China outgrowing 'Factory of the World' tag as reliance on imports dips

President Donald Trump talked tough against Mexico, and then essentially agreed to renew the existing trade deal and called that a victory. If only the China spat could end the same way. It won’t. That’s because the gulf between Beijing and Washington is not just caused by recent rhetoric and tariffs. It also goes beyond national security concerns. The inevitable clash stems from how the American and Chinese economies have evolved over decades. Relative to China, Mexico hasn’t shifted much. It has been and remains mortgaged commercially, diplomatically and culturally to its northern neighbour. The White House is fond of citing the merchandise trade deficit with China that America racks up each year. In 2017, it amounted to $375 billion. Sure, it’s big. But the fixation with that number misses the broader point.

Jack Ma's Too-Big-to-Fail Financial Giant Faces a Clampdown

There’s no other company on Earth quite like Ant Financial.

Spanning online payments, insurance, lending, credit scores, asset management and more, Jack Ma’s Chinese behemoth resembles a mashup of PayPal, Geico, Wells Fargo and Equifax -- with a bit of BlackRock thrown in for good measure. Thanks to clever mobile apps and a burgeoning Chinese middle class, Ant oversees the world’s biggest money-market fund and handles more than $2.4 trillion of mobile payments every three months. Many of the company’s 870 million customers rely on it for nearly every aspect of their financial lives.

But Ant’s extraordinary reach may soon expose the company to a major challenge: Chinese policy makers, worried that Ant and other financial holding companies pose systemic risks to the nation’s $12.7 trillion economy, are drafting new regulations that could make it much harder for the companies to grow.

The rules will force Ant and some of its peers that straddle at least two financial industries to obtain licenses from China’s central bank and meet minimum capital requirements for the first time, according to people familiar with the matter, who asked not to be identified discussing private information. The companies’ ownership structures and inter-group transactions will also be restricted, the people said, adding that the rules need approval from China’s State Council and are subject to change.

Good chance Kim Jong Un will give up his country's nuclear weapons: Trump

US President Donald Trump, who has agreed to meet with Kim Jong Un, said on Wednesday there is a now a good chance the North Korean leader will give up his country's nuclear weapons.

"For years and through many administrations, everyone said that peace and the denuclearization of the Korean Peninsula was not even a small possibility," Trump wrote in an early morning tweet.

This is what he tweeted:

For years and through many administrations, everyone said that peace and the denuclearization of the Korean Peninsula was not even a small possibility. Now there is a good chance that Kim Jong Un will do what is right for his people and for humanity. Look forward to our meeting!

— Donald J. Trump (@realDonaldTrump) 28 March 2018

His comments came as Kim completed a secretive and unprecedented visit to Beijing on Wednesday as the two countries seek to repair frayed ties before Pyongyang's landmark summits with Washington and earlier with South Korea.

China to build second foreign naval base near Gwadar in Pakistan

After Djibouti, China is planning to build its second foreign naval base in Pakistan, according to a South China Morning Post (SCMP) report.

The base is most likely to come up near Gwadar, according to Beijing-based military analyst Zhou Chenming.

"China needs to set up another base in Gwadar for its warships because Gwadar is now a civilian port," SCMP quoted Chenming as saying.

"It's a common practice to have separate facilities for warships and merchant's vessels because of their different operations. Merchant ships need a bigger port with a lot of space for warehouses and containers, but warships need a full range of maintenance and logistical support services," Chenming added.

Another source, which is close to the People's Liberation Army, has also confirmed the development.

"Gwadar port can't provide specific services for warships ... Public order there is in a mess. It is not a good place to carry out military logistical support," the source told the SCMP.

The SCMP story came after a report, which appeared on the Washington-based website The Daily Caller, a few days ago indicated the same.

US Army Reserve colonel Lawrence Sellin (retired) had stated that a consensus was reached in one of the meetings between Chinese and Pakistani military officers that a military base would come up on the Jiwani peninsula near Gwadar and close to the Iranian border.
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Pakistan denies China's funding halt for CPEC projects

Pakistan on Thursday refuted reports that Beijing had halted payments on some of the China-Pakistan Economic Corridor (CPEC) projects in the country.

