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China How To: Accounting.

China How To: Accounting.

Accounting Standards

The accountancy standards for companies were put into effect by the Ministry of Finances (MOF). China established its first complete standards specific to accountancy in 1997 and the MOF promulgated an additional 13 standards more specific to accountancy since then.

Chinese Accounting Standards for Business Enterprises (ASBEs) are mandatory for listed Chinese enterprises. Other Chinese enterprises are encouraged to apply the ASBEs, which are substantially in line with IFRS, except for certain modifications that reflect China’s circumstances and environment. China is committed to converge with IFRS.

 

Foreign Invested Enterprises (FIE) may prepare financial statements in accordance with other accounting standards or in other languages for global consolidation purposes. However, the Chinese authorities will only recognise and accept accounts in Chinese that are prepared based on Chinese accounting standards.


 

Accounting Regulation Bodies

Ministry of Finance
CASC
CICPA

 

Accounting Reports

Audit reports normally contain a paragraph defining the 'task' or 'scope' and a paragraph of opinion. The paragraph of opinion aims to establish if the accounts were prepared according to the appropriate rules/regulations and any reservations in opinion must be elaborated above.

Statements of financial accounts or reports should comprise a balance sheet, profit and loss accounts, a report of gross self-financing margin, notes on the accounts and an account for appropriation of profits and losses.

For more information consult the website of China Accounting operating under the Ministry of Finance.

 

Publication Requirements

Annual publication

 

Professional Accountancy Bodies

CICPA , Chinese Institute of Chartered Accountants website

 

Certification and Auditing

Chinese law requires representative offices and foreign-invested enterprises to utilise the services of accountants registered in China to prepare official submissions of annual financial statements and other specified financial documents. Only Chinese accountants and joint venture accounting firms may provide these services. Companies must seek a statutory auditor to conduct an annual audit of the financial health of their organisation. To find an auditor, contact the National Audit Office of China (CNAO).

 

 

What is the Ice Silk Road? The China...

What is the Ice Silk Road? The China perspective

Russia and China are becoming closer strategic partners, and the Arctic is gradually becoming an area where the two sides can potentially carry out their long-term cooperation. In 2017 Chinese and Russian leaders jointly proposed the "Ice Silk Road (ISR)," with an aim to promote cooperation and development in the Arctic within the context of China's Belt and Road Initiative (BRI).

 

China considers the Arctic a shorter and safer route connecting the Chinese mainland with Europe, it’s white paper on its Arctic policy states that the BRI should provide opportunities for parties interested in creating the Arctic Silk Road, sustainable economic and social development of the Arctic.

 

The ISR is an open initiative that abandons classical geopolitical thinking and advocates cooperation and a Chinese win-win perspective. Against the backdrop of geopolitical conflicts in the Arctic and bottlenecks in regional governance and cooperation, the ISR and the cooperation of countries under this framework are the highlight of current Arctic cooperation and represent a new direction for future Arctic governance and cooperation.

 

 

China's Policies and Positions on Participating in Arctic Affairs

1. Deepening the exploration and understanding of the Arctic

2. Protecting the eco-environment of the Arctic and addressing climate chang

3. Utilizing Arctic Resources in a Lawful and Rational Manner

4. Participating Actively in Arctic governance and international cooperation

5. Promoting peace and stability in the Arctic Conclusion

 

 

The Chinese vision of the Ice Silk Road involves the development of scientific, trade and economic cooperation with all Arctic countries in different directions. However, while developing cooperation with various Arctic countries on joint research and development of the Arctic, China is giving priority to Russia. In the foreseeable future, the main stimulus for the development of the "Ice Road" in this part of the Arctic will be economic projects in the North of Russia. The main regional project, whose fate is closely connected with the development of the ISR, is the development of the fuel and energy wealth of the Yamal Peninsula.

 

 

Ice Silk Road (ISR) projects include:

 

China-Russia Yamal LNG

Partners: China, Russia, France

Status: Production commenced December 2017

 

The world's largest liquefied natural gas (LNG) project, this is China and Russia's first joint Ice Silk Road (ISR) venture. Partners in the project include Russia's Novatek, the China National Petroleum Corporation (CNPC), French firm Total, and China's Silk Road Fund. Together, CNPC and the Silk Road Fund hold a 30-percent stake.

 

 

Payakha oilfield

Partners: China, Russia

Status: Deal signed

 

In June 2019, the China National Chemical Engineering Group and Russian firm Neftegazholding signed a deal on developing the Payakha oilfield, promising investment of USD5 billion over four years.

 

This is Russia and China's second Ice Silk Road (ISR) energy project after Yamal. Payakha lies on the Taymyr peninsula in the region of Krasnoyarsk. According to reports, the project includes the construction of six crude oil processing facilities, a crude oil port capable of handling 50 million tonnes a year, 410 kilometres of pressurized oil pipelines, a 750-megawatt power station and an oil storage facility.

 

 

Zarubino port

Partners: China, Russia

Status: Deal signed, progressing

 

Located just southwest of Vladivostok and close to the Chinese border, the port of Zarubino is ice free year-round. In 2014, the government of Jilin province, the China Merchants Group and Russia's largest port operator signed a framework deal to develop Zarubino into the biggest port in northeast Asia over 18 years, with capacity to handle 60 million tonnes of goods a year. Railways linking the port with inland regions of China will also be built.

 

In September 2018, as the first stage of this project, a shipping route started running from Hunchun on the Tumen river in Jilin to Zarubino and then on to Zhoushan in Zhejiang province. The new Zarubino port will strengthen links between northeast China and the rest of the world, and aid development in Russia's far east. It will also be a key link on the northeast passage trade route to Europe.

 

 

Arkhangelsk deepwater port

Partners: China, Russia

Status: Planning

 

Arkhangelsk is the largest city on Russia's northern coast, situated on the country's European side close to Finland. The new deepwater port has been planned for over a decade. It will be located 55 kilometres from Arkhangelsk on the island of Mud'yug, which lies in the Dvina river delta close to existing port infrastructure. Linking up with Russia's railway network, the port will help develop a combined sea-land transportation system, and improve links to Siberia.

 

The local government predicts the new port and associated railways will create 40,000 jobs in the region. According to one expert, the China Poly Group signed an agreement of intent in 2016, earmarking investment of 550 million yuan (USD79 million). The China Ocean Shipping Company has also made its interest in the project clear.

 

 

China-Finland Arctic Monitoring and Research Centre

Partners: China, Finland

Status: Deal signed

 

In April 2018, China's Institute of Remote Sensing and Digital Earth signed an agreement with Finland’s Arctic Space Centre to establish a new monitoring and research centre for the polar region. The facility, based in northern Finland's Sodankylä, will collect, process and share satellite data, providing an open international platform to support climate research, environmental monitoring and Arctic navigation.

 

The centre will contribute to China's "Digital Silk Road" plan, which aims to create a spatial information system for regions covered by the BRI. It will also promote the Chinese Academy of Sciences' "Global Three Poles Environment" project, which aims to better understand global climate change.

 

The project was inaugurated in October 2018.

 

 

China-Iceland Arctic Science Observatory

Partners: China, Iceland

Status: Operating since late 2018

 

In October 2018, the China-Iceland Arctic Science Observatory was officially opened in the city of Karholl in northern Iceland.

 

Set up to monitor climate and environmental change in the Arctic, the observatory is managed by the Polar Research Institute of China and Iceland's Institute of Research Centres. It can accommodate 15 people and will also be open to researchers from third countries.

 

The partnership started in 2012 when the two governments signed a deal on Arctic cooperation. That year also saw a memorandum of understanding signed between organisations from the two countries on a joint aurora observatory. Plans were expanded in 2017, with work at the observatory now covering the atmosphere, the oceans, glaciers, geophysics, remote sensing and biology.

Chinese shipping firms handle LNG cargos bound for China. In July 2018, seven months after operations started, the first shipment of LNG from Yamal arrived in Jiangsu province's Nantong. A second phase of the project is now being constructed on the Gydan peninsula, to the east of Yamal, and due to begin operating in 2023.

 

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Source; Xinhua Silk Road Information Service

AliExpress coming to a mobile near ...

AliExpress coming to a mobile near you

AliExpress is Alibaba’s cross-border e-commerce platform, which facilitates trade and brings sellers and buyers together. AliExpress does not sell directly, but provides a platform for safe transactions between sellers and buyers. AliExpress was founded in 2010, and is today one of the top cross-border B2C platforms. Alibaba’s mission is to make it easy to do business anywhere. AliExpress not just serves consumers from all over the world (it is currently available in: Russian, Portuguese, Spanish, French, German, Italian, Dutch, Turkish, Japanese, Korean, Thai, Vietnamese, Arabic, Hebrew, Polish) but also enables small and medium-sized businesses to grow locally and globally.

 

 

AliExpress is available to ship in more than 200 countries and regions, and recently launched their selling program to include overseas sellers, limited to some countries: from Italy, Spain, Russia and Turkey.  AliExpress was previously only open for Chinese sellers accessing international consumers. Now, they are exploring a change to their business model by opening its marketplace to non-Chinese sellers, which means they will be better positioned to compete against Amazon and leverage AliExpress as a platform to sell their products.

 

 

Leveraging Alibaba Group’s technology and expertise in commerce, AliExpress has built infrastructure to provide the best experience for consumers and sellers, including four key components – a well-established platform, localized payment options, an efficient logistics network through local partnerships and a money back guarantee if the item you received is not as described, or if the item is not delivered within the Buyer Protection period.

 

 

AliExpress have been offering a livestreaming service for more than 1 year, and the penetration keeps increasing. They have quite a few merchants who have enjoyed a better result via livestreaming. In China this has been growing year on year, and is now estimated to account for about 9 percent of total e-commerce sales in China. Brands use livestreaming, broadcasting in real-time, as a tool to promote products and engage better with their potential customers.

 

 

They have also launched a brand new platform called AliExpress Connect, which is designed to create opportunity for both brands and influencers: as the world moves increasingly toward online shopping. It offers new income sources and job opportunities for influencers and content creators, helping them to scale and digitalize their business. While for brands, it opens up the opportunity to attract new customers. Anybody interested in joining the program, you could email to the following: aesocial@aliexpress.com or go directly to: https://connect.aliexpress.com/

 

 

Whilst their website is not as user friendly as Amazon’s they are positioning themselves to better positioned in developing e-commerce markets to compete against Amazon.

The Belt and Road Initiative Progress...

The Belt and Road Initiative Progress 2019

Since 2013, the Belt and Road Initiative, with policy coordination, connectivity of infrastructure, unimpeded trade, financial integration and closer people-to-people ties as its main goals, has advanced in solid steps. Significant progress has been made, including a number of landmark early results. Participating countries have obtained tangible benefits, and their appreciation of and participation in the initiative is growing.

 

 

1. Policy coordination

Policy coordination is an important guarantee for this initiative, and an essential precondition for joint actions. Over the past five years or so, China has engaged in thorough communication and coordination with participating countries and international organizations, and reached a broad consensus on international cooperation for building the Belt and Road.

