Weekly report of the true economy inside China — 1/4/2021 – 1/9/2021

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Image source: https://www.worldatlas.com/

Supply chain

Food

Communist China decided to break through the agricultural problem in 5 years to secure food supply

According to “Today’s Headline” news on 4thof Jan, Communist China believes seeds and arable land are the two core elements of food security and is persistently keeping the 0.3 billion acres (1.8billion mu) arable land but having a big gap on seed industry compared other countries. The Ministry of Agriculture and Rural Affairs stressed that the seed industry will be the key task of agricultural science and technology in the next five years to catch, speed up the implementation of the project of core technology breakthrough, narrow the gap between pig, soybean, cow, corn and other varieties and international levels, to ensure food supply mainly from Chinese seeds.

https://www.toutiao.com/i6913799547638563341/?in_ogs=&traffic_source=&utm_source=&source=search_tab&utm_medium=wap_search&original_source=&in_tfs=&channel=

Chips

The overall performance of the current 5nm chip is not ideal, significantly lower than the expectation, which result in that cell phone manufacturers facing a selection puzzle Currently, common 5nm chips, like Huawei Kirin 9000 and Qualcomm Snapdragon 888, is only about 10% improvement compared to the previous generation of Qualcomm Snapdragon 865 processor in terms of performance, which could be viewed as a conventional upgrade and did not bring a substantial breakthrough in technology.

The bad thing is that 5nm chips lead cell phone manufacturers trap in a selection dilemma. On the one hand, the latest 5nm chip represents the highest level of technology in this industry. If cell phone manufacturers can not follow up the latest chip technology at the earliest time, they may inevitably miss the market opportunities. In order to ensure the competitiveness of their products, cell phone manufacturers will have to launch new cell phones with 5nm chips as soon as possible. On the other hand, the previous generation of 7nm chips means the mature technology used in cell phones.  Thus, whether blindly following up the “not excellent” 5nm chip or continuing to use the mature 7nm chip technology is really not easy to make a decision for cell phone manufacturers.

https://ishare.ifeng.com/c/s/v002m-_4BaTWULa7LaybUBjQ02DEuLMVqJjlkZKhHZlNitOU__?spss=np&aman=1cZ40fGc67Ief8g49bf4b6hd74dc6fA418xe01q305

Plastic

The first week of plastic restriction: biodegradable plastic bags price increase of 15%, paper products are produced 24 hours one day, upstream of which is expanding dramatically.

From January 1,2021, non-biodegradable plastic bags cannot be used in Beijing, Shanghai and other municipalities, provincial capitals and other places. Disposable plastic straws will also disappear in all beverage stores across the country. On the first day of 2021, the reporter found that, in a supermarket chain in Beijing, the previous ordinary plastic bags have all been replaced by biodegradable plastic bags, and the price rose to 1.2 yuan from 0.4 yuan for the same specifications’ bag. Alternatives of plastic bags are becoming popular with the “Plastic restriction”.

Biodegradable plastic bags prices are driving up by the increasing price of raw material.  A plastic entrepreneur said that the demand of raw materials of biodegradable plastic exceeds the supply. The price of raw material rose to 26,000 yuan/ton from 24,000 yuan/ton in just a few days.

http://www.nbd.com.cn/articles/2021-01-08/1592155.html

Paper

Paper industry experiencing national price increases in Communist China

Since Dec 7, 2020, prices for household paper products in Communist China have experienced three waves of increases, with an average increase of nearly 100 yuan/ton each time, due to many factors such as surging raw material prices, rising transportation costs and labor costs, downward trend of imported wastepaper.

http://economy.caijing.com.cn/20210106/4729313.shtml

https://www.gucheng.com/hot/2021/3996209.shtml

Corporations’ Situations

EV startup Byton to suspend production since July 1, 2020 for reorganization

Communist China-based electric car start-up Byton said on 4thof Jan, it will continue to suspend production from 1stof Jan 2021 to conduct a reorganization of the firm after being hit by the CCP virus pandemic which had brought great challenges to Byton’s financing and production operations. Byton , backed by state-owned automaker FAW Group and battery supplier Contemporary Amperex Technology Co Ltd. , said it was also actively raising funds to address issues relating to unpaid staff salaries etc.

https://finance.sina.com.cn/tech/2021-01-05/doc-iiznctkf0159987.shtml

Permanent job is no longer guaranteed? New proposal states that bank employees’ salary should be cut in half!

