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A Hard Touch of China’s ‘Soft Power’ in Central Asia

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Since gaining independence in 1991 and embarking on the path to economic development, Central Asian countries that were once a part of the former Soviet Union became a very attractive target for Chinese investment, especially in the infrastructure sector. While the development of infrastructure is a prerequisite of economic growth and such initiative should be viewed positively, China’s investments in the Central Asian region create challenges and issues.

Dr. Gül Berna Özcan, a Reader in International Business and Entrepreneurship at Royal Holloway, University of London, conducted research on the impact of growing Chinese business expansion and influence on the five countries comprising the Central Asian region: Kazakhstan, Kyrgyzstan, Turkmenistan, Tajikistan, and Uzbekistan. She presented the results of her research that traced “the footprint of China” in the region at an event at the Wilson Center in Washington on Feb. 20.

Epoch Times Photo
KTZE-Khorgos Gateway Dry Port, a logistics hub on the Kazakh side of the Kazakhstan-Chinese border, on April 15, 2019. (Abduaziz Madyarov/AFP via Getty Images)

China’s Belt and Road Initiative

China launched its Belt and Road Initiative (BRI) to make use of its “surplus capital and excess productive capacity,” James Nolt, professor of international relations at New York University, told The Epoch Times in 2017. “With a high savings rate in China and a slowdown in industrial investment at home, they are looking for overseas projects that can be financed and a new outlet for Chinese exports,” Nolt said.

Özcan also noted that China has an overcapacity of its labor force and wants to gain access to critical trade routes, as well as secure its access to strategic natural resources, and these are also important reasons for carrying out the BRI.

Building infrastructure in Central Asia plays an important role in the BRI because “Central Asia sits at the heart of Eurasia and, historically, made up half of the ancient Silk Route,” according to a paper published by Observer Research Foundation. The region is also rich in natural…

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China Scraps Health Declaration Requirement for All Travelers from November 1

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China has lifted all COVID-19 travel requirements, including the need to fill out a health declaration form. Travelers should still report symptoms voluntarily, however.

Travelers leaving and entering China are no longer required to fill in the China health declaration form, meaning that China has now lifted all travel requirements related to COVID-19. Travelers should still voluntarily report themselves to Customs staff if they have symptoms or have been diagnosed with an infectious disease. 

China’s General Administration of Customs (“Customs”) has announced that, as of Wednesday, November 1, 2023, it will no longer require people leaving and entering China to fill in the Entry/Exit Health Declaration Card (“Health Declaration Card”). This card was implemented during the COVID-19 pandemic to screen travelers for symptoms of COVID-19 by asking them to fill out a survey on their current health conditions and symptoms. The system then generated a QR code that travelers had to show to Customs staff when leaving or entering the country.

The removal of the Health Declaration Card requirement means that China has now lifted all COVID-era restrictions and requirements for travelers leaving and entering the country. This move could help to encourage more international travel to and from China, and will further improve the travel experience for passengers.

Existing regulations on declaring possible symptoms of infectious disease when traveling will still be in place, as we discuss below.

Read the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

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Chinese commercial banks fear stimulus measures will do littl…

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China’s commercial banks are raising questions about whether the central bank’s recent cut to outstanding mortgage rates will be sufficient to hold back a flood of mortgage prepayments and help protect bank margins.

The People’s Bank of China (PBOC) unveiled new guidance last month requiring commercial banks to lower interest rates on outstanding mortgages for first-home loans. The new rates, which will be effective starting on September 25, aimed at stimulating consumption while also reducing the incentive for households to pay down their mortgages early, which had led to a decline in bank profits.

“Lowering outstanding mortgage rates will help alleviate the interest burden on households,” a spokesperson for the PBOC told local media on Wednesday, adding that the new rules have already led to a decline in prepayments, and will help improve household balance sheets and consumer confidence.

The measure has led at least some homebuyers to reconsider their mortgage prepayments.