 

 

1) The Belt and Road Initiative has been incorporated into important documents of international organizations. The initiative and its core concepts have been written into documents from the United Nations, G20, APEC and other international and regional organizations. In July 2015, the Shanghai Cooperation Organization issued the "Ufa Declaration of the Heads of State of the Shanghai Cooperation Organization", showing support for the Silk Road Economic Belt initiative. In September 2016, the "G20 Leaders' Communiqué" adopted at the G20 Hangzhou Summit endorsed an initiative to establish the Global Infrastructure Connectivity Alliance. In November 2016, the 193 UN member states adopted by consensus a resolution, welcoming the Belt and Road Initiative and other economic cooperation initiatives and urging the international community to ensure a secure environment for these initiatives. In March 2017, the UN Security Council unanimously adopted Resolution 2344, calling on the international community to strengthen regional economic cooperation through the Belt and Road Initiative and other development initiatives, while for the first time enshrining the concept of "a community of shared future for mankind". In January 2018, the Second Ministerial Meeting of the Forum of China and the Community of Latin American and Caribbean States (CELAC) was held in Santiago and adopted the "Special Declaration on the Belt and Road Initiative". In July the same year, the Eighth Ministerial Meeting of the China-Arab States Cooperation Forum (CASCF) was convened in Beijing, which adopted the "Declaration of Action on China-Arab States Belt and Road Cooperation". In September the FOCAC Beijing Summit adopted the "Beijing Declaration - Toward an Even Stronger China-Africa Community with a Shared Future" and the "Forum on China-Africa Cooperation Beijing Action Plan (2019-2021)".

 

 

2) More and more countries and international organizations have signed intergovernmental cooperation agreements on the Belt and Road Initiative. In the B&R framework, all participating countries and international organizations, based on the principle of seeking common ground while reserving differences, have exchanged views on economic development plans and policies and discussed and agreed economic cooperation plans and measures. By the end of March 2019, the Chinese government had signed 173 cooperation agreements with 125 countries and 29 international organizations. The Belt and Road has expanded from Asia and Europe to include more new participants in Africa, Latin America and the South Pacific.

 

 

3) Coordination and cooperation in specific fields of the Belt and Road Initiative have progressed steadily. The Digital Silk Road has become an important part of the Belt and Road Initiative. China has launched the "Belt and Road Digital Economy International Cooperation Initiative" with Egypt, Laos, Saudi Arabia, Serbia, Thailand, Turkey, and the United Arab Emirates. It has signed cooperation agreements with 16 countries to strengthen the construction of the Digital Silk Road. China issued the "Action Plan on Belt and Road Standard Connectivity (2018-2020)". It has signed 85 standardization cooperation agreements with 49 countries and regions. The long-term mechanism for tax cooperation between B&R countries is maturing. China co-organized the Belt and Road Initiative Tax Cooperation Conference (BRITCC) in May 2018, which published the "Astana Proposal by BRITCC Participating Jurisdictions for Enhancing Cooperation in Tax Matters", signaling that the cooperation network has expanded to 111 countries and regions. China and 49 B&R countries published the "Joint Statement on Pragmatic Cooperation in the Field of Intellectual Property Among Countries Along the Belt and Road" in August 2018. In July 2018 China hosted the Forum on the Belt and Road Legal Cooperation, which published the "Statement of the Co-Chairs of the Forum on the Belt and Road Legal Cooperation". In October 2018 China hosted the Belt and Road Energy Ministerial Conference and 18 countries jointly announced building the B&R energy partnership. In addition, China published the "Vision and Action on Jointly Promoting Agricultural Cooperation on the Belt and Road" in May 2017 and the "Vision for Maritime Cooperation Under the Belt and Road Initiative" in June the same year. China has been a strong proponent of the establishment of international commercial courts and a "one-stop" diversified resolution mechanism for international commercial disputes.

 

 

2. Infrastructure connectivity

Infrastructure connectivity is high on the B&R agenda. While committed to respecting the sovereignty and security concerns of all relevant countries, B&R countries have made concerted efforts to build an all-round, multi-level, and composite infrastructure framework centered on railways, roads, shipping, aviation, pipelines, and integrated space information networks. This framework is taking shape rapidly. It has greatly reduced the transaction costs of products, capital, information, and technologies flowing between regions, and effectively promoted the orderly flow and optimal allocation of resources among different regions. Thus it will help achieve mutually beneficial cooperation and common development.

 

 

1) Significant progress has been made in the construction of international economic cooperation corridors and passageways. The six major corridors for international economic cooperation - the New Eurasian Land Bridge, and the China-Mongolia-Russia, China-Central Asia-West Asia, China-Indochina Peninsula, China-Pakistan, and Bangladesh-China-India-Myanmar economic corridors - connect the Asian economic circle with the European economic circle. They have played an important role in establishing and strengthening connectivity partnerships between participating countries and building an efficient and smooth Eurasian market.

 

 

- New Eurasian Land Bridge. Over the past five years or so, regional cooperation through the New Eurasian Land Bridge has widened, enhancing partnerships featuring openness, inclusiveness, and mutual benefits to a higher level and driving forward economic and trade exchanges between Asia and Europe. The "Budapest Guidelines for Cooperation Between China and Central and Eastern European Countries" and the "Sofia Guidelines for Cooperation Between China and Central and Eastern European Countries" have been published, showing that steady progress is being made in pragmatic cooperation in the frameworks of the China-EU Connectivity Platform and the Investment Plan for Europe. Construction has started on the Belgrade-Stara Pazova section of the Hungary-Serbia Railway in Serbia. The Western China-Western European International Expressway connecting western China, Kazakhstan, Russia and Western Europe is basically complete.

 

 

- China-Mongolia-Russia Economic Corridor. China, Mongolia, and Russia have made positive efforts to build a cross-border infrastructure connectivity network consisting mainly of railways, roads and border ports. In 2018, the three countries signed the "Memorandum of Understanding on Establishing a Joint Mechanism for Advancing the China-Mongolia-Russia Economic Corridor", making further progress in improving the working mechanism of the tripartite cooperation. China's side of the Tongjiang-Nizhneleninskoye railway bridge was completed in October 2018. Construction of the Heihe-Blagoveshchensk road bridge is progressing smoothly. A Sino-Russian enterprise consortium has completed preliminary design of the Moscow-Kazan High-Speed Railway. The "Intergovernmental Agreement on International Road Transport Along the Asian Highway Network" signed and approved by the three countries has entered into force. The China-Mongolia-Russia cross-border terrestrial cable system has been completed.

 

 

- China-Central Asia-West Asia Economic Corridor. Over the past five years or so, cooperation has advanced in energy, infrastructure connectivity, economy and trade, and industrial capacity in this corridor's framework. China has signed bilateral agreements on international road transport with Kazakhstan, Uzbekistan, Turkey, and other countries, as well as China-Pakistan-Kazakhstan-Kyrgyzstan, China-Kazakhstan-Russia, China-Kyrgyzstan-Uzbekistan, and some other multilateral agreements on international road transport, constantly improving infrastructure construction in Central Asia and West Asia. The China-Saudi Arabia Investment Cooperation Forum has promoted industrial complementarity between the Belt and Road Initiative and Saudi Vision 2030, and has concluded cooperation agreements worth more than US$28 billion. China and Iran have drawn on their strengths in various fields and are strengthening their combined forces in the fields of roads, infrastructure and energy.

 

 

- China-Indochina Peninsula Economic Corridor. Over the past five years or so, progress has been made in infrastructure connectivity and construction of cross-border economic cooperation zones through this corridor. The Kunming-Bangkok Expressway has been completed, while the China-Laos and China-Thailand railways and some other projects are well underway. Cooperation has started in building the China-Laos Economic Corridor. More intensive efforts have been made to dovetail Thailand's Eastern Economic Corridor and the Belt and Road Initiative. Economic cooperation between China and Cambodia, Laos, Myanmar, Viet Nam and Thailand is advancing steadily. Positive roles for the China-ASEAN (10+1) cooperation mechanism, Lancang-Mekong cooperation mechanism, and Greater Mekong Subregion (GMS) Economic Cooperation are becoming clearer.

 

 

- China-Pakistan Economic Corridor. A cooperation plan focusing on energy, transportation infrastructure, industrial park cooperation, and Gwadar Port has been implemented in the framework of this corridor. China and Pakistan have established the Joint Cooperation Committee of the China-Pakistan Economic Corridor, which meets regularly. Smooth progress has been made in a number of projects. Key projects, such as the road to the Gwadar Port, Peshawar-Karachi Motorway (Sukkur-Multan section), Karakoram Highway Phase II (Havelian-Thakot section), Lahore Orange Line Metro, and 1,320MW Coal-Fired Power Plants at Port Qasim have been launched. Some projects have already brought benefits. The China-Pakistan Economic Corridor is open to third parties for cooperation, and more countries have joined or expressed a willingness to participate.

 

 

- Bangladesh-China-India-Myanmar Economic Corridor. Over the past five years or so, the four countries have worked together to build this corridor in the framework of joint working groups, and have planned a number of major projects in institutional development, infrastructure connectivity, cooperation in trade and industrial parks, cooperation and opening up in the financial market, cultural exchange, and cooperation in enhancing people's wellbeing. A Joint Committee of the China-Myanmar Economic Corridor has been established. The two countries have also signed an MoU on building the China-Myanmar Economic Corridor, as well as papers on a feasibility study for the Muse-Mandalay Railway, and the Framework Agreement on the Kyauk Phyu Special Economic Zone Deep-Sea Port Project.

 

 

 Infrastructure connectivity has been remarkably enhanced. "Access to roads will enable all sectors of the economy to prosper." Insufficient infrastructure investment is a bottleneck for economic development in developing countries. Accelerating infrastructure connectivity is a key area and core goal of the Belt and Road Initiative.

 

 

- Railways

Major progress has been made in building inter-regional and intercontinental railway networks focusing on such cooperation projects as the China-Laos Railway, China-Thailand Railway, Hungary-Serbia Railway, and Jakarta-Bandung High-Speed Railway.

 

 

Preliminary research has advanced on the eastern route of the Pan-Asia Railway Network, the upgrade of Pakistan's Karachi-Peshawar Railway Line (also referred to as Main Line 1 or ML-1), and the China-Kyrgyzstan-Uzbekistan Railway. A pre-feasibility study on a China-Nepal cross-border railway has been completed.

 

 

After preliminary work on China Railway Express cargo trains, an international railway operation mechanism with cooperation among multiple countries has been established. Railway companies of China, Belarus, Germany, Kazakhstan, Mongolia, Poland, and Russia have signed an agreement on deeper cooperation in China-Europe rail service. By the end of 2018, China-Europe rail service had connected 108 cities in 16 countries in Asia and Europe. A total of 13,000 trains had carried more than 1.1 million TEUs. Among the trains starting from China, 94 percent were fully loaded; and among those arriving in China, 71 percent were fully loaded.

 

China has cooperated with other B&R countries in customs clearance to make it more convenient and efficient for the operation of the trains. The average inspection rate and customs clearance turnover time have both decreased by 50 percent.

