhile, tourism has plunged 37% Y/Y in 3Q19, and the trend for 4Q19 is likely not to improve. The number of tourists for the first two weeks of October was down 50% on a Y/Y basis. Rooms at the most high-end hotels, like Marco Polo Hongkong in Tsim Sha Tsui, are going for $72 per night, a 75% discount versus last year. 

Anyone who wants to travel to Hong Kong this month, departing from New York City airports, can easily get roundtrip plane tickets for 50% off because air travel to Hong Kong remains depressed. 

Local businesses are cutting back on their workforce as approximately 77% of all hotel workers have just been asked to go on leave without pay.  Iris Pang, an economist at ING,  told the Financial Times that Hong Kong’s economy would be in a full-blown recession in 2020.

The Hong Kong government has rolled out countercyclical measures to buffer the economy and avoid a flat out depression. Some of these measures include tax cuts and increases to social security, along with housing perks for first-time homebuyers. But with an economic crisis expected to deepen, the government has held back on fully deploying its tools — would likely wait for a trough in the economy before large stimulative measures are seen.

Pang, on the other hand, said, “interest rates don’t matter for this economy anymore. When there’s violence in the streets, people don’t want to go out shopping or go out for dinner.”

In a series of charts below, the great collapse of Hong Kong can be visualized: 

Mainland Chinese tourists to Hong Kong volumes are plunging. 

In a 12-month and 3-month change, Hong Kong retail sales have absolutely collapsed over the last half-year. 

Hong Kong is the first domino to fall. More emerging growth countries will slip into technical recession as a global financial crisis could arrive as soon as 2020. 

(DieZeit) Don’t Be Naive, Germany

(DieZeit) Don’t Be Naive, Germany

Huawei shouldn’t be allowed to help build Germany’s 5G network. The government in Berlin needs to see that China exploits the weaknesses of liberal democracies.

Huawei 5G Breitband Netzausbau
The Global Mobile Broadband Forum in Zurich © Stefan Wermuth/​AFP/​Getty Images

Germany granted me protection as a political refugee. That is I why believe I have a duty to warn the federal government against making a mistake that will have far-reaching consequences. Angela Merkel’s Chancellery hasn’t ruled out the possibility of working together with Chinese telecommunications equipment maker Huawei to build Germany’s 5G mobile technology infrastructure. But Huawei is not a company like any other. It has close ties with the Chinese government and its military. Should Germany decide to allow Huawei to build one of the most critical infrastructure technologies, it would potentially be opening the backdoor for China to access and disrupt key national assets like electric power grids, the banking and financial system and telecommunications. It would also send a signal to those fighting for democracy and freedom in Hong Kong and beyond that Berlin puts economic interests above the consistent defense of Western values.

RAY WONG

26, a freedom activist from Hong Kong, received political asylum in Germany. In 2014, he founded a pro-democracy party in the city. Officials subsequently charged him with instigating riots and incitement of unlawful assembly. He managed to flee to Europe and today lives in Göttingen, Germany, where he studies political science at the local university.

Ray Wong © Norman Hoppenheit für Die Zeit

If you believe such warnings to be alarmist, then my answer is this: Don’t be naive, Germany. You can’t allow yourselves to be deceived into thinking that Huawei’s motives are purely commercial.

The 5G network is part of the foundations of the digital future. If the federal government compromises on the network’s security, in the long run it will compromise not only this country’s working environment, but also the privacy of its citizens. In the United Kingdom, government security experts concluded last year that the use of Huawei components in telecommunications infrastructure could pose risks to UK national security. Australia has already banned Huawei from providing 5G equipment out of fear the Chinese regime might one day shut down power grids and other networks.

I grew up in Hong Kong, so I know how naive it would be to trust the Chinese state to keep its word when it promises not to abuse 5G as a political tool. Hong Kong is the West Berlin in the new cold war, a small bastion of freedom in the grip of a totalitarian regime.

We know the reality behind the facade of the Chinese state. When China signed the agreement with Britain in 1984 regulating the handover of its former colony, it was agreed that the rights and freedoms of the people of Hong Kong would be upheld for 50 years. This didn’t happen. On the contrary, in the last 10 years, the people of Hong Kong have seen our rights systematically undermined. Why, Dear Germans, do you still believe you can trust Beijing?

