China
A COVID-19 debt shock in Asia?
Author: Paola Subacchi, Queen Mary University of London and University of Bologna
Even before the outbreak of COVID-19, the level of global debt was high by historic standards. According to the Institute of International Finance, by late 2019 global debt (including private and public debt) was more than US$250 trillion. Public debt, in particular, has increased everywhere since the global financial crisis of 2008.
IMF calculations show that public debt ratios in almost 90 per cent of advanced economies are higher than before 2008. Emerging markets on average have seen such ratios increase to levels similar to those seen during the crises of the 1980s and 1990s. Public debt has also built up in low-income countries with two-fifths at high risk of debt distress.
How much global debt has been added on the back of the COVID-19 health emergency? Focussing only on low-income and emerging economies, IMF Managing Director Kristalina Georgieva reckoned that US$2.5 trillion was a ‘very conservative, low-end estimate’ of their financing needs.
Where does Asia stand in all this? The two largest Asian economies, China and Japan, have some of the highest levels of debt in the world — at the end of 2017 Japan’s total debt stood at 395 per cent of GDP and China’s at 254 per cent. But there are some significant differences in their debt composition.
In Japan debt is mainly public — approximately 237 per cent of GDP in 2019 — and is mostly held domestically. Around 70 per cent of this debt is held by the Bank of Japan. Under normal conditions the combination of domestic–public debt holdings and very low interest rates considerably reduces the risk of default.
But will things change now? Japan’s emergency stimulus package announced in April 2020 — a mix of cash handouts to households and firms, concessional loans and deferrals on tax and social security premiums — will widen the budget deficit to approximately 7.1 per cent of GDP from 2.8 per cent in 2019. This will bring the debt to around 252 per cent of GDP. Japan’s already limited fiscal space has significantly narrowed as a result of the pandemic, pointing to some fiscal tightening and debt stabilisation when the economy gets onto a firm recovery path. This is especially necessary given Japan’s ageing population.
In China, on the other hand, debt is mainly corporate with ramifications in the banking and shadow banking sectors. The rate at which it has grown in recent years is a cause of concern domestically as well as internationally. Capital controls, that were tightened in 2017 on the back of the renminbi’s weakening, are ensuring that individual and family savings remain in the country and continue to feed into the banking and the shadow banking sector, keeping China’s debt sustainable.
The COVID-19 crisis and its impact on China’s economic activity — real GDP is expected to grow by 1–1.2 per cent this year — created significant bottlenecks and increased the risk of financial instability. There are a number of areas of potential stress.
Small- and medium-sized banks are exposed to the potential insolvency of small private firms and private borrowers. Larger banks face credit and liquidity risks due to their exposure to the heavily indebted real estate sector. The shadow banking sector, where there are significant liquidity and maturity mismatches, is vulnerable to outflows that could be driven by savers withdrawing their money — either because they need their savings to face the economic crisis or because they panic amid falling equities prices and rising bond defaults.
China has responded to the crisis with an increase in welfare spending — such as unemployment insurance payment to support households — and temporary tax relief and deferral of tax payments for businesses in affected sectors and regions. Having significant fiscal space, China can extend its safety net to effectively mitigate the risk of personal and corporate bankruptcies, creating a buffer between banks and insolvent debtors.
Asia’s emerging economies show remarkable differences in levels of total debt. Some have entered the COVID-19 crisis with significant overall debt. Among the most indebted countries are Vietnam, India and Cambodia — with 189, 126 and 116 per cent of GDP respectively — followed by the Philippines (99 per cent), Pakistan (89 per cent), Bangladesh (75 per cent), Malaysia (73 per cent) and Indonesia (69 per cent).
The sharp decline in economic activity coupled with the risk of capital outflows — and a sudden increase in borrowing…
China
New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
China has been the world’s largest manufacturer for 14 years, producing one-third of global manufacturing output. In the Emerging Asia Manufacturing Index 2024, China ranks highest among eight emerging countries in the region. Challenges for these countries include global demand disparities affecting industrial output and export orders.
Known as the “World’s Factory”, China has held the title of the world’s largest manufacturer for 14 consecutive years, starting from 2010. Its factories churn out approximately one-third of the global manufacturing output, a testament to its industrial might and capacity.
China’s dominant role as the world’s sole manufacturing power is reaffirmed in Dezan Shira & Associates’ Emerging Asia Manufacturing Index 2024 report (“EAMI 2024”), in which China secures the top spot among eight emerging countries in the Asia-Pacific region. The other seven economies are India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Bangladesh.
The EAMI 2024 aims to assess the potential of these eight economies, navigate the risks, and pinpoint specific factors affecting the manufacturing landscape.