 

 

- Roads

Trial operations have been carried out on nonstop transport on the China-Mongolia-Russia, China-Kyrgyzstan-Uzbekistan, China-Russia (Dalian-Novosibirsk) and China-Viet Nam roads. In February 2018, regular operation began on the China-Kyrgyzstan-Uzbekistan highway. China-Viet Nam Beilun River Bridge II has been completed and opened to traffic.

 

 

China formally joined the Convention on International Transport of Goods Under Cover of TIR Carnets (TIR Convention). It has signed 18 bilateral and multilateral international transport facilitation agreements with 15 B&R countries, including the "Intergovernmental Agreement of the Shanghai Cooperation Organization Member States on the Facilitation of International Road Transport". Positive progress has been made in implementing the GMS "Agreement for the Facilitation of Cross-Border Transport of Goods and People".

 

 

- Ports

In Pakistan's Gwadar Port, routes for regular container liners have been opened and supporting facilities in the starting area of the Gwadar Free Trade Zone completed, attracting more than 30 companies into the area. Preliminary work has been completed for Sri Lanka's Hamban-tota Port Special Economic Zone, including defining the zone's industrial functions and making conceptual plans. An important transit hub has been completed at the Port of Piraeus in Greece, and Phase III construction is to be completed. Khalifa Port Container Terminal Phase II in the United Arab Emirates officially opened in December 2018. China has signed 38 bilateral and regional shipping agreements with 47 B&R countries. China's Ningbo Shipping Exchange has made constant efforts to improve the Maritime Silk Road Freight Index and released the China-CEEC Trade Index (CCTI) and the Ningbo Port Index.

 

 

- Air transport

China has signed bilateral intergovernmental air transport agreements with 126 countries and regions. It has expanded arrangements for air traffic rights with Luxembourg, Russia, Armenia, Indonesia, Cambodia, Bangladesh, Israel, Mongolia, Malaysia, and Egypt. Over the past five years or so, 1,239 new international routes have opened between China and other B&R countries, accounting for 69.1 percent of the total of China's new international routes over that period.

 

 

- Energy facilities

China has signed a large number of cooperation framework agreements and MoUs with other B&R countries, and has carried out extensive cooperation in the fields of electricity, oil and gas, nuclear power, new energy, and coal. It works with relevant countries to ensure the safe operation of oil and gas pipeline networks and optimize the configuration of energy resources between countries and regions.

The China-Russia crude oil pipeline and the China-Central Asia natural gas pipeline have maintained stable operation. Certain sections of the eastern route of the China-Russia natural gas pipeline will enter service in December 2019 and the entire eastern route will be completed and enter service in 2024. China-Myanmar oil and gas pipelines have been completed.

 

 

- Communication facilities

Significant progress has been made in the construction of China-Myanmar, China-Pakistan, China-Kyrgyzstan, and China-Russia cross-border fiber optic cables for information transmission. China and the International Telecommunication Union signed a "Letter of Intent to Strengthen Cooperation on Telecommunications and Information Net works Within the Framework of the Belt and Road Initiative". China has also signed cooperation agreements with Kyrgyzstan, Tajikistan and Afghanistan on fiber optic cables, which represent the practical launch of the Silk Road Fiber Optic Cable project.

 

 

3. Unimpeded trade

Unimpeded trade is an important goal of the Belt and Road Initiative. The efforts invested in the initiative have liberalized and facilitated trade and investment in the participating countries and regions, lowered the costs of trade and business, and released growth potential, enabling the participants to engage in broader and deeper economic globalization.

 

 

1) Greater liberalization and facilitation of trade and investment. China has issued the "Initiative on Promoting Unimpeded Trade Cooperation Along the Belt and Road", to which 83 countries and international organizations have subscribed. Cooperation in border inspection and quarantine has deepened. Since the first Belt and Road Forum for International Cooperation in May 2017, China has signed more than 100 cooperation agreements with other B&R countries, granting access to some 50 types of agricultural products and food after inspection and quarantine. Express customs clearance services for agricultural products between China and Kazakhstan, Kyrgyzstan, and Tajikistan have reduced the clearance time by 90 percent. China has further expanded sectors accepting foreign investment to create a business environment of high international standards. It has opened 12 pilot free trade zones for global business and experimented with free trade ports to attract investment from participating countries of the Belt and Road Initiative. China's average tariffs have dropped from 15.3 percent when it joined the World Trade Organization to 7.5 percent today. China has signed or upgraded free trade agreements with ASEAN,

 

 

Singapore, Pakistan, Georgia and other countries and regions, and signed an economic and trade cooperation agreement with the Eurasian Economic Union. A network of free trade areas involving China and other B&R countries has taken shape.

 

 

2) Expanding trade. From 2013 to 2018 the value of trade between China and other B&R countries surpassed US$6 trillion, accounting for 27.4 percent of China's total trade in goods and growing faster than the country's overall foreign trade. In 2018 the value of trade in goods between China and other B&R countries reached US$1.3 trillion, growing by 16.4 percent year on year. Trade in services between China and other B&R countries has seen steady progress, growing by 18.4 percent from 2016 to reach US$97.76 billion in 2017. The figure accounted for 14.1 percent of China's total trade in services, 1.6 percentage points higher than in 2016. According to a World Bank study that analyzes the impact of the Belt and Road Initiative on trade in 71 potentially participating countries, the initiative increases trade flows among participating countries by up to 4.1 percent.

 

 

3) Faster pace of trade model innovation. New trade models such as cross-border e-commerce are becoming an important driver of trade. In 2018 the total value of retail goods imported and exported through the cross-border e-commerce platform of China Customs reached US$20.3 billion, growing by 50 percent year on year. Exports were US$8.48 billion, growing by 67 percent year on year, and imports were US$11.87 billion, growing by 39.8 percent year on year. As Silk Road e-commerce prospers, China has established cooperation mechanisms for bilateral e-commerce with 17 countries, created agreements on e-commerce cooperation under the BRICS and other multilateral frameworks, and made solid progress in finding overseas partners for Chinese businesses and developing Chinese brands.

 

 

4. Financial integration

Financial integration is an important pillar of the Belt and Road Initiative. Exploring investment and financing models, international multilateral financial institutions and commercial banks have played an innovative role in expanding the channels of diversified financing, providing stable, transparent and quality financial support for the Belt and Road Initiative.

 

 

1) Exploring new models of international investment and financing. Boasting huge cooperation potential in infrastructure construction and industrial capacity, the Belt and Road Initiative is in urgent need of finance. The sovereign wealth funds and investment funds of the participating countries are playing a bigger part. In recent years the Abu Dhabi Investment Authority of the UAE, China Investment Corporation and other sovereign wealth funds have markedly increased investment in major emerging economies participating in the initiative. The China-EU Joint Investment Fund, which began operation in July 2018 with an injected capital of EUR500 million from the Silk Road Fund and the European Investment Fund, has helped the Belt and Road Initiative to dovetail with the Investment Plan for Europe.

 

 

2) Growing support from multilateral financial cooperation. China's Ministry of Finance and its counterparts in 27 countries including Argentina, Russia, Indonesia, the UK, and Singapore have endorsed the "Guiding Principles on Financing the Development of the Belt and Road". According to the Principles, the countries participating in the Belt and Road Initiative support channeling of financial resources to serve the real economy of countries and regions involved, with priority given to such areas as infrastructure connectivity, trade and investment, and industrial cooperation, among others. The People's Bank of China has rolled out joint financing programs with the International Finance Corporation under the World Bank Group, Inter-American Development Bank, African Development Bank, European Bank for Reconstruction and Development, and other multilateral development institutions. By the end of 2018 these institutions had invested in more than 100 programs in over 70 countries and regions. Established in November 2017, the China-CEEC Bank Consortium includes 14 financial institutions from China, Hungary, the Czech Republic, Slovakia, Croatia, and nine other Central and Eastern European countries. In July 2018 the China-Arab States Bank Consortium was founded, followed by the China-Africa Financial Cooperation Consortium established in September; each was the first multilateral financial cooperation mechanism between China and the respective area.

 

 

3) Closer cooperation between financial institutions. In building the Belt and Road, policy-backed export credit insurance, which has wide coverage, plays a special role in supporting infrastructure and basic industries. The strengths of commercial banks lie in taking deposits from wider sources, corporate financing, financial products, trade agency, and trust services. By the end of 2018 the China Export & Credit Insurance Corporation had endorsed US$600 billion on export to and investment in the participating countries. Chinese-financed banks, such as the Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank, have formed extensive agent banking relations with the participating countries. Commerzbank became the first German bank to join the banking mechanism of the Belt and Road Initiative when it signed an MoU on cooperation with the Industrial and Commercial Bank of China.

 

 

4) Improved financial market system. The initiative's participating countries have made continued efforts to consolidate and improve financial cooperation for long-term benefits and win-win outcomes. With a steady supply of innovative financial products, channels for financing the Belt and Road Initiative have expanded substantially. China has continued to open up its interbank bond market. By the end of 2018 about RMB200 billion of Panda bonds had been issued. The Export-Import Bank of China issued a RMB2 billion green bond for global investors, and the BRICS New Development Bank issued a RMB3 billion green bond to support the green development of the Belt and Road Initiative. Stock equity, business and technical cooperation between securities and futures exchanges has advanced. The Shanghai Stock Exchange, Deutsche B?rse Group, and China Financial Futures Exchange jointly founded the China Europe International Exchange in 2015, and the Shanghai Stock Exchange and Astana International Financial Center Authority of Kazakhstan have signed an agreement to co-invest in building the Astana International Exchange.

 

 

5) Deeper financial connectivity. Eleven Chinese-funded banks have set up 76 first-grade institutions in 28 B&R countries, and 50 banks from 22 B&R countries have opened 7 corporate banks, 19 branches, and 34 representative offices in China. Two Chinese-funded securities firms have established joint ventures in Singapore and Laos. China has made bilateral currency swap arrangements with more than 20 B&R countries and Renminbi clearing arrangements with 7 B&R countries, and signed cooperation agreements with the financial supervision authorities of 35 B&R countries. The Reminbi's functions as a currency for international payment, investment, trade, and reserve have been strengthened. The Cross-Border Interbank Payment System (CIPS) now covers some 40 countries and regions involved in the Belt and Road Initiative. The China-IMF Capacity Development Center and the Research Center for the Belt and Road Financial and Economic Development have been founded.

 

 

5. Closer people-to-people ties

People-to-people ties are the cultural foundation for building the Belt and Road. It is the common dream of all peoples to enjoy a peaceful and prosperous life. Over the past five years or so, the B&R countries have carried out diplomatic activities and cultural exchanges of various forms in wide fields, enhancing mutual understanding and recognition and laying a solid cultural foundation for furthering the initiative.