(EUobserver) Chinese professor at Brussels university on ‘spy’ charge

(EUobserver)

Professor Xinning Song, director of the Confucius Institute at the Brussels University (VUB), can no longer enter Belgium after being accused of espionage for China, De Morgen writes. He had a 10-year tenure. Previously, there were complaints at the French part of the Brussels university (ULB) about Chinese pressure on academics working on China.

(Politico) German MPs urge Merkel to keep Huawei out of 5G network

(Politico) Lawmakers argue that parliament, not the chancellor, should decide on telecoms contracts.

BERLIN — A group of MPs from Angela Merkel’s center-right Christian Democratic Union (CDU) is pressing the German chancellor to keep Chinese telecom company Huawei out of the country’s 5G network, citing national security reasons.

The push comes after Berlin last week released a new “security catalogue” for telecoms networks, which critics say lacks teeth because it only obliges Huawei to sign a “no spy” clause while generally opening 5G tenders to the Chinese telecoms giant.

Merkel has come under fire for her decision from allies like the U.S., which warned last week the move could have serious implications for future intelligence-sharing between Berlin and Washington.

Critics say Germany is bowing to pressure from China because it fears trade retaliation from the Asian powerhouse, which is Germany’s biggest trading partner and an important export destination at a time when the German economy risks sliding into a recession.

Senior CDU lawmaker Norbert Röttgen told POLITICO that he wants Merkel not to decide alone on the 5G issue, but submit the decision to the German parliament, which should debate and vote on the case.

Critics say Germany is bowing to pressure from China because it fears trade retaliation from the Asian powerhouse.

“The last word is far from spoken and I’m also cautiously optimistic that this matter can be decided in the Bundestag in the coming weeks or months,” said Röttgen, who is chair of the parliament’s committee for foreign affairs.

He described the 5G network as a “digital neural system” for Germany’s economy, society and political system, which meant the decision was “a first-rank question of national security.”

“In reality, this is not about Huawei but the trust in the Chinese leadership: This is a company that is at the mercy of state interests and can, in doubt, not refuse government-led interference,” he said, adding: “Significant state influence is something that we cannot tolerate because it would mean that we don’t have that company but the state in our networks.”

“I’m … cautiously optimistic that this matter can be decided in the Bundestag in the coming weeks or months” — senior CDU lawmaker Norbert Röttgen

Röttgen’s criticism was backed by his party colleague Mark Hauptmann, who said the 5G decision was about “critical infrastructure for the next 20 years.”

“I can only warn against relying on Huawei because we would enter a technological dependency relationship and there are massive security concerns, such as the outflow of information, a possible kill-switch scenario, but also a possible dependency in a trade war in which, for example, certain important accessories for a particular area could suddenly no longer be made available.”

Huawei and other Chinese telecommunication companies reject suggestions that their equipment is vulnerable to backdoors or spying by the Chinese state and says European countries should make their own decisions about 5G security.

The chancellor’s office could not immediately be reached for comment.

Hauptmann and Röttgen also expressed their concerns in an op-ed, co-signed by fellow CDU lawmakers Christoph Bernstiel, Peter Beyer, Stefan Rouenhoff and Roderich Kiesewetter, which was published by German newspaper Handelsblatt on Tuesday.

Hauptmann, in his interview with POLITICO, criticized that Huawei was partly offering prices for the installation of 5G networks that are below the purchase price for the required components. “This is not a market price, but a political price to push competitors out of the market,” he said.

He also asserted that China had largely shut European telecom providers Nokia and Ericsson out of its own tenders for 5G networks, and said that Germany should offer markets for those companies if it was serious about creating “European champions.”

“This is not a market price, but a political price to push competitors out of the market” — CDU lawmaker Mark Hauptmann

However, Hauptmann warned that Germany should brace for consequences if it decided to reject Huawei’s applications for 5G tenders: “It’s perfectly clear that excluding Huawei will lead to a response from the Chinese.”

His party colleague Röttgen said that Germany should coordinate its decision with European partners to cushion such retaliation.