In this article, we delve into the key findings of the EAMI 2024 report and navigate China’s advantages and disadvantages in the manufacturing sector, placing them within the Asia-Pacific comparative context.
Emerging Asia countries face various challenges, especially in the current phase of increased volatility, uncertainty, complexity, and ambiguity (VUCA). One notable challenge is the impact of global demand disparities on the manufacturing sector, affecting industrial output and export orders.
This article is republished from China Briefing. Read the rest of 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.
China
Is journalist Vicky Xu preparing to return to China?
Chinese social media influencers have recently claimed that prominent Chinese-born Australian journalist Vicky Xu had posted a message saying she planned to return to China.
There is no evidence for this. The source did not provide evidence to support the claim, and Xu herself later confirmed to AFCL that she has no such plans.
Currently working as an analyst at the Australian Strategic Policy Institute, or ASPI, Xu has previously written for both the Australian Broadcasting Corporation, or ABC, and The New York Times.
A Chinese language netizen on X initially claimed on March 31 that the changing geopolitical relations between Sydney and Beijing had caused Xu to become an expendable asset and that she had posted a message expressing a strong desire to return to China. An illegible, blurred photo of the supposed message accompanied the post.
This claim was retweeted by a widely followed influencer on the popular Chinese social media site Weibo one day later, who additionally commented that Xu was a “traitor” who had been abandoned by Australian media.
Following the publication of an ASPI article in 2021 which exposed forced labor conditions in Xinjiang co-authored by Xu, the journalist was labeled “morally bankrupt” and “anti-China” by the Chinese state owned media outlet Global Times and subjected to an influx of threatening messages and digital abuse, eventually forcing her to temporarily close several of her social media accounts.
AFCL found that neither Xu’s active X nor LinkedIn account has any mention of her supposed return to China, and received the following response from Xu herself about the rumor:
“I can confirm that I don’t have plans to go back to China. I think if I do go back I’ll most definitely be detained or imprisoned – so the only career I’ll be having is probably going to be prison labor or something like that, which wouldn’t be ideal.”
Neither a keyword search nor reverse image search on the photo attached to the original X post turned up any text from Xu supporting the netizens’ claims.
Translated by Shen Ke. Edited by Shen Ke and Malcolm Foster.
Asia Fact Check Lab (AFCL) was established to counter disinformation in today’s complex media environment. We publish fact-checks, media-watches and in-depth reports that aim to sharpen and deepen our readers’ understanding of current affairs and public issues. If you like our content, you can also follow us on Facebook, Instagram and X.
Read the rest of this article here >>> Is journalist Vicky Xu preparing to return to China?
China
Guide for Foreign Residents: Obtaining a Certificate of No Criminal Record in China
Foreign residents in China can request a criminal record check from their local security bureau. This certificate may be required for visa applications or job opportunities. Requirements and procedures vary by city. In Shanghai, foreigners must have lived there for 180 days with a valid visa to obtain the certificate.
Foreign residents living in China can request a criminal record check from the local security bureau in the city in which they have lived for at least 180 days. Certificates of no criminal record may be required for people leaving China, or those who are starting a new position in China and applying for a new visa or residence permit. Taking Shanghai as an example, we outline the requirements for obtaining a China criminal record check.
Securing a Certificate of No Criminal Record, often referred to as a criminal record or criminal background check, is a crucial step for various employment opportunities, as well as visa applications and residency permits in China. Nevertheless, navigating the process can be a daunting task due to bureaucratic procedures and language barriers.
In this article, we use Shanghai as an example to explore the essential information and steps required to successfully obtain a no-criminal record check. Requirements and procedures may differ in other cities and counties in China.
Note that foreigners who are not currently living in China and need a criminal record check to apply for a Chinese visa must obtain the certificate from their country of residence or nationality, and have it notarized by a Chinese embassy or consulate in that country.
Foreigners who have a valid residence permit and have lived in Shanghai for at least 180 days can request a criminal record check in the city. This means that the applicant will also need to currently have a work, study, or other form of visa or stay permit that allows them to live in China long-term.
If a foreigner has lived in another part of China and is planning to or has recently moved to Shanghai, they will need to request a criminal record check in the place where they previously spent at least 180 days.
There are two steps to obtaining a criminal record certificate in Shanghai: requesting the criminal record check from the Public Security Bureau (PSB) and getting the resulting Certificate of No Criminal Record notarized by an authorized notary agency.
This article is republished from China Briefing. Read the rest of 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.
- New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
- Is journalist Vicky Xu preparing to return to China?
- Guide for Foreign Residents: Obtaining a Certificate of No Criminal Record in China
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