 

 

1) Diverse forms of cultural exchange. China and other B&R countries have hosted events such as arts festivals, film festivals, music festivals, cultural relics exhibitions, and book fairs, and have jointly launched new publishing, radio, film and television programs, as well as translating and introducing each other's media programs. The Silk Road International League of Theaters, Silk Road International Museum Alliance, Network of Silk Road Arts Festivals, Silk Road International Library Alliance, and Silk Road International Alliance of Art Museums and Galleries have been established. China, CEE countries, ASEAN countries, Russia, Nepal, Greece, Egypt, and South Africa have hosted activities to celebrate the cultures of B&R countries in different years, and developed about a dozen cultural exchange brands such as the "Silk Road Tour" and "Chinese/African Cultures in Focus". Major cultural festivals and expos have been launched such as the Silk Road (Dunhuang) International Cultural Expo, Silk Road International Arts Festival, and Maritime Silk Road International Arts Festival, and 17 Chinese culture centers have been set up in B&R countries. China has signed cooperation agreements on the protection of cultural heritage with Indonesia, Myanmar, Serbia, Singapore, and Saudi Arabia. Through a combined effort from China, Kazakhstan and Kyrgyzstan, Silk Roads: The Routes Network of Chang'an-Tian Shan Corridor has become a UNESCO World Heritage site. Steady progress has been made in the Belt and Road News Alliance. The Silk Road NGO Cooperation Network, with 310 members, has become an important platform for non-governmental cooperation.

 

 

2) Fruitful results in education and training. The Chinese Government Scholarship - Silk Road Program has been set up, and China has signed agreements with 24 B&R countries on the mutual recognition of higher education degrees. In 2017, 38,700 students from other B&R countries studied in China on scholarships provided by the Chinese government, accounting for 66 percent of all students receiving such scholarships. Other B&R scholarships are provided in the Hong Kong and Macao SARs. China has opened 153 Confucius Institutes and 149 Confucius Classrooms in 54 B&R countries. The Chinese Academy of Sciences offers scholarships in Master's and Doctorate programs to other B&R countries, and runs science and technology training courses which have trained some 5,000 students from other B&R countries.

 

 

3) Expanding cooperation in tourism. China has held joint year of tourism with many other B&R countries, initiating cooperation mechanisms such as the Silk Road Tourism Promotion Union, Maritime Silk Road Tourism Promotion Alliance, and Tea Road International Tourism Alliance. China has signed mutual visa exemption agreements for different types of passport with 57 B&R countries, and concluded 19 agreements or arrangements to streamline visa application procedures with 15 countries. In 2018 outbound Chinese tourists numbered 150 million, and inbound foreign tourists numbered 30.54 million. Russia, Myanmar, Viet Nam, Mongolia, Malaysia, the Philippines, and Singapore were the main sources of tourists for China.

 

 

4) Deeper cooperation in health and medicine. Since the first Belt and Road Forum for International Cooperation, China has signed 56 agreements on cooperation in the health sector with countries such as Mongolia and Afghanistan, international organizations such as the World Health Organization, and NGOs such as the Bill & Melinda Gates Foundation. In August 2017 the Belt and Road High-Level Meeting for Health Cooperation: Towards a Health Silk Road was held in Beijing, which issued the "Beijing Communiqué of the Belt and Road Health Cooperation". China has carried out cooperation on the prevention and control of AIDS, malaria, dengue, flu, and tuberculosis with Lancang-Mekong countries; on the prevention and control of echinococcosis, plague and other zoonoses with Central Asian countries; and on the prevention and control of polio with Western Asian countries. China has dispatched ophthalmology teams to Cambodia, Myanmar, Laos, and Sri Lanka to carry out the "Brightness Action" program, and shortterm medical teams to island countries such as Fiji, Tonga, Micronesia, and Vanuatu in the Pacific. It has established traditional Chinese medicine centers in 35 B&R countries, and 43 international TCM cooperation bases.

 

 

5) Ongoing effort in disaster relief, assistance, and poverty alleviation. Since the first Belt and Road Forum for International Cooperation, China has provided RMB2 billion in emergency food assistance to developing countries participating in the initiative, injected an additional US$1 billion to the South-South Cooperation Assistance Fund, and implemented 100 Happy Home Projects, 100 Anti-Poverty Projects, and 100 Health Recovery Projects. China has participated in 8 joint programs for the protection of cultural relics with 6 countries, and 15 joint archeological activities with 12 countries. China has provided Laos and other countries with seismic monitoring equipment to improve their early warning and disaster alleviation capacity. China has initiated 24 cooperation programs with civil society organizations in Cambodia and Nepal, in an effort to improve the lives of local people.

 

 

6. Industrial cooperation

The Belt and Road Initiative draws investment from diverse sources, encourages third-party market cooperation, and aims to build industry, supply, service, and value chains that benefit all and are shared by all, so as to provide new growth drivers for faster development in the participating countries.

 

 

1) Stable growth in China's direct investment in B&R countries. From 2013 to 2018 China's direct investment in B&R countries surpassed US$90 billion, realizing a turnover of US$400 billion in foreign contracted projects in these countries. In 2018 Chinese businesses made a total of US$15.6 billion in non-financial direct investment in B&R countries, growing by 8.9 percent year on year and accounting for 13 percent of China's total non-financial FDI during the same period. The turnover of foreign contracted projects in B&R countries reached US$89.3 billion, or 53 percent of the total turnover of foreign contracted projects in the same period. According to a World Bank study, the transportation network proposed by the Belt and Road Initiative can lead to a 4.97-percent increase in total FDI flows to B&R countries, a 4.36-percent increase in FDI flows within B&R countries, a 4.63-percent increase in FDI flows from OECD countries, and a 5.75-percent increase in FDI flows from non-B&R countries.

 

 

2) Steady progress in international cooperation on industrial development and third-party markets. As faster growth in B&R countries has generated huge market demands on international industrial cooperation, China has taken active measures to boost market-oriented industrial cooperation with relevant countries in all areas, so as to upgrade the industrial structure and raise the level of industries in these countries. Currently China has signed agreements on industrial cooperation with more than 40 countries including Kazakhstan, Egypt, Ethiopia, and Brazil. It has dovetailed industrial cooperation programs with regional organizations such as the ASEAN, African Union, and CELAC. China has signed third-party market cooperation agreements with France, Italy, Spain, Japan, and Portugal.

 

 

3) Vigorous development in cooperation parks and zones. Applying market principles and complying with laws, Chinese businesses of all types have joined in the development of cooperation parks and zones in other B&R countries, sharing China's best practices and the experience it has gained in development zones and industrial parks during reform and opening up. In addition to promoting the local economy, these have also created new sources of tax revenue and jobs in the countries involved. China has established the China-Kazakhstan Khorgos International Border Cooperation Center, and the China-Laos Mohan-Boten Cross-Border Economic Cooperation Zone; more cross-border economic cooperation zones with other countries are being planned or built.

 

--------------------------------------------------------------

 


Source: This article is an English version summary of the full text of a report titled "The Belt and Road Initiative: Progress, Contributions and Prospects" released by the Office of the Leading Group for Promoting the Belt and Road Initiative, April 2019.

Chi­na’s Mo­bile Pay­ments Mar...

Chi­na’s Mo­bile Pay­ments Mar­ket, simply upwards.
China is steadily marching toward a cashless society, enabled by Alibaba’s Alipay and Tencent’s WeChat Pay. Those two leading payment systems have introduced QR code-backed payments into the daily habits of consumers. Proximity mobile payments are now ubiquitous for purchases in apparel stores to supermarkets to convenience stores.
 
 

How many people in China use proximity mobile payments?

Proximity mobile payment users in China grew by 10.0% in 2019 to reach 577.4 million (by far the largest in the world). While 81.1% of smartphone users use proximity mobile payments, penetration is much lower (49.6%) among the overall population, meaning this market still has room for further growth.

 

 

What are the leading proximity mobile payment service providers in China?

Alipay, owned by Alibaba affiliate Ant Fi­nan­cial’s Ali­pay con­tin­ues to re­main the lead­ing force in Chi­nese mo­bile pay­ments, with a 54.5% mar­ket share, whilst Ten­cent comes in sec­ond on the back of its WeChat Pay plat­form, with a mar­ket share of 39.5%
 
 

Why are proximity mobile payments so popular in China?

Two primary factors have led to consumers in China embracing mobile payments; 1) China is a mobile-first market, meaning most internet users’ first device was a mobile phone; 2) Credit card ownership was low when mobile options Alipay and WeChat Pay were first introduced.

 

 

What are the opportunities for more adoption of proximity mobile payments?

It is worth noting that even in China, the mobile payments revolution is far from complete. Importantly, rural China has yet to join the digital transformation. A 2016 study found that 46 percent of respondents in northwest rural China had a smartphone, but that only 11 percent of respondents had tried mobile financial services. While these numbers are improving, Alipay and WeChat Pay will need to adapt their approaches if they are to have success in rural areas. The challenges to convert those groups to switch to a mobile payment system will require consumer education, product adoption and infrastructure investment.
 
 
 
Effect of the new digital e-RMB
 
The Chinese government has been testing out its new government-backed digital currency as a pilot program in Shenzhen, Suzhou, Chengdu, and Xiong’an. The e-RMB represents a digital yuan that is backed by the government and is stored in a digital wallet instead of a bank account and will be competing with other digital currencies already used in China
 
 
One of the reasons for this new digital currency push could be a chance for the government to oversee and have greater oversight on mobile app purchases & transactions. Chinese government also does not want monopolization of digital currencies by tech giants. Last year, People’s Bank of China Governor Yi Gang said: “Those big tech companies bring to us a lot of challenges and financial risks … You see: In this game, winners take all, so monopolies are a challenge.”


 

Whisky Galore! The growth of Scotch...

Whisky Galore! The growth of Scotch Whisky in China

Whisky is a rapidly growing segment of the higher-end spirits market in China. Demand continues to increase among the urbanized and high-income consumers, especially young adults. The Chinese perceive whisky as a dynamic, international and sophisticated drink. According to Diageo more than 200 whisky bars opened throughout China in 2018. China is an important emerging market for the Scotch whisky industry. From 2000 to 2018, the value of direct exports to China has grown from under £10 million (US$12.5 million) to around £76 million (US$95.5 million) in 2019. The lowered tariff of 5% from 10% was a further boost to the industry, which was already benefiting from soaring sales.

 

 

Significantly in 2018, China renewed its trademark protection for Scotch whisky, valid until 2028. This is to protect the category from local counterfeit products (since 2008, the Scotch Whisky Association (SWA) has fought more than 100 trademarks cases). The SWA remains confident that Scotch whisky would be given special recognition in the Chinese market as a product of Scotland. The protection means that any bottle of spirit sold in China labelled "Scotch whisky", or bearing a Chinese translation with the same meaning, must have been produced in Scotland using methods that distillers have perfected over centuries.

 

 

Quality Brands

Rather than compete on price at the lower end of the market, distilleries and sellers prefer to focus on educating the Chinese consumers on the different types of whiskies and Premium brands. The high prices of Scotch whisky speak of prestige and quality that the brand-conscious consumers of China like. Whiskies sold in China typically cost around 300 RMB - 550RMB (US$45-US$85) per bottle. Target customers are the younger, upper-middle class with a hankering for heritage luxury brands.

