China Direct

China's post-covid economy - China Leadership Monitor

China’s economy has emerged from “zero-Covid” without the inflation that occurred in some other major economies but with reduced consumption, minimal private investment growth, a weakened real estate sector, high youth unemployment, and constrained local government finances. Beijing is banking on a surge of new household spending and is planning only marginal new stimulus measures. Chinese leaders, however, are sending contradictory signals to entrepreneurs and foreign investors. China will almost certainly achieve its conservative growth target of 5 percent this year. But in the next few years, Beijing’s prioritization of national security over economic reforms will pose a risk to China’s economic trajectory.

To read the full article by Gerard DiPippo please click here.

Our thanks to Mr. DiPippo and the team at China Leadership Monitor for sharing this analysis.

Dates for diaries: UK-APAC Tech Conference 14 June

Looking to expand your business into the Asia Pacific region? Then look no further than the UK-APAC Tech Conference event scheduled for 08 June (1300-1600 tbc) at Deloitte's London HQ.

To register please click here.

The agenda can be accessed here.

Our sincere thanks to UKABC for sharing this information.

Interpreting China's economy & recovery post-covid - CSIS

 

In this episode of Pekingology, Freeman Chair Jude Blanchette is joined by Carl Minzner – Senior Fellow for China Studies at the Council for Foreign Relations and a Professor of Law at Fordham Law School, Gerard Dipippo – Senior Fellow in the Economics Program at CSIS, and Andrew Polk – Co-founder of Trivium China and Senior associate with the Freeman Chair in China Studies at CSIS. Through the lens of China’s politburo and domestic leadership, they examine how China assesses its economy and recovery since the end of zero-COVID policies.

Our thanks to the team at CSIS for kindly sharing this podcast and insights.

Nanometres over GDP - Can China's technocrat leaders improve industrial policy?

Space is the final frontier, it is also a revolving door in Chinese politics these days. Of the 205 full members of the Chinese Communist Party (CCP) 20th Central Committee (CC), ten are aerospace industry veterans, some of whom ran major projects like the Chang’e Lunar Program.

Pride over China’s successful space program is effusive in official media. With intensifying technology competition between China and the United States, Beijing can easily tout tangible products like trains, rockets, commercial jets, and its space station as “wins” for technological self-sufficiency.

Such emphasis on technology self-sufficiency is not only manifest in the rise of this “aerospace cabal.” It is also reflected in the broader resurgence of technocrats in the top echelon of Chinese politics, as our previous analysis highlighted.

The numbers make clear that technocrats did quite well in getting promoted or retaining their seats in the 20th Party Congress political transition. Of the 205 full members of the 20th CC, more than a third (69) are STEM technocrats, a 35% increase from the 19th CC. Even at the Politburo level, 8 of the 24 members are technocrats, a doubling from the 19th Politburo.

Among this cohort of technocrats is a notable provincial bias: the majority are running provinces instead of central ministries. In fact, 36 technocrats in the 20th CC are leading provinces, compared to just 20 in the 19th CC (see Figure 1). The logic here seems to be that placing leaders with technical expertise, instead of your average politician, in provincial roles will improve the odds of ameliorating technological deficiencies vital to China’s national security.

To read the full analysis please click here.

Our thanks to the team at Macro Polo for sharing these insights.

Dates for Diaries: 01 June - US-China & S Korea CSIS

Join the CSIS for an in-depth conversation on U.S.-China competition and what that means for Korea with Robert D. Atkinson, president of the Information Technology and Innovation Foundation, recognized as the world’s top think tank for science and technology policy.

Dr. Atkinson is an internationally recognized scholar and a widely published author whom The New Republic has named one of the “three most important thinkers about innovation,” Washingtonian Magazine has called a “tech titan,” Government Technology Magazine has judged to be one of the 25 top “doers, dreamers and drivers of information technology,” and the Wharton Business School has given the “Wharton Infosys Business Transformation Award.”

To find out timings on 01 June in your time zone and to join please click on the link here.

Our sincere thanks to the CSIS for kindly sharing this information.

China Dialogue - Environmental News Digest 26 May 2023

Dear CBI Members and Partners,

For reports, interviews and insights into a country shaping the world please review China Dialogue directly here.

Download China Dialogue News Digest 26 May 2023

With grateful thanks to the team at China Dialogue for so very kindly sharing this content.

