Local authorities no longer required to work on ‘Made in China 2025’
Dec-18-2018 By : fcccadmin
China has stopped requiring local governments to work on the “Made in China 2025” strategy, the latest directive issued by the Chinese government to local authorities showed, in a clear sign that Beijing is toning down a policy that has become a centerpiece of its rivalry with the U.S. However, China will continue to pursue its ambition of becoming an industrial and technological power, with the directive making clear that the initiative has been dropped in name only. “Made in China 2025” had the clear target of increasing domestic players’ market share of key hi-tech sectors such as robotics and new energy vehicles.
The Chinese government has released a list of key policies for local governments to focus on, omitting any references to the scheme, which had been strongly opposed by the U.S. government. In the previous guideline, issued in November 2016, Beijing set up a special fund for “Made in China 2025” and clearly stated that local governments should offer financial support to projects and enterprises related to the policy. In 2017 and early 2018, central authorities published a list of local governments to recognize and recommend their “outstanding achievement” in supporting the initiative.
The U.S. claimed that Chinese government support for the hi-tech sector would create an unequal playing field for U.S. tech companies. The omission is likely to be read as another indicator that China is attempting to play down its support for “Made in China 2025”, which has appeared less frequently in propaganda materials and official documents since the U.S. made its opposition clear during the summer. U.S. Commerce Secretary Wilbur Ross said that it was clear that China has been playing down the 2025 strategy, since there has been fewer talk about it. “But that doesn’t mean they’ve dropped it,” Ross said, adding that the U.S. does not oppose China’s efforts of moving into advanced technologies.
European Chamber urges China to define the role of government in its economy
By : fcccadmin
The European Union Chamber of Commerce in China (EUCCC) has urged China to define the role of the government in its economy, with experts warning that its continued interference is spooking global markets. “When we look at the next round of reforms, the key issue is the correct definition and the role of the government in the economy,” said Chamber President Mats Harborn on the sidelines of the Chamber’s annual conference in Beijing. “It’s the core of all the conflicts. Should the government be directly supporting the industries or should the government be creating the frameworks?” he said, in reference to the ongoing trade war between the U.S. and China, as well as former disputes between China and the EU.
At the crux of the China-U.S. trade war is Washington’s accusation that China’s government investment in selected industries amounts to unfair competition – a complaint made by many foreign businesses over the years. For example, the “Made in China 2025” initiative, which aims to replace imports with local products and build global champions to compete with Western companies in cutting-edge technologies, has attracted the ire of the U.S. government, which claims it will destroy any chance of a level playing field for private companies. The Chamber also said that President Xi Jinping’s various economic reforms have not delivered meaningful change in opening up the Chinese economy.
Scott Kennedy, China Expert at the Center for Strategic and International Studies, a Washington think tank, told the South China Morning Post that the global solar industry has been clearly and negatively affected by China’s state objectives in clean energy. China, the world’s biggest solar market, has been the leader in new solar installations over the past few years, often subsidized by the government through guaranteed electricity prices. As such, there are growing concerns about overcapacity. China’s installed solar capacity reached 140 gigawatt (GW) at the end of March 2018, almost twice the 2016 level. But the expansion is expected to slow. In June, Beijing moved to rein in the expansion of the industry by suspending the allocation of more quotas for new farms and cutting subsidies. The glut in global inventories sent solar panel prices plummeting and the continued state support means they are set to plunge further. Some foreign solar panel producers have already gone out of business, showing the impact China’s plans have on companies elsewhere.
World’s first nuclear European pressurized reactor (EPR) goes into operation
By : fcccadmin
The world’s first European pressurized reactor (EPR) has gone online in southern China after years of safety and design delays. The third-generation reactor went into operation at the Taishan Nuclear Power Plant, 136 km west of Hong Kong, following extensive tests. The Taishan plant is a joint venture between the China General Nuclear Power Group (CGNPG) and Electricité de France, and its start date has been pushed back repeatedly since construction began a decade ago. A spokesman for the Taishan Nuclear Power Joint Venture confirmed the plant had begun commercial operations. A second EPR reactor is expected to come online at the plant next year.
The French EPR technology is notoriously difficult to build and similar projects in Finland and France have also been plagued by delays. Guo Limin, General Manager of the joint venture, said the company had learned from the delays and would apply that knowledge to the construction of the second reactor. He said delays had also been caused by changes in design and resulting contract disputes. Guo said the design was upgraded to prevent major disasters, including a direct hit from a plane and generator failures like those in Fukushima in 2011. China’s National Nuclear Safety Administration raised concerns about safety at the Taishan plant in May after an inspection, and the plant had addressed those issues.