 

 

Popular Brands of Scotch Whisky in China

Top Blended brands: Chivas Regal, Johnnie Walker Red/Black, Ballantine’s Finest & Dewer’s  

Top Malt brands: The Macallan, Glenmorangie, Glenfiddich

 

 

And the major Groups in China

Edrington

Edrington is one of the biggest exporters of Scotch whisky to China. In 2003, the company decided to open a representative office in the country to better cater to its growing customers. The Shanghai office also serves as Edrington’s headquarter for its markets in the Asia Pacific region, including Taiwan, Hong Kong, Korea, Japan, Australia and New Zealand. Part of its portfolio are brands like The Macallan, The Famous Grouse, Highland Park and The Glenrothes.

 

 

Loch Lomond Group

In 2017, the Loch Lomond Group secured a major distribution deal with one of China’s food and beverage giants, COFCO. The partnership was part of the distillery’s bid to expand its reach in the country. The Loch Lomond Group is one of Scotland’s oldest whisky producers. Its full range of whiskies, which include Loch Lomond, Glen Scotia and Littlemill, are currently available throughout China.

 

 

Speyside Distillery

Speyside Distillery recently signed a distribution deal with Luzhou Laojiao International Development to increase the production of its single malt whisky. This is expected to see an output of 1 million liters in a year to meet the surging demand for Scotch whisky in the region. Luzhou Laojiao also distributes the distillery’s Spey and Beinn Dubh brands in duty-free outlets across China.

 

 

William Grant and Sons

In 2005, William Grant & Sons set up a distribution and marketing base in Shanghai to tap further into the country’s growing market of malt whisky drinkers. Two of its brands, Glenfiddich and The Balvenie, remain popular among Chinese consumers. The portfolio of the family-owned distillery also includes Girvan, Kininvie and blended whisky brands like Grant’s and Monkey Shoulder.

 

 

Diageo

British multinational alcoholic beverages company Diageo is one of the biggest producers of Scotch whisky, controlling one-third of the total production. Aside from its world popular Johnnie Walker blends, it owns other brands like Lagavulin, Mortlach and Talisker. In 2019, Diageo reported that its organic net sales in China increased by 20%, helped by strong demand for Scotch whisky.

 

 

 

Pernod Ricard

Pernod Ricard, the French alcohol giant, owns a number of distilleries in Scotland. The company, alongside Diageo, controls around 55% of the Scotch whisky market. Some of its massive portfolio includes Chivas Regal blended whiskies, Glenlivet and Aberlour. Pernod Ricard has been aggressively expanding its portfolio in China, recently introducing a new Chivas range, the Chivas Extra 12.

Huawei Goes All-In on Computing Power...

Huawei Goes All-In on Computing Power To Rival Google, Amazon

By Xue YueJie, Sixth Tone

Huawei, the world’s largest supplier of telecom equipment and a polarizing pioneer of 5G technology, is now gearing up to compete in the field of cloud computing against tech giants like Amazon, Google, Tencent, and Alibaba.

 

 

At Huawei Connect 2019, the company’s annual flagship event that kicked off Wednesday, Huawei underlined its commitment to advancing computing power by announcing several breakthroughs — including what it calls “the world’s fastest AI training cluster,” the Atlas 900, a network of 1,024 of Huawei’s own Ascend-brand AI processors — and pledging $1.5 billion to attract developers to its computing platforms.

 



“When most people think Huawei, they think connections,” said Ken Hu, Huawei’s deputy chairman, in his keynote kickstarting the three-day event. “But our work doesn't stop at connectivity. If our goal is to build an intelligent world, both connections and computing are key.”

 

 

Cloud computing is the use of a network of remote servers to store, manage, and process data, rather than a local server or a personal computer. Commercial cloud computing services make these vast pools of computing power accessible to developers for a wide range of purposes, including data analysis and storage.

 

 

Although it is a global leader in the telecommunications industry, Huawei is a relative newcomer to cloud computing, having entered the field just two years ago with the establishment of a dedicated cloud business unit. Since then, the company has charged ahead at full speed. At last year’s Huawei Connect, the company’s rotating chairman, Eric Xu, announced Huawei's first AI strategy, with a focus on research and making powerful, cost-effective computing resources for a range of devices and platforms. In August, the company announced the Ascend 910 — the world’s fastest AI chip — as well as a new AI computing framework called MindSpore.

 

 

Huawei’s interest in new networked computing technologies is understandable given its AI ambitions. According to Moore’s law, traditional processor speeds should double every 18 to 24 months. The extreme computing needs of AI algorithms mean the industry operates on a much faster timeline. A 2018 report from San Francisco-based AI research firm OpenAI found that over the past seven years, the computing needs of cutting-edge AI algorithms have doubled roughly every 3.5 months. “Since we’re reaching the limits of Moore’s law, if the industry wants to provide a steady and abundant supply of affordable computing power, we need to make breakthroughs in processor architecture,” Hu said.

 



Citing data from research and advisory firm Gartner, Hu said the global computing market is projected to be worth more than $2 trillion by 2023. He also estimated that in five years, AI computing will account for more than 80% of all computing power used around the world, and said the company will invest heavily in new processor architecture targeting a wide range of devices, including its Ascend line and Kirin-brand mobile chipsets.

 

 

The latest fruit of this strategy, the Atlas 900, is designed to boost the company’s cloud computing efforts. An AI training cluster, it consists of a collection of many individual computers, called nodes, which are then connected to provide greater computational power. Compared to a single device, clusters provide faster processing speeds, more storage, and are more reliable.

 

 

According to Huawei, the company trained the Atlas 900 in the ResNet-50 architecture — a deep neural network for image recognition that is often used as a benchmark to measure deep learning processing speed — in just 59.8 seconds, 10 seconds faster than the previous world record. Hu said the company hopes the Atlas 900 will be a game-changer for computing, opening up new possibilities in scientific research and business innovation.

 

 

Hu also said Huawei plans to invest an additional $1.5 billion to beef up its developer platform, which will be expanded to accommodate 5 million developers worldwide. On Thursday, the company, which is under increasing scrutiny internationally for its supposed links to the government, announced its Mate 30 line of smartphones — the first to be released outside China without Google’s proprietary apps after the United States added Huawei to a trade blacklist in May.

 

 

Globally, the cloud computing industry is dominated by Amazon, Microsoft, and Google, which controlled a combined 57% of the cloud computing market in 2018, according to research firm Canalys. The next biggest player, Alibaba, had just 4% of the global market. Data from market intelligence firm IDC put Huawei's share of China’s domestic cloud computing market at 5.2% in the first quarter of 2019, leaving the company fifth behind Alibaba, Tencent, China Telecom, and Amazon.

 

 

“Best case, Huawei entering the computing industry could help boost healthy competition, pushing top players like Nvidia and Google to step up their game,” Zhang Heng, a tech analyst and lecturer at Chongqing University of Posts and Telecommunications, told Sixth Tone.

 

 

But the fact that Huawei’s servers and data centers are located on the Chinese mainland limits Huawei’s appeal in overseas markets, Zhang noted, and this could pose a challenge to the company’s global ambitions.

 

 

In the domestic market, however, Huawei remains formidable. “China’s market is still very big,” Zhang said. “And due to Huawei’s high cost-effectiveness and market standing, local governments, universities, research institutes, and price-sensitive enterprises could be the first batch to consider making the switch to Huawei.”

A profile of the Chinese healthcare...

A profile of the Chinese healthcare system

China achieves near-universal coverage through the provision of publicly funded basic medical insurance. The urban employed are required to enroll in an employment-based program, which is funded primarily via employer and employee payroll taxes. Other residents can voluntarily enroll in Urban-Rural Resident Basic Medical Insurance, financed primarily by central and local governments through individual premium subsidies. Local health commissions organize public and private health care organizations to deliver services. The basic medical insurance plans cover primary, specialty, hospital, and mental health care, as well as prescription drugs and traditional Chinese medicine. Deductibles, copayments, and reimbursement ceilings apply. There is no annual cap on out-of-pocket spending. Complementary private health insurance helps cover cost-sharing and coverage gaps.

 

 

How does universal health coverage work?

China largely achieved universal insurance coverage in 2011 through three public insurance programs:

 

 

  • Urban Employee Basic Medical Insurance, mandatory for urban residents with formal jobs, was launched in 1998.
  • The voluntary Newly Cooperative Medical Scheme was offered to rural residents in 2003.
  • The voluntary Urban Resident Basic Medical Insurance was launched in 2007 to cover urban residents without formal jobs, including children, the elderly, and the self-employed.

 

 

In 2016, China’s central government, the State Council, announced that it would merge the Newly Cooperative Medical Scheme and Urban Resident Basic Medical Insurance to expand the risk pool and reduce administrative costs. This consolidation is still underway. The combined public insurance program is now called Urban-Rural Resident Basic Medical Insurance.

 

Because China has a huge population, insurance coverage was increased gradually. In 2011, approximately 95 percent of the Chinese population was covered under one of the three medical insurances. Insurance coverage is not required in China.

 

 

Role of government:

China’s central government has overall responsibility for national health legislation, policy, and administration. It is guided by the principle that every citizen is entitled to receive basic health care services. Local governments — provinces, prefectures, cities, counties, and towns — are responsible for organizing and providing these services.

 

Both national and local health agencies and authorities have comprehensive responsibilities for health quality and safety, cost control, provider fee schedules, health information technology, clinical guidelines, and health equity.

 

 

Role of public health insurance:

In 2018, China spent approximately 6.6 percent of GDP on health care, which amounts to CNY 5,912 billion (USD 1,665 billion). Twenty-eight percent was financed by the central and local governments, 44 percent was financed by publicly funded health insurance, private health insurance, or social health donations, and 28 percent was paid out-of-pocket.

 

Urban Employee Basic Medical Insurance is financed mainly from employee and employer payroll taxes, with minimal government funding. Participation is mandatory for workers in urban areas. In 2018, 316.8 million had employee-based insurance. The base of the employee payroll tax contribution is capped at 300 percent of the average local salary; individual payroll above this level is not taxed. In most provinces, individual tax rates are about 2 percent. Tax rates for employers vary by province. The base for employer contributions is the sum of employees’ payrolls. Workers’ nonemployed family members are not covered.

 

Urban-Rural Resident Basic Medical Insurance covers rural residents and urban, self-employed individuals, children, students, elderly adults, and others. The insurance is voluntary at the household level. In 2018, 897.4 million were covered under the two insurance schemes (the rural plan and the urban nonemployed plan) that make up this program.

 

Urban-Rural Resident Basic Medical Insurance is financed through annual fixed premiums. Individual premium contributions are minimal, and government subsidies for insurance premiums make up the majority of insurer revenues. In regions where the economy is less developed, the central government provides a much larger share of subsidies than provincial and prefectural governments. In more-developed provinces, most subsidies are locally provided (mainly by provincial governments).

 

The few permanent foreign residents are entitled to the same coverage benefits as citizens. Undocumented immigrants and visitors are not covered by publicly financed health insurance.