Foreign Office Spokesperson Muhammad Faisal at a briefing said there was no news from Beijing that the Chinese government was halting funding for any of the projects, adding that execution of payments takes place in a specific manner.

The Foreign Office's denial came days after Minister for Planning and Development Ahsan Iqbal said that China had halted the release of funds for three CPEC projects till the revision of its "financial mechanism" by Beijing.

According to a press release by the National Assembly Secretariat on December 11, Iqbal informed the 25th parliamentary committee meeting on the CPEC that the work on these projects would only restart after approval from Beijing.

The three projects are related to the road network.

Another member of the committee, Al-Haj Gul Khan Afridi, had said that they were told earlier that China had not stopped financing the CPEC projects but raised some "technical objections" to the projects, Dawn online reported.
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North Korea fires ICBMs that can hit DC, NYC

North Korea fired an intercontinental ballistic missile (ICBM) on Wednesday that can reach the "whole" American mainland, in a bold act of defiance against US President Donald Trump after he put the country back on a list of state sponsors of terrorism. The latest launch drew swift global condemnation with Pyongyang's ally Beijing expressing "grave concern".

The Hwasong-15 missile, described by the state television as the country's "most powerful", was launched around 3 a.m. local time. It landed in Japanese waters but flew higher than any other missile the North had previously tested.

North Korea claimed the entire US mainland was within reach after "successfully" testing the missile that it claimed can carry a "super-large heavy warhead" to unprecedented heights of almost 4,500 kilometres.

State news agency KCNA said North Korean leader Kim Jong-un personally signed off on the launch of the missile that reached an altitude of 4,475 kilometre and flew 950 kilometre in 53 minutes.

The distance travelled appeared to be significantly greater than that of the two previous ICBMs, which flew for 37 minutes on July 4 and for 47 minutes on July 28.

Trump, together with his counterparts in South Korea and Japan and the UN Secretary General, condemned the launch. "We will take care of it," he told reporters at the White House, calling it a "situation we will handle".
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China tells $151-bn unqualified micro-lending sector to stop 'cash loans'

The National Internet Finance Association of China issued a risk warning letter late on Friday telling "unqualified institutions" to immediately stop offering loans as Beijing steps up a crackdown on the micro-loan sector to fend off financial risks.

The 1 trillion yuan ($151.5 billion) short-term, unsecured lending sector, known as "cash loan" in China, has been accused of charging exorbitant interest rates and violent debt collection practices.

In Friday's warning letter, the Internet Finance Association, a government-backed industry group, said the unqualified microlenders are disrupting economic and social orders and must stop lending immediately.

"Some institutions are not qualified to issue loans but have used false promotion to attract clients, conduct violent debt collection, and charge extremely high interest rates and fees, causing financial risks and social problems in some regions," it said in the letter released on its website.

Qualified lending institutions should also increase self-discipline, charge interest rates at a reasonable level, and increase information disclosure, the association added.

The companies are not allowed to conduct violent debt collection or harass unrelated people, it said.

China has started to take steps to rein in the loosely regulated lending market.
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China forges 'strategic' ties with Djibouti after opening base, grants aid

China on Thursday offered loans to Djibouti, the site of its first overseas military base, as the Horn of Africa state's leader told President Xi Jinping he considered himself a great friend of the Asian giant.

With a population of less than one million, Djibouti has long punched above its weight, thanks to a strategic location on the Gulf of Aden, one of the world's busiest shipping routes linking Europe to Asia and the Middle East.

China formally opened the base, which it calls a logistics facility, on August 1, the 90th birthday of the People's Liberation Army. Djibouti also hosts large US and French bases.

Djibouti was politically stable, Xi told its president, Ismail Omar Guelleh, at a meeting in Beijing's Great Hall of the People.

"China sets great store by its relations with Djibouti," he added.

Guelleh, who has been in power since 1999, said he considered himself a "great friend of China's" and could not count the number of times he had visited.

"Djibouti is known for being a country of peace, exchanges and meetings," Guelleh said.

"I would like to recall the geostrategic position of Djibouti and its importance in this part of the world as an island of stability for Asia, Africa and the Middle East."
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China's economy on brink collapse due to high borrowing: Chinese bank chief

Zhou Xiaochuan, the governor of China's central bank - the People's Bank of China (PBOC), has warned that China's financial system is becoming more vulnerable due to high levels of leverage, or borrowing.