Banking jobs are widely considered to be a lifetime employment with high salaries and many benefits in Communist China. Recently the Chinese Academy of Social Sciences has published an article “China’s banking industry profits are abnormally high and can surrender nearly trillions of profits to the real economy”, pointing out that the operating surplus of China’s financial industry accounts for 13.7% of the operating surplus of all enterprises. Such high profits robbed the profits of the real economy. Moreover, the banking employee’s salary is five times of the average of all sectors thus their salary should be cut in half at least, especially for middle/high level employees.

https://www.sohu.com/a/442226479_10454

98% Huaqiangbei makeup shops closed due to regulation that imported products must have Chinese labels

Huaqiangbei was once the wind vane of the global electronics industry, with counterfeit mobile phone produced there and swept the world. Most mobile shop owners transferred their business to cosmetics, mainly international brands, in recent years. On January 6, a reporter was told by one of the shop owners that almost all the makeup shops were closed and many of their warehouses were sealed by officials from customs, commerce, and public security division of Communist China. Related Information shows that Hunan Bangpu is one of the main suppliers of Lithium battery’s core raw materials, ranking second with a 15% market share.

https://money.163.com/21/0106/19/FVMC08S600259DLP.html

Trillion RMB market value is blown to a halt! Ningde Times responds to factory explosion: no big impact

In the evening of January 7, one of the factories of the Chinese power battery business—Ningde Times (stock code:300750), Hunan Bangpu, occurred one explosion and fire accident, triggering market concerns. Although the explosion was remedied in time, it also shocked the stock market of Ningde Times. As of the close of the stock market on the 8th, the Ningde Times shares were at 403.68 yuan, down 2.31%.

https://finance.sina.com.cn/tech/2021-01-08/doc-iiznctkf0845306.shtml?cref=cj

War with the World

Preparing for the war

Xi signed No.1 order of 2021 of the Central Military Commission, kicks off the country’s armed forces’ training to be ready for war

On Jan 4th, according to Xinhua News Agency, Xi, who also chairs Communist China’s top command body called Central Military Commission, said the PLA must be ready to “act at any second” as the country’s armed forces kicked off the year’s military training and exercises. He also ordered the PLA to “substantially increase” the use of technology in its exercises, and to keep up with the latest developments in military and hi-tech knowledge. These included the use of computer simulations and online combat in drills, as well as exploration of more opportunities to add hi-tech and the internet    (known as tech+ and web+) in training.“ The PLA must increase the integration of new equipment, new forces and new combat realms into training and combat systems,” he said.

https://www.guancha.cn/politics/2021_01_04_576705.shtml?s=zwyxgtjbt

Economic War

Communist China’s pushing green bonds investments

On January 6, the People’s Bank of China stated to implement major “carbon peak” (CCP promised CO2 emissions will reach peak in 2030 and no longer grow) and “carbon neutral” (offset CO2 emissions by tree planting, energy saving etc.) decisions, and improve the green financial policy framework and incentive mechanism, guiding financial resources flow to green industry. While green bonds are undoubtedly one of the most important forces in green financing, the domestic labelled green bond market has grown to approximately US$120 billion, making it the world’s second largest green bond market. Opinion: CCP made fake promise of carbon reduction to the world, cheating foreign capital to invest in their green bonds.

https://finance.sina.com.cn/roll/2021-01-07/doc-iiznezxt0949269.shtml

Currency War

Chinese Yuan breaks 6.5 per US dollar surging 7000 basis points in half year

On the morning of January 4, the spot exchange rate of RMB against the U.S. dollar opened at 6.5195, and then successively rose above the 6.51 and 6.50 barriers, rising by more than 650 points in the day and setting a new high since June 22, 2018.

http://www.xinhuanet.com/fortune/2021-01/04/c_1126944113.htm

Trade War

Key aspects of Communist China’s monetary policy strategy in 2021

During the 2021 People’s Bank of China Work Conference on January 4, ten key tasks for 2021 were identified. One of them is to ensure Communist China’s in-depth involvement in global financial governance, strictly minimize external financial risks, and carefully manage loans to low-income countries. In addition, the conference pointed out the importance of steady RMB internationalization and mitigating foreign exchange risks. Opinion: These tasks seem to indicate the CCP is not only facing the risks of debt defaults with low-income countries but also attempting to exert greater control on global finance and trade.

