China is by far the most powerful contestant. Neither the Philippines, nor Malaysia nor Vietnam can compare, though they, especially Hanoi, dare to put up a fight and stave off the encroachment on its sovereignty. China, true, is willing to sit down to the negotiation table, yet insists on bilateral talks; the smaller contestants prefer group talks. And they all look to the United States, if for different reasons. China is trying to expand its regional clout, the smaller countries are defending their rights. And the United States? Failure to respond to the Chinese challenge entails serious consequences such as damage to Washington’s status of the world superpower and loss of American credibility, not only in the eyes of the few South-East Asian nations concerned but also others, like Japan. The eyes of the world are thus focused on the South China Sea.
China’s Communist Party leaders are working on the 13th Five-Year Plan this week. One of the main targets for the next years will be reducing social disparities within the country. Is it possible?
Source: own study based on National Bureau of Statistics of China Continue reading
The quarterly report on China’s economical growth was a hot topic in the media Monday. The world and especially emerging markets, are significantly impacted by the Chinese economy. The big question is: how much does China depends on the rest of the world?
The coming years will be crucial for the Chinese economy and decisive for the realization of the „Chinese dream” of a prosperous society. This dream is to be achieved through the 13th Five-Year-Plan. This conglomerate of strategic goals will have a cascading effect; it will affect the global economy as well.
Many see the Five-Year-Plan (FYP) as a Stalinist holdover of China’s old command economy1; disregarding those „Guidelines” is a mistake. Investors should be fully aware of China’s five year economical cycles. China’s economic cycles are dictated by the elite of the Communist Party of China (CPC) and not by the invisible hand of the market.
China is run by the CPC whom does not see a free markets as a goal, but as a mean to improve the wealth of the citizens of China. The website of the CPC states the following ”The Communist Party of China takes Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the important thought of Three Represents and the Scientific Outlook on Development as its guide to action.”
To understand the importance of the FYP, one must understand exactly what it is. Continue reading
China’s production is forecast to fall by as much as 7 percent this year, extending a record decline in 2016, according to analysts. Crude production fell 6.9 percent in the first 11 months of 2016 to about 4 million barrels a day. Lower domestic production will help support the nation’s imports. Source: Bloomberg
Beijing hit back at US president-elect Donald Trump on the weekend, saying the one-China principle is non-negotiable. Foreign ministry spokesman Lu Kang said late on Saturday that the one-China principle was the political foundation for Sino-US ties.“It’s not negotiable. Source South China Morning Post
China’s President Xi Jinping will attend the World Economic Forum next week, becoming the first Chinese head of state to do so at the annual gathering of business leaders, politicians and cultural icons in the Swiss Alpine town of Davos. Source Kyivpost
Russia has announced its intention to permanently walk away from the G8 group of industrialised nations – more than two years after it was kicked out over the illegal annexation of Crimea. Moscow said it had no intention of re-joining the influential bloc – which brings together the world’s richest countries to discuss global issues from economic growth to terrorism – even if it was invited to do so. Source Independent
China started levying hefty anti-dumping and anti-subsidy tariffs on Thursday on U.S. corn products used as animal feed — the latest development in a slew of trade disputes between the world’s two largest economies. Source: Caixin
China’s broadest measure of new credit expanded faster than expected, bringing the total of new loans extended last year to roughly equal the size of Italy’s $1.8 trillion economy. Companies are more willing to borrow, mortgage issuance slowed amid measures to cool property markets. Source: Bloomberg
The world’s largest trading nation posted gloomy data on Friday, with 2016 exports falling 7.7 percent and imports down 5.5 percent. The export drop was the second annual decline in a row and the worst since the depths of the global crisis in 2009. Source: Reuters
Nigeria ordered Taiwan to move its trade mission from the capital, Abuja, to the commercial hub, Lagos, following a visit by the Chinese foreign minister during which his government pledged to invest $40 billion into infrastructure in Africa’s most populous country. Source Bloomberg
Yet for a growing number of analysts and investors, the prospect of a freely floating yuan — a Chinese exchange rate wholly determined by market forces — is no longer a distant possibility. Advocates include a government-backed researcher and a former central bank adviser. Source: Bloomberg