Zhou, in an article published on the People's Bank of China's website, has warned about the prospect of potential financial problems in the world's second-biggest economy.

He argued that deepened reform and opening up are the key measures to proactively control such risks in China's financial sector.

The central bank governor called for eliminating "zombie" companies to avoid a financial crisis.

Zhou warned that risks of damage to the financial markets in China are "hidden, complex, sudden, contagious and hazardous".

"In sectors of the real economy, this is reflected as excessive debt, and in the financial system, this is reflected as credit that has been expanding too quickly," express.co.uk quoted Zhou as saying.

Zhou elaborated on the top three financial risks China is faced with: the high-leveraging ratio and liquidity in macro-finance; the credit risk in micro-finance; and cross-market and cross-regional shadow banking together with financial crime.
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Democracy without dignity: A Confucian critique of Donald Trump

The events of recent weeks have marked the point of absolute contrast between the world’s two most important countries and their leaders.

In China, President Xi Jinping has consolidated his power throughout the 19th Congress of the Communist Party of China (CPC), beginning with the bravura performance of a three-and-a-half hour opening speech, during which he sipped on not a drop of water.

By the end of the Congress, he was confirmed in his position for another five years, his supporters were elected to key government positions and his thinking was established as part of the CPC’s ruling doctrine for decades to come.

On the other side of the Pacific, witness the continuing omni-shambles of the Trump administration, now officially embroiled in a criminal investigation as it seemingly stumbles from scandal to scandal, one tweet at a time:
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No one can contain us, says Chinese envoy on US selling arms to India

The Chinese envoy to the US today said that no one could "contain" China now, expressing his displeasure over the formation of an "exclusive club" in the Indo-Pacific region.

Chinese Ambassador to the US Cui Tiankai was responding to questions on the recent India-centric policy speech by US Secretary of State Rex Tillerson and the decision of the Trump administration to sell to India high-tech military equipment, including state-of-the-art armed drones, and the Japanese proposal of a strategic quadrilateral dialogue involving India and Australia.

"I don't think that the sales of advanced arms would really serve that purpose," Cui said.

Political analysts in the west have described the sale of arms to India as a US move to contain China.

"By the way I don't think anybody would be able to contain China," the Chinese Ambassador asserted in his rare press conference at the Embassy of China here.

The top diplomat was addressing media ahead of US President Donald Trump's visit to China early next month.

Trump is scheduled to embark on a 10-day visit to China. He would also visit Japan, South Korea, Vietnam and the Philippines.

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China slams US anti-dumping duty on aluminium foil ahead of Trump visit

China has criticised new United States anti-dumping duties on aluminium foil, saying it was "extremely dissatisfied" with the new measures, just days before President Trump visits Beijing.

The tariff was announced Friday by the US following concern that China was undercutting American manufacturers by flooding the country with underpriced aluminium products.

But the timing has raised fears of a trade dispute during Trump's first visit as president to the Chinese capital next week, when commerce between the nations is expected to be high on the agenda.

On Saturday evening, China's Ministry of Commerce said the US was ignoring World Trade Organization rules by introducing the duties, and not fulfilling its international obligations.

"The US is not only harming the interests of Chinese companies, it is also damaging the seriousness and authority of multilateral rules and regulations," said Wang Hejun, Director of the Trade Remedy and Investigation Bureau, in a statement.

The US Commerce Department plans to impose fresh duties of 96.81 per cent to 162.24 on Chinese aluminium foil imports to the US.

The new tariff will affect the type of aluminium foil found in kitchens, packaging and automobiles.
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China's top lenders see growth in Q3 net, tapering of bad loans

Four of China's 'Big Five' state-owned banks reported higher quarterly profits and slower growth in bad loans, helped by a resilient economy and checks on the shadow banking sector.

The improved results from top lenders in the world's second-largest economy come after successive interest rate cuts dented their interest margins - a key gauge of profitability - while loan defaults rose sharply among struggling borrowers.

The improvement has been aided by a cocktail of policy measures, such as debt-for-equity swaps for struggling state borrowers.