Officers stand guard in front of the headquarters of the People’s Bank of China, the central bank, in Beijing on September 30, 2022. Photo: Reuters

Kang Chao, an insurance company employee in Changsha, in southeast China’s Hunan province, told the Post that a new mortgage rate of 4.2 per cent could help his family free up about 1,700 yuan (US$234) each month to cover living expenses.

“[My wife] and I both took out mortgage loans in 2018 and 2019, when the interest rates were as high as 5.15 per cent,” he said. “Each month, we need to pay about 9,800 yuan, and this leaves us no more than 3,000 yuan to spend on everything else.

“So we were under a lot of pressure to pay off our debt quickly, especially after we had a child. At one point, we were even considering selling one of our houses. Now that the new policy is out, we feel somewhat relieved.”

An estimated US$700 billion in mortgages, representing around 12 per cent of the country’s total mortgage balance, has been prepaid since 2022, according to analysts.

China property support spurs buying but sceptics warn of weak demand

Chinese commercial banks could see an earnings decline of up to 5 per cent this year if the prepayment wave persists, according to analysts’ estimates. However, if banks refinance home loans at lower rates, their net profits could also drop by 1 to 5 per cent, a report by Fitch Ratings said.

Early repayment is a behaviour driven by interest rates, and as the gap between new and outstanding mortgage rates narrows, the incentive to pay down mortgages early will start to decrease, said Gary Ng, senior economist for Asia-Pacific thematic research at Natixis.

“However, it does not mean [lowering outstanding mortgage rates] is a panacea for boosting China’s household confidence in properties,” he said. “The confidence issue is complex, and it will take more than rate cuts to repair. Although early repayment will ease, mortgage growth is not likely to see a significant jump.”

A banking analyst at the Beijing branch of a commercial bank echoed this…

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China trade: exports tumble for fourth consecutive month in A…

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China’s exports tumbled for the fourth consecutive month in August amid weak external demand and ongoing global supply chain upheaval, posing more challenges to the world’s second-largest economy as it struggles to carve out a path to a post-pandemic rebound.

Exports fell by 8.8 per cent compared to a year earlier to US$284.9 billion last month, according to customs data released on Thursday.

The decline, however, narrowed from a fall of 14.5 per cent in July, and was above the forecast by Chinese financial data provider Wind for a 9.5 per cent decline.

Imports, meanwhile, fell by 7.3 per cent last month to US$216.5 billion, narrowing from a 12.4 per cent decline in July, and exceeding the expectations from Wind for a drop of 8.2 per cent.

China’s total trade surplus in August stood at US$68.4 billion, down from US$80.6 billion in July.

“The typhoon in mid-July likely disrupted port operations in July and the normalisation of that could add to trade growth in August,” said economists from Goldman Sachs.

Improved year-over-year growth of oil prices would have also helped import growth last month, they added.

Heron Lim, assistant director and economist at Moody’s Analytics, said exports are expected to continue their retreat as weakness across the broader global economy keeps new export orders soft.

Will belt and road, Asean trade be China’s silver lining amid US de-risking?

“But as trade performance was already weakening from the second half of 2022, it will be slower,” he said.

The data showed that China’s exports to most of its major trading partners continued to shrink, although the declines narrowed from July.

Shipments to the Association of Southeast Asian Nations – China’s largest trade partner – fell by 13.25 per cent compared to a year earlier, marking the fourth consecutive monthly decline.

Exports to the European Union, meanwhile, declined by 19.58 per cent, year on year, while shipments to the United States dropped for the 13th consecutive month after falling by 9.53 per cent.

The figures still suggest the headwinds remain despite some marginal improvement

Zhou Hao

Zhou Hao, chief economist at Guotai Junan International, said while the August trade figures came in slightly better than expected, the overall momentum remains lukewarm.

“In general, the figures still suggest the headwinds remain despite some marginal improvement,” Zhou said.

“Looking ahead, whether China’s trade growth has already hit the bottom will hinge on several factors. The most important one is obviously the domestic demand where the recent property easing might provide some support in the short term.

“In the meantime, the rising oil prices suggest that the import growth in value terms might pick up somewhat in the foreseeable future.”

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