 

 

Role of private health insurance:

Purchased primarily by higher-income individuals and by employers for their workers, private insurance can be used to cover deductibles, copayments, and other cost-sharing, as well as to provide coverage for expensive services not paid for by public insurance.

 

No statistics are available on the percentage of the population with private coverage. Private health insurance is provided mainly by for-profit commercial insurance companies.

 

The total value of private health insurance premiums grew by 28.9 percent per year between 2010 and 2015.6 In 2015, private health insurance premiums accounted for 5.9 percent of total health expenditures. The Chinese government is encouraging development of the private insurance market, and some foreign insurance companies have recently entered the market.

 

Services covered: The benefit package is often defined by the local governments. Publicly financed basic medical insurance typically covers:

 

 

  1. inpatient hospital care (selected provinces and cities)
  2. primary and specialist care
  3. prescription drugs
  4. mental health care
  5. physical therapy
  6. emergency care
  7. traditional Chinese medicine.

 

 

A few dental services (such as tooth extraction, but not cleaning) and optometry services are covered, but most are paid out-of-pocket. Home care and hospice care are often not included either. Durable medical equipment, such as wheelchairs and hearing aids, is often not covered.

 

Preventive services, such as immunization and disease screening, are included in a separate public-health benefit package funded by the central and local governments; every resident is entitled to these without copayments or deductibles. Coverage is person-specific; there are no family or household benefit arrangements.

 

Maternity care is also covered by a separate insurance program; it is currently being merged into the basic medical insurance plan.

 

 

Cost-sharing and out-of-pocket spending:

Inpatient and outpatient care, including prescription drugs, are subject to different deductibles, copayments, and reimbursement ceilings depending on the insurance plan, region, type of hospital (community, secondary, or tertiary), and other factors:

 

 

  • Copayments for outpatient physician visits are often small (CNY 5–10, or USD 2–3), although physicians with professor titles have much higher copayments.
  • Prescription drug copayments vary; they were about 50 percent to 80 percent of the cost of the drug in Beijing in 2018, depending on the hospital type.
  • Copayments for inpatient admissions are much higher than for outpatient services.

 

 

There are no annual caps on out-of-pocket spending. In 2018, out-of-pocket spending per capita was CNY 1,186 (USD 262)—representing about 28 percent of total health expenditures.8 A fairly high percentage of out-of-pocket spending is for prescription drugs.

 

The public insurance programs only reimburse patients up to a certain ceiling, above which residents must cover all out-of-pocket costs. Reimbursement ceilings are significantly lower for outpatient care than for inpatient care. For example, in 2018, the outpatient care ceiling was CNY 3,000 (USD 845) for Beijing residents under Urban-Rural Resident Basic Medical Insurance. In comparison, the ceiling for inpatient care was CNY 200,000 (USD 56,338). Annual deductibles have to be met before reimbursements, and different annual deductibles may apply for outpatient and inpatient care.

 

Preventive services, such as cancer screenings and flu vaccinations, are covered by a separate public health program. Children and the elderly have no copayments for these services, but other residents have to pay 100 percent of these services out-of-pocket.

 

People can use out-of-network health services (even across provinces), but these have higher copayments.

 

 

Safety nets:

For individuals who are not able to afford individual premiums for publicly financed health insurance or cannot cover out-of-pocket spending, a medical financial assistance program, funded by local governments and social donations, serves as a safety net in both urban and rural areas.

 

The medical financial assistance program prioritizes catastrophic care expenses, with some coverage of emergency department costs and other expenses. Funds are used mainly to pay for individual deductibles, copayments, and medical spending exceeding annual benefit caps, as well as individual premiums for publicly financed health insurance. In 2018, 76.7 million people (approximately 5.5% of the population) received such assistance for health insurance enrollment, and 53.6 million people (3.8% of the population) received funds for direct health expenses.

 

 

How is the delivery system organized and how are providers paid?

Physician education and workforce:

The number of physicians is not regulated at the national level, and the government is trying to encourage more people to complete medical school. All the medical schools are public. Tuition varies by region, ranging from CNY 5,000 (USD 1,408) to CNY 10,000 (USD 2,816) per year. Tuition is heavily subsidized by the government.

 

To ensure a supply of medical providers in rural or remote areas, China waives tuition and lowers entrance qualifications for some medical students. Medical students who attend these education programs must work in rural or remote areas for at least six years after graduation.

 

Primary care: Primary care is delivered primarily by:

 

 

  1. Village doctors and community health workers in rural clinics
  2. General practitioners (GPs) or family doctors in rural township and urban community hospitals
  3. Medical professionals (doctors and nurses) in secondary and tertiary hospitals.

 

 

In 2018, there were 506,003 public primary care facilities and 437,636 private village clinics. Village doctors, who are not licensed GPs, can work only in village clinics. In 2018, there were 907,098 village doctors and health workers. Village clinics in rural areas receive technical support from township hospitals.

 

Patients are encouraged to seek care in village clinics, township hospitals, or community hospitals because cost-sharing is lower at these care sites than at secondary or tertiary hospitals. However, residents can choose to see a GP in an upper-level hospital. Signing up with a GP in advance is not required, and referrals are generally not necessary to see outpatient specialists. There are few localities that use GPs as gatekeepers.

 

In 2018, China had 308,740 licensed and assistant GPs, representing 8.6 percent of all licensed physicians and assistant physicians. Unlike village doctors and health workers in the village clinics, GPs rarely work in solo or group practices; most are employed by hospitals and work with nurses and nonphysician clinicians, who are also hospital employees.

 

Nurses and nonphysician clinicians are sometimes employed as care managers or coordinators to assist GPs in treating patients with chronic illnesses or complex needs. Care coordination is generally not incentivized well, although it is always encouraged by health authorities.

 

Fee schedules for primary care in government-funded health institutions are regulated by local health authorities and the Bureaus of Commodity Prices. Primary care doctors in public hospitals and clinics cannot bill above the fee schedule. To encourage nongovernmental investment in health care, China began allowing nonpublic clinics and hospitals to charge above the fee schedule in 2014.

 

Village doctors and health workers in village clinics earn income through reimbursements for clinical services and public health services like immunizations and chronic disease screening; government subsidies are also available. Incomes vary substantially by region. GPs at hospitals receive a base salary along with activity-based payments, such as patient registration fees. With fee-for-service still the dominant payment mechanism for hospitals (see below), hospital-based physicians have strong financial incentives to induce demand. It is estimated that wages constitute only one-quarter of physician incomes; the rest is thought to be derived from practice activities. No official income statistics are reported for doctors.

 

In 2018, 42 percent of outpatient expenses and 28 percent of inpatient expenses, on average, were for prescription drugs provided to patients in hospitals.

 

 

Outpatient specialist care:

Outpatient specialists are employed by and usually work in hospitals. Most specialists practice in only one hospital, although practicing in multiple settings is being introduced and encouraged in China. Specialists receive compensation in the form of a base salary plus activity-based payments, with fee schedules set by the local health authorities and Bureaus of Commodity Prices.

 

Patients have a choice of specialist through their hospital. Outpatient specialists are paid on a fee-for-service basis through the hospitals in which they work, and specialist doctors in the public hospitals cannot bill above the fee schedule.

 

Administrative mechanisms for direct patient payments to providers: Patients pay deductibles and copayments to hospitals for primary care and specialty physician office visits, and for hospital admissions at the point of service. Hospitals bill insurers directly for the remaining covered payment at the same time through electronic billing systems.

 

 

After-hours care:

Because village doctors and health workers often live in the same community as patients, they voluntarily provide some after-hours care when needed. In addition, rural township hospitals and urban secondary and tertiary hospitals have emergency departments (EDs) where both primary care doctors and specialists are available, minimizing the need for walk-in, after-hours care centers. In EDs, nurse triage is not required and there are few other restrictions, so people can simply walk in and register for care at any time. ED use is not substantially more expensive than usual care for patients.

 

Information on patients’ emergency visits is not routinely sent to their primary care doctors. Patients can call 120 or 999 for emergency ambulance services at any time.

 

 

Hospitals:

Hospitals can be public or private, nonprofit or for-profit. Most township hospitals and community hospitals are public, but both public and private secondary and tertiary hospitals exist in urban areas.

 

Rural township hospitals and urban community hospitals are often regarded as primary care facilities, more like village clinics than actual hospitals.

 

In 2018, there were approximately 12,000 public hospitals and 21,000 private hospitals (excluding township hospitals and community hospitals), of which about 20,500 were nonprofit and 12,600 were for-profit.

 

The National Health Commission directly owns some hospitals in Beijing, and national universities (directly administrated by the Ministry of Education) also own affiliated hospitals. Local government health agencies in each province may have a similar structure and often own provincial hospitals.

 

Hospitals are paid through a combination of out-of-pocket payments, health insurance compensation, and, in the case of public hospitals, government subsidies. These subsidies represented 8.5 percent of total revenue in 2018.

 

Although fee-for-service is the dominant form of provider payment, diagnosis-related group (DRG) payments, capitation, and global budgets are becoming more popular for inpatient care in selected areas. Pay-for-performance is rare. Local health authorities set fee schedules, and doctors’ salaries and other payments are included in hospital reimbursements. There are no special allowances for the adoption of new technologies.

 

 

Mental health care:

Diagnosis, treatment, and rehabilitation of mental health conditions is provided in special psychiatric hospitals and in the psychology departments of tertiary hospitals. Patients with mild illnesses are often treated at home or in the community clinics; only severely mentally ill patients are treated in psychiatric hospitals. Mental health care is not integrated with primary care.

 

Outpatient and inpatient mental health services are covered by both public health insurance programs (Urban Employee Basic Medical Insurance and Urban-Rural Resident Basic Medical Insurance). In 2018, there were 42 million mental health patient visits to special psychiatric hospitals; on average, one psychiatrist treated 4.7 patients per day.

 

Long-term care and social supports: Long-term care and social supports are not part of China’s public health insurance.

 

In accordance with Chinese tradition, long-term care is provided mainly by family members at home. There are very few formal long-term care providers, although private providers (some of them international entities) are entering the market, with services aimed at middle-class and wealthy families. Family caregivers are not entitled to financial support or tax benefits, and long-term care insurance is virtually nonexistent; expenses for care in the few existing long-term care facilities are paid almost entirely out-of-pocket.

 

The government has designated 15 cities as pilot sites for long-term care insurance, with the aim of developing a formal national policy framework by 2020. Local governments often provide some subsidies to long-term care facilities.

 

On average, conditions in long-term care facilities are poor, and there are long waiting lists for enrollment in high-end facilities. Formal long-term care facilities usually provide housekeeping, meals, and basic services like transportation, but very few health services. Some, however, may coordinate health care with local township or community hospitals.

 

Governments encourage the integration of long-term care with other health care services, particularly those funded by private investment. There were 3.8 million beds for aged and disabled people in 2016. Some hospice care is available, but it is normally not covered by health insurance

 

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Source: The Commonwealth Fund

 

Legal system of the PRC related to Busin...