Industrial and Commercial Bank of China (ICBC), the country's top lender by assets, posted a 3.3 per cent rise in third-quarter net profit, versus flat growth a year-ago.

Agricultural Bank of China (AgBank), China Construction Bank (CCB) and Bank of Communications (BoCom) also reported faster quarterly profit growth than a year ago.

ICBC, CCB and AgBank also reported declines in their non-performing loan (NPL) ratios, as they dispose of more of their bad debt. A crackdown on unregulated shadow banking has also helped.

"The market has been talking about a potential Chinese banking crisis caused by NPLs since 2011," said Jiahe Chen, chief strategist at Cinda Securities. "But after seven years and banks' net assets increased by over 100 per cent, it's now one of the most worthwhile investable industries."
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Cryptocurrency chaos as China cracks down on initial coin offerings

China's move last week to ban initial coin offerings (ICO) has caused chaos among start-ups looking to raise money through the novel fund-raising scheme, prompting halts, about-turns and re-thinks.

China is cracking down on fundraising through launches of token-based digital currencies, targeting ICOs in a market that has ballooned this year in what has been a bonanza for digital currency entrepreneurs.

The boom has fuelled a jump in the value of cryptocurrencies, but raised fears of a potential bubble.

"This is not unlike the dotcom bubble of 2000," said a partner at a venture capital fund in Shanghai, who didn't want to be named because of the issue's sensitivity. "There are a lot of companies raising a lot of money for not very good ideas, and these will eventually be weeded out. But even from the big dotcom bust, you still have gems."

"One of the reasons regulators stepped in was that the ICO fever extended beyond the traditional crypto community. The timing was an attempt to pre-empt this before it goes into a much broader mass market in China," the partner said.

Investors in China contributed up to 2.6 billion yuan ($394 million) worth of cryptocurrencies through ICOs in January-June, according to a state-run media report citing National Committee of Experts on Internet Financial Security Technology data.

Pre-ICO roadshows featuring elaborate standing room-only presentations at 5-star hotels drew a diverse crowd, including grandmothers - a likely tipping point for regulators.

The hype and subsequent crackdown came as China focuses on economic and social stability ahead of next month's congress of the Communist Party, a once-in-five-years event.
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Chinese regulators to rein in $3 trillion shadow banking industry

As a flood of unregulated cash swirls through the Chinese economy, Beijing has been taking aim at the trust companies whose unrestrained lending practices are worrying regulators.

The trusts, at the heart of a vast shadow banking industry, are being pressured to step up compliance and background checks, and are being pushed towards greater transparency.

But the fast-growing 20 trillion yuan ($3 trillion) industry, whose lending operations are cloaked behind opaque structures, will be tough to rein in, according to employees at some trusts.

A regulatory sanction against one trust, Shanghai International Trust, and a legal case against another, National Trust, offer rare insights into the industry, and reveals just how hard it will be to police it.

Shanghai Trust was fined 200,000 yuan for selling a product that violated leverage rules, according to a regulator's notice in January. Regulators provided no further details about the case. Under these rules, property developers are only allowed to borrow up to three times their existing net assets.
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China, Pakistan take swipes at Trump's Afghan policy

Pakistan has lauded China's "constructive role" in the process for a politically negotiated settlement of the Afghan conflict.

Addressing a joint press conference after his meeting with Chinese Foreign Minister Wang Yi in Beijing, Pakistan Foreign Minister Khawaja Asif said that the two countries are in favour of a political solution for the Afghan conflict and not military.

Asif, who arrived in China on Friday, appreciated China's "constructive role" in the process for a politically negotiated settlement of the Afghan conflict, saying that Pakistan and China can together contribute to a political solution to the conflict.

He is in China as a part of his regional outreach for consultations on the new US policy on Afghanistan and South Asia

"Pakistan strongly adheres to one-China policy: We support Beijing on its core issues of Taiwan, Tibet, Xinjiang and South China Sea," the Dawn quoted Asif as saying.

He said Operations Zarb-i-Azb and Raddul Fasaad have yielded positive results against terrorist groups including East Turkestan Islamic Movement (ETIM).

He added that ETIM is a threat not only for China but also to Pakistan.