Communist China’s plan to take opening-up to a higher level

During an interview with Xinhua (January7), Wang Wentao, Minister of Communist China’s Commerce Ministry, emphasized expanding domestic consumption and taking opening-up to a higher level. One of the priorities is to stabilize foreign trade and investment in 2021in various ways such as establishing more demonstration zones for import promotion, facilitating trade with countries along the Belt and Road, and relaxing market entry rules. Another priority is to expand its “circle of friends” worldwide by signing free trade agreements with more trading partners. Wang emphasizes the facilitation of China-Japan-ROK FTA negotiations and the consideration of joining the Comprehensive and Progressive

https://finance.sina.com.cn/china/gncj/2021-01-07/doc-iiznezxt1118109.shtm

Digital yuan pilot in Lujiazui district, Shanghai, but ordinary users can’t use it yet

Shenzhen and Suzhou, Shanghai have joined the ranks of cities testing the digital RMB. Recently, some people found that the digital RMB pilot has quietly come to Lujiazui.

In the central mall of Lujiazui, digital RMB payment can be supported at a milk tea store and people who use digital RMB can enjoy price discounts. But the store staff said that currently only Alipay employees can use digital RMB payment, which is one of the internal test points, ordinary users can not use it for the time being. For the pilot in Lujiazui Center Mall, Ant Group responded to reporters that Ant Group has been actively participating in the construction of the digital RMB system and steadily promoting the pilot in accordance with the overall arrangement of the Central Bank.

https://finance.sina.com.cn/tech/2021-01-08/doc-iiznezxt1252924.shtml?cref=cj

Supply Chain Shortage

Guideline to standardize and regulate utility fees

According to a circular issued by the General Office of the State Council on January6, a guideline has been passed to standardize and regulate fees for water, electricity, gas and heat supplies in Communist China. Unreasonable fees that have been charged for the supply of water, electricity, gas and heat must be canceled. Pricing for water should be based on the cost and reasonable profits. Restrictions on electricity prices will gradually be removed with the exception of residential, agricultural, and public works electricity supplies. The government should set or guide the pricing for gas and heating.

https://cn.reuters.com/article/china-ndrc-water-electricity-0106-idCNKBS29B1C9

Financial Crisis

Follow-up on Henan Province credit crisis: Henan’s financial is tight, local cleaners’ salaries are in arrears

(Pheonix News) On New Year’s Day, the local cleaners who are from Xiwan Town, Jiaozuo City, Henan Province, interviewed by local reporters, saying they have not been paid for 8 months due to local government’s financial difficulties, even though their average monthly salaries are only from 650 –800 yuan (between USD103 -USD123). But what is more worrying is that these cleaning workers may not be isolated cases.

https://ishare.ifeng.com/c/s/v004WW8gqtHlGYYFIBPMX9VXf5dgSsKPnZiAlr4D6MuO8q-_YZaSJnnA0y3gidZCphqsurXDugbktax898CzruGzPzw____?spss=np&aman=1cp40fYc673ef8K49bH4b68d74gc6fk418Be01k305

Banks tightened lending loan quota after New Year’s Day Instead of loosening up

Typically, Communist China banks’ mortgage quotas are most sufficient in January, but the situation is very unusual in 2021, with tighter quotas. Currently, real estate-related loans in China account for 39% of total banking loans, and a large amount of capital from bond, equity and trust investments have flowed into the real estate industry. Many Chinese households have borrowed heavily to buy real estate, with leverage reaching 57.7% in the first quarter of 2020. According to a report by China Guangfa Bank and Southwestern University of Finance and Economics (SWUFE), residential housing accounts for 77.7% of total household assets on average. Therefore, real estate could be the biggest “gray rhino” in China at the current phase, which is why banks are tightening their lending to avoid potential risks.

https://finance.sina.com.cn/roll/2021-01-04/doc-iiznezxt0404561.shtmlhttps://ntdtv.com/gb/2021/01/03/a103023801.html

Changes in judicial interpretation of private lending: protection cap rate reduces to 4x the LPR

The Communist China Supreme Court has amended and reissued the New Civil Lending Regulations for the second time after its consideration and adoption, effective from January 1, 2021. The revised judicial interpretation states that the private lending previously signed or even performed, including the lending occurred before August 20, 2019, even though it complies with the then judicia interpretation that the interest rate protection cap is 24%, the court may review and adjust the cap to 4 times the one-year LPR at the time the suit is filed if it goes to court after Aug. 20, 2020. According to the announcement by the People’s Bank of China on August 2020, the one-year LPR was 3.85%, which means the adjusted judicial protection cap on private lending has been reduced to around 15.4% from the previous effective cap of 24.0%.