Date for Diaries: A discussion with U.S. Ambassador to China Nicholas Burns - 16 June 2023

A Fireside Discussion with U.S. Ambassador to China Nicholas Burns

Date: Friday, June 16, 2023

Time: 2300-2400 (BJ)

On June 16^th from 11-12pm, please join CSIS Freeman Chair Jude Blanchette for a public fireside discussion with Ambassador Nicholas Burns on U.S.-China relations and his on-the-ground impressions as U.S. Ambassador to China. After welcome remarks by CSIS Senior Vice President for Asia Victor Cha, the conversation will explore recent developments in this critical bilateral relationship and the outlook for the years ahead.

To register please click on this link.

Our thanks to the CSIS for sharing this information.

 

China is upping its bets on Southeast Asia's EV market as South Korea drives to narrow the gap

With strong government support and increasing purchasing power, Southeast Asia has emerged as a hotly contested arena for Chinese and South Korean automakers.

With strong government support and increasing purchasing power, Southeast Asia has emerged as a hotly contested arena for Chinese and South Korean automakers, vying to dominate the electric vehicle (EV) industry.

Since the beginning of this year, Chinese companies, which include not only automakers but also battery suppliers, have intensified their efforts in Southeast Asia, particularly in Thailand and Indonesia. These two major regional auto manufacturing hubs have become focal points of interest for Chinese companies seeking to expand their presence in the area.

Timeline of recent investments:

• In March, BYD reportedly set its sights on building an electric bus assembly plant and, eventually, a battery manufacturing factory in Indonesia. In the meantime, the company has commenced construction of a new factory in Thailand, projected to be finalized in 2024, with an impressive annual capacity of 150,000 electric cars.

• In April, a Thai official revealed that Changan Auto has committed to investing $285 million in a facility in Thailand.

• On May 6, Hozon Auto, the parent company of the EV brand Neta, disclosed plans to initiate the construction of a manufacturing facility in Thailand. This upcoming facility is anticipated to possess an annual production capacity of 20,000 vehicles.

• On May 11, GEM Co. Ltd., a Guangzhou-based battery and material recycler, announced a $500 million joint investment to build a nickel project in Indonesia, with the target of producing 20,000 tons of nickel intermediate products for the new energy sector annually.

• On May 13, SAIC Motor started building a factory in Thailand for its sub-brand MG. The planned manufacturing facility, set to sprawl over an area exceeding 437.5 rai (equivalent to around 173 acres), will accommodate battery production, parts fabrication, and MG's EV assembly line.

The accelerated deployment of Chinese firms in Southeast Asia is not only driven by the growing demand in the EV market but also by the determined efforts of their South Korean counterparts to catch-up.

Hyundai has surpassed Chinese automaker Wuling to become the top player in Indonesia's electric car market, capturing a 55% market share in February, according to the Korea Economic Daily. By comparison, the South Korean automaker delivered 1,829 units of its electric SUV IONIQ 5 last year, well behind Wuling Air EV's 8,053 units.

The IONIQ 5 was launched in Indonesia last April with a starting price of 748 million rupiahs ($50,186), three times that of runner-up Wuling and twice the average selling price in Indonesia.

Back in 2017, Wuling opened its first overseas production site in Indonesia with an investment of $700 million. This was well before Hyundai, which only started full production at its new plant in Indonesia in March 2022.

It's evident that Hyundai is playing catch-up aggressively. From January to April this year, Hyundai and Wuling sold about 1,700 and 1,000 EVs in Indonesia, respectively, according to Nikkei. Driven by the surge in demand, the company recently decided to increase production of its IONIQ 5 at the local plant to 1,000 units per month.

Hyundai has announced its plans to intensify marketing efforts in Thailand this year to drive sales of its EVs in the country. While the South Korean automaker currently lacks an EV assembly plant in Thailand, it strategically relies on its Indonesian factory to cater to the burgeoning demand and service the wider region.

The battle between EV battery suppliers heats up as well.

As aforementioned, GEM, China's largest battery recycler, has unveiled its intentions to build nickel intermediate products in Indonesia for the new energy sector, while SAIC has started to build a factory in Thailand, including battery production for the MG brand.

Indonesia stands as one of the foremost global producers of nickel, a key raw material for EV batteries. Thailand also boasts significant lithium reserves, another crucial raw material in the realm of EV batteries.