China had repeatedly blamed ETIM for carrying out attacks in its far western region of Xinjiang.
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China invests $9.1 bn in Rosneft as Glencore, Qatar cut stakes

Chinese conglomerate CEFC will buy a 14.16 percent stake in Russian oil major Rosneft for $9.1 billion from a consortium of Glencore and the Qatar Investment Authority, strengthening the energy partnership between Moscow and Beijing.

CEFC China Energy has grown in recent years from a niche oil trader into a sprawling energy conglomerate and the transaction will allow China, the world's second largest energy consumer, to boost cooperation with the world's top oil producer.

The deal comes as the United States imposes a new round of economic sanctions on Russia, making it difficult for large Western firms such as Glencore to develop partnerships and increase ties with state-owned firms such as Rosneft.

Glencore said in a statement that CEFC will buy shares at a premium of around 16 percent to the 30-day volume weighted average price of Rosneft shares without naming the price. A CEFC spokesman said the company would pay $9.1 billion.

Rosneft's market capitalisation stands at $57 billion and the deal makes it one of the largest investments ever made by China into Russia.

Glencore and QIA will retain stakes of 0.5 percent and 4.7 percent in Rosneft respectively.

The Kremlin has been seeking to grow ties with China, especially since the West imposed wide-ranging sanctions on Moscow to punish it for the annexation of Crimea and an incursion in east Ukraine in 2014.
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To block extremism, China imposes restrictions on religious freedom

China has tightened regulations on religious freedom, intensifying punishments for unsanctioned activities and increasing its supervision of certain groups in a bid to "block extremism" and tackle what it sees as internal threats.

The updated rules, released by China's cabinet the State Council on Thursday, come as the country ratchets up already stringent controls on Muslim and Christian populations and include a ban on religious organisations accepting foreign donations.

China says it is facing a growing threat from domestic cults and radical Islam but critics have accused Beijing of a broader pattern of harassment, detention and abuse.

The latest measures focus on "maintaining legality, curbing illegality, blocking extremism, resisting infiltration and attacking crime", according to a copy of the regulations posted on the State Council's official website.

"Any organisation or individual may not use religion to carry out illegal activities such as endangering national security, undermining social order...And other activities that harm national interests," it said.

Among other changes, the regulations, which will be implemented February 2, extend previous rules to include online communications.
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China committed to denuclearizing Korean peninsula, Xi tells Trump

Chinese President Xi Jinping told his US counterpart Donald Trump, in a telephone conversation that Beijing remains persistent on the denuclearization of the Korean Peninsula.

During the phone conversation late on Wednesday, Xi and Trump exchanged their views on the current situation on the peninsula, Xinhua news agency reported.

Xi said China has been adamant in preserving international nuclear non-proliferation regime, maintaining peace and stability on the peninsula, and resolving the nuclear issue through talks.

The Chinese president said the general direction should head toward a peaceful settlement of the issue, adding that dialogue combined with a set of comprehensive measures is best for seeking a long-term solution.

Trump said Washington has been deeply concerned over the ongoing situation on the Korean Peninsula, and attaches importance to China's essential role in resolving the issue.

He pledged to step up communication with the Chinese side in a bid to find a solution as early as possible.

Also during the phone talks, Xi noted that exchanges and cooperation between China and the US in various areas have been moving forward.
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Govt confident of its steps over Doklam: MoS PMO Jitendra Singh

Union minister Jitendra Singh on Saturday played down the heightened rhetoric by Beijing over the Dokalam standoff, stating that India was fully equipped to face any challenge.

He said the government was confident about the steps it was taking in this regard.

"We are well equipped to face any challenge whether externally or internally," Singh told reporters.

The MoS PMO was responding to a question about the recent 'threat' by China through its official media asking India to withdraw troops from the Sikkim sector.

"I think for us the more important thing is to see what we are doing. I am not here to respond to what somebody is tweeting from the opposition parties. We are confident about what we are doing," he said.

China had recently said that it had conveyed its firm stand to India that it must take "concrete actions" by immediately pulling back troops from Doklam in the Sikkim section with "no strings attached" to resolve the current standoff.

The BJP leader also said that the government was giving "befitting reply" with regard to ceasefire violations on the Indo-Pakistan border, and was dealing with terrorism in Kashmir with a "stern hand".
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