https://finance.sina.com.cn/roll/2021-01-04/doc-iiznezxt0403127.shtml

Communist China’s propaganda on regulation of large-amount Cash deposit/withdrawalSince July 2020, the People’s Bank of China has been progressively piloting its regulation on large-amount cash deposit/withdrawal in Hebei province, Zhejiang province, and Shenzhen city. The Regulation requires registration for business transactions over 500,000 yuan (about $77,000) and for personal transactions over 100,000 yuan (about $15,400) in Hebei, 300,000 yuan (about $46,150) in Zhejiang and 200,000 yuan (about $30,770) in Shenzhen. The registration process requests customers to make an appointment in advance and provide detail information about the source or the destination of the funds. Failure to do so may result in funds being frozen. The implementation stage is expected to begin by June 2021. Commentary: It’s noticed many propaganda news was spread on the internet in recent weeks, saying significant increase of resident deposits in 2020 and explaining the regulation is to fight against so-called crime and gray transactions etc. The real purpose is more likely connected to Communist China’s current high financial risks due to banks’ high ratio of nonperforming loans, funds outflow, worse economic outlook.

https://www.163.com/dy/article/FVGEI9KA0519CCS1.htm

Increased upper limit of domestic companies’ overseas lending

The People’s Bank of China and the State Administration of Foreign Exchange have recently decided to increase the macro-prudential adjustment parameter of overseas lending by domestic enterprise from 0.3 to 0.5. This adjustment will raise the upper limit of domestic enterprises’ overseas lending and encourage them to send RMB out of Communist China and purchase foreign exchange aboard.

https://finance.sina.com.cn/money/forex/forexroll/2021-01-06/doc-iiznctkf0359927.shtml

New Directive Aiming to Boost Rural Consumption

On Jan 5, twelve ministries including the Ministry of Commerce in Communist China issued a directive on boosting the rural consumption potential. The Directive emphasizes five priorities: stabilizing and expanding automobile consumption, promoting consumption of home appliances, furniture, and decoration, boosting catering consumption, fixing weaknesses in rural consumption, and strengthening policy guarantees. It is expected that automobiles (especially new energy vehicles), home appliances, catering, and logistics (especially cold chain) industries will grow because of this directive. Commentary: According to World Bank standards, more than 40% of China’s population still lives in poverty. “Green Book of Rural Area” estimated per capita disposable income of farmers in poverty-stricken rural areas to be about 13,000 yuan (about $2000) in 2020. It is unlikely that such a directive can work.

https://finance.sina.com.cn/china/2021-01-06/doc-iiznctkf0345834.shtm

Communist China’s pushing green bonds investments

On January 6, the People’s Bank of China stated to implement major “carbon peak” (CCP promised CO2 emissions will reach peak in 2030 and no longer grow) and “carbon neutral” (offset CO2 emissions by tree planting, energy saving etc.) decisions, and improve the green financial policy framework and incentive mechanism, guiding financial resources flow to green industry. While green bonds are undoubtedly one of the most important forces in green financing, the domestic labelled green bond market has grown to approximately US$120 billion, making it the world’s second largest green bond market. Opinion: CCP made fake promise of carbon reduction to the world, cheating foreign capital to invest in their green bonds.

https://finance.sina.com.cn/roll/2021-01-07/doc-iiznezxt0949269.shtml

Communist China’s preventing abnormal cross-border capital flows

On January 6, the State Administration of Foreign Exchange disclosed that preventing the risk of abnormal cross-border capital flows has become a key task in 2021 and will strictly control the in and out of hot money.

https://finance.sina.com.cn/roll/2021-01-07/doc-iiznctkf0531210.shtml

Mergers and reorganizations of Communist China’s small and medium banks come to a climax

On January 6, a reporter noticed that there were 7 cases of merger and reorganization of small and medium-sized banks, involving nearly 30 banking institutions from Sichuan, Shanxi, Henan and other provinces in Communist China in 2020, more than in previous years. Option: Those banks are facing bankruptcy due to high ratio of nonperforming loan, and merger and reorganization is a temporary way but not sustainable.