“China prefers to pick and sanction individual countries and is betting on the premise that there is no solidarity [among EU countries],” he said. “I am firmly convinced that if we stand together here, there is no way to sanction Europe.”

P.O. (FT) Why China is preparing to ditch Hong Kong’s chief executive Carrie Lam

P.O.
In the Far East, a face loosing situation, is as bad as it gets abd should always be avoided.
But  this idea being floated around on Mrs Carrie Lam being eventually replaced, is in my opinion a serious face loosing situation for Beijing, who appointed to start with, and a tremendous victory for the demonstrators.
But the reality is that the Hong Kong we knew is no more.
Mainland China has lost it forever.
A substancial part of the big money has already left,and so as the young enterpreneurship.
Mainland China will always have the land.
But it will never have Hong Kong back.

Francisco (Abouaf) de Curiel Marques Pereira





https://www.youtube.com/watch?v=HBkRbeP1fqo

The FT’s global China editor James Kynge says that while Beijing doesn’t want the departure of Carrie Lam to be seen as a concession to the sometimes violent protests in Hong Kong, it will probably be greeted as a small victory by demonstrators.

(Pymnts) China’s GDP Near 30-Year Low As Trade War Impacts Factory Work

(Pymnts)

China, US, trade war, tariffs, factories, GDP, economy

Economic growth in China is at a near-30-year low in the third quarter as tariffs start to negatively affect factory production, Reuters reported on Thursday (Oct. 17).

The slowdown was worse than anticipated — gross domestic product (GDP) growth was the slowest it’s been since 1992, with the GDP increasing only 6.0 percent year-on-year.

“Given exports are unlikely to stage a comeback and a possible slowdown in the property sector, the downward pressure on China’s economy is likely to continue, with fourth-quarter economic growth expected to slip to 5.9%,” Nie Wen, a Shanghai-based economist at Hwabao Trust, told Reuters. “Authorities will loosen policies, but in a more restrained way.”

In an attempt to encourage regional investment, Mao Shengyong, a spokesman for China’s statistics bureau, told Reuters that Beijing could decide to issue bonds this year instead of waiting until 2020.

He also said the monetary policy could be adjusted to stabilize food price fluctuations, a major cause of inflation.

The trade war could cause the global economy to stall to its lowest point since the 2008 financial crisis, according to the International Monetary Fund, which has warned the U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, but said output would rebound if their dueling tariffs were removed.

Domestic and global demand has slowed down in freight shipments, factory power generation, employment and entertainment spending, Reuters said.

China’s second-quarter economic data showed a 6.2 percent growth; however, economists and investors believe the numbers are worse than what is being officially released.

China’s reported data came in close to Beijing’s target, a figure that has been published quarterly for the past 4.5 years. But a multinational index of Chinese production indicates a much smaller growth coupled with fewer workers returning to their jobs.

In a move intended to boost business as the trade war continues, China flooded banks with billions of dollars in September after The People’s Bank of China lowered how much was required to be kept in reserve.

(BBC) Tesla gets the go-ahead to build cars in China

(BBC)

Mr Musk walks with Shanghai Mayor Ying Yong in the rain
Image captionMr Musk met Shanghai Mayor Ying Yong in January as work began on the new Gigafactory 3

Tesla has been given the green light to start manufacturing its cars in China.

The electric carmaker, which is run by billionaire Elon Musk, is building a $2bn (£1.5bn) factory in the eastern city of Shanghai.

Tesla plans to build at least 1,000 of its Model 3s each week in the Chinese factory, which could be up and running within weeks.

The new factory will give Tesla access to China, which is the world’s biggest car market.

It would also help the company avoid higher import tariffs that are imposed on cars made in the US.

An aerial photo of the vast hanger.
Image captionThe Gigafactory 3 under construction

The new factory, known as the Gigafactory 3, is the first fully-foreign owned car plant in China.

Permission to build the plant has been seen as a sign that Beijing is looking to open up its car market.

Authorities in Shanghai have offered Tesla some help to speed up construction of the plant. Meanwhile, China excluded Tesla vehicles from a 10% tax on cars.