U.S. President-elect Donald Trump’s nominee for secretary of state set a course for a potentially serious confrontation with Beijing on Wednesday, saying China should be denied access to islands it has built in the contested South China Sea. Source Investing.com
A report by Rhodium Group and the Mercator Institute for China Studies estimates that Chinese direct investment in the EU surged 76 per cent to €35.1bn in 2016. EU acquisitions in China, by contrast, fell for the second consecutive year, to €7.7bn. The imbalance was particularly sharp in Germany. Source: FT
The Postal Savings Bank of China (PSBC) announced Tuesday that it has become the first Chinese bank to use blockchain. Blockchain, the underpinning technology of digital currency, is expected to revolutionize the financial sector and is part of China’s 13th Five-Year Plan for information technology. Source: People’s Daily
With Trump demanding more ships, the Navy is proposing the biggest shipbuilding boom since the end of the Cold War to meet “threats” from Russia and China. The Navy’s 355-ship proposal is even larger than what Trump had promoted on the campaign trail, providing a boost to shipyards that have struggled because budget caps. Source FoxNews
On the evening of Friday, January 6 in China, the PBOC offices in Beijing and Shanghai both issued statements on the meetings, noting that the “recent bitcoin price is highly volatile” and that the bank encourages the exchanges to “operate strictly in accordance with the laws and regulations of China and to conduct self-examination based on related laws and correct any possible irregularities.” Source bitcoinmagazine
“Apart from the fact that Pakistan has approved a Russian request for using the Gwadar Port, located in Balochistan Province, for its exports, media reports were swirling that Russia planned to merge the Moscow-led Eurasian Economic Union (EAEU) with the CPEC,” the article titled ‘Russia can be a welcoming presence at CPEC’ said. Source News18
China’s central bank Friday guided the yuan stronger at the fastest pace in a decade against the dollar, stepping up efforts to support the currency amid concerns over capital outflows from the world’s second-largest economy. Source CNBC
Chinese military expert Yin Zhuo told CCTV that China’s military deployment in the South China Sea is completely reasonable, in light of the powerful naval force of the U.S. in the region. He made his remarks after American media outlet Fox News quoted the U.S. intelligence community, saying that China has sent hundreds of surface-to-air missiles from the mainland to the South China Sea. Source People’s Daily
“There are flowers around the gate of China’s Ministry of Commerce, but there are also big sticks hidden inside the door — they both await Americans,” the Communist Party’s Global Times newspaper wrote. The article was published in response to Trump picking Robert Lighthizer, a former trade official in the Ronald Reagan administration who has criticized Beijing’s trade practices, as U.S. trade representative. Source Bloomberg
China’s central bank injected a total of 868.75 billion yuan ($124.90 billion) via short- and medium-term liquidity tools in December, its data showed on Tuesday, as it continues to support credit expansion and the economy. December liquidity injections were up 13.2 percent from November. Source: Reuters
Just as two submarines from China visited Malaysia this week, two Russian vessels are visiting the Philippines, and this is turning heads. In addition, Russia says it wants to hold naval exercises in the South China Sea with Malaysia, China and the Philippines. Defence analysts are trying to figure out how all this will play out as a new president, Donald Trump, takes over in the United States on Jan 20. Source Free Malaysia Today
A freight train has set out on the first direct rail service between China and the UK. The train is carrying millions of pounds worth of socks, cloth, bags, and household goods, and is expected to take 18 days to reach its destination of Barking, east London. Source: Evening Standard
Beijing is targeting output of 3.9bn tonnes of coal in 2020, up from 3.75bn tonnes in 2015, said the National Development and Reform Commission, adding that consumption will rise to 4.1bn tonnes from 3.96bn tonnes over the same period. Source: FT
Authorites may order state-owned firms to sell dollars. China may also further sell U.S. Treasuries in 2017 if needed to keep the yuan’s exchange rate stable, the people said, adding that the size of the reduction will depend on capital outflows and market intervention. Source: Bloomberg
China initiated a rail-freight service to Britain as part of President Xi Jinping’s efforts to strengthen trade ties with Europe. The first train departed Yiwu in eastern Zhejiang province on Jan. 1 and will cover more than 12,000 kilometers in about 18 days before reaching London. Source Bloomberg