Legal system of the PRC related to Business debt

In China, the courts are divided into the Supreme People’s Court, the High People’s Courts, the Intermediate People’s Courts and the Basic People’s Courts. Generally, the Basic People’s Courts have jurisdiction as courts of first instance over civil cases. The Intermediate People’s Courts have jurisdiction as courts of first instance over civil cases that have major impacts on the area under their jurisdiction. The High People’s Courts have jurisdiction as courts of first instance over civil cases that have major impact on the areas under their jurisdiction. The Supreme People’s Court has the right to give interpretation of questions concerning specific applications of laws and decrees in judicial proceedings.

 

 

Supreme People’s Court

High People’s Courts

Intermediate People’s Courts

Basic People’s Courts

 
 

Required documents

The following conditions must be met when a lawsuit is filed:

  •   The plaintiff must be a citizen, legal person or any organisation that has a direct interest in the case.
  •   There must be a definite defendant.
  •   There must be a specific claim or claims, facts and a cause or causes for the suit.
  •   The name, gender, age, ethnic status, occupation, work unit and home address of the parties must be provided. If the parties are legal persons or any other organisations, their names, addresses and the names and posts of the legal representatives or the principal heads must be provided.
  •   The evidence and its source, as well as the names and home addresses of the witnesses, must be provided. Original documents do not need to be provided.

 

When a lawsuit is filed, copies of statements as well as other evidence will be provided depending on the number of defendants in court.

 

 

Legal dunning procedure

When a creditor requests payment of a debt or recovery of negotiable instalments from a debtor, they may, if the following requirements are met, apply to a Basic People’s Court that has jurisdiction for an order of payment.

  •   No other debt disputes exist between the creditor and the debtor
  •   The order of payment can be served on the debtor.

 

 

China are the most credit-averse country with less than 40% of the business-to-business transactions made on credit.

The debtor will, within 15 days after receipt of the order of payment, clear off their debts or submit to the people’s court their dissent in writing. If the debtor has neither dissented from nor complied with the order of payment within 15 days, the creditor may apply to the people’s court for execution. The order of payment is effective only when the debtor has failed to submit a dissent in writing within 15 days. Once such a dissent is submitted, the order of payment will be terminated and the creditor will take action.

 

 

Lawsuit

A lawsuit can only be initiated by a creditors.

Generally, a civil lawsuit brought against a citizen will be under the jurisdiction of the people’s court in the area where the defendant lives. If the place of the defendant’s address is different from that of the defendant’s usual residence, the lawsuit will be under the jurisdiction of the people’s court of the place of the defendant’s habitual residence.

A civil lawsuit brought against a legal person or any other organisation will be under the jurisdiction of the people’s court of the place where the defendant has their domicile. A lawsuit brought on a contract dispute will be under the jurisdiction of the people’s court at the place where the defendant has their domicile or where the contract is

 

 

Appeal

If a party disagrees with a judgment made by a local people’s court at first instance, the party has the right to lodge an appeal with the immediate superior people’s court within 15 days from the date when the written judgment was served. When filing an appeal, a petition for the purpose will be submitted. The content of the appeal petition will include the names of the parties, the names of the legal persons and their legal representatives or names of other organisations and their principal heads, the name of the people’s court where the case was originally tried, the file number of the case and the cause of action, and the claims of the appeal and the reasons.

 

 

Expected time frame

When a case is tried according to a summary procedure, the people’s court will conclude the trial within three months from the date of entering it on its trial docket. When a case is handled according to an ordinary procedure, the people’s court will conclude the case within six months from the date of accepting it. When an extension of the period is necessary under special circumstances, a six-month extension may be allowed subject to the approval of the president of the court. Further extension, if needed, will be reported to the people’s court at a higher level for approval. The case on appeal will be concluded within three months after being docketed by the people’s court.

 

 

Interest and costs in the legal phase

Interest and costs in the legal phase can be claimed as well with the same rate set by the People’s Bank of China, plus 30% to 50% (the Reply of Supreme People’s Court on the Calculation Standard of Late Payment Penalty).

 

 

Enforcement of debt

The parties concerned must comply with legally effective judgments or written orders in civil cases. If a party refuses to do so, the other party may apply to the people’s court for execution, or the judge may refer the matter to the execution officer for enforcement. All fees arising from the enforcement will be borne by the debtor, and the applicant does not have to pay such fees.

Enforcement in movable property and immovable property
If the debtor subjected to execution fails to fulfil the obligations according to the execution notice and the obligations specified in the legal document, the people’s court will be empowered to make inquiries with the banks, credit cooperatives or other units that deal with saving into the accounts of the debtor and will be empowered to freeze or transfer deposits. If the debtor subjected to execution fails to fulfil the obligations specified in the legal document, the people’s court will be empowered to seal up, freeze, sell by public auction or sell off part of the property of the debtor for the fulfilment of their obligations.

 

 

Costs

Any party filing a civil lawsuit will pay the court costs according to the rules. In most cases, the litigation fees are borne by the losing party.

 

 

Expected time frame

The time frame for enforcement is usually less than six months, but it can be extended when necessary after being approved by the president of the court.

 

--------------------------------

 

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70MW floating solar farm, a world first...

70MW floating solar farm, a world first.

Chinese state-owned developer CECEP has completed a 70MW floating solar project - the largest in the world - at a former coal-mining area of Anhui Province, China, in collaboration with French floating solar specialist Ciel & Terre.

 

 

China is the world's top investor in renewable energy, having committed $698 billion (£551.4bn) in renewables capacity between 2010 and the first half of 2019 according to a UN-backed report. However, this project will soon be overtaken. Rival developers Three Gorges New Energy have already partially connected a 150 megawatt floating solar farm, also in Anhui, which will be the world's largest when fully commissioned.

 

 

The project, spread across 13 separate islets on an area of 140 hectares, was completed in late 2018, with grid-connection, tests and commissioning carried out this month at the project site in the Lianghuai mining subsidence area, Yongqiao District, Suzhou City.

 

 

EPC services were provided by China Energy Conservation Solar Technology and the China Energy Engineering Group Shanxi Electric Power Design Institute. A brand new 18km 110V overhead line was also built for the grid connection of the plant, which is expected to generate up to 77,693MWh of electricity in its first year, equivalent to the power consumption of nearly 21,000 households. While the complete facility in Anhui is said to currently be the largest floating PV plant on the same reservoir in the world, nearby, China-based firm Three Gorges New Energy has already partially connected a 150MW floating PV project to the grid, which will become the largest plant globally once fully commissioned.

 

 

Equipment

The CECEP system was built using Ciel & Terre's Hydrelio floats, which are locally produced to minimize emissions, optimise logistics costs and offer local employment. The project uses monocrystalline modules from Chinese manufacturer LONGi Solar, as confirmed by a C&T spokesperson to PV Tech. Central inverters have also been put on stilt platforms on the shoreline of the quarry lake so as not to interfere with neighbouring farm activity. Concrete poles support the electrical installation and 1,500 helical anchors were used for the project and buried at an 8-15 metre-depth to match the water body.

 

 

Ciel & Terre has already supplied its floating structure solution to GCL's 32MW FPV plant in Anhui province. It has also recently supplied a 9.8MW PV project featuring rooftop and floating elements in Cambodia.

 

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Source: Tom Kenning, for PVTech.

PRC Cyberspace Security Law

PRC Cyberspace Security Law

The Cyber Security Law is the first national-level legislation establishing principles for the protection of the People’s Republic of China’s cyberspace security and the law is intended to address, amongst others, the need to control China’s critical information infrastructure (CII) and its data. The law focuses on the security challenges facing information infrastructure in a range of critical sectors, such a telecommunications, energy, transportation and finance and addresses unlawful cyber activities including illegally obtaining or selling personal information, disseminating malicious software or prohibited information, and online fraud.

 

 

The PRC Cybersecurity Law generally imposes obligations on three types of entities: 1. network operators; 2. critical information infrastructure operators; and 3. providers of network products and services.

 

 

Network Operators

The PRC Cybersecurity Law imposes a range of cybersecurity obligations on “network operators,” which are defined as owners and administrators of networks and network service providers. A “network” is defined as any system comprising computers or other information terminals and related equipment for collection, storage, transmission, exchange, and processing of information. On its face, the term network operator could broadly be interpreted to encompass any company that uses a network to do business in China despite not having a physical presence in China.

 

 

Generally, network operators must:

  • Develop internal security management systems and procedures, appoint personnel responsible for network security, and implement network security protection responsibility.
  • Adopt measures to prevent viruses, network attacks, network intrusions, and other threats to network security.
  • Monitor and record network activity and security incidents, and store network logs for at least six months.
  • Implement measures to classify, back up, and encrypt data.
  • Network operators must also provide “technical support and assistance” to law enforcement authorities to safeguard national security and investigate crimes. The term “technical support” is not formally defined, and it remains to be seen whether this includes providing backdoor and decryption assistance for encrypted data. To the extent it does, it will permit government access to data stored and potentially to data transferred (such as data in motion) in the PRC.

 

 

Critical Information Infrastructure Operators

Critical information infrastructure (CII) operators are defined as entities providing services that, if lost or destroyed, would endanger China’s national security, economy, or public interest. The PRC Cybersecurity Law lists public communication and information services, energy, finance, transportation, water conservation, public services, and e-government as examples of CII.

 

 

CII operators are subject to the same cybersecurity requirements applicable to network operators as outlined above. CII operators must also sign security and confidentiality agreements with their suppliers of network products and services, and evaluate cybersecurity and other potential risks at least once a year.

 

 

Providers of Network Products and Services

Providers of network products and services must comply with relevant national and industry standards and ensure the security of their products. Products determined to be “Critical Network Equipment and Network Security Products” are required to go through testing by accredited evaluation centers prior to being marketed in China.

 

 

Penalties for Non-Compliance

Failure to comply with the Cyber Security Law carries penalties, ranging from making corrections to fines and confiscation of unlawful gains. At the end of the spectrum lies temporary suspension of operations, closing down of websites, and revocation of relevant operation permits and the business license. The CAC and other related governmental departments are also entitled to take technical measures and other necessary actions to intervene and stop the transmission of data which is imported from sources outside of PRC and is prohibited by PRC laws from being released or transmitted.     

 

                

Cross-Border Transfers

One of the most significant and controversial provisions of the PRC Cybersecurity Law restricts the cross-border transfer of personal information and important data collected or generated through operations in China (collectively, Local Data). Specifically, a network operator may transfer Local Data outside of China only if it has a business need to do so and passes a security assessment.

 

 

The Scope of Local Data

Local Data subject to the cross-border transfer requirements consists of “personal information” and “important data.” Notably, the definition of “personal information” is not explicitly limited to information pertaining to Chinese citizens.

 

 

Security Assessments for Cross-Border Transfers

If a network operator wishes to transfer Local Data outside of China, it must undergo a security assessment. Self-assessments generally suffice for this requirement and must consider, among other factors:

  • The legality, legitimacy, and necessity of the cross-border transfer.
  • The amount, scope, type, and sensitivity of the data.
  • If the transfer involves personal information, whether data subjects have consented to the transfer.
  • The data recipient’s security capability, measures, and environment.
  • The risks associated with the data being leaked, damaged, tampered with, or misused after the data transfer or subsequent re-transfer.
  • The risks to national security, societal and public interests, and the individual lawful rights and interests after the cross-border transfer.