Zhao Jiyun, Professor of nuclear science and engineering at the City University of Hong Kong, said the Taishan reactors were sealed in a “double-wall crust”. The inner shell could resist internal hazards resulting from severe accidents such as an earthquake, while the outer layer, a reinforced concrete structure, was designed to withstand a plane crash. “The European pressurized reactor technology is the third generation of nuclear reactors, and it’s safer than the second generation used by plants such as the Daya Bay Nuclear Power Plant in Shenzhen,” he said. The Taishan project was launched on November 26, 2007 and was initially expected to generate power as early as 2013. France’s Flamanville EPR project is still years behind target, as is Finland’s project in Olkiluoto, the South China Morning Post reports.
China economy weaker in November as effect of trade war sets in
By : fcccadmin
The Chinese economy weakened further in November, as the trade war with the United States continued to take a toll on growth, according to the latest economic data. The data suggest that fourth quarter growth will slow further from the rate of 6.5% posted in the third quarter. Retail sales growth decelerated sharply to 8.1% from the 8.6% rate in October, lower than the 8.8% rate expected by analysts polled by Bloomberg. The November growth rate was the lowest since the 4.3% gain posted in May 2003. The slowing of retail sales suggests that record sales during November 11 Singles’ Day could not offset declines in other areas, such as car sales, which fell 16.1% during the month, year-on-year, according to the China Association of Automobile Manufacturers (CAAM). Ding Shuang, Chief China Economist at Standard Chartered Bank, said weak auto sales were caused by the expiration of tax rebates for smaller cars, a slowdown in consumer loans partly due to the crackdown on online peer-to-peer lending platforms, and subdued property investment, since new homes are often sold together with garages.
Industrial production grew 5.4% in November compared to the previous year, well below the 5.9% gain in October. The November growth rate was the lowest in 10 years, matching the 5.4% gain in November 2008. Fixed-asset investment (FAI) was the lone bright spot, growing 5.9% in the January to November period, up from 5.7% in the first 10 months of the year. The property investment growth rate was stable at 9.7% in November. Analysts predicted that growth will be hit hardest in the first half of next year when the full effect of U.S. tariffs is felt. National Bureau of Statistics (NBS) Spokesman Mao Shengyong said that China still had the potential to maintain a stable and fast rate of consumption growth next year, given the rise in the number of middle class citizens.
The government is expected to roll out more pro-growth measures, including tax cuts and an increase in fiscal spending, when officials set overall economic policies for 2019 at the Central Economic Work Conference this week.
Foreign direct investment (FDI) in China fell sharply in November as concerns over the tariff battle between China and the United States hit investor confidence. China’s Ministry of Commerce said FDI in the month fell 27.6% year-on-year to USD13.6 billion. “Given the prospect of additional tariffs, foreign companies are afraid to invest in China now,” said Shen Jianguang, Chief Economist at JD Finance in Beijing. FDI in China in the first 11 months of 2018 fell 1.2% year-on-year to CNY793.7 billion.
China’s imports and exports totaled CNY27.88 trillion in the first 11 months, up 11.1% from the same period last year. Exports grew 8.2% to CNY14.92 trillion while imports rose 14.6% to CNY12.96 trillion, narrowing the trade surplus by 21.1% to be CNY1.96 trillion.
Zhejiang province pledges billions to drive tech innovation
By : fcccadmin
Zhejiang province, home to e-commerce giant Alibaba Group, has pledged CNY120 billion to drive tech and innovation in the next five years. The investment plan is part of a new technology policy rolled out by the provincial government, with the goal of building itself into a global “high ground” of technology innovation in internet and medical research by 2020. “We will also guide social capital and financial institutions to invest around CNY290 billion,” Gao Yingzhong, head of the provincial Science and Technology Department, was quoted as saying by Xinhua. He added that the total investment in research and development (R&D) in Zhejiang province over the five year period is expected to reach CNY900 billion.
For years, China relied on government subsidies to encourage development of key industries, but starting in 2014, subsidies gave way to so-called “guidance funds”, or state-backed funds and private equity firms. As of October, various levels of governments in China had set up 2,041 government guidance funds, raising a total of CNY3.7 trillion, according to a report by Tsinghua University last month. While the investment by the Zhejiang government is not a government guidance fund, it is part of a broader top-down innovation approach by the Chinese government as it steps up efforts to boost the private sector and increase the competitiveness of its home-grown tech sector, which still relies heavily on foreign suppliers for core technologies such as semiconductors.
Zhejiang is home to many of China’s most successful private businesses, which made up nearly two-thirds of the provincial economy in 2017. Alibaba said in October that it expects to invest USD15 billion in R&D over the next three years. Last year the company spent USD3.6 billion on R&D, according to a PwC survey. Zhejiang province is also aiming to increase the ratio of R&D expenditures to the equivalent of 3% of provincial GDP by 2022. China’s total investment in R&D was equal to about 2.2% of GDP last year, the South China Morning Post reports.
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