Announcing that it had broken ground at the site of the factory in January, Mr Musk said the plant would build “affordable versions” of the Tesla Model 3 – the carmaker’s mass market vehicle – and its proposed Model Y for the Greater China region.

“Aiming to finish initial construction this summer, start Model 3 production end of year [and] reach high volume production next year” the entrepreneur tweeted at the time.

In August, Mr Musk visited the new factory on a trip to China, where he sparred with Alibaba’s Jack Ma in a debate at an AI conference.

Tariff hit

The push into China comes amid ongoing trade tensions between Beijing and Washington.

US carmakers have been vocal critics of President Donald Trump’s tariffs, which have targeted the car sector among others.

In October last year, Tesla warned that tariffs in China were creating challenges.

(ZH) Panic Behind The Scenes: China’s Capital Outflows Are Soaring

(ZH) For months, pundits have been looking at China’s official data – be it the PBOC’s reserve data or SAFE’s monthly flow report – for indication that capital flight is picking up again as it did in 2015 in the aftermath of the first yuan devaluation, and so far the data has refused to validate predictions that Chinese depositors are quietly pulling their money from China’s financial system.

Does this mean that Beijing has been successful in implementing draconian controls on outbound foreign investment and other capital movements to lock the front door through which money used to leave China.

That’s one possibility. However, as the WSJ notes, instead of using the front door, Chinese capital is increasingly “walking through the back door” following the recent sharp devaluation in the yuan, which has slumped 6% against the dollar since late April, and 10% since mid-2018; of course should the back door open any wider Beijing will find itself again forced to sell down big parts of its currency reserves to avoid a panic. Worries about cracks in currency fortress China are another reason Beijing is likely to remain wary of aggressive monetary stimulus.

We Are at the Bottom of Weakness in China, Says AMP Capital’s Mousina

It’s also why China – the country where economic data is anything but what is represented by the government – has no qualms about fabricating data to refute a worst case scenario that would unleash a self-fulfilling prophecy leading to more devaluation and more capital flight.

And yet, despite Beijing’s best efforts at misdirection – and outright data fabrication – there is a relatively simple way to keep track of what is really happening with China’s fund flows behind the scenes. As the WSJ notes, the relevant figure to track is China’s “errors and omissions” line in its balance of payments.

This number represents the residual of the main BOP accounts registering trade and investment flows—in other words, capital that has moved across China’s borders without being documented. An equation “plug.”

Whereas in most countries this line item is relatively small, in China, since 2014 when Beijing decided to stop appreciating the yuan against the dollar, it has become :persistently and mysteriously large and negative” with analysts at Rhodium Group and others long suspecting this item represents undocumented capital flight.

And while this shadow capital flight moderated in 2018, the trend recently became even more striking, as “errors and omissions” hit a record first-half high of $131 billion in 2019, the WSJ notes citing Gene Ma of the Institute of International Finance, much larger than the first-half average of $80 billion during the last period of big capital outflows in 2015 and 2016.

On the surface, this suggests that true capital flight is now twice as large as what was observed after the 2015 devaluation, and indicated that while measures instituted a few years ago to limit capital flight have appeared effective, China remains vulnerable to rising outflows through unofficial channels. Furthermore, the country has yet to report its third-quarter figures, following the big yuan depreciation in early August, when it dipped below 7.00 against the dollar for the first time in a decade.

So what to make of this? Two things, and neither is good.

First, as the WSJ notes, Beijing’s decision to allow its currency to offset the pressure from the trade war has been one of China’s key survival strategies so far, but “with increasing signs that the ocean of capital sloshing around behind China’s dike is finding new cracks—and out-of-control domestic food-price inflation adding to the stakes—that strategy is looking riskier.”

The second one is that with capital already fleeing China, any future attempts to boost China’s economy using monetary policy will be promptly punished, which also explains why the world is sinking into recession: as a reminder, in a world where China has been the primary growth dynamo thanks to its tremendous credit impulse after the financial crisis, this massive credit creation mechanism has now shut down…

… as Beijing runs the risk of an out-of-control capital flight should it push too hard to stimulate the local economy at the expense of another sharp devaluation in the yuan. In short, whereas the official data does not show it, reading between the lines suggests that the global economy may be on the verge of collapse.