 

 

Prohibited Cross-Border Transfers

Cross-border transfers of Local Data are prohibited in the following circumstances:

  • The transfer does not comply with state laws, administrative regulations, or departmental rules.
  • Data subjects do not consent to a transfer involving personal information.
  • The transfer poses risks to China’s national security or public interests.
  • The transfer could endanger China’s security of national politics, territory, military, economy, culture, society, technology, information, ecological environment, resources, and nuclear facilities.
  • Other circumstances where the Chinese government determines that the data involved in the transfer is prohibited from being transferred offshore.

 

 

Implications

Businesses operating in China should evaluate how the PRC Cybersecurity Law might impact their operations and amend their policies and procedures as necessary. Companies should pay close attention to their data transfer practices to meet the new restrictions on cross-border transfers. Companies should also understand the implications of data localization requirements and the ability of the government to access private and proprietary data stored and transferred in China.

 

 

China Automotive Roundup 2018

China Automotive Roundup 2018

According to the China Association of Automobile Manufacturers (CAAM), domestic vehicle sales increased 3% year-on-year in 2017, to 28.88 million units, a sales increase far lower than the 10% rise seen in 2016. The slower growth was due to higher taxes on smaller cars and subsidy adjustments on electric vehicles. Passenger car sales, led by Volkswage, increased 1.4% (among those SUV sales rose by 13.3%, to 10.25 million units), while sales of minibuses/multi-purpose vehicles plunged 20% and 17% respectively. Commercial vehicles recorded robust demand with sales increasing 14%, to 4.16 million units. In 2018 it is expected that vehicle sales will increase as much as 5% year on-year.

 

 

Whilst Government of China views its automotive industry, including the auto parts sector, as one of the country’s pillar industries, Electric cars remain a promising segment, as the government still provides substantial subsidies to manufacturers, while customers are offered incentive and favourable discounts for purchasing. State-owned institutions are encouraged to buy more new energy vehicles. The electric car market grew 53.3% in 2017, to about 780,000 units, while sales increased 111.5% in H1 of 2018

 

 

However, concerns over overcapacity are rising, as there are currently more than 200 electric-vehicle projects in China with investment of over CNY 1,026 billion and a potential capacity of more than 21 million units, while the government-set target aims at just 7 million units on the road by 2025. In order to guide the industry, the Chinese state is gradually reducing subsidies. Stricter rules are also set to raise the subsidy threshold, which will force automakers to increasingly convert themselves into hi-tech companies with core competencies. In this way, low-cost manufactures will leave the stage.

 

 

It seems that the Chinese car market is rather resilient in the light of the ongoing Sino-US trade dispute. Vehicle import and export volumes (1.25 million units and 1.06 million units respectively) are quite small compared to the industry output (29 million in 2017). The government has recently taken several measures to boost the automotive market. Since July 2018 import duties on vehicles have been slashed to 15% from 25%, while duties for car parts have been lowered to 6% from around 10%. The additional 25% tit-for-tat tariff is only imposed on products made in the USA. At the same time China announced it will ease limits on joint ventures within five years and open up the market to overseas carmakers. The rules will be loosened on electric cars this year, commercial vehicles by 2020 and passenger cars in 2022. All that should ensure a solid and steady performance of the domestic automotive market in the coming years. However, despite its resilience a major escalation of the current Sino-US trade dispute would surely impact the automotive business along with other sectors (e.g. potential deterioration of business and consumer sentiment).

 

 

New Energy Vehicles

Made in China 2025 is an initiative to upgrade the country’s industry from low cost mass production to higher value-added advanced manufacturing.  It prioritizes 10 sectors, including the auto sector (and NEVs). The initiative’s objectives are to sell one million units of domestically produced pure electric and plug-in hybrid cars in China by 2020, which should account for a minimum of 70% of the country’s market share. Moreover, it aims to sell three million domestic brand units by 2025, and account for a minimum of 80% of the country’s market share.

 

 

The NEV market in China is dominated by domestic brands including BAIC, BYD, and JAC.  A draft measure has been released for public comment that aims to set NEV production targets for both domestic and foreign automakers operating in the Chinese market.  Automakers that do not meet this target would need to purchase NEV credits from other automakers that exceeded it.

 

 

Recreational Vehicles


China’s RV market has undergone significant changes over the past several years, including a national focus on the development of tourism, campgrounds and the RV industry. With a growing demand for RVs and a shift in consumers' travel preferences, tourism experts in China anticipate a surge of RV-related businesses in the coming years. According to the “2016 China Campground Industry Report”, there are total of 958 campgrounds in China, of which 489 are under construction. There were about 25,000 RVs in China by 2016. 33% of the campgrounds are located along the eastern part of China, for instance Shandong, Jiangsu, Shanghai, Zhejiang, Fujian and Guangdong), while another 22% are in western China, for instance Inner Mongolia, Gansu, Sichuan and Yunnan. There are currently around 80 RV manufacturers in China, of which 56 are active. It is predicted that the campground industry will hit a trillion RMB market ($145 billion USD) by 2020, which will also stimulate the RV industry’s development.

 


China has made a push in recent years to develop domestic tourism, including campgrounds and the RV industry. Campground development has received great support from the central government.  The China National Tourism Administration, together with 10 other ministries, released “Several Opinions on Promoting the Development of Self-Driving Tourism” on November 9, 2016. This set a target of building 2,000 campgrounds by 2020, and allows vehicles to tow trailers which are less than 2.5 tons.

 



However, the RV industry faces issues such as lack of standards and regulations, as well as the luxury car consumption tax challenge. China Customs does not have an HS code for RVs, so RVs are treated as automobiles upon import.  This means imported RVs have to pay the same high tariffs and duties as imported cars.

 

 

China’s Belt and Road Initiative:...

China’s Belt and Road Initiative: Heightened Debt Risks to Countries

The following article is reproduced here in it's entiety from the Center for Global Development

 

China’s Belt and Road Initiative – which plans to invest as much as $8 trillion in infrastructure projects across Europe, Africa, and Asia – raises serious concerns about sovereign debt sustainability in eight countries it funds, according to a new study from the Center for Global Development.

 

 

The study evaluated the current and future debt levels of the 68 countries hosting BRI-funded projects. It found that of the 23 countries that are at risk of debt distress today, in eight of those countries, future BRI-related financing will significantly add to the risk of debt distress. You can see the full list of countries, their external debt levels, and China’s portion of that debt in the new study here.

 

 

“Belt and Road provides something that countries desperately want – financing for infrastructure,” said John Hurley, a visiting fellow at the Center for Global Development and a coauthor of the study. “But when it comes to this type of lending, there can be too much of a good thing.”

 

 

According to the study, China’s track record managing debt distress has been problematic, and unlike the world’s other leading government creditors, China has not signed on to a binding set of rules of the road when it comes to avoiding unsustainable lending and addressing debt problems when they arise.

 

 

“Our research makes clear that China needs to adopt standards and improve its debt practices – and soon,” said Scott Morris, a senior fellow at the Center for Global Development and a coauthor of the paper.

 

 

The study recommends that China:

  • Multilateralize the Belt and Road Initiative: Currently, the multilateral development institutions like the World Bank are lending their reputations to the broader initiative while only seeking to obtain operational standards that will apply to a very narrow slice of BRI projects: those financed by the MDBs themselves. Before going further, the MDBs should work toward a more detailed agreement with the Chinese government when it comes to the lending standards that will apply to any BRI project, no matter the lender.

 

  • Consider additional mechanisms to agree to lending standards: Some methods might include a post-Paris Club approach to collective creditor action, implementing a China-led G-20 sustainable financing agenda, and using China’s aid dollars to mitigate risks of default.

 

 

In all eight highest risk countries, the proportion of external debt that is owed to China and its banks will rise, sometimes dramatically, under the Belt and Road Initiative:

 

 

  • Pakistan: Pakistan, by far the largest country at high risk, currently projects an estimated $62 billion in additional debt, with China reportedly financing roughly 80 percent of that. Big-ticket BRI projects and the relatively high interest rates being charged by China add to Pakistan’s risk of debt distress.

 

 

  • Djibouti: The most recent IMF assessment stresses the extremely risky nature of Djibouti’s borrowing program, noting that in just two years, public external debt has increased from 50 to 85 percent of GDP, the highest of any low-income country. Much of the debt consists of government-guaranteed public enterprise debt and is owed to China Exim Bank.

 

 

  • Maldives: China is heavily involved in the Maldives’ three most prominent investment projects: an upgrade of the international airport costing around US$830 million, the development of a new population center and bridge near the airport costing around US$400 million, and the relocation of the major port (no cost estimate). The country is considered by the World Bank and the IMF to be at a high risk of debt distress and is currently being buffeted by domestic political turmoil.

 

 

  • Lao, P.D.R. (Laos): Laos, one of the poorest countries in Southeast Asia, has several BRI-linked projects. The largest, a $6.7 billion China-Laos railway, represents almost half the country’s GDP, which led the IMF to warn that the project might threaten the country’s ability to service its debts.

 

 

  • Mongolia: Mongolia’s future economic prosperity depends on major infrastructure investments. Recognizing Mongolia’s difficult situation, China Exim Bank agreed in early 2017 to provide financing under its US$1 billion line of credit at concessional rates for a hydropower project and a highway project. If reports of an additional $30 billion in credit for BRI-related projects over the next five to ten years are true, then the prospect of a Mongolia default is extremely high, regardless of the concessional nature of the financing.

 

 

  • Montenegro: The World Bank estimates that public debt as a share of GDP will climb to a whopping 83 percent in 2018. The source of the problem is one very large infrastructure project, a motorway linking the port of Bar with Serbia that would integrate the Montenegrin transport network with other Baltic countries. The Montenegro authorities concluded an agreement with China Exim Bank in 2014 to finance 85 percent of the estimated US$1 billion cost for the first phase of the project, with the second and third phases likely to lead to default if financing is not provided on highly concessional terms.

 

 

  • Tajikistan: One of the poorest countries in Asia, Tajikistan is already assessed by the IMF and World Bank to be at “high risk” of debt distress. Despite this, it is planning to increase its external debt to pay for infrastructure investments in the power and transportation sectors. Debt to China, Tajikistan’s single largest creditor, accounts for almost 80 percent of the total increase in Tajikistan’s external debt over the 2007-2016 period.

 

 

  • Kyrgyzstan: Kyrgyzstan is a relatively poor country with significant new BRI-related infrastructure projects, much of it financed by external debt. China Exim Bank is the largest single creditor, with reported loans by the end of 2016 totaling US$1.5 billion, or roughly 40 percent of the country's total external debt. While currently considered to be at a “moderate” risk of debt distress, Kyrgyzstan remains vulnerable.

 

 

The full study, “Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective” can be found at: https://www.cgdev.org/publication/examining-debt-implications-belt-and-road-initiative-policy-perspective.

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