Welcome to the 66th edition of Trade War and happy International Workers’ Day to you all.
Biden focuses on the competition with China in his address to the U.S. Congress. China’s population may start shrinking earlier than expected, presenting new economic challenges.
Beijing beefs up its anti-monopoly apparatus in preparation for further crackdowns on Chinese tech companies. And a report shows growing regional gaps in China.
Winning the 21st Century
In his first speech to the U.S. Congress, president Joe Biden took a tough tone towards China, reports Reuters.
"China and other countries are closing in fast. We have to develop and dominate the products and technologies of the future," Biden said. "We’re in a competition with China and other countries to win the 21st Century."
"America will stand up to unfair trade practices that undercut American workers and American industries, like subsidies to state-owned enterprises and the theft of American technology and intellectual property," Biden said.
Here is the full text of his comments from the White House.
Chinese firms susceptible to foreign infiltration
China’s ministry of state security has announced new measures to combat “hostile forces” infiltrating Chinese companies and other institutions, reports Bloomberg News.
China’s security forces can now order the staff of affected companies and organizations to undergo “anti-spying education through seminars and short movies, where cases of foreign intelligence work are shown” and “leave their devices such as mobile phones, laptops and USB drives at home before going abroad.”
“Overseas espionage and intelligence agencies and hostile forces have intensified infiltration into China, and broadened their tactics of stealing secrets in various ways and in more fields, which poses a serious threat to China’s national security and interests,” Xinhua reported.
China presses US companies to influence Washington
A senior Chinese official has asked U.S. companies to pressure Washington for a better business relationship with Beijing, reports the South China Morning Post.
“US businesses are stakeholders in cooperation between China and the US,” foreign vice minister Xie Feng said in a meeting with American companies including General Motors, Ford Motor, Walt Disney, Delta Air Lines, United Airlines and UPS.
“We hope that everyone will exert active influence to push the US government to cancel its tariffs on China, to stop its ‘decoupling’ efforts, and to stop unreasonably suppressing Chinese businesses, providing a fair, just and non-discriminatory environment for Chinese businesses in the US,” Xie said.
China wants world to know about its anger
While retail companies caught up in consumer boycotts in China usually have quickly recovered, that might not be the case for those involved in other kinds of business, reports the BBC.
"China wants the world to know about its anger. They do so. It's very painful for companies, but it blows over," Joerg Wuttke, president of the European Chamber of Commerce in China, told the British broadcaster.
However, “if they were to punish a chemical company, or a company that produces machinery, these guys have assets on the ground. If they walk away, they will not come back," Wuttke said.
China’s first population drop in decades?
China is about to report the first drop in its population since the late 1950s when it experienced a massive famine that led to the deaths of tens of millions, reports the Financial Times.
“The current fall in population comes despite the relaxation of strict family planning policies, which was meant to reverse the falling birth rate of the world’s most populous country,” reports the paper, noting that it “could exact an extensive toll on Asia’s largest economy, affecting everything from consumption to care for the elderly.”
“The pace and scale of China’s demographic crisis are faster and bigger than we imagined,” Huang Wenzheng, a fellow at the Beijing-based Center for China and Globalization, told the Financial Times. “That could have a disastrous impact on the country.”
While in 2019 China’s population for the first time exceeded 1.4 billion, the census is expected to show that it now has fallen back below that figure. That means India, with an estimated 1.38 billion people, will soon replace China as the world’s most populous country.
Maybe not but the peak is coming soon
China’s National Bureau of Statistics has refuted the Financial Times report and says the population did not shrink in 2020, reports the South China Morning Post.
Regardless, China’s population is expected to reach that challenging milestone very soon: “Even if the total population does not fall immediately, the Chinese government has said in the past that the annual gap between the number of newborns and the number of deaths will shrink significantly to around 1 million people over the next five years,” reports the Hong Kong-based paper.
And while in November the Chinese government predicted that the population would peak in 2027, some Chinese researchers think it will happen much sooner.
“He Yafu, an independent expert on China’s demographics, expects the population to fall in 2022 as the number of births falls to nearly 10 million and the number of deaths surpasses 10 million,” writes the Post.
The Great Famine
Official figures show (in Chinese) a 10 million decline in population in 1960, during the 1959-61 great famine, the result of the disastrous economic policies pursued under Mao’s “Great Leap Forward” campaign. Scholars estimate the real death toll to be as high as 40 million, however.
1,700 case backlog in anti-monopoly push
“China’s antitrust watchdog is beefing up its senior ranks as authorities step up efforts to rein in the country’s powerful technology companies,” reports the Wall Street Journal’s Jing Yang.
China’s Antimonopoly Bureau has a backlog of some 1,700 cases that involve companies not properly filing for deals that required regulatory review, people familiar with the matter told the business paper.
Regulators are preparing to levy penalties of the maximum of 500,000 yuan on companies including Tencent Holdings, ride-hailing company Didi Chuxing, retailer Suning and the Ant Group, the Alibaba subsidiary which saw its planned $37 billion stock offering halted last year.
The State Administration for Market Regulation, which includes the Antimonopoly Bureau, was set up in March 2018 after absorbing several other agencies.
China’s north-south gap widening
The economic gap between China’s richer southern provinces and its lagging northern ones was exacerbated by the pandemic and will continue to worsen, according to investment bank Nomura, reports Bloomberg News.
While the south has benefitted from export industries and the internet boom, northern China has been hit hard by its heavy reliance on commodity production, slower fixed investment, and outward migration, the report by the bank says. Nomura estimates that northern China’s contribution to the national economy fell from 42.9 percent in 2012 to 35.2 percent last year.
Northern China’s slower growth has also contributed to higher debt levels; more than 60 percent of total bond defaults in 2020 originated in the region, up considerably from the year before.
“Low birth rates and net population outflows from the north also suggest the divide may persist in coming years,” writes Bloomberg. The average annual population growth in the north from 2017 to 2019 was only 0.3 percent, well below the 0.8 percent recorded in the south, Nomura estimates.
Notable/In Depth
The controversial argument that the U.S. should cut its commitment to Taiwan is made in Foreign Affairs by international affairs professor Charles Glaser.
While demand for food delivery has soared during the pandemic, delivery workers, continue to toil under difficult and dangerous conditions, Caixin Global explains in this podcast.
Xi’s “Sweeping Black” (saohei chu’er) campaign has targeted the nexus between criminals and officials, including the use of ‘thugs-for-hire’, or “loose gangs of individuals who are hired by local governments, among others, to carry out ‘dirty work’, including evicting residents, collecting taxes and exactions, and harassing protesters,” writes University of Toronto political scientist Lynette Ong.
Book review for Chinese edition
Here is a review for the Chinese edition of my book in Taiwan’s non-profit, investigative media publication The Reporter.
《低端中國》a top 5 bestseller in Taiwan
The Chinese edition of my book 《低端中國》(“The Myth of Chinese Capitalism”) has broken into the top five bestsellers in the social sciences category in Taiwan.