South Korean battery suppliers have also recognized the value of these resources. In June 2022, LG Energy Solutions (LGES) broke ground on a nickel processing plant in Indonesia. This venture is part of the LGES’s substantial $9.8 billion investment in the country aimed at manufacturing EV batteries. Prior to this, in September 2021, LGES and Hyundai began construction of a $1.1 billion factory in Bekasi, West Java, which will also produce EV batteries.

There are multiple reasons why South Korea and China are eyeing establishing battery-related supply chains in the emerging market: As global demand for EVs continues to rise, it is increasingly vital to have more raw materials under control; a more comprehensive local supply chain will help automakers gain more strength in the face of increasing competition; local governments offer incentives including tax breaks, land concessions, and financial assistance to attract battery manufacturers to the region, as well as cheaper labor costs.

Over the years, South Korean companies have established a strong presence in the field of nickel, manganese, and cobalt (NCM) batteries. However, as the market landscape evolves and priorities shift, there is a notable transition towards lithium iron phosphate (LFP) batteries. These LFP batteries offer several advantages, including lower cost, a longer lifespan, improved safety, enhanced ecological sustainability, and reduced risks of fire or explosion compared to NCM batteries. Consequently, Chinese battery manufacturers are beginning to dominate EV battery production globally.

LG Energy Solution, Samsung SDI, and SK On's combined share in the global EV battery market declined from 30.2% in 2021 to 23.7% in 2022, according to a February report by market research firm SNE Research, while at the same time, the market share of EV batteries supplied by Chinese manufacturers rose robustly.

But the ground is likely to keep shifting. South Korea's trade ministry last year identified batteries as one of the country's three strategic industries, along with semiconductors and artificial intelligence. LGES, Samsung SDI, and SK On are ramping up the development and production of LFP batteries.

The South Korean automotive sector shares certain parallels with its Chinese counterpart, particularly in aspects like supply chain and manufacturing capabilities. For instance, China is renowned for its world-class battery providers like CATL and Gotion High-Tech, as well as well-established automakers such as BYD, Wuling, and GMW, alongside emerging startups like Hozon. On the other hand, South Korea, while trailing China in EV battery market share, boasts a strong presence in automobile manufacturing, anchored by its two flagship brands, Hyundai and Kia.

Even though Chinese brands may not have achieved the same level of recognition as their counterparts in the traditional vehicle market, they possess significant potential for growth. "In the EV segment, consumers can easily jump over old brand walls and are willing to try new options," said Pitaya Tanadamrongsak, managing director of EV Primus, the Thai distributor of China's second-largest automaker, DFSK (Dongfeng).

Writer: Rebbeca Ren

For more information please click here. Our sincere thanks to Ms. Ren and the PingWest team for sharing this article.

 

British Business in China Position Paper 2023 - Conditional Optimism in reopening

 

China’s ability to restore its position as a leading global investment destination depends largely on the ability to regain a reputation for certainty, stability, and trust, finds the results of the British Business in China: Position Paper 2023.

While businesses are much more optimistic about their prospects in the market than they were a year ago, they say more needs to be done to improve consultation between businesses and the Chinese government, and level the unequal playing field between SOEs, domestic businesses, and international companies.

Still, British businesses highlight many reasons to be optimistic about the Chinese market; 86% of businesses are optimistic about China’s market potential in the long-term, and almost three-fifths of businesses are more optimistic now travel has resumed.

To make sure China is able to reach its full market potential, the British Chamber of Commerce is calling for concrete action, to improve transparency, restore competition, and reduce uncertainty.

We call for: 

1. Actions to support proposals and statements related to further opening up;
2. Measures to improve transparency and competition between SOEs, domestic companies, and international businesses;
3. Clarity to reduce compliance uncertainty for businesses navigating the regulatory environment;
4. An open and inclusive consultation process when designing and implementing policies;
5. Clear and increased lines of communication at all levels.

To access the Report please click here.

Our sincere thanks to the British Chamber of Commerce in China for kindly sharing the Position Paper.

 

 

China Dialogue - Environmental News Digest 19 May 2023

Dear CBI Members and Partners,

For reports, interviews and insights into a country shaping the world please review China Dialogue directly here.

Download News digest China Dialogue 19 May 2023

With grateful thanks to the team at China Dialogue for so very kindly sharing this content.