http://finance.people.com.cn/n1/2021/0106/c1004-31990641.html

Key aspects of Communist China’s monetary policy strategy in 2021

During the 2021 People’s Bank of China Work Conference on January 4, ten key tasks for 2021 were identified. One of them is to ensure Communist China’s in-depth involvement in global financial governance, strictly minimize external financial risks, and carefully manage loans to low-income countries. In addition, the conference pointed out the importance of steady RMB internationalization and mitigating foreign exchange risks. Opinion: These tasks seem to indicate the CCP is not only facing the risks of debt defaults with low-income countries but also attempting to exert greater control on global finance and trade.

https://www.sohu.com/a/442920258_177992?scm=1004.759016887454728192.0.0.0&spm=smpc.ch15.top-news-1.1.1610042499820g4oTEkp

Handling of CCP Virus

Beijing began CCP-virus vaccination among key groups: 20 people are vaccinated per half hour on average

From January 1, 2021, Communist China’s first batch of CCP-virus vaccines will be vaccinated in Beijing, Shandong and other places for key populations, and it is expected to be completed in mid-February. 220 vaccination sites are now opened in Beijing and nine groups of people aged 18 to 59 will receive the vaccine first. These include frontline customs inspectors of imported cold-chain goods and personnel working in the overseas and domestic transportation sector. “The people who came to be vaccinated today were mainly the city’s water, electricity, heating, and gas related staff, about two hundred people. On average, about 20 people are vaccinated every half hour.” Shan Daling, deputy director of the Liulitun Community Healthcare Center, told reporters.” Yesterday we were informed to come here to get the vaccine.” Mr. Deng, who is working in city heating service, said. He also propagandized that he is happy he received free vaccination developed by his country.

https://finance.sina.com.cn/china/2021-01-03/doc-iiznctke9958351.shtml?cref=c

Brainwashing Chinese People and Spreading Hatred Against The USA

Hua Chunying’s Response to NYSE’s Delisting Announcement of Communist China’s State-Owned Telecom Companies

During the Foreign Ministry Spokesperson Hua Chunying’s Regular Press Conference on January 5, 2021, she stressed that “some political forces in the United States have been wantonly suppressing foreign companies listed in the country, exposing an arbitrary and capricious uncertainty in its rules and mechanisms.” She also pointed out that the Communist China hopes “the United States will respect rule of law and market principles and do things conducive to upholding order in the global financial market, protecting in vectors’ lawful rights and interests, and promoting the steady development of the global economy”. Comments by users seem to indicate two opposite views among Chinese people: one group of people strongly agree with Hua Chunying’s statement and express their anti-Americanism while the other group pointed out the irony of a hooligan (the CCP) talking about respecting the rule of law.

https://finance.sina.com.cn/world/gjcj/2021-01-05/doc-iiznezxt0690611.shtml

https://www.fmprc.gov.cn/ce/cesl/eng/fyrth/t1844575.htm

Communist China says it will take ‘necessary measures’ in response to NYSE delisting of 3 Chinese companies

On Jan 2, Communist China vowed to respond to the delisting of three telecommunications giants by the New York Stock Exchange under an executive order signed by President Trump in November that barred Americans from investing in companies connected to the Chinese military. The ministry of commerce said in a statement that Communist China will “take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises”. The commerce ministry propagandized that the U.S. was “abusing national security and using state power to crack down on Chinese enterprises” and said the move was “not in line with market rules and logic, which harms not only the legitimate rights of Chinese enterprises, but also the interests of investors in other countries, including the US.”

https://www.sohu.com/a/442098258_177992

Hua Chunying Threatens U.S. Anti-Communist Politician sand Mocks Secretary Pompeo

During a press conference on January 7, 2021, when asked about U.S. Secretary of State Pompeo’s statement on the people arrested by the Hong Kong police, Foreign Ministry spokeswoman Hua Chunying claimed that “a handful of anti-China politicians within the Trump administration have been staging a show of madness as their days at the rein are numbered”. She threatened that such actions will be punished by history and the U.S. shall “pay a heavy price for its erroneous actions”. She also mocked Secretary Pompeo using an opinion piece on him published in Washington Post saying, “There is not enough space in this newspaper to chronicle all of Pompeo’s falsehoods.” Opinion: As revealed in a report by National Pulse (December 29, 2020), The Washington Post is among the host of U.S. media outlets that have participated in private dinners and sponsored trips with a Chinese Communist Party-funded group aiming to garner “favorable coverage” and “disseminate positive messages” about Communist China.

http://www.xinhuanet.com/world/2021-01/07/c_1126957905.htm

By:【G-Translators-Financial Team】

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